McDonald's Takes Antibiotics Out of Chicken. Where Do Other Chains Stand?

By Markets Fool.com

McDonald's has made a big change to its chicken. Image source: McDonald's.

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McDonald's (NYSE: MCD) is ahead of schedule in its move to stop using antibiotics important to human medicine in its chicken.

That move comes as part of a broader effort by the fast-food chain to make its food appeal to those seeking healthier and more natural food. Other steps it is taking include removing corn syrup from its buns (replacing it with sugar) and it has already gotten rid of artificial preservatives in its Chicken McNuggets and a number of its breakfast items, including scrambled eggs. McDonald's also switched from liquid margarine to butter on English muffins, biscuits, and bagels.

The company does not plan to pass extra costs related to the menu changes on to customers, Reuters reported. The move to get rid of antibiotics in the chicken has been called for by activist groups and was celebrated by Consumers Union (CU), the parent company of Consumer Reports, after it was announced.

"The reckless overuse of these critical medications on healthy livestock is contributing to our antibiotics resistance crisis," said CU Director of Food Policy Initiatives Jean Halloran in a press release today. "McDonald's has shown that it's possible to eliminate this practice on a large scale while still meeting its supply needs."

The consumer advocacy group also called on other chains serving chicken to make the same changes."We urge Kentucky Fried Chicken and other fast-food restaurants to follow McDonald's lead and make the same commitment to public health," she said.

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Where does the industry stand?

There are essentially three major players in the fast-food chicken space: McDonald's, Chick-fil-A, and Yum! Brands'(NYSE: YUM) Kentucky Fried Chicken (KFC). McDonald's has shown surprising leadership in making the requested changes as it had pledged to do so by March 2017 but has sped up the move to now.

"We are committing to use chicken that is not raised with antibiotics important to human medicine," the company wrotewhenit announced the original March 2017 deadline. "McDonald's has been working closely with farmers for years to reduce the use of antibiotics in our supply, thus we are able to commit today to stop using antibiotics important to human medicine in chicken production."

Chik-fil-A, which has the most sales of any chicken chain, has pledged to stop supplying its restaurants with poultry raised on antibiotics by 2019, according to CU. KFC, which has the most restaurants and is No. 2 in sales behind Chick-fil-A, has not committed to the change.

As CU said, to explain why it has called for the fast-food chains to stop using chicken treated with antibiotics:

Some 80% of all antibiotics sold in the U.S. are used not on humans but on animals. These antibiotics are regularly fed to healthy animals like cows, pigs, and poultry to make them grow faster and to prevent disease in often crowded and unsanitary conditions on today's industrial farms. When antibiotics are used on the farm, the bugs that are vulnerable to them tend to be killed off, leaving behind "superbugs" that are resistant to antibiotics.

Basically, if we use antibiotics to keep our chickens healthy, it could make the human population more likely to get sick.

This is a business move

McDonald's did not decide to make its food healthier at a higher cost to the company because it cares about its customers' welfare. That might be a side benefit, but dropping corn syrup from buns and eliminating antibiotics are efforts to both bow to public pressure and change consumer perception. This is a chain that recently ran an ad campaign where it answered consumer questions as to whether its beef is actually beef and whether its chicken nuggets actually contained chicken.

The publicity it garners by making these changes should help McDonald's as it battles with fast-casual chains known for higher-quality ingredients. Chick-fil-A does not face the same pressures because its food has a better reputation in the first place, so it will likely receive a pass from consumers as it waits to implement these changes.

KFC is somewhere in the middle. It's certainly not health food, but its product is recognizably chicken. Ultimately, it probably makes sense for Yum! Brands to follow this trend, but unless sales start to dip as public pressure mounts, it may make sense to wait and not incur the added cost.

For McDonald's, this is a needed public relations move made necessary by years of having a less-than-natural product lineup. The rest of the chicken chains will likely follow, but with less urgency because they have better reputations.

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Daniel Kline has no position in any stocks mentioned. He misses being able to eat KFC. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.