What’s for breakfast? Increasingly, it’s not a traditional meal of cereal and milk or bacon and eggs served at home. Instead, grab-and-go nutritional and performance drinks are a popular meal option. That’s a threat to dairy companies, especially those that make milk, cheese and yogurt.
According to a survey by the Chicago-based market research firm Mintel, 39% of consumers use nutritional and performance drinks as a replacement for breakfast. What’s more, three in five (58%) consumers currently use nutritional and performance drinks as a meal replacement and 48% consume them as part of a meal, up from just 20% who used nutritional drinks as a meal supplement in 2012.
On the other hand, the dollars Americans spend on dining out exceed those spent on grocery purchases, the U.S. Department of Commerce reported in 2015. That’s good news for dairy processors because restaurants use a lot of dairy products, said Robert Chesler, vice president of the foods division at INTL FCStone Financial, Chicago.
Now if the restaurant chain happens to be McDonald’s, then you are really talking about dairy on a large scale. With 14,000 restaurants in the United States and 27 million daily visitors, the company represents a huge channel for the sale of dairy foods and beverages.
The chain states that 80% of its menu includes a dairy food or beverage; rising to 90% on its breakfast menu. Items include the obvious, like milk, cheese on burgers and yogurt parfaits. Not-so-obvious items include buttermilk in the coating for a chicken sandwich, butter for pancakes and milk in espresso-based drinks. A latte beverage is made with a cup of milk.
Dairy Management Inc., funded by the dairy checkoff program, has a hand in getting dairy foods on McDonald’s menus. The Rosemont, Ill.-based dairy association doesn’t just encourage putting milk on the menu, it surveys consumers, develops food items and identifies ingredient suppliers and dairy processors. DMI was instrumental in developing nonfat chocolate milk and mozzarella sticks.
In June, DMI invited Dairy Foods and reporters from six dairy processor and producer publications to meet with McDonald’s executives at the restaurant chain’s headquarters in Oak Brook, Ill.
DMI’s partnership with restaurant chains (it also works with Pizza Hut, Taco Bell and Domino’s) benefits dairy processors because restaurants buy milk, cheese, butter, ice cream and yogurt. Seeing dairy foods on menus also helps to build trust in dairy, said Jacqi Coleman, who directs DMI’s partnership with McDonald’s.
When McDonald’s removed soft drinks as a beverage option for its Happy Meals in 2014, fewer families selected a soft drink and instead chose milk or juice. The chain said orders for low-fat white milk, fat-free chocolate milk and 100% apple juice increased nine percentage points from 37% to 46% in the first 11 months following the change in menu boards (July 2014 – May 2015). In the same period, selection of sodas fell from 56% to 48%.
The DMI-McDonald’s partnership dates to 2004. That’s when McDonald’s replaced paper milk cartons with plastic bottles, based on DMI’s insights that children preferred milk in plastic “chug”-type bottles.
Danielle Paris, McDonald’s manager of menu innovation, said DMI “is very much part of the McDonald’s family” and that DMI helped to “crack the code” on making fat-free chocolate milk taste good. The flavored milk has 20% fewer calories than the 1% version and 10% less sugar.
Since 2004, the two organizations have collaborated on a number of initiatives. DMI offers consumer insights, product development, consumer issues and nutrition counseling that get considered during menu creation. Two DMI employees work full-time in McDonald’s headquarters and travel to suppliers and dairy processors, as needed. DMI’s Porter Myrick serves as the interface between McDonald’s and dairy suppliers.
For example, McDonald’s sources soft-serve ice cream mix from more than 16 dairy processors and requires that the mix taste and perform the same, regardless of who made it. Myrick gives the processors clear direction on flavor attributes and quality so that they can deliver a product that is “up to spec,” said Jessica Foust, McDonald’s chef and director of culinary innovation. And that’s not easy, given that each mix supplier has different processing technologies, she said.
Paul Zieminisky, DMI’s senior vice president of global partnerships, said his group is “supplier agnostic,” meaning that DMI does not promote any specific dairy processor or ingredient supplier over another. McDonald’s makes the sourcing decisions and the recipes are proprietary to it.
McDonald’s has partnered with national consumer food brands, most notably General Mill’s Yoplait. Since 2014, when the yogurt maker developed an exclusive Go-Gurt recipe, McDonald’s has sold nearly 300 million tubes of the food. DMI helped to “McDonald-ize” the product with less sugar and no artificial colors, Myrick said.
DMI food scientist Divya Reddy is credited with developing mozzarella sticks. The cheese is cut to a precise length, breaded, par-fried and packaged. It is finished at the restaurant in an oven.
McDonald’s learned that “not all mozzarella is created equal,” Paris said, because of attributes like sodium levels and mouth feel. She said McDonald’s “leaned on suppliers to get the right cheese and the creamy mouthfeel.”
Writing a recipe was not the end of the process. Because the make of the oven used in restaurants varies, proper temperature and bake times had to be figured into the equation, and then crew and store managers needed to be trained on the preparation. And like the soft-serve ice cream, McDonald’s various cheese suppliers had to deliver a product that tasted the same.
The item was successful. Introduced as part of McDonald’s two items for $2 promotion, two of every three customers ordered the cheese item.
In 2015, restaurants replaced liquid margarine with butter on English muffins, biscuits and bagels on the breakfast menu. The reasons were to provide better tasting foods and to meet the expectations of customers, the company said.
Swapping out one ingredient for another isn’t as simple as it might seem. McDonald’s had to change the Nutrition Facts labels for all its menu items made with butter. It also had to assure that the restaurants had the necessary portioning tools (“smallware,” in restaurant lingo). Restaurants receive butter in stick form, melt it and put it into squeeze bottles so that crew members use the proper amount consistently when following recipes.
For McDonald’s, converting to butter from margarine was relatively rapid. Developing new foods can take years. Adding apples to Happy Meals took three years because McDonald’s had to build the supply, Foust said.
Foust would not elaborate when asked if McDonald’s is looking at ideas using cream cheese, sour cream or cottage cheese. She did say there are “opportunities” for all dairy foods and that “all dairy products are generally delicious.”