Originally published in Forbes Magazine on April 15, 2013.

The knives are out for the food industry, and they are getting sharper by the week. Not since Upton Sinclair exposed the meat packers in 1906 have America’s food companies been the target of so much public outrage. A new book, Salt, Sugar, Fat, by Pulitzer Prize-winning reporter Michael Moss, contends that big food companies engineered junk food to get us hooked on it. Two other new books, Pandora’s Lunchbox, by Melanie Warner, and Foodopoly, by Wenonah Hauter, rail against Big Food as well. That’s not all. A widely read New York Times column by former Kraft Foods executive Michael Mudd charged that the industry’s business models “put profits over public health.” And New York City Mayor Michael Bloomberg has vowed to continue his fight against oversized sugary drinks.

These revelations give activists new reasons to clamor for new taxes and restrictions on the $1.25 trillion U.S. food industry. But it might surprise them that one organization—involving the White House, health advocates, and business—is already moving the needle in the right direction without legislation, lawyers, and lobbyists. The group, the Partnership for a Healthier America, is a model of how activists and every industry should try to resolve their differences and make an impact. Its novel approach: getting the free market to help solve a societal problem in which it plays a role.

PHA is laser-focused on childhood obesity, which affects an estimated 18% of all U.S. children. The group has assembled a broad range of business leaders, health and fitness advocates, and thought leaders to find solutions. It is nonpartisan; its leaders include First Lady Michelle Obama as honorary chairman, former Republican Senate Majority Leader Bill Frist, and Newark Mayor Cory Booker. Its members include major health insurers such as Kaiser Permanente, mega-retailers like Wal-Mart, and food companies like Darden and Birds Eye Foods.

In his March 16 Times opinion article, Mudd, a former executive vice president of global corporate affairs for Kraft Foods, derided food industry-sponsored public health programs as “posing for holy cards.” They are public relations initiatives that distract the public from the industry’s dastardly deeds and a rogues’ gallery of products, he opined.

But that’s not what PHA stands for. As Sam Kass, senior White House policy adviser on healthy food initiatives, told me, “We will only solve the obesity epidemic if the food industry takes substantial action toward a healthier marketplace, which is increasingly what consumers are calling for. We have seen some exciting progress but we have a long way to go. PHA is a serious effort to get the food industry behind a solution.”

PHA is already getting results. Among its most impressive so far: dramatically expanding access to fresh fruits and vegetables in “food deserts,” areas of the country where 23 million people have only convenience stores and fast-food outlets nearby. PHA partners have so far expanded access to more than 500,000 people and opened or renovated 141 stores. They aim to eliminate the food deserts for 10 million Americans by 2016. PHA members have also removed French fries from day care centers and some chain restaurant children’s menus, and started exercise programs for nearly 3 million children.

Why is PHA working? It believes strongly in putting market forces to work to alleviate childhood obesity, but also it does not kowtow to any of its members. Like the best chief executives, PHA expects its members to set concrete goals. It then measures how well they reach them and publishes the results in an annual Progress Report.

I observed PHA in action, speaking at its summit in early March, along with Ms. Obama and representatives from health care, the food and restaurant industries, academia, and government. Their approach should be imitated by every industry whose products and practices are under fire, and by activists who want to achieve their goals more quickly. Here are some key lessons from PHA for any industry:

Don’t shame and bludgeon the other side. As we’ve learned from 100 years of activist-vs.-industry wars, when one side is demonized, progress can come to a halt.

For businesses: Acknowledge the problem and address the role that your company may be playing. Major companies like Darden, Wal-Mart, Walgreens, Hyatt, and Birds Eye, as well as other large regional firms, have committed to make real change to help solve the obesity problem through PHA. Across four of its restaurant chains, Darden Restaurants Inc. (an $8 billion company; NYSE: DRI) has established specific nutrition standards for meals that children will enjoy and will simplify their parents’ search for healthier options. Drew Madsen, Darden’s president and chief operating officer, shared with me that “PHA is an effective partner in working with us to deliver greater choice and variety for our guests and helping address childhood obesity and children’s health.”

For the activists: Don’t demonize capitalism; celebrate it. Accepting an industry’s need to increase sales and make a healthy profit will make it far easier to get that industry to listen to you. Few companies can afford to alienate shareholders. But if activists and an industry look for creative solutions to a problem, both sides can get what they want.

