The FDA has taken trans fat off its "generally recognized as safe" list. Are fast food stocks safe?
If you're the type of person who listens to everything the government says, you're going to want to hold off on taking another bite of your Cinnabon Delight. That's because the Food and Drug Administration has made it clear that it's going after trans fat, saying it's now off the "generally recognized as safe" list.
This comes after years of pressure from such groups as the Center for Science in the Public Interest while use of trans fat has declined thanks to food companies themselves. In the press release announcing their move on Thursday, the FDA said:
"In recent years, many food manufacturers and retailers have voluntarily decreased trans fat levels in many foods and products they sell. Trans fat can be found in some processed foods, such as certain desserts, microwave popcorn products, frozen pizzas, margarines and coffee creamers. Numerous retailers and manufacturers have already demonstrated that many of these products can be made without trans fat.
"Thanks to these efforts, along with public education, the consumption of trans fat in American diets has been significantly reduced. Since trans fat content information began appearing in the Nutrition Facts label of foods in 2006, trans fat intake among American consumers has declined from 4.6 grams per day in 2003 to about 1 gram per day in 2012."
But, while fast-food is often the most-cited culprit in America's obesity problem, some chains have already taken steps to reduce or eliminate trans fat from its menus (Though it should be noted that the FDA doesn't count anything less than half a gram of trans fat). McDonald's and Yum! Brands – two of the largest proprietors of fast food restaurants in the world – are among many that have already reducing their trans fat numbers for the past several years.
"If you're looking to be impacted to the downside [with the FDA announcement], there are several names in the fast-food industry that still use trans fats in their ingredients," says CNBC contributor Gina Sanchez, founder of Chantico Global. "If you're looking for a name on the upside, I'd say Yum! Brands is one group that announced in 2007 that they removed all trans fats from their ingredient list. That could be a net positive for companies that have actually proactively taken steps to remove trans fats."
But, Yum! Brands may not benefit from being ahead of the curve. Instead, it have other issues to contend with says Andrew Busch, editor and publisher of The Busch Update.
"Sadly for Yum! Brands, while they've eliminated [trans fats] from their menu, that's not the driving force with what's going on with this company," says Busch. "It's a big earnings miss that happened in October."
To see the rest the analyses by Sanchez and Busch on what's next in fast food and what's ahead for Yum! Brands, watch the video above.
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