Those sprinkles on top of a doughnut might be the first to go under the new FDA ban on trans fats. Photo: Kate Fisher, Flickr.

Essentially closing the barn door after the horse has bolted, the Food and Drug Administration has effectively banned the use of artificial trans fats -- those artery-clogging, fat-inducing, partially hydrogenated oils that not only give many foods their delicious taste and texture, but also keep baked goods from sticking to pans.

The regulatory agency has declared that artificial trans fats are no longer generally recognized as safe. It has given the food industry until 2018 to remove the last vestiges of them from the U.S. food supply or apply to the agency for approval of specific individual foods. This could dramatically alter how some of the foods you love taste, and could create problems for food companies and restaurants that still use trans fats.

Although the FDA is late to the game -- and acknowledged that trans fat consumption dropped 78% from 2003 and 2012 while the food industry removed 85% of trans fats from the food supply -- certain businesses still rely upon trans fats.

The skinny on who still uses trans fats
Chains such as McDonald's, Burger King, and Subway have largely removed trans fats from their menus, and Yum! Brands, which operates KFC, Pizza Hut, and Taco Bell, said it will stop using trans fats by the end of this year. Wal-Mart pressured suppliers to phase them out by this year and says only about 6% of the foods on its shelves still have trans fats. Even Dunkin Brands' Dunkin' Donuts removed trans fats from its doughnuts and muffins.

Yet even at restaurants that have eliminated their use, you'll still find trans fats on nutrition labels because they also occur naturally in meat and dairy products. For example, Restaurant Brands International (NYSE:QSR), the owner of Burger King and Tim Hortons, shows the burger joint's classic Whopper sandwich as containing 1.5 grams of trans fat. The more beef patties you add to it, the higher the count goes, with the Triple Whopper topping out at 4 grams. 

Still in the thick of it
Other chains such as Krispy Kreme Doughnuts have reduced their trans fat levels to 0.5 grams or less per serving, but have FDA permission to declare they have no trans fats, something that won't change under the agency's latest decree.

But a number of food companies and restaurants still use artificial trans fats and will be under the gun to reformulate their recipes. The Center for Science in the Public Interest has created a Trans Fat Wall of Shame on Pinterest where it lists the 20 worst offenders, including:

  • Popeyes Louisiana Kitchen (NASDAQ:PLKI) cajun fries and onion rings each contain 3.5 grams of trans fat per serving
  • General Mills (NYSE:GIS) Betty Crocker and Bisquick biscuit mix (2 g per serving)
  • Pinnacle Foods' (NYSE:PF) Duncan Hines brand frostings (2 g)
  • Campbell Soup's (NYSE:CPB) Pepperidge Farm coconut layer cake (2.5 g)
  • ConAgra's (NYSE:CAG) Marie Callender's pies have anywhere from 1.5 g to 3.5 g of trans fat per serving

On second thought, never mind
The irony of the latest push is that the government once promoted partially hydrogenated oils, particularly during the fat-phobic 1990s, because they were seen as a healthier alternative to animal fats. But the FDA has often gotten the American diet wrong and has needed to reverse itself over the years.

We've seen changes of heart recently on salt and cholesterol, and might soon see the agency reverse course on red meat, sugar, saturated fats, and omega-3 fatty acids.

The Grocery Manufacturers Association accepts the three-year window before the trans fat ban takes effect, as it allows the industry time to comply without undue disruption to manufacturing processes. It plans to petition the FDA, however, to allow low levels of artificial trans fats on the same scale as occur naturally in meat and dairy products, reasoning that they're no more harmful.

Naturally slimming down
The FDA credits its efforts at requiring food companies to list trans fats on their nutrition labels in 2006 as a leading driver in the reduction of their consumption and commercial use. As the risks associated with trans fats became more widely known, the public voluntarily stopped ingesting them in ever larger numbers, and manufacturers and restaurants began eliminating them from their recipes and menus.

Average trans fat intake in the U.S. has declined from 4.6 grams in 2002 to about 1 gram in 2012. Thus, consumption is already well below the 2 grams per day that the American Heart Association says should be the average upper limit.

Ultimately, the ban by the FDA is largely symbolic because the market took care of the problem on its own. There's also enough of a transition period that a major disruption might only be felt by a relatively small segment of the food and restaurant industry. This suggests that investors need not fear their favorite producer or dining chain will suffer from the action.