It's no surprise that many burger joints and other fast-food restaurants have drawn fire for their high-fat, high-calorie foods over recent years. Hold onto your coffee, though, because there's a new kid in town: A consumer group is now chastising Starbucks (Nasdaq: SBUX) as well.
This development comes hot on the heels of the Center for Science in the Public Interest's (CSPI) lawsuit against Yum! Brands' (NYSE: YUM) KFC, seeking to halt the chicken chain's use of trans fats in its products. As Fool contributor Brian Gorman pointed out, whether the lawsuit succeeds or not is probably beside the point -- it's still negative publicity, especially given consumers' increased awareness of America's widening obesity problems. The first salvo against Starbucks was fired last Friday, but a sweep of the Internet indicates that the story has already garnered a lot of attention.
Other fast-food competitors have faced similar criticism, most notably McDonald's (NYSE: MCD) and Wendy's (NYSE: WEN). Both chains have made concerted efforts to offer healthier options on their menus. (Of course, just because healthy choices are there, consumers don't necessarily choose them. Late last year, Wendy's said it would discontinue its fruit options due to low sales.)
CSPI -- which told Reuters that it hasn't ruled out a similar lawsuit against Starbucks -- thinks Starbucks should display calorie information on its menu boards and better publicize its "short" size drink. Oddly, the "short" size seems to be one of the company's best-kept secrets; it's available, but not advertised like the more familiar tall, grande, and venti varieties. It also pointed out that some of Starbucks' menu items contain as much saturated fat as a McDonald's Big Mac. Supersize me, indeed.
On the other hand, Starbucks has clearly shown awareness of nutritional issues. The company released lower-calorie drinks back in 2004. Even then, you could look up nutritional stats on Starbucks' website. You still can, and the information is also available in brochures in Starbucks stores, so it's not like consumers can't make educated decisions. Although Starbucks does offer high-fat and high-calorie items, it's also got healthier options, like its reduced-fat pastries. Starbucks says that it's investigating ways to remove trans fat from some of its seasonal baked goods, and that it's already trying to limit trans fat in its beverages.
It's important to gauge how Starbucks responds to issues that could harm its products' reputation. As a shareholder, I feel pretty good about Starbucks' position on the nutrition issue. However, increased attention to unhealthy trans-fat content is an important point for many publicly traded companies who specialize in foods and beverages. Given the constant talk of expanding waistlines nationwide, it's no small matter.
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Alyce Lomax
owns shares of Starbucks but of none of the other companies mentioned.
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