McDonalds Beef

Fries Controversy
*Baccay *Cabezas *Ramos, Nicole
*Ramos, Sonia
Summary
 Mid-
1937 1954 1961
1950s
Establishm Income: Ray Kroc Ray Kroc
ent USD350,00 Established Brought out
Income: 0 a the
USD200,00 Franchising franchising McDonald
0 system company brothers
Self- Changed
service the
company
name to
McDonalds
 End of Early
1965 1960s 1990s
1993
Went 400 Change in Set-up
franchising customer restaurants
public outlets preferences inside
Establishmen Only 125 Walmart,
t of Franchise gas
Realty restaurants
in 1991- stations,
Corporation
1992
5,000
restaurants
Sales: USD3
billion
 1996 1998 1998 2001
Entered a Took a Sales: 30,093
USD1 billion minority USD36 restaurants
stake in billion
10-year Chipotle Sales:
contract Mexican Grill one of the USD24
with Disney 25,000 worst billion
Opened its restaurants in tasting BEEF FRIES
116 countries ever CONTROVERS
first serving 15 Y
restaurant billion
in India customers
annually
The McDonalds Beef Fries
Controversy
May 2001
Class lawsuit was filed in Seattle, U.S.A. alleging the company
for duping its vegetarian customers into eating French fries
that contained beef extracts.
Activists of Hindu fundamentalist groups such as the Shiv
Sena, the Vishwas Hindu Parishad (VHP) and the Bajrang Dal
staged a demonstration in front of the McDonalds office
protesting about the companys alleged use of beef flavoring.
They also submitted a memorandum to the Prime Minister
demanding the closure of all McDonalds outlet in the country.
 The company immediately released a statement
saying that it never claimed its fries to be
vegetarian.
Interestingly enough, this statement was proven to
be wrong when a 1993 letter of McDonalds to a
consumer as to the list of its vegetarian items, its
French fry, together with English muffin, and
garden salad among others have been found.
McDonalds employees repeatedly told customers
that there was absolutely no meat product in their
 1990: Controversy started on the companys
decision on the way fries were prepared.
Prior to 1990, the company uses beef tallow
Customer concern on health
McDonalds declared that it will only use vegetable oil in
the future.
Controversy reached India
85% of the countrys population are vegetarian
Hindus consider cows to be holy and sacred
Experts
Issue: moral and ethical responsibility of the
company to be honest to its customers about the
products and services it offered.
The company was trying to play with words to
brush off the allegations classifying the beef
extracts as natural flavors
Weak guidelines of the Federal Food and Drug
Administration (FDA)
June 2001
Another class action lawsuit was filed in the
District Court in Travis County, Austin, Texas
Public outrage intensified.
Conditional Apology
McDonalds released a conditional apology on its
website admitting that the recipe for the fries
contained miniscule trace of beef flavoring, not
tallow
The apology is issued just to provide more details
about the companys products.
Aftermath
McDonalds issued a new apology
Pay USD10 million to vegetarians and religious
groups
60% - vegetarian organizations
40% - various groups devoted to Hindus and Sikhs,
childrens nutrition and assistance, and kosher dietary
practices.
USD4,000 each to the 12 plaintiffs in the five
lawsuits
Post a new and more detailed apology on the
Core Problem
Proper ethical conduct and the social responsibility
statement of McDonalds were not applied on their
operations which backed fire to them with left and
right allegations and issues from their customers.

