El Pollo Loco, which soared more than 50% on its market debut Friday, again surged Monday.

Shares in the Costa Mesa-based fire-roasted chicken specialists ended up 43% to $34.48. 

BI's Hayley Peterson has explained why investors believe Pollo Loco could be the next Chipotle.

Like Chipotle, it's a fast casual chain that serves Mexican-style food in large portions. Its same-store sales growth rate is comparable to Chipotle's, and actually surpassed Chipotle's in 2012 and 2013, according to The Motley Fool's Nickey Friedman. 

El Pollo Loco, which translates to "the crazy chicken," is also extremely popular. It recently won second place for best-tasting fast food chicken restaurant in the country behind Chick-fil-A in a Consumer Reports survey.

Chipotle shares were flat pre-market. 

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Shares in fire-roasted chicken chain El Pollo Loco have climbed 43% since its market debut Friday.

BI's Hayley Peterson has explained why some investors believe Loco, based out of Costa Mesa, California, could be the next Chipotle: It's same-store sales growth rate actually surpassed that of the burrito chain, and customers appreciate their large portion sizes. 

But Tuesday, shares were down 13%.

In his note Monday morning, market guru Dennis Gartman says this smells like a top. 

We are even concerned about the fact that the names of new offerings are looking “toppish” to us: Is the market really healthy when an IPO with the name EL Pollo Loco... the Crazy Chicken... is a blow-out success and trades to a swift premium immediately? Is this the sign of a market climbing a wall of worry, or is this the sign of a market already high upon the wall and tottering? We think the answer is rather obvious. 

Loco shares were trading at around $31. Here's the chart:

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(Reuters) - A food safety scare in China is testing local consumers' loyalty to foreign fast-food brands, including McDonald's Corp and Yum Brands Inc, which owns the KFC and Pizza Hut chains.

Yum said on Wednesday that the scare, triggered by a TV report earlier this month showing improper meat handling by a supplier, Shanghai Husi Food, caused "significant, negative" damage to sales at KFC and Pizza Hut restaurants over the past 10 days. "If the significant sales impact is sustained, it will have a material effect on full-year earnings per share," Yum said in a regulatory filing.

Shares in Yum, which counts China as its No. 1 market, tumbled more than 6 percent in extended trading. The stock has dropped nearly 12 percent since Yum posted second-quarter earnings on July 17.

Officials from McDonald's in China and Hong Kong have not responded to requests for information on the impact on sales from the scandal, but McDonald's Holdings Co (Japan) Ltd on Tuesday scrapped its full-year earnings guidance after the China scare forced it to switch to alternative chicken supplies. A McDonald's Japan executive said sales had dropped 15-20 percent on a daily basis due to the scare.

Both McDonald's and Yum are looking to China - where consumers see foreign brands as offering better food quality - for long-term growth given the size of its population, growing middle class and rapid economic growth.

"Both of these stocks are banking heavily on China for their future growth," said Richard Brubaker, an adjunct professor at the China Europe International Business School and founder of the Collective Responsibility consultancy. "For Yum, this is a problem because it has a history of problems in China. For McDonald's, it's the sheer size of the problem and the inability to get product."

CONSUMER CAUTION

Yum, which has nearly 6,400 restaurants in China, had just begun to see its restaurant sales there recovering from a slide last year due to an avian food outbreak and a previous food safety scare. Yum has cut its global ties with OSI Group LLC [OSIGP.UL], the U.S. parent of Shanghai Husi Food. Yum said OSI was not a major supplier and the move had "minimal disruption" to the availability of menu offerings in China.

McDonald's, which has more than 2,000 restaurants in China, has had a long relationship with OSI and was more dependent on the supplier than Yum. Many McDonald's China outlets have been hit by meat shortages since the company ended its relationship with OSI there.

Around two-thirds of the more than five dozen consumers Reuters reporters spoke to in Shanghai, Beijing and Hong Kong on Thursday said they would scale back their visits to McDonald's, at least for now.

"For people like us, McDonald's and KFC are places to meet friends," said Yao Nanfang, a 16-year-old student in a shopping mall in central Shanghai. "We'll still go to McDonald's, but we'll order fewer meat products."

Diners in Hong Kong also said they were likely to eat less frequently at McDonald's, but noted that the chain's low prices made it hard to give up.

"I come to McDonald's less often now, but I won't completely stop coming because it's so much cheaper than other restaurants," said Nan Tang, who says he eats at McDonald's twice a week.

In Hong Kong, McDonald's has ended a promotion of its chicken McSpicy burger and shifted a membership program away from offering discounts on McNuggets, which it is not currently selling.

Following the TV report that alleged workers at Shanghai Husi Food used expired meat and doctored food production dates, regulators closed the plant on July 20. Police have detained five people including Shanghai Husi's head and quality manager.

