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Saturday, November 04, 2006

Weekend Edition: Trans-Fat Range Wars: McDonald’s And Starbucks

Stocks: (MCD)(SBUX)(YUM)

New York City is thinking of setting a ban for restaurants that sell foods with trans-fats and Kentucky Fried Chicken is not going to sell food containing the stuff.

That opens the door to the question about what the really big food and beverage chains will do about the “bad health” issue of trans-fats and what it will cost them to fix Trans-fats are unsaturated fats that can clog your arteries, and perhaps are killing consumers left and right.

McDonald’s and Starbucks, with their donuts, cookies, and hamburgers are apparently stuffed with trans-fats. It poses two problems for the huge chains. First, there is a cost to replacing menu items with new foods. Trans-fat foods have a longer shelf life. They are cheaper than products made with content like butter. They also require less refrigeration. If you have a business with thousands of outlets, changing a lot of the “eats” over to a healthier fare could be damned expensive.

The other problem is the tobacco company/car company issue. Smokers sue cigarette companies for giving them cancer and heart disease. And, of course, the State of California is suing the auto manufactures for polluting the air.

People may now think that Starbucks and McDonald’s have poisoned them with trans-fats, knowingly cutting short the customer’s lives by filling their bodies with sludge. It has premature heart attacks and strokes written all over it.

KFC does not have much to lose. They are fairly small and comparatively poor next to Starbucks and McDonald’s.

It has to end up in court. Everything else does.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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