Business

Shake Shack Faces Scrutiny Over Chicken Claims as Shareholder Calls for Transparency

Shake Shack, known for its commitment to quality ingredients, is under the spotlight as a shareholder group questions the veracity of its “no hormones, ever” claim regarding its crispy fried chicken. The Accountability Board, a shareholder activist group with a focus on stewardship and transparency, is challenging the company to provide evidence or explanations for its assertions, claiming they are “difficult to understand.”

Shake Shack’s CEO, Randy Garutti, emphasized the use of “hormone- and antibiotic-free proteins” in a 2023 report, particularly highlighting the chicken and bacon. However, the shareholder group contends that no restaurant chain in the country utilizes hormones in its chicken, making the claim less impactful. The company has sought to alter its wording to “no added hormones” and has requested the Securities and Exchange Commission (SEC) to exclude the shareholder proposal from its 2024 proxy statement.

The Accountability Board, dissatisfied with the change, argues that Shake Shack cannot merely replace one misleading claim with another. Josh Balk, the CEO of the Accountability Board, expressed concern that the company shouldn’t be allowed to make “harmful and false claims for years” without addressing the issue transparently.

In response to the scrutiny, a Shake Shack spokesperson acknowledged the change in wording to “no added hormones” but emphasized that there are no alterations to the chicken suppliers or any supply chain and food policies. The company maintains that it’s a language change aimed at providing clearer communication.

This development comes at a time when other fast-food chains, including McDonald’s, have faced challenges from shareholders concerned about animal welfare issues. Notably, activist investor Carl Icahn engaged in a prolonged battle with McDonald’s over the treatment of pigs, pushing for reforms in the company’s practices. McDonald’s, in response, pledged to eliminate the use of gestation crates for pregnant pigs entirely by 2024. The intersection of shareholder activism and ethical considerations in the food industry underscores the increasing demand for transparency and accountability among consumers and investors alike. As Shake Shack navigates these challenges, the outcome may shape industry standards and the expectations of socially conscious shareholders.

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