Food safety has been a big concern for Chinese consumers after dairy products tainted with the industrial chemical melamine sickened many thousands and led to the deaths of six infants in 2008.

(Additional reporting by Sruthi Ramakrishnan in Bangalore, James Zhang, Emily Chung, Nikki Sun, Donny Kwok and Clare Baldwin in Hong Kong, and Shanghai and Beijing newsrooms; Editing by Lisa Shumaker and Ian Geoghegan)

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People are willing to pay twice as much for meat processed by a tiny slaughterhouse that fits onto the back of a truck, as opposed to a large commercial meat processor.  

That's the case at least in Martha's Vineyard, where a mobile slaughterhouse operated by a local nonprofit is selling chicken for 2.5 times the price-per-pound as the grocery stores. 

The Island Grown Initiative started the small-scale slaughter program in 2007 to give local farmers an alternative to shipping their locally raised poultry to the mainland for processing, according to Taz Armstrong, who runs the program.

In its first year, the mobile unit processed 100 to 200 birds, he said. Now the unit is processing thousands of birds annually and some farmers are starting to buy their own machinery to mimic IGI's operation.

All the processing equipment — including a scalder, feather plucker and sink — fits onto a 12-foot-by-6-foot trailer that can be towed behind a pickup truck. 

Armstrong and a team of two others drive the trailer to various farms several times a week and typically process 75 birds in a single visit.

"The process itself is pretty quick," says Armstrong. It takes about two hours to unload the trailer, then everything is cleaned and sanitized. The killing, cleaning, cooling, and packaging of the birds takes about another two hours. 

In the photo below, the chickens are being cooled after their feathers are removed. The team has 4 hours from the time the birds are killed to get them below 40 degrees to kill potentially harmful bacteria.

By the time they are finished, the chicken is packaged and ready to be sold to consumers. 

The Island Grown Initiative is one of about 20 mobile slaughterhouses nationwide, according to Businessweek, which profiled IGI last month.

Mobile processors give small farms another, sometimes more affordable option for processing their meat. The units especially make sense for farms that aren't located near any commercial processors.

They also align nicely with the values of the growing farm-to-table movement.

Many people are willing to pay more for meat that's processed right on the farms where the animals are raised.

"We have lots of wealthy patrons excited about buying local produce," Armstrong said.

SEE ALSO: Why The Godfather Of Natural Beef Cut Ties With Niman Ranch

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Shares of U.S. poultry producers are down today after Russia announced sanctions targeting Western meat products including chicken from the U.S.

Arkansas-based Tyson Foods is down 2.3% and Colorado-based Pilgrim's Pride is down 3.0%.

Russia imported $303 million worth of American chicken last year, according to the National Chicken Council. It's the second-largest destination for U.S. poultry.

The NCC said any impact on U.S. industry would be minimal. 

"As its domestic poultry industry has expanded, Russia has in recent years become less important as an export market," they said. "Russia currently accounts for only about 7% of total U.S. poultry export volume. In the mid-1990s, exports to Russia were as much as 40 percent of that total."

Instead, they said, ordinary Russians are likely to suffer the most.  

“The biggest impact, we believe, will be on Russian citizens who will be burdened by higher prices for all food products, especially meat and poultry," the NCC said in its statement. "The price of poultry in Russia is already rising and has recently been increasing at a rate of 2% percent to 3% per week." 

Russia's RIA Novosti is reporting Brazil has offered to replace lost volumes. 

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A bar in Milwaukee, Wisc., is now selling a Bloody Mary drink garnished with an entire fried chicken, according to local news Fox 6 Now.

Now that's what we call brunch.

Dubbed "The Chicken Fried Bloody Mary" at Sobelman’s Pub & Grill, it features a whopping four-pound chicken from a local butcher shop, 80 liquid ounces of Bloody Mary-goodness, cheeseburger sliders, and 'Baconadoes' (bacon-wrapped jalapeno cheeseball skewers) for a total of $50. 

Though it's meant to be split between friends, that is still a massive amount of food.

This also isn't the first drink that has gained Sobelman's national attention. The bar is known for its year-round drink, "The Bloody Masterpiece," which has 13 different garnishes including sausage, Brussels sprouts, and shrimp. According to their website, it was voted Milwaukee's Best Bloody Mary by locals. 

However, the Chicken Fried Bloody Mary isn't totally rooted in gluttony. 

Fox 6 Now reports reports that a $5 donation will be made to Milwaukee’s Hunger Task Force for every Chicken Fried Bloody Mary sold. Owners Dave and Melanie Sobelman are hoping to give a big holiday donation to the lobbying and food banking charity at the end of the year.

The drink will be available through the end of 2014.

SEE ALSO: Why You Should Never Thaw Frozen Steaks Before Cooking Them

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Charoen Pokphand Foods Pcl, Thailand's largest meat and animal feed producer, said on Monday its business was booming, especially after it was approached by McDonald's Holding Co (Japan) to supply chicken products after a food scare in China.

