MCD McDonalds Corp

By Julie Jargon 

OAK BROOK, Ill. -- McDonald's Corp. said Monday it will replace high-fructose corn syrup in its sandwich buns with sugar as part of an effort to simplify its ingredients and satisfy increasingly conscientious customers.

The fast-food giant also is rolling out Chicken McNuggets and some breakfast items free of artificial preservatives and said it has curbed the use of chicken raised with antibiotics that are also commonly used on humans a year earlier than planned.

Mike Andres, president of McDonald's U.S. operations, said the "sweeping change" will affect 50% of the menu. McDonald's is in the midst of an attempted turnaround designed to satisfy diners who have asked it to do away with ingredients including high-fructose corn syrup, which some research suggests may cause weight gain and diabetes.

The burger chain also is racing to keep up with rivals who have been quicker to embrace the so-called clean-label movement. Food makers from General Mills Inc. to Yum Brands Inc.'s Taco Bell have begun stripping their products of ingredients that have made many customers wary.

Since taking over as chief executive last year, Steve Easterbrook has pushed McDonald's to improve its familiar product offerings. McDonald's last year returned to its original Egg McMuffin recipe, which calls for butter instead of liquid margarine because many consumers didn't understand exactly what liquid margarine is, the company said.

The chain has pledged to make other changes aimed at showing that its food is less processed and more humanely sourced than consumers may realize. McDonald's has run ads showing that its breakfast items are made with freshly cracked eggs and plans to stop using eggs from chickens raised in cages. McDonald's also has begun serving some of its milk and yogurt from cows not treated with an artificial growth hormone.

"Some of the changes may be a little on the late side, but it was McDonald's that kicked off the move to cage-free eggs," said Nomura Securities analyst Mark Kalinowski. "We've seen a slew of restaurants announce they're going cage-free since McDonald's announced the move."

In the case of Chicken McNuggets, McDonald's eliminated an artificial preservative in the cooking oil used to fry them. Artificial preservatives in its pork sausage patties and the eggs used in some breakfast sandwiches and platters have been replaced with pea and rice starches.

Once ubiquitous in products ranging from soda to ketchup, high-fructose corn syrup has fallen out of favor since scientists and consumer advocates identified a possible link between consumption of the compound and obesity and diabetes. Many food and beverage companies, including PepsiCo Inc. and ketchup maker Kraft Heinz Co., already have removed the sweetener from products or introduced separate lines without it.

At a press event on Monday, McDonald's supply chain chief, Marion Gross, said it takes time to make changes at a company with 14,000 U.S. restaurants. "It's been a journey," she said.

The chemical composition of high-fructose corn syrup, derived from corn, is nearly identical to that of sugar, and it is unclear whether natural sugar is indeed healthier. Medical research has reached conflicting conclusions on whether corn syrup causes weight gain and other health problems.

The American Journal of Clinical Nutrition in 2008 published a paper concluding that there is no such link. But a 2010 Princeton University study found that rats that consumed high-fructose corn syrup gained significantly more weight than rats that consumed table sugar, even when their overall caloric intake was the same.

Advocates for more healthful food applauded McDonald's efforts, but said there is still room for improvement.

"We hope McDonald's will act soon to make commitments on beef, turkey, and pork -- and extend the policy globally," said Steven Roach, Food Safety Program Director at Food Animal Concerns Trust, a nonprofit that has been pushing food makers to reduce antibiotic use for almost two decades.

Ms. Gross said McDonald's is looking for improvements to every item on its menu, including the possibility of one day serving beef raised without antibiotics. "Nothing is out of bounds," she said.

Whether the moves will boost McDonald's business remains to be seen. "I think people who are happy to go to McDonald's will still go, and people who have deep reservations about going to McDonald's will still have deep reservations," said Mr. Kalinowski of Nomura.

After the Egg McMuffin was reformulated with simpler, more natural ingredients last September, its sales leapt by double digits. The launch of all-day breakfast a month later gave a lift to sales in the quarters that followed.

But interest appears to be waning. McDonald's sales growth slowed in the latest quarter.

Mr. Easterbrook said he expected demand for all-day breakfast to settle after an initial boost but that the company anticipates another lift this fall when it makes more breakfast items available all day.

Write to Julie Jargon at julie.jargon@wsj.com

(END) Dow Jones Newswires

August 01, 2016 16:34 ET (20:34 GMT)

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