My grandfather, who smoked a box of cigars each day, used to say the tobacco industry is the only business that actively seeks to kill its best customers.
Will we ultimately add fast food to that category? And will that result someday in an economic blow similar to the thousands of jobs lost when Brown & Williamson and Philip Morris USA left town?
The last two years have seen a serious run by Louisville-based Yum! Brands Inc., largely because the world’s largest fast foot chain has grown exponentially in China, where franchisees open a store every 18 hours.
Yum! Brands shares closed Friday at $51.40, just below the 52-week high of $53.19 Yum! hit in March, almost 120 percent above the recession low of about $24 per share back in the dark days of late 2008.
But suddenly, there are a few gray (not exactly black) clouds on the horizon for shareholders, mostly reflecting the concern about KFC and the fat content of caloric blowouts such as the Double Down sandwich.
Researchers and government agencies are starting to point the finger at Yum!, McDonald’s and other United States-based fast food chains as international culprits in an obesity explosion. They draw a correlation between Yum!’s global expansion and the accompanying increase in related diseases such as diabetes in the developing world.
In a Reuters story Friday, “China toddler fights fat in land of little emperors,” reporters Gary Ling and Stefanie McIntyre profile an obese 3-year-old as an example of the problem:
“Little more than 20 years ago many people, even in China’s richest cities, were struggling to feed themselves; now they are struggling to lose weight,” wrote Paul French and Matthew Crabbe in their recent book “Fat China: How expanding waistlines are Changing a Nation.”
Hardly any high street in Chinese towns and cities now are without a McDonald’s or Kentucky Fried Chicken, and smoking rates are amongst the highest in the world as the country rapidly develops and its economy sky-rockets. “Obesity is a problem for the wealthy, newly emergent middle-class consumers,” wrote French and Crabbe.
National Public Radio’s “Fresh Air” program, hosted by Terry Gross, last week featured a piece on a Canadian physician deployed to a Canadian combat hospital in Afghanistan.
In “How Western Diets are Making the World Sick,” Dr. Kevin Patterson was stunned to see in surgery how much Westerners differ from Afghans, who survive on low-calorie diets.
Patterson found that compared to Afghans, even healthy Westerners have “most of the organs encased in fat.”:
Typical Afghan civilians and soldiers would have been 140 pounds or so as adults. And when we operated on them, what we were aware of was the absence of any fat or any adipose tissue underneath the skin,” Patterson says. “Of course, when we operated on Canadians or Americans or Europeans, what was normal was to have most of the organs encased in fat. It had a visceral potency to it when you could see it directly there.”
The culprit? Fast food, specifically KFC, and lack of exercise. In Canada, where Patterson practiced among the Inuit – the indigenous people we call “Eskimos” – he again blames the Kentucky brand for wrecking Inuit health.
“The traditional Inuit culture of relentless motion and a traditional diet consisting mainly of caribou, Arctic char, whale and seal has been abandoned over this period of time for Kentucky Fried Chicken and processed food and living a life very similar to ours,” he says. “[They’re] spending a lot of time in front of a glowing screen.”
Most worrisome for Yum! stockholders, though, may be the Food and Drug Administration proposal – part of health care reform law – for all restaurants to post the caloric content of each food item.
KFC posts on its Web pages that the Original Recipe Double Down has 540 calories (roughly one-third of the daily recommended caloric intake), 32 grams of fat and 1380 grams of sodium.
But seeing those numbers staring you in the face at the counter may be off-putting.
Now, you’ll say, “What happens in the U.S. doesn’t matter much because domestic same-store sales for fast food chains are flat, at best.”
And you’re correct. Domestic growth for 30-and-40-year-old fast food chains will be incremental. The future is in developing countries where an expanding middle class equates American brands with this new affluence. I’ve been in Yum! brand stores from Japan to Germany to Turkey to Yemen, and invariably, they’re packed.
The truth is, the Double Down and KFC products in general are among the worst, though not the worst, fast foods you can buy. The difference is, the Burger Kings, Hardees and even McDonald’s aren’t rolling the dice in Asia, the Middle East and Africa in the same way as KFC.
The question becomes, what happens when those educated Chinese or Yemeni bourgeois begin trekking to the doctor to find out why their American jeans don’t fit anymore, and why they suddenly have diabetes?
Can Yum! executives sitting in the C-suites at Gardiner Lane start adapting should the Chinese turn back to their traditional diets?