Strong demand for exports, especially from Japan and Russia, had boosted domestic meat prices and that could help the company post revenue growth of 15 percent this year, higher than its target of 10 percent, said president and CEO Adirek Sripratak.

"We have received orders from McDonald's. Strong demand for exports helped push up chicken prices and the company will move orders from the domestic spot market to export to customers," he told Reuters in an interview.

Some regional companies including Japanese firms have turned to Thailand to supply chicken after Shanghai Husi Food, a unit of U.S.-based OSI Group LLC, was accused in a TV report of having improperly handled meat and using expired food.

McDonald's has said it had shifted business to Thailand, boosting purchases from existing suppliers McKey Foods Services (Thailand) Ltd, a unit of Keystone Foods, and Cargill Thailand.

"The industry is short of supply and we've got a full order book now as people are asking us to accelerate our shipping after the China food scare," Adirek said.

CPF has also been contacted by companies in Russia to supply meat products after the country banned imported meat from the European Union, the United States and other countries, he said.

"Russia is very keen to buy chicken from us. They contact us every day and they want to secure food supplies," Adirek said, although he would give no detail on the value of orders.

CPF, owned by billionaire Dhanin Chearvanond's Charoen Pokphand Group, is looking for opportunities to buy assets in high-growth emerging markets to achieve its annual revenue growth of 10-15 percent in the next five years, Adirek said.

(Reporting by Khettiya Jittapong and; Manunphattr Dhanananphorn; Editing by Alan Raybould)

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Southern California-based El Pollo Loco, which went public just three weeks ago, has already seen its shares climb as much as 71%. Before Tuesday, the stock was trading around $33.

Today shares were down 10%.

In a new note, Morgan Stanley's John Glass and Jake Bartlett say they are initiating coverage on the stock with an under-weight rating and a $22 price target, saying it's gotten far out ahead of a host of metrics.

"The market appears to be paying a premium ... far above what we consider to be fair value — and well above any reasonable peer comparable," they write. "We note that several other recent IPOs have followed a similar course, with initial valuations based more on scarcity value than fundamentals. Many of these have underperformed post the initial IPO upside." 

The pair then present three cases for how shares could trade from here, which they call "Pollo en Fuego,""Pollo Bueno," and "Pollo Muertos."

No really:

The main risk, they say, is that the chain fails to meet its ambitious growth plans: The company plans to go from opening six new stores a year for the past three years to 45 new ones in the next three. This could produce margin pressures, site selection missteps and delays, they write.  

They also note that Pollo Loco was recently trading at 56x earnings, compared with the 32x rate of closest peer Fiesta (which owns Pollo Tropical and Taco Cabana) and 39x for current burrito king Chipotle. 

And as articulated in the Pollo Muertos case above, they seem to be betting heavily on success in large markets like Houston. If those fail to take off they are likely to struggle elsewhere. 

But the rest of the note is pretty upbeat. They cite a host of items the firm has going for it, including strong leadership from CEO Steve Sather, who's put together a team of deputies from leading fast-food chains; an  increasingly diverse clientele that now has Hispanics accounting for just of 29% of diners compared with 45% for Caucasians; and 12 consecutive quarters of positive same-store sales growth.

Even in the "Muertos" case, a 24x multiple still bests those of regional fast-food chains. 

And of course there's the pollo itself:

LOCO’s menu pricing is attractive, with its traditional family meal business comparable to offers at chicken based QSRs like KFC (with what we consider to be better quality and certainly healthier fare), while its newer entrée business (burritos, etc.) are priced 10-15% lower than comparable items at Mexican fast casuals (e.g. CMG). We think this positioning in unique in the market and sets LOCO up well. ELP’s price point is similar to traditional QSR competitors but 10-15$ below fast casual.

SEE ALSO: The Golf Business Is Looking Terrible

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I recently got a firsthand reminder of how quickly a company can destroy its brand and future business with an individual customer.

With a restaurant, especially, all it takes is one bad — and badly handled — experience, and the customer may be gone for good.

Around midnight on Wednesday, Sept. 3, I went to the McDonald's at 946 8th Ave and 56th Street in Manhattan. After my experience there I'll never eat at the chain again.

I began the night at a party with a friend. Afterward, we were exhausted. We were also starving, so we went to McDonald's because it's convenient and open late.

I ordered a Southern Style Chicken sandwich meal (I've had this before). My order didn't come out immediately, so we picked out a table and waited.

When the food arrived, I opened up the bun. I'm not sure why. When I looked inside, I saw there was a white substance on the pickles, the bun, and at the edge of the chicken patty.

I knew there had to be a mistake. I've had this meal before and the sandwich is served plain with a buttered bun.

I took the sandwich back to the counter. When I told the cashier without being explicit what I thought the substance looked like, she laughed and said it was "tartar sauce." 

