McDonald's Trims Preservatives

New recipes aim to project a more healthful image; pickles remain a challenge

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One of the chain's restaurants in Hong Kong. The company is working to reverse a sales slump.

McDonald's Corp. is stripping artificial ingredients from more food to win over customers who, the burger chain believes, don't want to eat things with names like calcium propionate and sodium benzoate.
 Those and other ingredients found in the buns, cheese and sauce on some of McDonald's best-known burgers are gone from its U.S. restaurants, the chain said. The Big Mac, Quarter Pounder with Cheese and burgers in Happy Meals are now among items free from artificial preservatives, flavors and coloring.
 The new recipes are McDonald's latest attempt to project a more healthful image and reverse a sales slump in its main U.S. market.
 McDonald's this past spring started making Quarter Pounders in the U.S. with fresh beef. The company has replaced highfructose corn syrup with sugar in its buns, removed artificial preservatives from Chicken Mc- Nuggets and reverted to butter instead of liquid margarine in Egg McMuffins.
 The company said that since the changes, McNuggets sales have risen and burger sales have increased. “This really is meant to serve as another proof point of what we're doing at McDonald's to enhance the quality of the food,” said Chris Kempczinski, president of McDonald's USA. “We hope it's the cumulative impact of all the changes we've been making that will move perception.”
 Fresh, natural ingredients are a focus at chains such as Chipotle Mexican Grill Inc. and Panera Bread Co. As interest in more wholesome diets has spread, fast-food chains that have taken sales from McDonald's in recent years have revisited their recipes, too.
 Chains including Yum Brands Inc.'s Taco Bell and Pizza Hut and Doctor's Associates Inc.'s Subway have eliminated artificial ingredients from menu items. Wendy's Co. has eliminated antibiotics also used on humans from its poultry and introduced salads made with fresh berries and tomatoes grown in greenhouses.
 McDonald's and Chick-fil-A have said they would eliminate such antibiotics from their chicken. McDonald's has done so in the U.S. and is working on eliminating antibiotics from its restaurants overseas.
 McDonald's hasn't shown its improved food can generate the sales growth that investors are expecting. An increase in U.S. same-store sales of 2.6% in the second quarter fell short of analyst forecasts of 3% growth. Mr. Kempczinski said investing in the simpler menu would pay off. McDonald's didn't disclose how much it had spent to remove artificial ingredients from its menu.
 In the latest changes to its burgers, McDonald's replaced artificial ingredients with natural ones or removed them. That will mean a shorter shelf life for some products or additional refrigeration.
 McDonald's switched the American cheese on its burgers to one made with a naturally derived beta carotene, the ingredient that makes such cheese orange. It also removed the preservative sorbic acid from the cheese, reducing the time it can remain on restaurant prep tables to four hours from seven.
 “Even though American cheese with sorbic acid had a very long shelf life, it was really unnecessary because McDonald's sells a lot of food, and they sell it quickly,” said Mike Haddad, president and CEO of Schreiber Foods, the chain's American cheese supplier. Pickles remain a challenge. Executives said it could take them two more years to find a pickle with the same sour taste sans artificial preservatives.
 “For us, pickles are extremely important,” said Marion Gross, senior vice president of supply chain management for McDonald's USA. “We're not willing to change to a preservative- free pickle that has a different dill profile.”

Cooling Down
McDonald's quarterly U.S. comparable store sales, change from previous year

Sources: the company; Kalinowski Equity Research

Some of the sandwiches won't be made with these artificial ingredients:
Buns Calcium propionate
Cheese Sorbic acid
Sauce Potassium sorbate, sodium benzoate and calcium disodium EDTA

Three-Bun Burger Boosts a Brand
Removing artificial ingredients from the Big Mac's sauce and three buns is the latest evolution to one of McDonald's Corp.'s best-known foods. The burger made its debut at McDonald's nationwide 50 years ago, based on a recipe that franchisee Jim Delligatti had introduced a year earlier at one of his stores in Uniontown, Pa. Originally sold for 45 cents, the burgers quickly caught on world-wide. Today they sell in the U.S. for an average of $4.44.
 In 1974, Max Cooper, another franchisee, created the jingle that popularized the burger and solidified its brand. As the Soviet Union broke down and big emerging markets opened up to the global economy, the Big Mac found fans in China, India, Russia and beyond. Globally, McDonald's sold more than 1.3 billion Big Macs last year.
—Erica Snow



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