How KFC Went Trans-Fat Free
Protests and New York's upcoming ban have forced fast-food eateries to seek new ways to fry meals. KFC found a solution, but it wasn't cheap
by Michael Arndt
Doug Hasselo was pumped. The chief food-innovation officer at KFC had spent more than 18 months and millions of dollars on the fast-food chain's top-priority project: creating a frying oil that had all the attributes of the vegetable oil KFC had been using, without its unhealthy trans fats. And on a Monday morning last January, the company's senior executives were at their weekly "leadership team" meeting taste-testing chicken that had been deep-fried in a canola oil. This one, Hasselo hoped, would finally do the trick.
Going around their conference-room table, however, the seven executives turned thumbs down. "Nothing was dreadful," recalls KFC President Gregg Dedrick. "The product was actually very close." But the new oil masked the 11 herbs and spices in the company's trademark recipe, the panelists agreed, and the chicken wasn't quite as crispy. Hasselo was sent back to his kitchen laboratory at KFC's headquarters in Louisville to try again.
Over the last few years, makers of packaged food have raced to eliminate or reduce trans fats, spurred by a Food & Drug Administration rule requiring nutritional labels to list trans-fat content starting in 2006. Today, it's the restaurant industry's turn to step it up. Next July, New York City—the nation's No. 1 restaurant market, with 20,000 eateries—will phase in a ban on trans fats in restaurant foods.
Kitchen R&D Costs
So some of the biggest brands in the industry are struggling to reformulate their recipes. After more than four years of tests in its labs and in the field, McDonald's (MCD) says it still hasn't hit on an oil without trans fats that doesn't make its french fries taste worse. Other chains are already in compliance. Wendy's International (WEN) last summer switched its frying vats over to a blend of soy and corn oils that is trans-fat-free. And on Jan. 3, Starbucks (SBUX) quit using trans fats in pastries in half of its 5,600 company-owned cafés in the U.S., including in New York, Los Angeles, Chicago, Philadelphia, and Washington.
KFC should beat the deadline, too. The subsidiary of Yum! Brands (YUM) says that it has removed trans fats from its fried foods in New York, Chicago, Atlanta, and Louisville. By May, the company has promised, all of its 5,500 U.S. locations will be using a newly developed frying oil that has no trans-fatty acids.
But coming up with this alternative, derived from a hybrid soybean, took much more time and money than KFC's food innovators and top executives had thought. Hasselo figures his 62-employee team has tested two dozen oils that do not contain trans fats, or partially hydrogenated vegetable oils. They've also spent a third of every work week on the effort over 2½ years. Even so, they are still working on a substitute in KFC's biscuits and other baked goods. "Every oil interacts differently with every food," Dedrick notes. "To get everything right is not easy."
Unhealthy Bottom Line
While trace amounts of trans fats occur in meat and dairy products, the unsaturated fat did not become ubiquitous until after a German chemist patented a process called hydrogenation a century ago. Pumping hydrogen into vegetable oil changes the shape of fat molecules. If the mixing is thorough, the result is a substance almost as hard and stable as a brick. But if the transformation is only partial, the liquid turns to a semi-solid, like margarine or Crisco. Food processors came to prefer partially hydrogenated vegetable oils because they don't turn rancid as quickly as unadulterated oils, extending the shelf life of cooked or baked foods.
Fast-food restaurants were late converts to partially hydrogenated oils.
Many turned to the oils only 20 to 30 years ago after public-health advocates began warning that animal fats such as beef tallow and butter could cause coronary heart disease. Medical researchers have since learned, though, that trans fats in these processed vegetable oils may pose an even worse health threat, by raising so-called bad cholesterol and clogging arteries with deposits of plaque.
These findings were impacting KFC's bottom line. Same-store sales had been declining since 2002, in part, surveys revealed, because of customers' health concerns. So in mid-2004, Dedrick ordered Hasselo to find a better oil. He also set criteria on what would be an acceptable substitute. The zero-trans-fat oil could neither alter the taste of the company's fried chicken nor cost much more than the hydrogenated soy oil KFC was then using. That meant there had to be plentiful supplies and the "fry life" had to be at least a week, which is how long its frying oil typically held up at 340 degrees Fahrenheit.