The cashier asked if I wanted another sandwich without tartar sauce. I accepted. 

My second sandwich arrived to my table. I inspected it and it looked OK. I ate it.

The next morning, with the help of a friend and some Googling, I determined that the whatever was on my sandwich was definitely not tartar sauce. McDonald's tartar sauce includes pickle relish, which was definitely not in the substance I saw on my meal. 

I sent an email with the photograph to McDonald's corporate public relations. That afternoon, Linda Dunham, the owner of the 56th Street and 8th Avenue location, called me at my desk.

Dunham's late husband opened the first McDonald's in New York City. She is also the chair of Ronald McDonald House Charities, and she owns and operates multiple McDonald's restaurants in NYC.

During our first phone call, she apologized and explained that there was not supposed to be tartar sauce or mayo on that sandwich. She said she would look into it.

I called her back the following Tuesday afternoon when I still had not heard from her.

"I apologize that I didn't get back to you yesterday," Dunham said. "What I did do is I watched some of the product being prepared and you know I don't see — other than occasionally — I don't know whether it's the grease that caused it or something like a little balloon that comes up and sometimes it has a little more white in it, but there's absolutely nothing that we add to that product other than butter."

I asked her why the cashier would have called it "tartar sauce."

"I could not explain that behavior," Dunham continued. "I don't think she knew. She only works the front counter. She doesn't work in the back. I don't think she understood or knew."

She went on to say that late at night a limited number of people work in the store but that she did not know who was cooking. Dunham also said that cameras cover part of the kitchen, but not every part. 

She assured me that she didn't think anyone did anything intentional to the sandwich.

"I've been in the restaurant industry for 30-some years," Dunham said. "I've never, ever, ever, ever, ever known an employee to do something like that. That is ruining number one, a brand. That's also a person's job on the line."

Dunham said that it was a "safe product" and that she had never gotten a complaint like mine. 

Well, McDonald's was responsive, at least. But I'm not satisfied with the explanation. And I'm still never eating there again.

 
NOW WATCH: Here Are 9 McDonald's Menu Items That Flopped

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SEATTLE (Reuters) - California-based poultry giant Foster Farms is recalling nearly 40,000 pounds of frozen grilled chicken due to Listeria contamination, the Department of Agriculture said on Friday.

Foster Farms shipped the breast strips produced on Aug. 5 from Farmerville, Louisiana, to many U.S. states, USDA's Food Safety and Inspection Service (FSIS) representative, Benjamin Bell, said.

No illnesses have been reported, Bell said.

The company said in a statement it distributed the 3.25-pound packages to Costco locations in Oregon, Alaska, Washington state, Idaho, Montana, Utah, Colorado, Texas, Louisiana, California and Hawaii, and to Stater Brothers in California.

All retailers have been notified and have withdrawn product from distribution, it said.

The contamination in a sample of the products was discovered "during the company's routine in-plant inspection," FSIS said in a statement announcing the recall on Thursday.

"While some of the product was set aside and held, the product subject to this recall was inadvertently shipped," it said.

The recall comes amid revelations that major U.S. poultry firms are administering antibiotics to their flocks far more pervasively than regulators realize, posing a potential risk to human health.

The chicken affected by the recall says on the packaging "P-33901" and has a "Best by Date" of Aug. 5, 2015, the statement said.

Consumption of food contaminated with Listeria monocytogenes can cause listeriosis, a serious bacterial infection that may cause fever, muscle aches, headache, convulsions and diarrhea, among other ailments, FSIS said.

(Reporting by Eric M. Johnson; Editing by Sandra Maler)

SEE ALSO: A Crazy Cockroach Infestation Forced The USDA To Close This Foster Farms Processing Plant

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Researchers in Canada sought to raise three breeds of broiler chickens common in 1957, 1978, and 2005 without the influence of disparate feeds or hormones to see how they’d changed genetically.

This video originally appeared on Slate Video. Watch More: slate.com/video

Jim Festante is an actor/writer in Los Angeles and regular video contributor to Slate. He's the author of the Image Comics miniseries The End Times of Bram and Ben.

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McDonald's is offering up a degree of transparency with their new “Our Food, Your Questions" campaign. The restaurant is inviting consumers to ask questions about their food on social-media platforms in an attempt to dispel myths surrounding the fast food chain.  

Produced by Devan Joseph. Video courtesy of Associated Press.

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It's not uncommon for my weekly grocery list to feature a smattering of protein odds and ends. With one ribeye here, one pork chop there, it can resemble a catalogue of butcher's cuts — plus, it makes for an exhausting grocery run. But for the weeks when lazily perusing the meat section isn't an option, there's always chicken. 

By using the thighs, wings, breasts, and even the carcass, you can turn one whole chicken into several dinners. This week, break down a chicken into the sum of its parts and help it realize its potential as a variety of satisfying chicken recipes. 

