United States fast-food giants will have to act quickly to head off public fears over mad cow disease and convince consumers to keep eating hamburgers.
World fast-food leader McDonald’s and its rivals such as Wendy’s and Burger King risk being among the main losers from the first suspected US case of bovine spongiform encephalopathy (BSE), which has been linked to a fatal brain-wasting disease in humans.
The big names will be counting on the US authorities to dispel any sign of consumer concern in their most important market.
But their shares took a knock as soon as trading opened on Thursday.
McDonald’s was down 5,46% at $23,90 and Wendy’s fell 4,69% to $38,90 as the New York market came to the end of half-day trading before Christmas.
Wendy’s launched an immediate campaign to reassure customers.
”The identified cow is called a downer, or one that cannot walk. Wendy’s has a strict policy prohibiting the processing of downer cows in our beef supply,” said Tom Mueller, Wendy’s North America president.
”Additionally, our beef supply is not affiliated with the meat plants where the single cow was detected,” he added.
”We remain very confident that Wendy’s beef is safe and wholesome. Furthermore, we commend the USDA [US Department of Agriculture] on their swift actions in response to this situation.”
But the chains will be relying on the actions and transparency of the USDA and other government agencies involved to ease public worries.
In Europe, McDonald’s blamed the ”poor communications” of the German government for its problems there after the mad cow crisis.
The group had been in the midst of restructuring and was forced to cut hundreds of jobs and close many restaurants to tackle the mounting competition.
McDonald’s is now trying to reinforce its position in the US by introducing more healthy diets to counter accusations that its food contributes to the US obesity epidemic.
However, not all analysts see bad news.
Robert Buckley, an analyst for Bear Stearns, said: ”We are concerned but not panicked by this chain of events.
”Restaurant stocks of beef-focused companies traded lower in after-market trading yesterday. The initial reaction is understandably negative but the same reaction represented a buying opportunity last May when Canada discovered what has thus far been a single case of mad cow disease.”
David Palmer, an analyst for UBS, said the BSE case could even become positive for the restaurant industry. In a note to clients, Palmer said the ban on imports of US beef by other countries could send domestic beef prices down 20% or more.
And in a word of encouragement for his US colleagues, Etienne Aussedat, director of external relations for McDonald’s France, highlighted how a well-organised public relations campaign had effectively countered the second mad cow crisis in Europe in 2000.
”The strengthening of information for the consumer about the use of 100% meat from the muscle, on its traceability and permanent checks along the production chain, helped us to reassure,” said Aussedat. — Sapa-AFP