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White Hutchinson Leisure & Learning Group, Kansas City, MO, USA

Carbohydrates Take a Toll

Over the past year, we have been giving coverage to the changes in consumers' diets and how the restaurant industry has been proactively responding with new menu selections that are low in carbohydrates, fat, sugar and calories. The changing eating habits of Americans are starting to take a toll on companies that are out of sync with these consumer preferences.

New World Pasta, American's largest pasta manufacturer, recently filed Chapter XI Bankruptcy due to decreasing sales and earnings. According to Jonathan Braatz, who follows the industry for Kansas City Capital Associates, a unit of Oppenheimer & Co., the explosion of interest in low-carbohydrate diets such as Atkins and South Beach has taken a significant bite out of pasta sales. This year, pasta sales are down 7% over the year earlier period. "And it doesn't look like it's hit bottom," he says.

A recent darling of Wall Street, Krispy Kreme Doughnuts, is seeing a decline in its earnings. It recently lowered its forecast for 2004 by 10%. CEO Scott Livengood blamed, in part, "increasing consumer interest in low-carbohydrate diets, which has adversely impacted several flour-based food categories, including bread, cereal and pasta." It probably doesn't help Krispy Kreme's sales that the trademark product, its Hot Original Glazed Donut, packs 200 calories, of which more than half are fat.

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