As you may know, The Motley Fool as of late has been highlighting how Fools can best prepare their portfolios for adversity. Every company has potential pitfalls and does its best to avoid them. Unfortunately, there will always be events beyond anyone's control, where the only course of action is to play the cards dealt. For restaurant stocks, that means having to deal with the niceties of possible foodborne dangers, such as mad cow disease or the avian flu virus.
Fortunately for U.S consumers, the bird flu has not yet reached our shores. But fear has nonetheless swept through the stocks of well-known poultry producers and some related dining establishments. Just last month, shares of the largest poultry producers, including Pilgrim's Pride (NYSE:PPC), Tyson Foods (NYSE:TSN), Gold Kist (NASDAQ:GKIS), and Sanderson Farms (NASDAQ:SAFM), traded down because of concerns that avian flu may have mutated and could begin to quickly spread from person to person. Luckily, the pain so far has only been psychological, but this type of sentiment doesn't exactly drive demand for chicken products.
Those frumpy doomsayers fear that bird flu, already found in countries such as Indonesia, could easily spread and set off a terrible global human pandemic. That would definitely be a calamity, but it's clearly a worst-case scenario. Nonetheless, proactive companies have been wisely developing contingency plans to develop as many game plans as possible to protect their consumers and franchises.
This includes a number of names consumers are familiar with, including Yum! Brands (NYSE:YUM) and its KFC restaurants. Yum! has a number of restaurants in Vietnam, a country that has experienced some of the most serious individual bird flu cases. Yum! is well aware of the risk and has an "Avian Influenza" link in its corporate responsibility portion of its website, in which it details contingency plans and flu tracking, with a number of useful links.
On the domestic front, Motley Fool Hidden Gems pick Buffalo Wild Wings (NASDAQ:BWLD) also discussed its strategy in a recent interview (launches a portion of the interview video) with Tom Gardner. CEO Sally Smith highlighted that Buffalo Wild Wings has prepared a video for each employee in regard to handling bird flu, and that it always stresses serving fully cooked and properly prepared chicken. Plus, it buys from U.S. suppliers and has menu choices in addition to chicken, should an outbreak occur or flu fears begin to scare off its wing-based connoisseurs.
Overall, it's obviously difficult to predict what will happen going forward. The best we can hope for is that bird flu stays away from countries fortunate enough to have no reported cases so far, and that those countries already affected are able to treat current victims and avoid any further spread of the disease.
It's impossible to completely eliminate some risks, but it's quite possible for an astute firm to effectively manage any adversity that may come down its path. Those types of firms are for Fools, not for the birds.
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Interested in what else CEO Sally Smith had to say about her growing, publicly traded company? Well, there's more at the Hidden Gems website. If you're already a subscriber, make your way to the interview section. If not, click here to take a free trial and then head over to Sally's interview and a host of other great ones.
Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. The Fool has an ironclad disclosure policy. Feel free to email him with feedback or to discuss any companies mentioned further.
