“Fast Food Nation: The Dark Side of the All-American Meal,”by Eric Schlosser, Houghton, Mifflin, Harcourt, Boston, 2012. This 362-page paperback gives the history of the fast food industry but extends coverage to much of agriculture. More women working has increased the need for fast food to supplement traditional roles: cooking, cleaning and childcare.
The story begins with Carl Karcher. He began with hot dog carts in Southern California. As cars became more numerous, fast food developed. The first was “Pig Stand” founded by Jesse Kirby in Texas but the chain thrived in California. Flashing signs were used to attract customers. Carhops brought food to your car. They often wore uniforms and worked for tips.
Carl’s first restaurant was Carl’s Drive-in Barbeque opened in January, 1945, in Anaheim. The McDonald brothers opened a drive-in restaurant in Pasadena in 1937. They found themselves constantly looking for car hops and short-order cooks. In 1948, they fired the staff and adopted a streamlined self-service style that became McDonald’s. Karcher saw the benefits of self service and opened Carl’s Jr in 1956. William Rosenberg opened Dunkin Donuts in Boston in 1948. Keith Cramer opened Insta-Burger-King in 1953 in Florida. Glen Bell Jr used the same concept for Mexican food founding Taco Bell. Dave Thomas opened Wendy’s in Columbus, OH. Thomas Monaghan founded Domino’s in Ypsilanti, MI.
Harlan Sanders began as a small restaurant serving home cooked food and expanded to a popular restaurant. He sold it to pay off debts and became a traveling salesman selling his secret chicken recipe. The first Kentucky Fried Chicken opened in Salt Lake City on 1952.
In 1976, Carl Karcher Enterprises (CKE) headquarters opened in Anaheim. It went public in 1980. The share price tumbled in 1988 and he was charged with insider trading and paid a large fine. After failed real estate investments, he was forced out of the company in 1993. He partnered with financier William Foley to regain control of the company. In 1997, CKE acquired Hardee’s.
In 1954, Ray Kroc found the McDonald’s restaurant and bought franchising rights. Later he acquired the company. Kroc and Walt Disney are both from Chicago and knew each other from service in the ambulance corps in World War I. Both used “universities” to train employees. Disney had Disneyland University; Kroc had Hamburger University. Kroc approached Disney to put McDonald’s restaurants in Disneyland, but couldn’t agree on terms.
A section describes business at Disney. Walt developed methods to mass produce his cartoons. He pioneered synergy marketing allowing companies to use Mickey Mouse to sell their products. In 1938, Snow White was a turning point. Disney had licensed over 70 products based on the characters. He began TV programs in 1950 to promote up coming Alice In Wonderland. He signed with ABC to make the Disneyland TV series to raise funds for Disneyland. ABC was a major equity investor.
Kroc chose the theme for McDonald’s as Quality, Service, Cleanliness, and Value. To emphasize children, he advertised on children’s TV. He hired Ronald McDonald the clown. He installed play rooms in restaurants. Kroc used a Cessna to spot the best sites for new restaurants from the air. Now McDonald’s uses satellite photos. Teenagers are the ideal employees. They work cheap and they are easier to control. They are by far the biggest group of low paid workers in America. A typical restaurant employs 50 crew members, has four or five managers and assistant managers. Managers earn about $23K plus bonus and profit sharing and get medical benefits.
In 1993 synergy marketing extended to schools. Colorado Springs signed a deal for Burger King ads in its schools. In 1997 they signed a ten year deal with Coca-Cola to serve their products exclusively for $11MM. Other school districts soon followed. Schools now have Subway franchises, Subway delivery contracts, and Subway sandwich carts.
Fast food restaurants find beverages profitable. Coca-Cola syrup is bought for $4.25/gal. A medium Coke that sells for $1.29 uses $0.09 worth of syrup (plus cup, lid, straw, ice, and carbonated water).
Despite all the press about aerospace, biotech, computers, and telecommunications, in Colorado the largest employer is the restaurant industry. The arrival of the US military and the US Air Force Academy was a plus.
Franchises now drive much of the fast food industry. Companies expand using local capital. The concept goes back to 1898 when General Motors signed dealers. McDonald’s typically offers a restaurant location far from home and requires that they give up other business activities. Kroc expects loyalty and total devotion to the business. McDonald’s usually owns the real estate and leases it to the franchisee.
