Company test marketing new oil blend for french fries

Tuesday, May 17, 2005 | 9:05 a.m.

CHICAGO -- Healthy french fries might seem like an oxymoron, but McDonald's said it is trying to make good on an almost 3-year-old promise by testing a healthier blend of oil for its signature fries at a small number of restaurants.

The company would not disclose the location or number of restaurants at which it is testing the cooking oil. A company spokesman said it is gauging customer feedback but wouldn't say what the response has been.

McDonald's in September 2002 vowed to switch to a new oil that would halve the level of harmful trans fatty acid in its fries. But it delayed those plans in February 2003, citing product quality and customer satisfaction as priorities.

Riker said the company has been testing a new frying process in a small number of stores ever since.

Trans fat is produced when manufacturers add hydrogen to vegetable oil -- a process called hydrogenation. It raises the body's level of artery clogging cholesterol.

The Oak Brook-based company already has reduced the amount of trans fat in its Chicken McNuggets, Crispy Chicken and McChicken sandwiches, Riker said. It also has been adding healthier menu items like a fruit and walnut salad in response to consumers' changing eating habits.

But rolling out a new cooking oil for its fries could pose a risk to sales of one of McDonald's most popular menu items, said Janna Sampson of Oakbrook Investments, which owns more than 1 million McDonald's shares. "It's hard to imagine they can do that without some effect on the taste or texture of the fries," she said.

"I just don't think the people buying fries care that much" about trans fat, Sampson added.

Analyst Carl Sibilski of Morningstar said he thinks it makes good business sense to test the cooking oil at a limited number of restaurants and gauge customers' reaction.

"It sounds like a really smart marketing move not to make a big deal out of it," Sibilski said. "If they came out and said it's new oil, people probably would think the fries taste different regardless."

Food and farm products conglomerate Cargill Inc. is a major supplier to McDonald's for its cooking oil, the privately held Minnesota company confirmed Monday, but it declined to answer specific questions about its involvement in testing.

In February, McDonald's agreed to pay $8.5 million to settle a lawsuit from a nonprofit advocacy group accusing the company of misleading consumers by announcing plans to change its cooking oil but then delaying the switch. The bulk of the settlement went to the American Heart Association to educate the public about trans fats in food.

McDonald's also agreed to pay $10 million in 2002 to settle a lawsuit brought by vegetarian groups that had sued after it was disclosed that its french fries were being cooked in beef-flavored oil during the 1990s despite the company's insistence it was using pure vegetable oil.

Shares of McDonald's rose 23 cents to $29.88 in trading Monday on the New York Stock Exchange.

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