Small eateries face NY fat fight squeeze

Industry representative: National chains will have easier time adapting, local joints may have to pay top dollar for new products.

By David Ellis, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- In New York City's latest effort to stamp out transfat, national chains may be better suited to adapt than the friendly neighborhood restaurant, says one industry representative.

The city's Board of Health voted Tuesday to ban the use of artificial transfats at all food service establishments in a move aimed at improving public health.

Chuck Hunt, the executive vice president of the New York City chapter of the New York State Restaurant Association, said some area restaurants face a potential supply problem of transfat-free products.

Besides competing with other independently owned restaurants, there's the potential demand for similar transfat-free products from the national restaurant chains, who have the economies of scale to handle such a transition more easily.

That demand, says Hunt, could drive prices higher.

"The mom and pops, particularly if the supply is short, will have to pay absolutely the highest prices," said Hunt.

Burger King (Charts), in a statement issued late Tuesday, said it was working to find a transfat-free alternative, but also hinted that finding an adequate supply of transfat free products was a concern.

"We will move with all haste to secure commitments from our suppliers in order to ensure that when we do select an alternative - or alternatives - we will have full, continuous supply for our entire U.S. and Canadian system," the burger chain said in a statement.

Under the ban, restaurants, bakeries and other food establishments will have to eliminate artificial transfats from all food by July 2008.

There are roughly 24,000 food service establishments in New York City, according to the New York State Restaurant Association.

Some national restaurant chains pre-empted the ban, which was proposed in August, by altering their oil and food ingredients.

Yum Brands (Charts), which operates the fried chicken chain KFC, announced in October it was making the switch to zero transfat cooking oil for all of their fried products.

The Ohio-based Wendy's (Charts) completed a seamless switchover to a transfat-free soy-corn oil blend by late August this year at all of its 6,300 North American stores.

"We've served millions of french fries and breaded chicken sandwiches and customers have told us they do not see a difference in taste," said Wendy's spokesman Bob Bertini.

The closely held Dunkin Brands, which operates the Dunkin' Donuts chain, removed transfat from its muffins and said it is looking at alternative oils to eliminate transfats from its menu. The company said in a statement issued Tuesday it will meet the July 2008 deadline set by the New York City Board of Health.

McDonald's (Charts), the nation's largest fast-food chain, issued a statement late Tuesday, saying it would comply with the New York Board of Health's proposal.

The company said it is currently testing a zero transfat oil in some of its U.S. restaurants, but noted it is not ready to switch to a new oil blend at all of its U.S. locations just yet.

The Food and Drug Administration defines transfat as made when companies add hydrogen to their cooking oil in a bid to make their food taste better and extend its shelf life.

The regulatory agency says the consumption of transfats raises the amount of "bad" cholesterol in a person's body.


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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.