The Bottom Line: Is Burger King's "cage-free" announcement a marketing ploy?

Filed in Gather News Channel by on March 28, 2007 0 Comments

Burger King says it will start buying eggs from suppliers who don’t confine chickens to cages.  The chain already purchases 10 percent of its pork from crate-free suppliers.

Burger King is the world’s No. 2 hamburger chain (behind McDonald’s) with more than 11,100 restaurants in more than 65 countries. This news came out after Burger King Corp. product safety manager Steve Weiffenbach reportedly sent two letters in March to the People for the Ethical Treatment of Animals (PETA) organization — a strong lobby group — detailing the company’s new supply guidelines. No information about this move has yet found its way to the Burger King Corp. U.S. investor relations site.

This move can have a significant impact on the farms that rely on Burger King contracts to sell their pigs and chickens. However, the percent of its products that will actually be cage-free is relatively small. Only 2 percent of its eggs in 2007 will be from hens not confined to small cages; it will be 4 percent the end of 2007.  Additionally, BK says it will double the amount of crate-free pork it buys, from 10 percent to 20 percent.

Burger King follows the pace set by the 39-restaurant Burgerville chain. Burgerville went cage-free in January. It already purchases sustainable ingredients and locally grown produce, and has branded itself for these strategies.   

Our questions:

1) Is going “cage-free” being used as a marketing ploy? 

2) What ripple effect do you see for the worldwide economy in relationship to this trend?

3) Burger King’s stock, traded at BKC, is down 42 cents today. What further impact do you think we’ll see on its stock price as a result of this news?

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