Breasts:

Shish Taouk with Toum (Chicken Kebabs with Garlic Sauce) by Oui, Chef

Mexican Chicken Noodle Soup by jessie schupack

Minced Chicken and Cashew with Thai Basil by MummysLittleHelper

Thighs:

Roasted Achiote Chicken with Potatoes, Broccoli, and Tangerine Aioli by savorthis 

Extraordinary Marinated and Roasted Chicken, Potatoes, and Chickpeas by divasparkle 

Wings:

Ideas in Food's Korean-Style Chicken Wings by Genius Recipes

Michael Ruhlman's Rosemary-Brined, Buttermilk-Fried Chicken by Genius Recipes

Carcass and giblets:

Chicken Broth by Cara Nicoletti

 Chicken Giblet Gravy by Cara Nicoletti

Here's how to properly break down a chicken: 

Video shot by Alex Lisowski and edited by Kyle Orosz. 

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Early in December, North Carolina chicken farmer J. Craig Watts blew the whistle on the poultry industry, revealing what it looks like inside the chicken breeding houses for Perdue Farms, the third largest poultry producer in the US. In the process, Watts revealed how meaningless terms like “natural,” “humanely raised,” “organic,” and “cage-free” are.

In a recent AMA on Reddit, Watts was asked this pointed question: “They’re just chickens,” user Warlizard asked. “What does it matter how they’re raised when we’re going to eat them anyways."

Here’s what Watts had to say:

Well, it does matter. If you’ve been paying attention to the news. There’s a lot of issues with food born illness with poultry. These chickens come loaded with salmonella, e coli and staff [sic]. Even if you don’t care about welfare, they’re getting sick because of the ways they’re raised. And that everyone should care about … How you treat your animals reveals your true character.

In the AMA, Watts responded to accusations that his farm, which Compassion in World Farming depicted in a video, does not represent the majority of poultry farms.

"To that, I say check my record,” Watts said. "Check how I performed in the tournament system [how Perdue judges their farmers] … Or call Perdue and ask them. For the flock filmed in the video, I was THE top producer. Obviously they didn’t see anything wrong with what I was doing. I’ve never been on any disciplinary program in 22 years. This was my first welfare audit in 22 years."

Many farmers would love to speak out against the industry but are worried about their job security, according to Watts.

“I would say 80% would want to speak out. That’s conservative. I don’t know one farmer who is happy. And I know a lot. If there is one, I would love to talk them. I could use a little good news,” Watts wrote.

By the end of the AMA, many Redditors wondered how to improve the current poultry system. Watts says it all comes down to poultry companies becoming more transparent and farmers gaining more control over their farms. Watts went on to explain that in order to improve the welfare of chickens, producers must stop using chickens that are “genetically bred” to grow at absurd rates.

Change won’t come from governments or farmers by themselves, which have little incentive to reform, according to Watts.

“The only way is for the public to make [sic] apply the pressure,” wrote Watts.

SEE ALSO: Perdue Farmer Reveals How Bad Life Is For His 'Humanely Raised' Chickens

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A Super Bowl party is nothing without wings, and grilled wings are even better.

Even if you live in a small apartment with no outdoor space or safe grilling area to speak of, you can still enjoy that quintessential charred flavor by doing a bit of indoor, urban grilling — just don’t forget to open your windows and turn on the exhaust.

Wings are one of America’s most beloved and versatile foods. You can fry them or bake them, make them sweet, spicy, or both, and slather them with almost any kind of sauce, from one in a jar to one you whip up on your own.

We think that the best way to enjoy wings this season is to throw them on the grill, whether that means getting outside and sparking a flame, or just turning on your stove and heating up your griddle. The key is making sure that you marinate the chicken overnight to ensure that they are both tender and full of flavor.

These wings pack a punch with exactly the right amount of spice and coated in a sweet, sticky sauce that will leave you licking your fingers and going back for seconds.

Sweet & Spicy Grilled Wings

Serves 4

For the Marinade:

3 pounds chicken wings (whole or separated, either is fine)

¼ cup hot chili oil or Sriracha

3 tablespoons olive oil

2 tablespoons smoked paprika

2 teaspoons kosher salt

¼ teaspoon freshly ground black pepper

juice of 1 lemon

For the Sauce:

3 tablespoons unsalted butter, melted

3 tablespoons hot chili oil or Sriracha

3 tablespoons honey

juice of ½ a lemon

Combine all of your marinade ingredients in a small bowl. If you are using whole wings, cut a slit in either side of the fatty skin (so they are easier to eat later) — if you are using pre-cut wings, use them as they are. Place the wings in a gallon sized sealable bag or sealable container and pour the marinade of them. Use your hands to be sure that the wings are well coated, then refrigerate overnight.

When you are ready to cook, heat your grill to medium heat (or your indoor griddle to high heat). Place the wings on the flame and cook for 5-8 minutes on each side, depending on how hot your surface is.

