McDonald's antibiotic-free move could prompt US chicken squeeze

McDonald's antibiotic-free move could prompt US chicken squeeze

A plan by McDonald's Corp to phase out chicken raised with certain kinds of antibiotics at its 14,000 US restaurants will put additional pressure on an already-stressed supply chain.

Antibiotic-free chicken currently accounts for a tiny portion of total US 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 US school districts tried to make the switch to antibiotic-free poultry last year, chicken sellers such as Tyson Foods Inc and Pilgrim's Pride Corp said they could not change their production systems quickly enough to meet the demand.

The decision by the world's biggest restaurant chain to jump into the fray seems likely to complicate things further, tightening supply and thereby 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 meats, but it has occasionally had trouble finding supplies.

From time to time its popular burrito restaurants have had to hang signs alerting diners that it was unable to get antibiotic-free chicken, beef or pork.

McDonald's said Wednesday it will eliminate from its menus chicken raised with antibiotics that are "critically important" to human medicine, but unlike Chipotle, it will continue to purchase chicken raised with ionophores, an animal antibiotic commonly added to feed.

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