But Where Does the Special Sauce Come From?
Ever wondered where the fish in a McDonald's Filet-O-Fish comes from? If you're a Chinese customer of the world's most famous burger chain, wonder no more. Over the weekend, the Chinese outlets for U.S. restaurants McDonald's, KFC, Carl's Jr. and Burger King, as well as Taiwan's Dicos, were ordered by Shanghai's government to disclose the source of every ingredient they serve in the Chinese marketplace.
The result is that -- as of this weekend -- Chinese fast-food consumers now have access to more information about what they're eating than do patrons of most "locally grown" restaurants in the U.S. (assuming those restaurants don't offer the detailed nutritional data available at the average McDonald's). Take, for example, french fries. Before this weekend, a McDonald's China customer could find nutritional information about the fries posted at the local outlet. After this weekend, that in-person nutritional information is supplemented by a smartphone friendly data dump revealing that the fries were processed at the Harbin, China, facility of Canada's McCain Foods. Even better, from a public disclosure standpoint, McDonald's included -- by order of Shanghai -- recent health inspection data from the McCain facility (it passed).
This was no random crackdown by Shanghai, of course. It was inspired by a food safety scandal that started in March after a Chinese television crew revealed the American-owned, Shanghai-based supplier of chicken products to KFC and McDonald's was relabeling expired meat as fresh. The outcry, from the public and the government, was immediate. After all, most of the foreign fast-food chains in China (KFC in particular) have profited from the belief (which they've promoted) that fast food is more sanitary than what's served in China's notoriously unsafe independent restaurants. (In my experience, it most assuredly is.)
Shanghai has responded with inspections, arrests and -- on Saturday -- a tweet from its official account on the Sina Weibo microblogging service announcing the new disclosure requirement. In all likelihood, neither the fast-food chains nor their suppliers relished fulfilling the city's new requirement. After all, supply chains are closely guarded secrets whether a company makes smartphones or all-beef patties. You don't want your customers or competitors to know where you're getting the ingredients for your secret recipes -- especially if it's some Canadian company in Harbin and not an Idaho potato farm.
Such illusions, of course, are tolerable so long as food safety is something that can be taken for granted. But what the most recent food safety scandal shows -- once again -- is that even food companies with supposedly full-proof supply chains are capable of gaps in supervision and safety, whether in China or elsewhere. Requiring those companies to disclose from whom they're purchasing ingredients won't necessarily reduce those risks. But requiring fast-food chains to release supplier inspection records provides a strong incentive to maintain top-level food safety practices. Frankly, McDonald's would be acting in the best interests of its consumers if it disclosed supply chains in all countries where it operates.
In the meantime, Shanghai hasn't made clear whether it's planning to make supply chain disclosures permanent. In a few weeks it might turn out that this regulatory push was little more than a stunt. Let's hope Shanghai continues the practice and extends it beyond foreign-owned fast-food chains to the neighborhood restaurants that cause the most concern among locals. After all, the more you know about what you're eating, the more likely you -- and the people you buy from -- will make smart choices.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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