While the wings cook, whisk together the sauce ingredients, taste, and adjust seasonings as necessary. If you want the sauce to be spicier, add more hot chili oil or Sriracha. If you want it to be sweeter, add more honey and/or lemon juice. When the wings are nice and charred, toss in the sauce and serve hot. These can be made a day or two ahead of time, if you like, then placed in the oven under the broiler or on the grill to quickly reheat and serve.

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CHICAGO/LOS ANGELES (Reuters) - McDonald's Corp's decision last week to phase out human antibiotics from its U.S. chicken supply will add to costs of production in a tight-margin business that are likely to be borne mostly by poultry companies.

McDonald's, whose top chicken suppliers include giant Tyson Foods Inc, has given its producers two years to eradicate all antibiotics used on humans from barns and hatcheries.

It's going to be expensive and may take longer than planned: switching to antibiotic-free chickens could increase on-farm costs by up to 3%. Perdue Farms, a supplier with about a third the volume of Tyson, told Reuters it's taken more than a decade and millions of dollars to make such a change.

McDonald's will use its purchasing muscle as the world's largest restaurant chain to avoid passing extra costs on to customers, increasingly lower income as more affluent diners prefer competitors like Chipotle Mexican Grill Inc, said analysts including Morningstar's R.J. Hottovy.

Marion Gross, McDonald's senior vice president of North America supply chain management, declined to say how much the company’s costs for chicken could rise. Rather, she told Reuters, the project is "an investment" to meet customer demand.

While veterinary use of antibiotics is legal, controversy has grown over routine feeding of antibiotics that are important to humans to otherwise healthy chicken, cattle and pigs in a bid to stave off disease and help the animals grow more quickly.

The risk is that overuse could spur the creation of so-called superbugs that develop cross-resistance to antibiotics used to treat humans. Reuters found last year that major U.S. poultry firms were administering antibiotics to their flocks on the farm far more pervasively than regulators realized.

The poultry industry maintains there is little evidence that bacteria which do become resistant also infect people. However, more restaurants and retailers are heeding the concerns of consumers, straining meat supplies.

Sandwich chain Chick-fil-A in 2014 gave its producers five years to meet its commitment to go antibiotic-free for chicken. Perdue is a major supplier to Chick-fil-A.

Costco Wholesale Corp., the nation's third-largest retailer that annually sells 80 million rotisserie chickens, told Reuters Thursday it has a "large" appetite for chicken free of these medically-important antibiotics.

The company is aware of the supply difficulties and won't commit to a timeline, said Craig Wilson, vice president of food safety for Costco.

Who pays the price?

Some of the extra costs of cutting out antibiotics could be borne by franchisees, which could cut labor hours, waste and utility costs to offset higher meat prices.

But most analysts expect McDonald's to push the costs back onto its suppliers, who may not have the market power to resist. The top four U.S. chicken processors control about 53 percent of the domestic market, according to the National Chicken Council.

McDonald's "carries a lot of clout with suppliers," and some of them are dependent on the chain for survival, Hottovy said.

Tyson and Keystone Foods, part of Brazil-based Marfrig Global Foods SA, both told Reuters they have significantly reduced medically-important antibiotic use in their flocks and are positioned to meet McDonald's and other customers' needs. However, neither company would answer specific questions about how such drugs are used on-farm and in hatcheries.

Slow changes

Perdue, the fourth-largest domestic chicken producer, began removing antibiotics used for growth promotion in 2002 amid consumer questions about what was being put into the animal feed, said Bruce Stewart-Brown, senior vice-president of food safety, quality and live operations.

Now more than 95% of the chickens it produces are raised without antibiotics approved for human use, and more than half are raised with no antibiotics of any kind, according to the company.

The transition led to unexpectedly high bird mortality rates, a need for more chicken houses and spending at least $4 million more a year on vaccines than rivals who haven't made the switch, among other things.

Birds raised without antibiotics also generally take three to nine days longer to reach their market weight, Stewart-Brown told Reuters — or as much as 20% longer than conventionally raised birds.

McDonald's two-year deadline is "a really fast timeframe to do it right and be predictable to your customers and your supply," Stewart-Brown said.

Birds raised on farms without antibiotics take longer to reach optimal slaughter weight, resulting in higher feed costs and death rates, forcing companies to ramp up with more eggs at the hatcheries, said Tom Elam of FarmEcon, an agricultural consulting company.

"The ones that aren't quite as good with keeping up with their biosecurity, it's going to cause some issues," Elam said. "This change is not free."

(Reporting by P.J. Huffstutter in Chicago and Lisa Baertlein in Los Angeles. Editing by Jo Winterbottom and John Pickering)

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LOS ANGELES/CHICAGO (Reuters) - KFC, the world's largest chain of fried chicken restaurants, may face pressure from consumer and environmental groups to change how its poultry are raised after McDonald's Corp said it would switch to chicken raised without human antibiotics.

