Burger King Has a Soft Spot for Chickens

Burger King EggsMost Americans probably balk at the idea of paying more than a couple of bucks for a dozen eggs. But show them a PETA video of where those eggs come from, and chances are they'll happily shell out a little more not to have to think about it.

Recognizing this, last month the folks at Burger King committed themselves to switching over within the next five years to using only eggs laid by cage-free chickens. As defined by Burger King, the companies from which it will be buying eggs in the future must ensure that their hens have "room to roam," places to perch, and nesting boxes in which to lay their eggs.

The restaurateur, which purchases and resells hundreds of millions of eggs every year, says that 9% of its eggs are already "cage-free," and now it's going in whole-hog for the concept -- the first major fast-food restaurant chain to do so.

Applauding the decision, the U.S. Humane Society opined: "For every cage-free egg ... that Burger King sells, animals have been spared lifelong confinement in a cage so small they can barely even move." And Burger King is only just the beginning.

Do the Right Thing ... and Profit

Encouraged by research showing that consumers are willing to pay a little more to be able to eat with a clean conscience, Walmart (WMT) and Costco (COST) have both committed to selling only cage-free eggs under their private-label brands. Unilever (UL), which owns the Hellmann's mayonnaise brand, is also switching to cage-free sourcing for the 350 million eggs it processes for use in its food products every year.

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Let's examine just the simplest possible example of the process: retail sale. Studies suggest that switching to cage-free from "battery-cage" production, (in which hens practically stand on top of each other, having less than a square foot of space apiece) only adds about a penny an egg in extra cost to the producer. Logically, therefore, if a grocer can sell a dozen cage-free eggs for, say, $3 a dozen instead of $2 for a dozen battery-caged eggs, and net an extra $0.88 in profit, then this isn't just humane animal husbandry -- it's good business, too.

If consumers truly are willing to fork over that extra profit, it shouldn't take long for corporate egg producers to get with the program and begin delivering the kinds of eggs that Burger King, Walmart, and individual egg-eating Americans demand. It probably won't hurt that the largest company in the industry -- Cal-Maine Foods (CALM), the biggest by a factor of two -- is a publicly traded company, and so especially susceptible to shareholder agitation.

Do the Right Thing... or Else

If, however, pure, unfettered capitalist lust for profit can't win chickens their freedom, then perhaps a few stern words from Uncle Sam might do the trick.

Inspired by California's 2008 cage-free "Proposition 2" law, the U.S. Congress is working on a bill to increase cage sizes for egg-laying hens.

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Burger King Has a Soft Spot for Chickens

Organic brands Cascadian Farm and Muir Glen may make you think "small." Don't they both sound kind of pastoral, the sort of products that might come from family farms? Think again: Both brands are owned by food giant General Mills (move over, Betty).

Vans footwear calls forth images of rebellious skater youth, not to mention some musical credibility, given its frequent sponsorship of the annual Warped Tour. However, it may lose a few counterculture points given it's owned by brand giant VF Corporation (VFC), which also owns Timberland, SmartWool, 7 for All Mankind, Lee, and Wrangler, to name just a few.

In Maine circa 1970, a guy named Tom and his partner Kate dreamed up a whole slew of natural products for folks who, like them, yearned to simplify their lives. Certainly some of Tom's customers really wanted to stick it to The Man and all his chemical-laden merchandise, too. In 2006, consumer giant Colgate-Palmolive (CL) acquired Tom's of Maine. But let's face it: Tom's of Colgate-Palmolive just doesn't have the same ring.

Trader Joe's products always give a mysterious, boutique sort of feel, like some remarkable merchant named Joe has gone all over the world picking out exotic goods to stock the shelves. It's a nice thought, but in 2010 Fortune magazine revealed that some of Trader Joe's store brands are actually made by big companies like PepsiCo's (PEP) Frito-Lay. Incidentally, Trader Joe's is owned by Germany's Albrecht family, which also owns the Aldi Sud global supermarket chain. (U.S. Aldi supermarkets are owned by a different part of the same family.)

Morningstar Farms may sound like it should be just up a country road from Cascadian Farm, but the veggie-burger maker is owned by Kellogg (K). Who knows if Tony the Tiger participates in "Meatless Mondays" after a hearty breakfast of Kellogg's Frosted Flakes? Meanwhile, Kashi might make a lot of people want to don their tie-dyes and grab handfuls of granola, but it also happens to be a Kellogg subsidiary.

The fact that many brands boast counter-cultural appeal but are actually parts of huge conglomerates isn't necessarily awful. For example, Kashi says it's still run independently in La Jolla, Calif., according to its original business philosophy. In fact, it says its mission expanded in 2000 "with a little help from a friend." (Kellogg's one heck of a big friend, that's for sure.)

Likewise, Tom's of Maine still claims to be holding true to its original all-natural mission, despite Colgate-Palmolive's involvement. On the Tom's website, it claims, "Our simple, direct approach hasn't changed one bit: we listen to what our customers want (and don't want) in their products, we learn how it can be done, and we respond with effective natural (and sustainable) solutions."

Still, from the consumer viewpoint, it's always good to know a little bit more about what you're purchasing -- and putting in or on your body -- and from whom. Your dollars equal support, after all. Betty Crocker never had a choice as to which products she'd purchase (she was obviously a General Mills gal all the way!), but American shoppers do.

The bill has the support of both the USHS and egg-industry advocacy group United Egg Producers. It's an improbable alliance, forged by the necessity of compromising on the results each would really prefer -- cage-free for USHS, and... "30 days in the hole," one assumes, for UEP. The result would be a bill that, while not winning hens full parole, at least would increase the amount of elbow room in their cages.

Perhaps best of all, the law working its way through Congress would mandate new, clearer labeling on egg cartons at your grocer. Within one year of passage, eggs would have to be clearly marked as coming from:
  • Caged hens
  • Hens housed in "enriched systems" (i.e., bigger cages)
  • Cage-free hens
  • Free-range hens
Motley Fool contributor Rich Smith owns no shares of companies mentioned in this article. The Motley Fool owns shares of Costco Wholesale. Motley Fool newsletter services have recommended buying shares of Unilever and Costco Wholesale, and creating a diagonal call position in Walmart Stores.

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