You Want Cadmium With That Shake?

There won't be any raising of the glass at McDonald's (NYSE: MCD  ) . The burger giant is recalling 12 million of its Shrek-themed glasses after the Consumer Product Safety Commission detected cadmium in the painted designs.

This is a blow for Mickey D's, naturally, but it may be an even bigger blow for DreamWorks Animation (NYSE: DWA  ) .

Let's tackle the golden arches first. This isn't the first product recall at a fast-food joint. Burger King (NYSE: BKC  ) had to call back the plastic balls that contained Pokemon kids' meal toys back in 1999 after a suffocation incident.

McDonald's routinely sells premium glassware on a promotional basis. Even if this is an isolated incident, people will be leery of forking over an extra $2 the next time that the world's largest restaurant operator offers up licensed glasses.

However, the real loser here appears to be DreamWorks Animation. Shares of the computer animation studio have already been reeling since the disappointing cinematic start to Shrek Forever After. Can flawed, 16-ounce glasses make things worse?

It's certainly possible. Naive parents who hear about a Shrek-related recall -- unaware of the distinct licensing partnerships that character-driven studios establish -- may avoid snapping up licensed toys in the franchise's product line.

"Put that down, sweetie. It's a Fiona!"

This didn't happen when Mattel (NYSE: MAT  ) had to recall die-cast Sarge toys with impermissible levels of lead paint from Disney's (NYSE: DIS  ) Cars franchise three years ago, but things are different this time.

This is McDonald's, one of the most ubiquitous brands in the world. Everyone will be talking about this over the weekend.

It may come as some relief that this is presumably the final installment in the Shrek franchise, but DreamWorks Animation is spinning off the Puss in Boots character for his own animated flick next year.

It may just be a voluntary recall by McDonald's, but there are plenty of negative implications if it's not communicated and carried out effectively.  

Will this move hurt McDonald's or DreamWorks Animation more? Share your thoughts in the 2-D comments box below.

Walt Disney is a Motley Fool Inside Value pick. Walt Disney and DreamWorks Animation SKG are Stock Advisor selections. Try any of our Foolish newsletter services, free for 30 days.

Longtime Fool contributor Rick Munarriz is a sucker for quality animation. He owns shares of Disney. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (3) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 04, 2010, at 3:57 PM, esxokm wrote:

    I believe it will hurt both companies, but most likely, McDonald's will feel the brunt of it in the short-term. Long-term, of course, it doesn't mean much.

    Shrek, of course, did enough damage to himself all on his own. Actually, that may not be fair; I think the problem with the latest Shrek is that, beyond anyone's control, the series simply ran its course.

  • Report this Comment On June 05, 2010, at 9:37 AM, rrtzmd wrote:

    ...what is the purpose of this post?...everybody has heard of the recall one way or another...everybody recognizes that it's not a good thing for the businesses involved...so what insight does this article offer?...none!...I wish Motley would hire some editors to filter out the meaningless crap so readers wouldn't have to waste time...

  • Report this Comment On June 05, 2010, at 2:18 PM, TMFBreakerRick wrote:

    rrtzmd, mainstream media has covered the recall, but not the investing implicaitons for McDonald's and DreamWorks Animation. This is an investing site, so that is my angle.

Add your comment.

DocumentId: 1200515, ~/Articles/ArticleHandler.aspx, 4/16/2014 7:18:47 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement