The oil rush is on.
Philadelphia has pulled the plug on the use of artificial trans fats in restaurants, following in the footsteps of New York and moving ahead of dozens of other cities and states that seem intent on passing similar bans.
Meanwhile, burger giants McDonald’s and Burger King plan to jettison partially hydrogenated vegetable oil in their thousands of domestic outlets, joining the growing list of U.S. restaurant operators that are distancing themselves from artery-clogging trans fats.
The campaign to eliminate artificial trans fat from restaurant foods is unfolding at an unparalleled pace, observers say. But while foodservice operators generally accept the need for change, the rapid shift in product use could trigger growing pains as suppliers scramble to meet the demand for high-performing, trans-fat-free oils.
“We’re probably looking at greater demand than we have supply,” said Robert Reeves, president of the Institute of Shortening and Edible Oils in Washington, D.C. “Because major restaurant chains want to make the change in a short period of time, it’s putting a strain on the marketplace.
“Prices may go up,” Reeves added. “And in some cases, some restaurants may not get exactly what they want in the short term.”
Sheila Weiss, director of nutrition policy for the National Restaurant Association, said that if just one city were to ban trans fats, “the industry could meet the supply demands [for alternative oils]. But the challenge is that restaurant companies won’t want to alter the oil in just one city. They will want consistency across the chain.”
However, there is concern that some smaller operators may end up getting shut out when it comes to procuring the higher-performing varieties in the near term.
“Many large chains already have been working with suppliers,” Weiss said. “And they have buying power that smaller operations don’t have.”
In particular, suppliers say they harbor some concerns about the rising demand for oils made from trait-enhanced grains that offer longer cooking life without being hydrogenated and provide the flavor profile many operators are looking for—in particular, oils that contain less fatty linolenic acid and more of the desirable high-oleic acid.
The problem, experts say, is that farmers are not yet growing enough of those genetically modified crops to meet the projected demand for replacement oils. According to a New York Times report, U.S. farmers planted about 750,000 acres of low-linolenic soybeans last year, only about a third to a half of what is actually needed. Over time, however, that number could rise to 5 million acres.
“We are, in the short term, looking at a supply chain challenge that is probably one to two years long in terms of crops years,” said Kelly Brintle, senior vice president of Ventura Foods in Brea, Calif.
Bill McCullough, director of marketing for Bunge in St. Louis, said the demand for trans-fat-free oils has increased two-fold since the New York City Department of Health and Mental Hygiene banned oils containing trans fat, starting in July. Bunge is offering a high-oleic, low-linolenic canola oil. But, McCullough added, “Industrywide, not all solutions may be available to everyone in the short term.”
Various naturally stable, unhydrogenated oils derived from soybean, corn, canola, cottonseed and palm are available in sufficient quantities to meet the demands of the foodservice industry. However, those products may not be the first choice of many chains because of their limited cooking life, which results in more frequent oil changes and higher operating costs. In general, most naturally stable, unhydrogenated oils might last for a couple of days in the fryer, while hydrogenated oils don’t need to be changed for eight to 10 days.
“In the past, you would take oils and partially hydrogenate them, which would enhance the fry life,” said Tom Bandler, national business director of oil products for ACH Food Cos. in Memphis, Tenn. “The trick now is getting an oil that doesn’t sacrifice fry life.”
Some popular unhydrogenated candidates, such as palm oil, contain a high saturated fat content, which also contributes to coronary disease and which many operators avoid. U.S. chains, in fact, were pressured to swap oils containing saturated fat for partially hydrogenated vegetable oils containing trans fats in the late 1980s when consumer advocates and health officials launched a campaign linking saturated fats to heart disease, before the greater dangers of trans fats were known.
“There are a lot [of oils] that are available, but the issue is whether they would be acceptable to a restaurant from a functional standpoint,” Reeves said.
In their natural state, vegetable oils contain only trace amounts of trans fat. Once hydrogen is added to prolong their cooking life, however, the amount of trans fat increases.
Ventura’s Brintle said the foodservice industry uses about 4.6 billion pounds of hydrogenated oil products annually, primarily for frying. About 3 billion pounds is liquid, and most of that is partially hydrogenated liquid soybean oil, he said. The remaining 1 billion pounds or so is solid. Brintle projected that in about three to four years at least 80 percent of the liquid hydrogenated oil used today—between 2.4 billion and 2.5 billion pounds—will have been replaced.
“And over half of that will be replaced by oils whose deep-frying characteristics have been changed by ‘seed breeding,’ ” he said.
KFC, for example, said it would transition to an unhydrogenated product made from low-linolenic soybeans, which a spokeswoman said came closest to maintaining KFC fare’s taste profile.
McDonald’s, which nearly five years ago had planned to reduce trans fats by nearly half, finally announced two weeks ago that it had found a substitute for the nearly 75 million pounds of oil it uses each year to cook fries, chicken and fish. The chain is said to be planning to use a blend of soybean, corn and high-oleic canola oils. McDonald’s reportedly tested 18 varieties of oil in more than 50 different blends. Officials said the chain had been hesitant to make the change until it found a replacement that could maintain the flavor of its signature French fries, although concerns about supply and cost were also cited.
Oil-related cost increases, in fact, are likely to be a fact of life for restaurant operators. Suppliers say they must pay farmers a premium for making the change to the new generation of oil-producing products, which then is passed on through the price of the oil.
Further complicating the transition is President Bush’s recent call to develop more ethanol products to lessen the nation’s dependency on foreign oil. Some market watchers predict that farmers will increase lucrative corn plantings this year at the expense of other crops as ethanol demand grows.
Foodservice commodities analyst John Barone, president of Market Vision Inc. in Fairfield, N.J., predicted that “ethanol will drive up costs across the industry.”
Edible oil suppliers are not absolutely convinced of that, however. “If oil prices are low, you won’t hear a peep about ethanol,” Brintle said. “The bottom line is, we don’t think there will be a major shift based on what’s going on with biofuel.”