McDonald’s Corporation (NYSE:MCD) And Peers Put On Notice Over The Use Of Antibiotics In Supply Chain

If restaurant chains such as McDonald’s Corporation (NYSE:MCD), Domino’s Pizza, Inc. (NYSE:DPZ) and Yum! Brands, Inc. (NYSE:YUM) are already struggling with week consumer spending and heightened competition, they have another headache to deal with. A coalition of 54 large investors with more than $1.41 trillion worth of assets under their watch recently wrote to a number of large food companies telling them begin the process of curbing the use of antibiotics in their supply chain.

The large investors particularly want antibiotics out of meat and poultry and they are asking the food companies to set a timeline to drop antibiotics in their supply chain. According to the investors, their move to push the food companies to curb the use of antibiotics in their foods is to protect health and shareholder value.

The pressure on McDonald’s Corporation (NYSE:MCD), Yum and others to drop antibiotics comes after the World Health Organisation (WHO) recently warned of a growing number of infections becoming untreatable because of disease resistance resulting from antibiotics overuse.

Restaurants on target

Besides McDonald’s Corporation (NYSE:MCD), Domino’s and Yum, other food companies targeted by the large investors over the use of antibiotics include Brinker International, Inc. (NYSE:EAT), Mitchells & Butlers, Darden Restaurants, Inc. (NYSE:DRI) and Wendys Co (NASDAQ:WEN). Others are Restaurant Group and Restaurant Brands.

Who are these large investors?

The investors worried about continued use of antibiotics in the food supply chain include Aviva Investors, EdenTree Investment Management, Impax Asset Management and Boston Common Asset Management.

Antibiotics use in food supply chain

It is reported that 8% of antibiotics produced in the U.S. are used in livestock. That is worrying considering the growing disease resistance to antibiotic treatments. The investors are of the view that avoiding the use of antibiotics in food supply chain will reduce health risk to consumers and that should go a long way into protecting investor return in the food companies.

Response from the food companies

Several large food companies that received the notice from the large investors over the use of antibiotics in meat and poultry have responded. Domino’s said that its suppliers were using antibiotics carefully saying that such uses were only limited to treating diseases but not preventing them. Even when it comes to antibiotics treatment, Domino’s said its suppliers administer the antibiotics treatment under the supervision of veterinary experts.

On its part, JD Wetherspoon said its suppliers are already prohibited from using antibiotics to boost growth.

McDonald’s Corporation (NYSE:MCD) will respond to the investors later.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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