Subway was founded in 1965 by Frederick DeLuca. Development agents sign-up new franchises. They are unpaid but received half the franchise fee… Rapid expansion is the goal. To earn a living, franchisees must work sixty to seventy hours per week and own more than one Subway.
A chapter describes the potato business. JR Simplot led the development of the Idaho potato business raising the Russet Burbank near the Snake River for irrigation. He is a major land owner. He also raised onions and sold dehydrated onions to the US Army in World Was II. French fries became popular in the US after soldiers brought them back from Europe after World War I. They fit nicely with drive-in restaurants as they could be eaten without silverware behind a steering wheel.
Simplot saw an opportunity for frozen fries as people got refrigerators and freezers after the war. His were available in 1953. They were precooked and could be prepared in an oven but tasted better in hot oil. McDonald’s found making fries from fresh potatoes labor intensive. Simplot met Kroc in 1963 and convinced him to try frozen fries. He built a plant to supply McDonald’s. He also sold to other restaurants. French fries became the most widely served food service item in the US. Lamb Weston is now the leader. McCain, a Canadian firm, bought Ore-Ida in 1997 to become number two. Fast food companies find fries very profitable. They cost about $0.30/lb and sell for about $6/lb.
Idaho passed Maine in potato production in the 1950s mostly due to french fries. Since 1980, potato production in Idaho has doubled and the average yield increased by 30%. The business is consolidating as farms get larger and small farms sell out. McDonald’s french fries owed their flavor to the oil: 7% cottonseed oil/93% beef tallow. In 1990 they switched to pure vegetable oil. The ingredients list now includes “natural flavor.” The author implies that companies like International Flavors & Fragrances supply that flavor.
Schlosser lists the flavor companies found mostly in New Jersey. In addition to IFF, there is also Givaudan, Haarmann & Reimer, Takasago, Flavor Dynamics, Frutarom, Elan Chemicals and dozens of smaller firms. These companies are best known for perfumes including product fragrances but also engage in flavors. Flavors are used for potato chips, corn chips, breads, crackers, breakfast cereals, cookies, candies, toothpastes, mouthwashes, and antacids. They also supply flavors for beverages. Half a dozen synthetic chemicals with food flavors are described. He was shown one with the aroma of burgers on a hot grill.
Lamb Weston invented a Water Gun Knife that slices french fries by firing potatoes at 117 feet/sec into a grid of sharp blades. The company was founded in 1950 and sold to ConAgra in1988. The potatoes are peeled with steam and sliced. They are blanched with hot water, dried and fried to a slight crisp, then frozen and packaged. Every day, they fill a dozen rail cars and two dozen trackor-trailers with frozen french fries for McDonald’s.
The beef industry is described. In 1917, the Beef Trust companies–Armour, Swift, Morris, Wilson, and Cudahy–controlled 55% of the market. A consent decree in 1920 forced them to sell their stock yards, meat stores, railway interests, and livestock journals. Congress created the Packers and Stockyards Administration to present price fixing. Under the Reagan Administration companies consolidated. Today the top four are ConAgra, IBP, Excel, and National Beef. They slaughter 84% of the nations cattle. Today 20% of live cattle is captive in company owned feedlots. These cattle are used to keep meat prices down by flooding the market when prices begin to rise. Up to 80% of cattle sold are captive distorting market prices.
Similarly the poultry market is largely controlled. Eight chicken processors control two-thirds of the US market. Production is moving to the south. In 1979, McDonald’s asked for chicken finger food without bones about the size of your thumb. The result was Chicken McNuggets, which revolutionized the business. Keystone developed the product but McDonald’s turned to Tyson for adequate supply. They developed a chicken breed with unusually large breasts in 1983. McDonald’s became the second largest buyer after KFC. Initially they were cooked in beef fat. McDonald’s switched to vegetable oil adding “beef extract” to retain their flavor. Twenty years ago most chicken was sold whole; now 90% is sold as pieces, cutlets, or nuggets. Consumption of chicken passed beef in the US in 1992. Tysons is largest and breeds, slaughters, and processes chicken. Independent contractors raise the birds.
Tyson owns the chickens, drops them off at one day old, supplies feed, determines feeding schedules, and picks them up seven weeks later. Growers get paid based on count, weight, and feed used. Poultry houses cost about $150K and hold 25,000 birds. A typical grower with three houses earns about $12K/yr. Half leave the business after three years. Paying off debt can be difficult. The processor can terminate the contract at any time. Signing with another processor can be difficult.