How would McDonalds prove and redeem its

statement as a socially responsible corporate citizen
to its customers and stakeholders, despite the
allegations and issues against the company?
Question 1
Analyze the various allegations leveled against
McDonalds before the French fries controversy.
Why do you think the company attracted so much
hostility and criticism despite it being the number
one fast-food chain in the world?
Nutrition
McDonalds high fat, low fibre food can cause diseases
such as cancer, heart problems, obesity and diabetes,
which are responsible for about 75% of premature deaths
in the West.
Mass-produced processed food has gradually and
increasingly replaced fresh and healthy foods in people's
diets over the course of the twentieth century.
Recent decades companies have further capitalized on this
situation by promoting fast and mediocre meals to be
eaten outside the home.
 This development in eating habits has enormous and
serious consequences for relations between people and
for human health.
It has also catalyzed a whole range of campaigns and
movements dedicated to encouraging healthy eating
and healthy lifestyles.
Such efforts have forced food companies like McDonald's
onto the defensive, and they have had to resort to
producing propaganda to try and deflect public criticism.
Employment
Though McDonalds has generated millions of jobs
worldwide, it is accused of offering low wages and forcing
local food outlets out of business.
Jobs are becoming increasingly low-paid, non-union,
temporary or part-time employment with few guaranteed
rights and conditions.
termed 'McJobs' - McDonald's worldwide employs over one
and a half million workers, over half of them under 21yrs
old. It has been calculated that a staggering 10% of all
workers in the USA get their first job at McDonald's.
 The fast food giant has helped pioneer
employment practices based on low pay and few
rights coupled with arduous production-line work.
They've pioneered, world-wide, a psychology of
control over their 'crew' to motivate their young
workers to identify with idiotic company goals
rather than their own individual and collective
needs and rights.
Many other companies are now following
McDonald's example.
Advertising
McDonald's spend over two billion dollars each year on advertising
the Golden Arches are now more recognized than the Christian
Cross.
Using collectable toys, television adverts, promotional schemes in
schools and figures such as Ronald McDonald the company
bombards their main target group: children.
McDonald's argue that their advertising is no worse than anyone
else's and that they adhere to all the advertising codes in each
country
Others argue it still amounts to cynical exploitation of children
Environment
McDonald's contribution to this destruction is mainly through
the effects of cattle ranching (as the world's foremost
promoter of a beef-based diet and the largest user of beef),
Through the growing and transportation of cash crops, and
through the production and disposal of thousands of tonnes
of packaging materials.
Since the 1980's many corporations like McDonald's have
been forced onto the defensive, resorting to producing
propaganda to try to deflect public criticism and claiming
their 'concern'.
Animals
They suffer continuous, systematic and extreme cruelty through
confinement and artificial conditions, the denial of their natural
instincts, the contraction of production diseases and finally a
premature and frightening death.
Hundreds of millions of animals in every 'developed' country have to
endure this nightmare.
This mass production process has been due primarily to the food
companies' drives for ever greater profits, backed by their
promotional campaigns.
Cattle, chickens and pigs destined for use in McDonald's products
suffer the well-documented conditions typical of the whole industry.
Freedom of Speech
McDonalds uses its clout to influence the media and legal
powers to intimidate people into not speaking out against
it. Many media organizations that voiced strong opinions
on the above issues have been sued by the company.
Such has been the experience with the McDonald's
Corporation in the UK. Hundreds of groups, newspapers
and individuals have received legal threats and then
backed down and apologized.
Such climb downs are then cited by McDonald's as 'proof'
the company was right, and as a warning to others.
 This has happened to, amongst many others, the BBC, Scottish TUC,
Channel 4, The Guardian, the Vegetarian Society, labour research
groups, local press, green groups... and even a kids theatre.
But court cases do not have to be about only legal procedures and
verdicts. They can be turned into a public forum and focus for protest,
and for the wider dissemination of the truth.
This is what the defendants, the McLibel Support Campaign and local
activists everywhere have achieved with the McLibel case.
In the courtroom the tables have been turned and McDonald's have
been put on trial. The support campaign has ensured publicity and the
circulation of the truth, and campaigners and activists have distributed
ever greater numbers of leaflets in the UK and worldwide
Expansion
By opening restaurants in developing countries, McDonalds
is creating a globalized system in which wealth is drained
out of local economies into the hands of very low rich elite.
McDonald's real influence has been in establishing
organizational systems of complete control at every stage
from raw product to process factory, from worker to
consumer - backed of course by incessant media hype.
McDonald's has probably been the most successful trans-
national food corporation at refining, co-ordinating,
standardizing and developing them into a total system.
 They've set up these pioneering practices in every
country they've moved into, and many other
companies have followed suit.
As a result, they've significantly aided the spread
of the western junk food diet, as well as modern
methods of exploiting workers, children and
animals.
Question 2
Discuss the French fries controversy and critically
comment on the companys stand that it had
never claimed the fries were vegetarian? Do you
think the company handled the controversy
effectively? Give reasons to support your answer.
 The Beef Fries Controversy started in 2000 when Hitesh Shah, a Hindu Jain
software engineer, read a news article that stated that the French fries of the said
fast food restaurant contains beef. He sent an e-mail to the companys customer
service department, inquiring about this matter. It turns out that McDonalds uses
vegetable oil in cooking the French fries and a minuscule amount of beef extract
for flavor enhancement. The reason behind the beef extracts non-disclosure on
the list of ingredients is that it is a natural flavor, and since the Code of Federal
Regulations, which the company follows, did not require the specification of the
aforementioned item. In May 2001, Harish Bharti, a US-based Indian attorney,
filed a lawsuit against the company. McDonalds immediately released a
statement stating that they never claimed that the French fries in the US are
appropriate for vegetarians. However, the claim was debunked. The attorney
found a letter sent by McDonalds in 1993; it includes a list of its products fit for
vegetarian consumption and the fries were included.
 McDonalds did not handle the situation effectively. It was apparent in their first
apology, which was conditional, that they do not want to become at fault. They
want to pass the blame to others: the FDA for not requiring the specification of
natural flavors and its vegetarian customers for not asking about the ingredients
used in making the fries. Being a global company, McDonalds has the
responsibility of knowing the cultures, traditions, and practices of the nation and
people they are serving. This issue connotes that they do not know their target
market, the Hindus and other vegetarians, well enough. It may be due to a lack
of study or that they have done their research about the cultures and traditions
of this target market but not extensive enough. Either way, it is an implication
that the customers welfare is not on their topmost priority. McDonalds is a huge
company; it is expected to act beyond what the law says. The company should
have been honest about the ingredients of their fries because this information is
relevant for their customers.
Question 3
Discuss the steps taken by McDonalds to deal with
the French fry controversy and critically comment
whether the company will be able to come out of
this unscathed.
 First, In India, McDonalds launched extensive
investigations into the preparation method of fries
served in its Indian restaurants
 Second, the Board apologized for the confusion it
created
 It helped the company move forward and innovate
solutions that would mitigate and reduce the
damages it has caused to the public.
 Solutions include compensating $10M to, among
others, Hindu and vegetarian organizations that
are involved in charitable and educational projects
 On 14 April 2002, McDonalds published its first
global Social Responsibility Report as part of a new
strategy of openness and transparency
 Third, McDonalds reviewed its labeling policy for
the sake of clarity. Fourth, extensive information on
all product ingredients has been added on the
corporate website and in restaurants.
 Lastly, a Dietary Practice/Vegetarian Advisory
Panel was established to give advice on guidelines
and restrictions on vegetarian products.
 did not promise the company to come out
unscathed because of the initial actions
 stating their compliance with the Federal laws on
disclosure
 claimed to be innocent and defended themselves
by stating that the company did not claim that the
fries that they serve are vegetarian
 pointed out that it was their customers fault \\\
company is unwilling to adjust to satisfy their
customers preferences and beliefs
 McDonalds still has a long way to go before
regaining the trust of the consumers.