McDonald’s chases trends as Egg McMuffins go cage-free

Sep 9, 2015 02:52 PM

McDonalds

How do Americans feel about eggs? Look at consumption and buying patterns over several decades and it can best be described as scrambled.

On Wednesday, McDonald’s   said that it plans over the next decade to stop using eggs from hens housed in cages. It’s a move that could have a significant impact on the egg industry — as McDonald’s purchases more than 4% of all the eggs produced in the United States; already about 10% of the eggs that McDonald’s uses in the U.S. are cage-free .

It’s not the first company to change the type of eggs it serves. In 2010, Subway announced that it would phase in cage-free eggs, in 2012 Burger King promised that it would have 100% cage-free eggs by 2017, and earlier this year, Dunkin’ Donuts said it would double its purchases of cage-free eggs by the end of 2016.

Experts say moves like this are in response to consumer demands and changing tastes. Consumers increasingly say they want ethically sourced foods, says Andrew Alvarez, an industry analyst with IBISWorld – and many fast-food chains are taking cues from fast-casual competitors (many of whom are rapidly gaining market share) like Chipotle   and Panera Bread, which have been successfully making moves toward adding ethically sourced foods to their menus.

More than 40% of consumers now say that animal welfare is very important when they consider their purchase of eggs, according to a study from the University of Kentucky. For its part, McDonald’s even says as much: “Our customers are increasingly interested in knowing more about their food and where it comes from,” said Mike Andres, president of McDonald’s USA.

Looking back, this is just the latest in consumer’s changing relationship with the egg.

Overall, egg consumption in the past 50 or so years has fallen by nearly 20%. There was a big dip in the ‘90s thanks, in part, to the popularity of the low-fat diet and concerns about cholesterol.

However, recently — partially because of changing dietary preferences including the popularity of low-carb diets and a successful ad campaign speaking to the health of eggs — we’re falling back in love with the egg. Per capita egg consumption as of 2014 was at a five-year high, as more Americans now consider eggs to be part of a healthy diet.

But Americans are sensitive to egg prices: Nearly 60% say that price is a very important factor in their purchase decisions, according to the University of Kentucky study. So the rising prices — due in large part to the avian flu outbreak (in Iowa, the largest egg producing state in the U.S., in the first two weeks of July alone, more than 2.6 million birds were culled) that has led to large declines in production — could impact demand for pricier eggs.

Still, many Americans say they will pay more for cage-free and free-range eggs. And IBISWorld analyst Alvarez says higher disposable incomes and the fact that eggs tend to be relatively inexpensive even with the price hikes will keep demand strong.