McDonald's will phase out chicken raised with antibiotics that are important to human health over two years to allay concern that use of the drugs in meat production has exacerbated the rise of deadly "superbugs" that resist treatment, Reuters reported last week. Within days, retailer Costco Wholesale Corp told Reuters it aims to eliminate the sale of chicken and meat raised with human antibiotics.

KFC is owned by Louisville, Kentucky-based Yum Brands Inc, which has no publicly stated policy on antibiotic use in the production of meat it buys. Chick-fil-A, another chicken restaurant chain that competes with KFC, says about 20 percent of the chicken it serves is raised without any antibiotics, and that its entire supply chain will be converted by 2019.

Both McDonald's and Yum are stepping up efforts to win back younger and wealthier diners lured away by chains such as such as Chipotle Mexican Grill Inc and Panera Bread Co, which boast antibiotic-free meats and other high-quality ingredients. Yum's KFC restaurants in China two years ago suffered a massive sales hit following local media reports that a few poultry farmers supplying KFC fed excessive levels of antibiotics to their chickens.

"The train has left the station," Bob Goldin, a food services company consultant at Technomic in Chicago, said of McDonald's influence on U.S. chicken production standards.

Yum, which also owns the Taco Bell and Pizza Hut chains, declined to discuss its standards for antibiotic use in meat production.

"The chicken served in our U.S. restaurants is USDA high quality, and free of antibiotics," the company said in an emailed response to Reuters queries.

The antibiotic-free statement refers to a lack of residue in the meat served at its restaurants and not the practice of delivering antibiotics to chickens before they are slaughtered, said Steven Roach, food safety program director at Food Animal Concerns Trust in Chicago.

The U.S. Department of Agriculture has three classifications for poultry, A, B, and C, and doesn't have a "high quality" designation for chicken. Poultry rated A is what's typically found at retail, while poultry rated B or C is usually used in further-processed products where the meat is cut up, chopped, or ground, according to a USDA website.

NOT PART OF THE CONVERSATION

McDonald's told Reuters it worked with a wide range of stakeholders, including environmental group Friends of the Earth, to develop its U.S. chicken guidelines. Yum and its brands have ignored requests for information regarding its antibiotic policy, said Kari Hamerschlag, senior program manager for Friends of the Earth's food and technology program.

"They have so far not answered any of our emails or phone calls," said Hamerschlag, who is working with other advocacy groups to persuade food companies to change their supplier standards to exclude animals raised with the routine use of antibiotics. By contrast, McDonald's was "very responsive" to the groups' requests, she said.

Other groups working with Friends of the Earth to cut antibiotics from chickens and other meats include the Natural Resources Defense Council, Consumers Union and the Center for Food Safety. Friends of the Earth said its interest in antibiotics has to do with animal agriculture's connection to the environment and human health.

KFC supplier Tyson Foods Inc did not comment. Other U.S. chicken producers that have supplied Yum either declined to comment or could not be reached. It’s not known who KFC’s biggest supplier is or how many chickens KFC buys a year.

In 2012, Chinese media reports about excessive antibiotic use by a few KFC chicken farmers hammered sales there. The country has more than 4,800 KFC restaurants and accounted for nearly half of Yum's 2014 operating profit. In response, Yum dropped some 1,000 small poultry farmers from its supply chain and launched a public relations campaign to reassure diners about the quality and safety of its food.    

Yum operates separate supply chains in China and United States. While antibiotics have made for big headlines in China, the issue also has surfaced at home.

A Reuters investigation last year found that KFC supplier Koch Foods Inc from November 2011 to July 2014 had given some of its flocks antibiotics critical to fighting human infections, even though its website stated otherwise.

The Chicago-based chicken producer changed the language on its website after questions from Reuters about its use of virginiamycin, an antibiotic included in a class considered "highly important" to fighting infections in humans. At the time, Koch said it has no plans to discontinue the use of virginiamycin, which it says may be used to prevent a common intestinal infection in chicken.

Koch did not respond to interview requests for this story.

KFC US said at the time that its "supply partners must adhere to our strict standards and specifications, which in some cases are more stringent than the FDA's regulations." It declined to comment this week.

(Editing by Michele Gershberg and John Pickering)

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McDonald's restaurants outside of the US serve a bunch of unique dishes that you can't get Stateside. So when I was in Barcelona, Spain, earlier this month for MWC, I made it a mission to try McDonald's menu items that I would never be able to order at a regular American McDonald's.

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China will no longer chase bumper grain harvests and instead make safer foods a priority and boost imports as it bids to tackle its rural environmental problems, government officials said.

The shift in emphasis suggests the authorities are willing to forgo their obsession with agricultural output growth.

Achieving bumper harvests has long been considered a political necessity for the world’s most populous country, particularly after Mao’s 1958 “Great Leap Forward” industrialisation campaign led to widespread famine.

