How much are we worth? – The “Veto Vote”

In a prior blog entry entitled “USA Today survey suggests food allergy sufferers find socializing tricky,” I suggested that restaurateurs would cater more and more to the food allergy and Celiac Disease community due to simple economics and the natural profit motive. So I thought it might be worthwhile to use my financial analysis background to estimate how much power (dollars) our community can influence.

First, some assumptions. Roughly 4% of Americans have food allergies and 1% has Celiac Disease. We’ll use Applebee’s as an example of a “typical” restaurant (since they seem to be on every street corner anyway!). Note that I am not suggesting anything, one way or the other, about the allergy-friendliness of Applebee’s.

The average Applebee’s store has annual sales of roughly $2.3 Million. On each of these sales dollars, they earn about 13.5c of profit. Since there is a lot of fixed overhead in a restaurant, every ADDITIONAL sales dollar generates closer to 25c (or more) in profit.

Now back to that 5% of the population with food allergies and/or Celiac Disease. Let’s make an assumption that 1% will never eat out and another 1% will go where they please and figure out what to order when they get there. This would leave 3% of the US population “up for grabs.”

Here’s where a very key factor comes in – the “veto vote.” The veto vote refers to the fact that if just one person in a party has food allergies, then the whole group will likely go to a restaurant that can cater to that one individual. (How many of your family members dine in allergy-friendly restaurants despite THEM not having an allergy?) So let’s make a very conservative assumption that the average “food allergy party” includes only 3 people, 2 of whom do not have food allergies. Thus the 3% of the US population with food allergies who are “up for grabs” can actually translate into a 9% increase in business for a restaurant that makes the necessary changes to become allergy-friendly! (Incidentally, a small restaurant chain in the Boston area, Burton’s Grill, claims they have sales 8-10% higher than they otherwise would by thoughtfully catering to JUST the Celiac community!)

A 9% increase in sales at a hypothetical Applebee’s equates to roughly $207K. Thus, if each additional dollar of sales is worth roughly 25c in added profits, then an allergy-friendly Applebee’s would earn over $50K more than an unfriendly one! Fifty-thousand dollars!

This is the math the smart restaurateurs are seeing and why more are providing gluten free menus and allergen information, having their employees trained in allergy safety, and in some cases seeking industry certifications.

For those still reading and still with me, I hope this demonstrates that, as a group, we can have a tremendous impact on pressuring more restaurants to become allergy-friendly.

I hope AllergyEats (www.allergyeats.com) becomes a powerful resource for those of us seeking new allergy-friendly restaurants as well as a tool to help demonstrate to restaurateurs the value of the food allergy and Celiac Disease community. Please help in this effort by going to the main AllergyEats site and sharing your restaurant experiences (it takes less than one minute per restaurant).

As always, I welcome your comments, questions, and criticisms. Please click on the Comments button below to share your thoughts.

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    I would love other comments on this as well.

    Another entry I’m about to print has a restaurant suggesting the increase in revenues is even higher!

    If you’re reading this and you’re a restaurateur or a financial analyst (as I was), I would greatly appreciate your thoughts and feedback — agreeing or disagreeing.

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