Beef consumption in the US fell from 94 lb/person in 1976 to 68 lb. Use of growth hormones resulted in larger cattle but beef that cannot be sold in Europe. ADM was convicted of price fixing lysine in 1999. They are one of the largest shareholders of IBP. Rising land prices (due to increasing vacation homes) makes it difficult for ranchers to expand. Cattle require 30 acres each for grazing. Inheritance taxes can claim over half of a ranch’s value. Ranching could be coming to an end in Colorado. Sale of development rights as conservation easements can be one solution. The suicide rate among ranchers and farmers is now triple the national average.
Beef production began to consolidate in Colorado where Warren Monfort began a feedlot operation to feed grain to cattle. He followed with a small slaughterhouse in Greeley, CO in 1960. Initially it had a generous union contract. That same year two former Swift executives formed Iowa Beef (IBP) in Dennison, IA. They used the McDonald method to steamline operations and use untrained labor. In 1967, IBP opened a plant in Dakota City, NE that processed all the way to boxed beef, ie market cuts packaged and ready for shipment. This eliminated the need for meat cutters to cut up sides of beef produced by large packing houses. To sell boxed beef in New York City, IBP made a deal to pay a commission to La Cosa Nosa. Crime family members were hired by IBP. Execs later were convicted of bribery and IBP paid a fine but executives got no jail time.
The big city packing houses found themselves unable to compete and gradually shut down. In 1986, ConAgra acquired Monfort to become the largest meatpacker. It’s brands include Hunt’s, Armour, Hebrew National, and Healthy Choice. The company expects executives to be very aggressive. The book lists multiple incidents of price fixing and cheating farmers. Unions were driven out of packing houses and replaced with recent immigrants, many of them illegals. Recruiters hire immigrants near the border in Texas, and bus them north to live in homeless shelters. The slaughterhouses run fast–processing up to 400 cattle per hour. The jobs are dangerous. Injuries often go unreported.
Stories of meat recall are reported. In 1997, e coli 0157:H7 was the culprit. It can produce bloody diarrhea and result in kidney damage. It was traced to frozen hamburger patties produced by Hudson Food in Columbus, NE. In the largest recall in the US, 35MM lb was recalled. They were also supplier to Burger King. In 1993, e coli contamination was traced to Jack in the Box beef supplied by Von Companies in Arcadia, CA. Since then half a million Americans have been made ill and hundreds have died. Food poisoning is the leading cause of kidney failure among children in the US. E coli is shed in the stool and can infect others due to poor hygiene.
The USDA recall procedure is cumbersome. Hudson Food learned of the contamination in July, 1997, but a recall was not announced until a second lot was found. On August 12 they recalled 20,000 lb of beef although they could produce 400,000 lb/shift. Gradually the recall was expanded under public pressure reaching 35MM lb, but most was already eaten.
Examples are given of places where pathogens are monitored. Sweden began a program to eliminate salmonella from its beef 40 years ago. Today 0.1% of their cattle carry salmonella, a much better rate than the US. Netherlands began to test for e coli in ground beef in 1989. In the US food safety is the responsibility of a dozen federal agencies and monitored by 28 congressional committees. Salmonella in eggs has been eliminated in Sweden and Netherlands, but is unregulated in the US. The industry vigorously resists stricter regulations.
IBP was acquired by Tyson Foods in 2001. Cargill Meat Solutions is a leading producer of beef and turkey. The company traces to Excell Packing in Chicago in 1936. They merged with Missouri Beef to form MBPXL, which was acquired by Cargill in 1979. It has since expanded with additional acquisitions. JBS Holdings, a Brazilian company, is a major player. They acquired Cargill’s pork processing in 2015. In 2007, JBS acquired Swift, which had earlier been part of Conagra. JBS acquired Smithfield in 2008 and Pilgrim’s Pride in 2009.
In 2022, Zippia lists the largest meat producers as Cargill, Sysco (a food distributor owns Newport Meat), JBS, and Tysons. Cargill is by far the largest.
This is an excellent history of the fast food industry including the stories of founders and their choices for agricultural products. The story of packaging and recycling is omitted. Those interested in franchising will find the book informative. Index. References.