China has been beset by a series of food safety scandals in recent years.

These included the contaminated milk controversy in 2008 when at least six children died after drinking baby formula containing the industrial chemical melamine. 

It had been added to watered-down milk to distort tests into showing the produce was high in protein.

Han Jun, the deputy director of the Office of Central Rural Work Leading Group, the country’s top decision maker on rural policy, said. “In our current grains policy, one of the most important ideas is to speed up the transition in the way we boost grain output.

“In the past we were exhausting our resources and environment in pursuit of yield and now we have to focus equally on quantity, quality and efficiency and particularly the quality of grain output growth, environmental protection and sustainable development,” Han told the China Development Forum on Saturday.

He said China had recently published its sustainable development plan for agriculture, which will cap water use as well as reduce the use of chemical fertiliser and pesticides in its agriculture production.

China’s huge grain reserves should help ease the transition and reduce the risk of food shortages, said Han. His speech was carried on the news website Sina.com.

China should remain self-sufficient in cereals given its huge population, while making full use of international markets for farm products that are in short supply.

Qian Keming, chief economist at China’s agriculture ministry, said the country could achieve an 85 per cent self-sufficiency ratio by 2020, which was lower than the controversial 95 per cent rate that Beijing has been aiming to maintain over the past few decades.

China’s grain production should be capped at 610 million tonnes, rather than the previous level of 650 million tonnes, which is close to the country’s maximum capacity and puts its resources and the environment under strain, said Qian.

Ning Gaoning, chairman of the China National Cereals, Oils and Foodstuffs Corp, told the Saturday forum that China could open up more to agriculture trade.

As well as growing amounts of rice and wheat, China is also consuming more protein-rich food, which means it needs extra supplies, he said.

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The possibility that superbugs — bacteria that can't be killed by our best antimicrobials — might become widespread is a terrifying doomsday scenario. In such a future, driven by our extreme overuse of antibiotics, we'd effectively return to the dark ages when people routinely died of bacterial infections.

Over-prescription of antibiotics to human patients contributes to the development of resistant bacteria, but in the United States about 80% of total antimicrobial use goes toward raising animals for food. The Food and Drug Administration recognizes the threat this poses to human health and has encouraged farmers — who use antibiotics routinely, not just when animals are sick — to curb their use.

The problem isn't just in the US, though. It's global in scale — and according to a study published in Proceedings of the National Academy of Sciences, it's about to get much worse.

To get a handle on antimicrobial use in raising livestock worldwide, an international team of scientists mapped where in the world antimicrobials are used in livestock, and how much is used in each country.

They estimated that in 2010, the world used about 63,151 tons of antimicrobials in livestock. China's usage already exceeded that in the US, and the researchers project that — driven by a growing demand for meat around the world and a shift to large-scale farming practices — "antimicrobial consumption will rise by 67% by 2030, and nearly double in Brazil, Russia, India, China, and South Africa."

On the chart below, (A) shows the five countries that used the most antimicrobials in livestock in 2010, and (B) shows the researchers' projections for 2030:

The researchers also created a heatmap of antimicrobial use in livestock around the world:

"Antimicrobial consumption hotspots" are in darker red on the map, including Sichuan province and the southeast coast of China, the south coast of India, the south of Brazil, and the midwestern and southern regions of the United States.

Armed with this map, we have a better idea of how much we use antimicrobials for raising livestock around the world, and which areas might be more likely to produce a drug-resistant bug.

Cows, chickens, and pigs

The researchers also made separate maps to show antimicrobial use for raising different species of animals.

In Europe, the antimicrobial use for raising cattle wasn't as intense as for raising chickens and pigs. This is partly because antimicrobial use is proportionately lower for cows, and partly because chicken and pigs are raised closer together than cows.

Map A shows antimicrobial use for cows, B for chickens, and C for pigs:

The researchers did a similar breakdown for chicken (map A) and pigs (B) in Asia, including predictions for where antimicrobial use will increase significantly (purple on the maps).

Limitations

The researchers acknowledged some assumptions in their model that could have affected the maps that came out. Because data about antimicrobial consumption were only available from 32 high-income countries, they had to use that data to estimate antimicrobial use for low and middle-income countries with similar farming practices. That could have made their estimate greater than the real amount of antimicrobial use.

But the researchers also think they overestimated antimicrobial use in the United States because they couldn't get data from individual states, so it might even out.

The study also did not differentiate between antimicrobial compounds used only in animals and those used in both humans and animals, which are are a greater concern for their role in stimulating drug-resistant bugs.

Still, this analysis is an important first step at assessing the scale of the problem. The next step is figuring out a solution.

SEE ALSO: We May Have Reached The 'Apocalyptic Scenario' With Antibiotics

SEE ALSO: Crazy Infographic Shows How Deadly Superbugs Will Be In The Post-Antibiotic Era

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