For regulators: Don’t mandate change; demonstrate the benefits of it. Gather the facts that show an industry how delivering healthier products will deliver a better bottom line. Fortunately, lower-calorie, better-for-you foods have been shown to deliver higher profit and sales growth for companies. That’s a key selling point in getting food and restaurant companies to shift to them. One PHA partner, Birds Eye, started a campaign that cleverly marketed vegetables to children. The company said sales rose as a result.
Keep a report card to maintain accountability. Set goals that are measurable, realistic, acceptable to both sides, and available to the public. Then track progress. An outside agency tracks PHA member companies’ progress.

PHA’s free-market approach has achieved real results. It’s a playbook that should be read by every industry and activist group that are at war or about to start one.

Originally published in Advertising Age on February 7, 2013 by Maureen Morrison.

Among some of the largest restaurant chains in the U.S., lower-calorie foods are increasingly key growth drivers.

That’s according to a study released today by policy research group Hudson Institute, funded by the Robert Johnson Wood Foundation. In other words, chains that serve more lower-calorie foods and beverages have better business performance.

The report, called “Lower-Calorie Foods: It’s Just Good Business,” analyzed 21 of the largest chain restaurants in the country including McDonald’s, Burger King, Wendy’s, Taco Bell, Arby’s, Panera, Olive Garden, Applebee’s, Red Lobster and Outback Steakhouse. Between 2006 and 2011, lower-calorie foods and beverages were the growth drivers for the chains analyzed, and in 17 of the 21 chains, lower-calorie foods and drinks outperformed items that were not lower-calorie. The report did not detail individual company information.

Of the 21 chains, nine increased the number of lower-calorie items sold from 2006 to 2011; those nine averaged a 5.5% same-store sales increase. Meanwhile, 12 chains did not increase the number of lower-calorie items sold; those chains averaged a 5.5% same-store sales decline. The chains increasing the number of lower-calorie servings also recorded an increase in traffic, while the others declined.

Traditional fast-food items such as french fries are on the decline in the U.S. at fast-food chains that have more than $3 billion in sales, according to NPD Group. From 2006 to 2011, french fries as a total share of the food sold declined to 24.1% from 24.8%. At the same time, lower-calorie beverages have increased as a share of the total food sold, up to 34.1% from 32.4%.

The report did not measure success by number of lower-calorie items offered, it measured by the number sold. Lower-calorie entrees and sandwiches were defined as those that have no more than 500 calories. Beverages with 50 or fewer calories were considered lower-calorie, and side dishes, appetizers and desserts with 150 calories or fewer were considered lower-calorie. Even items that the chains may not promote as low-calorie or diet items can fall into the criteria simply because of calorie count, and what’s considered lower-calorie item for the study does not necessarily mean the item is perceived as healthy. A McDonald’s cheeseburger with 300 calories, for example, would make the cut, but an Angus and bacon cheeseburger at 790 calories, or an order of small fries, at 230 calories, would not.

Advertising Calories
Some of the chains monitored have been advertising food by calorie count in recent years. Applebee’s, for instance, advertises a number of dishes as under 500 calories. McDonald’s in July, as part of its Olympics marketing, launched a Favorites under 400 Calories menu.

Hank Cardello, lead author of the report and director of the Hudson Institute’s Obesity Solutions Initiative, estimated that in the U.S. individuals often consume upwards of 2,600 calories daily, compared to 2,000 in 1970. Ultimately, he said, it’s calories contained in food that need to be counted, because they’re an indicator of other concerns such as saturated fat — the higher the calorie count, the more likely the food is to have additional unhealthy factors.

“What went up must come down,” Mr. Cardello, a former executive with Coca-Cola, General Mills, Anheuser-Busch and Cadbury-Schweppes, told Ad Age. “It’s a calorie issue. If you consume fewer calories, you take in less saturated fat. … It’s a simple way of dealing with the problem. The restaurant chains can execute against it.”

He added that consumer-advocacy groups will sometimes go after individual food items, typically ones that tend to be the most profitable for the companies in question. Ultimately, institutions have little incentive to make any real change, particularly to their most popular and profitable items, especially if they’re publicly traded companies that have to answer to shareholders.

Last year, Rand Corp. released a study that found that a whopping 96% of entrees sold at top U.S. chains exceeded the daily limits for calories, sodium, fat and saturated fat recommended by the U.S. Department of Agriculture. But according to Mr. Cardello’s study, consumers appear to be moving toward lower-calorie options.

“This report suggests that the smart [chains] will get it and be more aggressive” in including and selling lower-calorie items. The report said that “emphasizing lower-calorie foods and beverages is a proven pathway to improved servings, traffic and sales” and “public health officials and policymakers need to heed core restaurant chain business metrics in order to most effectively work with [the] industry to address the obesity epidemic.”