Yum! Brands (NYSE: YUM) wants to educate its patrons. No, it's not going to be offering history lessons to go along with its personal pizzas, fried chicken and burritos. It just wants to make sure you know exactly how many calories are in the stuff you eat at its restaurants. The information will be posted at company-owned locations over the next few years. Management is hoping that franchise locations will also participate in the initiative (I'm sure most eventually will).
Personally, I think this is a great idea. How could anybody be opposed? After all, if I'm in a Pizza Hut, I want to know how much damage I'm doing to myself. Yes, I am one of those people who actually checks out the nutrition pages on the sites of fast-food joints such as McDonald's (NYSE: MCD), Burger King (NYSE: BKC) and Wendy's Arby's Group (NYSE: WEN).
But yes, there is a downside for shareholders when this type of information is made available. Indeed, the more I've learned about the health effects of a bad diet, the more conservative I've been about going to a KFC or a McDonald's. No doubt Yum! will see some challenges from people scaling back on buying the junk food it sells. Will there be a significant effect? Will Yum! and its various chains disappear as a result of this decision? No. Management will simply adjust, if it becomes necessary, and will try to offer healthier selections.
As the timeline progresses, society will continue to demand healthier fare. There's no turning back the clock on that count, thankfully. But, trust me, you can put all the calorie data you want in the restaurants, and you simply won't eliminate America's habit of bulking up on Big Macs and secret-recipe chicken. Especially considering that the health trend has been around for a while.
When you see a stock like McDonald's working so well in such an environment, one conclusion becomes obvious: innovative marketing and better menu selection can counteract the ill effects of a lifestyle-conscious consumer base. It's no secret that McDonald's has positioned itself as not only a place where you can gorge on double-quarter-pounders-with-cheese, but as a fast-food joint where you can pick up a nice fresh salad.
I think Yum! is engaging sound public relations with this calorie-disclosure program. Transparency can always be considered a value-added element. It also deflects the critics who will be on its back if it doesn't disclose stuff like this.
Yum! isn't doing this out of the kindness of its corporate heart, let's be honest here. But the demand is out there for the increased availability of convenient, accessible nutritional statistics. Responding to the demand allows a business to present a positive image. It can also help improve brand equity.
I think this is a smart move for Yum!, and as reaction to the calorie-disclosure is analyzed, it should help the company determine what kinds of menu investments and marketing promotions might be useful to drive incremental sales increases.
Disclosure: I don't own any company mentioned; positions can change at any time.
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