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Yum! Brands' (YUM) KFC to Eliminate Antibiotics from Chicken
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Yum! Brands, Inc.’s (YUM - Free Report) KFC has pledged to discard the use of chicken raised with antibiotics – commonly used to treat humans – at more than 4,000 of its restaurants in the U.S., by the end of 2018.
Notably, KFC is the second-biggest U.S. chicken chain by sales after privately held Chick-fil-A. To implement the change, KFC has been working in close collaboration with over 2,000 farms around the country. The company has given its U.S. poultry suppliers a deadline to phase out the use of antibiotics important to human medicine by 2018 end.
Rationale Behind
Meat producers give antibiotics to animals for them to grow faster and avert illness. While, this has become a public health issue, a major portion of antibiotics essential for fighting infections in humans are sold to be used in meat and dairy production. Thus, the medical researchers have raised concern about the overuse of those drugs. According to them excess usage of the antibiotics might ebb its effectiveness in combating disease in humans.
Yum! Brands has thus been a target for many consumer groups, who have warned for years that such practices might help foster dangerous antibiotic-resistant bacteria known as superbugs.
In fact, this move has made KFC the last of the big three chicken restaurants to give up on antibiotics and join the fight.
It is to be noted that in 2014, Chick-fil-A was the first to announce its plan of stop serving poultry raised with antibiotics, by the end of 2019. In 2016, McDonald's Corp. (MCD - Free Report) announced that it has discontinued the use of chicken raised with antibiotics that are classified important to human medicine, at its roughly 14,000 U.S. restaurants.
Yum! Brands Pizza Hut and Taco Bell brand had already committed to terminate serving chicken raised with antibiotics, in 2016.
Bottom Line
Shares of Yum! Brands outperformed the Zacks categorized Retail–Restaurants industry from the beginning of year to Oct 31. In this span, Yum! Brands gained 18.1% while the industry fell 4%.
However, the spin-off of the company’s China division into an independent, publicly-traded company on Oct 31 has hampered the growth tale. Post separation, shares of the company underperformed the broader industry by recording a decline of 25.5% till today, as against the industry’s growth of 5.6%.
But the company is leaving no stone unturned to subsidize the effects of the spin-off as well as to bring its growth story back on the track. Discontinuing the use of human antibiotics in the chicken it buys is also one such attempt in this direction.
Moreover, keeping in mind the changing customer preferences, KFC has also committed to remove all artificial colors and flavors from all its core products by 2018. Also, it aims to make its menu free of food dyes by end of this year with the exception of beverages and third-party products.
Though somewhat late, KFC’s move to eliminate the use of antibiotics along with other key health-related commitments bode well and should aid in enticing customers and driving growth. Also, it is bound to have an impact on the way chickens are raised in the U.S. restaurant industry at large given the stature of this iconic fast-food chicken chain.
Restaurant Brands’ earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 19.20%. Meanwhile, for 2017, EPS (earnings per share) is expected to improve 14.9%.
The Zacks Consensus Estimate for Bob Evans Farms’ fiscal 2017 earnings climbed 1.3%, over the last 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 12.74%.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
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Yum! Brands' (YUM) KFC to Eliminate Antibiotics from Chicken
Yum! Brands, Inc.’s (YUM - Free Report) KFC has pledged to discard the use of chicken raised with antibiotics – commonly used to treat humans – at more than 4,000 of its restaurants in the U.S., by the end of 2018.
Notably, KFC is the second-biggest U.S. chicken chain by sales after privately held Chick-fil-A. To implement the change, KFC has been working in close collaboration with over 2,000 farms around the country. The company has given its U.S. poultry suppliers a deadline to phase out the use of antibiotics important to human medicine by 2018 end.
Rationale Behind
Meat producers give antibiotics to animals for them to grow faster and avert illness. While, this has become a public health issue, a major portion of antibiotics essential for fighting infections in humans are sold to be used in meat and dairy production. Thus, the medical researchers have raised concern about the overuse of those drugs. According to them excess usage of the antibiotics might ebb its effectiveness in combating disease in humans.
Yum! Brands has thus been a target for many consumer groups, who have warned for years that such practices might help foster dangerous antibiotic-resistant bacteria known as superbugs.
In fact, this move has made KFC the last of the big three chicken restaurants to give up on antibiotics and join the fight.
It is to be noted that in 2014, Chick-fil-A was the first to announce its plan of stop serving poultry raised with antibiotics, by the end of 2019. In 2016, McDonald's Corp. (MCD - Free Report) announced that it has discontinued the use of chicken raised with antibiotics that are classified important to human medicine, at its roughly 14,000 U.S. restaurants.
Yum! Brands Pizza Hut and Taco Bell brand had already committed to terminate serving chicken raised with antibiotics, in 2016.
Bottom Line
Shares of Yum! Brands outperformed the Zacks categorized Retail–Restaurants industry from the beginning of year to Oct 31. In this span, Yum! Brands gained 18.1% while the industry fell 4%.
However, the spin-off of the company’s China division into an independent, publicly-traded company on Oct 31 has hampered the growth tale. Post separation, shares of the company underperformed the broader industry by recording a decline of 25.5% till today, as against the industry’s growth of 5.6%.
But the company is leaving no stone unturned to subsidize the effects of the spin-off as well as to bring its growth story back on the track. Discontinuing the use of human antibiotics in the chicken it buys is also one such attempt in this direction.
Moreover, keeping in mind the changing customer preferences, KFC has also committed to remove all artificial colors and flavors from all its core products by 2018. Also, it aims to make its menu free of food dyes by end of this year with the exception of beverages and third-party products.
Though somewhat late, KFC’s move to eliminate the use of antibiotics along with other key health-related commitments bode well and should aid in enticing customers and driving growth. Also, it is bound to have an impact on the way chickens are raised in the U.S. restaurant industry at large given the stature of this iconic fast-food chicken chain.
Zacks Rank & Stocks to Consider
Yum! Brands currently has a Zacks Rank #3 (Hold). Better-ranked stocks in this sector include Restaurant Brands International Inc. (QSR - Free Report) and Bob Evans Farms, Inc. . Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Restaurant Brands’ earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average beat of 19.20%. Meanwhile, for 2017, EPS (earnings per share) is expected to improve 14.9%.
The Zacks Consensus Estimate for Bob Evans Farms’ fiscal 2017 earnings climbed 1.3%, over the last 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 12.74%.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>