New Soybean Oil
Hasselo's team began in their ground-floor kitchen lab by frying chicken in a variety of oils that had no trans fats, including canola, corn, cottonseed, peanut, and sunflower. They also cooked up batches of chicken in the trans-fatty soy oil. Then, without identifying which was which, they served the chicken to consumers and, separately, to the leadership team at its meetings and asked for their reviews. "We figured that if the leadership team could tell right off the bat, so would our customers," Dedrick says. "I have to tell you, the first efforts that were brought in, they were too detectable to us."
Hasselo, a 2004 hire with more than 20 years in the fast-food industry, was preparing to take canola oil to a broader test outside KFC's labs when the leadership team unexpectedly rejected it last winter, sending his food scientists immediately back to a new form of soy oil they had considered earlier. The oil had been developed by Monsanto (MON) for packaged-food companies rushing to purge products of trans fats before the FDA's labeling rule took effect. Soybeans typically contain 8% linolenic acid, which tends to degrade relatively fast. Beans from Monsanto's new plant contain less than 3% linolenic acid, making its oil stable enough that it doesn't need hydrogenation to have a long shelf- or fry-life.
KFC had set the oil aside, however, because of supply issues. The new plant, achieved through conventional cross-pollination methods, had been grown for the first time on just 100,000 acres in Iowa in 2005, a drop in the bucket compared to KFC's needs.
Ensuring Adequate Supply
"Farmers have to be encouraged to plant these seeds," notes Mark R. Gulley, a chemical-industry analyst with Soleil Securities Group in New Canaan, Conn. For instance, the beans have to be trucked to special storage facilities and processing plants so they can be kept separate from ordinary beans. "As a farmer you have to figure out, will you make more money doing this" vs. growing regular soybeans, he says.
If KFC was going to secure enough oil for its entire U.S. chain, its suppliers would have to line up many more farmers by the upcoming fall, when seed for the 2007 crop would be purchased.
The company soon had another problem. In June, the Center for Science in the Public Interest (CSPI), an advocacy group focused on nutrition and public health, sued KFC to force it to stop using trans-fat oils.
But by September, management believed it had found its long-sought elixir. KFC had been testing the low-linolenic oil at two or three high-volume outlets each in New York, Chicago, Atlanta, and Louisville. Crews would fry chicken with its hydrogenated oil one week and poll diners after their meals. The restaurants then would switch over to the experimental oil the next week and again people would be asked what they thought. After months of consumer research, KFC uncovered no taste difference.
Effect on Prices?
The product faced one last panel of judges: the company's franchisee advisory council. The 13 members all go way back with Kentucky Fried Chicken; some even started before founder Harland Sanders sold the company in 1964. Meeting at KFC headquarters, the franchisees munched on chicken fried in trans-fatty oil and in the low-linolenic alternative. Afterward, Dedrick asked them to tell the chicken apart. They split 50-50, just as any coin-tosser would. "It was the breakthrough," says Hasselo.
KFC announced its conversion plans in October. The CSPI dropped its suit that same day. The company now uses the trans-free oil at all 300 restaurants in its four test markets.
The new oil does cost more, though management won't say how much. But Dedrick says the chain hopes to hold prices steady. "We believe this is an investment in our customers," he says. "A lot of people love our chicken but are not wanting to consume trans fats." Also, oil prices could drop as supply grows. With KFC promising to fry exclusively with low-linolenic oil after April, Monsanto predicts farmers will plant 1.5 million acres of the new soybean in 2007, a threefold increase from 2006.
DuPont (DD) is also selling a low-linolenic soybean. In 2005, farmers planted just 35,000 acres of its new Pioneer brand soy. This year, DuPont expects the acreage to grow to 300,000. For KFC's followers, the turn to healthier fried food is looking easier. Says Michael F. Jacobson, the CSPI's executive director, "2007 may well be remembered as the year that partially hydrogenated oil was dispatched to that great big compost heap in the sky."
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