McDonald's (NYSE:MCD) and like-minded food chains are gearing up for what could be the granddaddy of all food fights this fall, when Eric Schlosser's revelatory Fast Food Nation goes from book to screen. Fox Searchlight Pictures, a subsidiary of News Corp. (NYSE:NWS), will be the distributor.
Who threw the first fry?
McDonald's would probably say it didn't start the scuffle. In fact, at the company's annual shareholder meeting last week, CEO Jim Skinner painted the world's largest restaurant chain as the innocent bystander that's been targeted because of its size. He pledged to more aggressively counter the debris that the fast-food critics are flinging with more frequency and zeal these days.
When was the first fry thrown?
While some may point to muckraking journalism, which had its roots in the 1906 publication of Upton Sinclair's tome regarding the meat-packing industry, a more modern and direct antecedent is Schlosser's 2001 nonfiction work, which cast a critical eye on the fast food industry's effects on American society. The 2004 documentary Super Size Me also did McDonald's no favors -- it documented the physical effects of a monthlong McDonald's-only diet on its 33-year-old filmmaker, Morgan Spurlock. While the company refutes the direct link, it phased out its "Super Size" meal option soon after the film's debut and began to roll out more nutritious menu offerings.
The recent ire from McDonald's over the new film is not surprising. The movie traces the experience of an executive at a fast food chain called Mickey's. He encounters illegal immigrants, poor working conditions, and robberies along his way to figuring out what might be tainting the meat in the company's hamburgers.
The real Mickey D's is feeling even more heartburn from the just-published book titled Chew on This: Everything You Don't Want to Know About Fast Food." Schlosser co-wrote the book, which is aimed at 11- to 15-year-olds.
Has anyone else joined the fight?
McDonald's isn't the only one upset with this unappetizing portrayal. Through various trade groups representing food suppliers, processors, and restaurant associations, the food industry has launched a new website called "Best Food Nation," whose banner proclaims it to be "A celebration of our safe, abundant, affordable food system." The site appears to take the upper road -- it asserts that it welcomes debate but needs to correct certain inaccuracies that its critics have pointed to. It addresses complaints about working conditions, illegal immigrants, and environmental concerns, and it urges consumers to write letters to editors and to school boards pointing out any misinformation. But the group also names names where it thinks necessary. In a press release, the group directly says Chew on This contains inaccurate and misleading information.
Has anyone gotten hurt?
While Schlosser would likely say that consumers and workers have already suffered from the fast food machine, McDonald's will surely suffer from a further tainted image with the film's release. Whether its share prices will reflect that damage has yet to be seen, though its shares have gained nicely over the past three years, in the midst of a lot of the ruckus. The company has delivered solid performance of late, too, averaging 7% annual growth in U.S. comparable sales over the past three years. It's also making inroads in China and is trying to boost its European business.
Still, bad PR is never a good thing. It diverts management's attention and ties up funds to combat the issues. One needs only to look at Wal-Mart (NYSE:WMT), which faced its own film nemesis last year -- Wal-Mart: The High Cost of Low Price -- on top of an already growing mound of negative publicity. A recent survey has shown that 38% of Americans hold an unfavorable view of the nation's largest retailer, and 46% believe that its public image has worsened from a year ago.
In the case of McDonald's, add such ingredients as competition from Wendy's (NYSE:WEN) and newly public Burger King (NYSE:BKC), coupled with any potential future scare from crazy cows or sick chickens, and the recipe for its continued share rise might not pan out. To be sure, the shares of other burger joints might also get grilled, but when you're the Golden Arches, you tend to take the most heat.
Is it a fair fight?
In this country, one has a right to a burger and to a movie. Freedom of expression and the right to clog one's arteries live on. As far as I know, McDonald's has not initiated any libel suit regarding the movie or books.
McDonald's can also use this clash as an opportunity to focus more attention on its varied menu offerings, as well as its positive role as a global citizen. Since 2002, the company has published corporate-responsibility reports that document its progress on its products, employees, and environmental impact, and it even maintains a corporate-responsibility blog.
Is it fun to watch?
Apparently, my name was inadvertently left off the list for Fast Food Nation's debut at the Cannes Film Festival. I really can't vouch for whether the film is either entertaining or seemingly credible. Substantial star power exists in its ensemble cast -- including Greg Kinnear, Ethan Hawke, and Patricia Arquette -- and the movie will garner a wider audience than did the Wal-Mart documentary, which had only limited public screenings.
As we wait for the film's public release, there will surely be more of this battle to watch taking place outside the theater. We can hope that, to the extent any negative claims are credible, the dispute will result in positive change in the way McDonald's and its cohorts carry out their business operations. That, in my opinion, would translate into increased shareholder value over the long term.
Appetites are powerful creatures. Public response to the movie might just split into a divide between the Burger Crowd and the Alfalfa Crowd, each of which will likely remain set in its ways. When the film does open, I'll be ponying up for a ticket to digest its thesis. But I just might stick to the popcorn when viewing it.
If you missed the Wal-Mart documentary, check out our review,"Wal-Mart Movie: A Wavering Thumbs Up."
Wal-Mart is part of the Inside Value universe, where we track filet mignon stocks trading for Happy Meal prices. Go ahead; take a bite -- it's free for 30 days.
Fool contributor S.J. Caplan has never been able to make a burger that hasn't fallen apart. She does not own shares of any of the companies mentioned in this article. The Motley Fool has a disclosure policy.
