Supplies are already tight and costs could rise
(Reuters) — A plan by McDonald’s Corp. to phase out chicken raised with certain kinds of antibiotics at its 14,000 U.S. restaurants will put additional pressure on an already-stressed supply chain.
Antibiotic-free chicken accounts for a tiny portion of total U.S. supplies, and an increasing desire on the part of consumers for more “natural” products has meant that demand sometimes exceeds supply.
Available product has been so tight that when six of the largest U.S. school districts tried to switch to antibiotic-free poultry last year, chicken sellers said they could not change their production systems quickly enough to meet the demand.
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The decision by the world’s biggest restaurant chain to jump into the fray seems likely to complicate things further, tightening supply and raising prices, said Athlos Research principal Jonathan Feeney.
“This is very likely to cause a disruption in McDonald’s food supply and will likely raise operating costs for McDonald’s franchisees,” added Richard Adams, a former McDonald’s franchisee who now runs the consulting firm Franchise Equity Group.
One key impediment up to now in increasing supplies has been convincing livestock farmers and meat packers to switch to new farming practices that they fear could threaten their profit margins. Routine use of antibiotics can mean larger animals and less disease.
Chipotle Mexican Grill Inc. has some of the restaurant industry’s highest standards for antibiotic-free meat, but it has had trouble finding supplies. Its popular burrito restaurants have occasionally had to hang signs alerting diners that it was unable to acquire antibiotic-free chicken, beef or pork.
McDonald’s recently said it will eliminate from its menus chicken raised with antibiotics that are “critically important” to human medicine. However, unlike Chipotle, it will continue to buy chicken raised with ionophores, an animal antibiotic commonly added to feed.
Public health advocates cheered McDonald’s chicken plans, but they also pushed the chain to go further.
Jonathan Kaplan, director of the Natural Resources Defense Council’s food and agriculture program, said the new policy has a “disappointing loophole” in that it covers only chicken and only U.S. restaurants.
He said he would like to see the chain expand its policy to all meat.
“Hopefully, chicken is just the start,” he said. “The Big Mac and McRib may be next.”
However, switching to antibiotic-free pork and beef would present even tougher challenges. Adjusting supplies is easier in animals that mature more rapidly. It takes only about six weeks to get a chicken ready for slaughter, while it takes four to six months to ready a hog for market and 18 months or more for beef cattle.
Antibiotic-free beef is already in short supply.
Chipotle and CKE Restaurants travelled to Australia to find their supplies.
CKE Restaurants’ 1,150-restaurant Carl’s Jr. chain debuted a “natural” burger that is made from grass-fed cattle raised without antibiotics, steroids or added hormones.
Brad Haley, CKE’s chief marketing officer, said the company would like to start selling similar burgers at its Hardee’s chain, but the company finds itself asking, “where’s the beef?”
“I don’t think there’s enough for sizeable chains to move over in the immediate future,” Haley said.
