McDonald's Recalls `Shrek' Drinking Glasses in U.S.

McDonald’s Corp., the world’s biggest restaurant chain, is recalling drinking glasses promoting the new “Shrek” movie in the U.S. because they’re tainted with cadmium.

The U.S. Consumer Product Safety Commission is working with the company on the recall, according to a statement from the agency today. Brief inhalation of high concentrations of cadmium may cause lung disease, according to the website of the Agency for Toxic Substances and Disease Registry.

The designs on the glasses contained the cadmium, typically used in making batteries, metal coatings and plastic. The recall may taint McDonald’s image with families, who have fueled the chain’s sales growth, Tom Forte, an analyst with the Telsey Advisory Group, said in an interview.

“The challenge for McDonald’s will not be the lost revenue from the promotion, but the perception concerns regarding the recall,” Forte said. “McDonald’s does a better job marketing to other families than other quick-serve restaurants, so I do worry about the potential impact on sales.”

Forte said the recall hasn’t pushed him to change estimates for the company. New York-based Telsey expects McDonald’s to climb to at least $75 a share in the next 12 months.

McDonald’s fell $1.15 to $66.70 at 4:05 p.m. in New York Stock Exchange composite trading. The shares have climbed 6.8 percent this year.

No Injuries

No injuries have been reported, and McDonald’s is advising customers to stop using the 16-ounce glasses, which sold for about $2, according to the statement from the CPSC.

The glasses were manufactured in the U.S. by ARC International, the Arques, France-based maker of Pyrex and Luminarc glassware. The company first learned about the recall last night, Ron Biagi, vice president of North America for ARC International, said in an interview. The glasses passed “all federal and state requirements” before they were shipped, Biagi said.

“Do I think the recall’s justified? No, but that’s McDonald’s decision,” Biagi said. “Is the glass perfectly safe to use? The answer to that question would be yes.”

The glasses came in four designs featuring characters like Shrek, Princess Fiona, Puss n’ Boots, and Donkey, McDonald’s said in a statement today. They had undergone testing and were deemed safe by an independent laboratory before their release, McDonald’s said.

The inquiry started after Representative Jackie Speier, a Democrat from San Francisco, complained to the CPSC. Speier learned of the problem after she was contacted by an anonymous source, according a statement from her office.

Using Caution

“McDonald’s determined in an abundance of caution that a voluntary recall of the Shrek Forever After glasses is appropriate,” the company said.

The recall doesn’t affect the U.K., the company’s British press office said in an e-mailed statement. McDonald’s isn’t running the promotion in Asia, its China office said in an e- mailed reply to Bloomberg questions.

The “Shrek” glasses were originally intended to be sold in McDonald’s stores from May to June, according to the CPSC. McDonald’s began offering Happy Meals tied to the movie last month in a cross-promotion effort.

“Shrek Forever After,” from DreamWorks Animation SKG Inc. and Viacom Inc.’s Paramount Pictures, is the fourth film in the series about a good-natured ogre, voiced by Mike Myers. The 3-D animated adventure has been No. 1 at the U.S. box office since its May 21 release, taking in $154 million in ticket sales as of June 2, according to Box Office Mojo, a researcher based in Sherman Oaks, California.

DreamWorks Chief Executive Officer Jeffrey Katzenberg said last month that the movie would be the final installment in the series, with the first three films generating $2.2 billion in worldwide ticket sales, according to Box Office Mojo.

To contact the reporters on this story: Tom Mulier in Geneva at tmulier@bloomberg.net; Burt Helm in New York at bhelm3@bloomberg.net

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