SOURCE: Paragon Financial Limited

Paragon Financial Limited

June 05, 2012 08:20 ET

McDonald's and Yum! Brands Face Bans on Oversized Sodas in New York

The Paragon Report Provides Stock Research on McDonald's and Yum! Brands

NEW YORK, NY--(Marketwire - Jun 5, 2012) - Shares of restaurant and beverage companies fell across the board Friday as jobs slowdown in the U.S. added to global fears. Numbers showed that the U.S. added only 69,000 jobs in May and the unemployment rate rose for the first time since last summer from 8.1 percent to 8.2 percent. Restaurant and beverage companies will soon face a new hurdle in New York as Mayor Michael Bloomberg is proposing a ban on the sale of large sodas and other high sugar drinks. The Paragon Report examines investing opportunities in Restaurant Industry and provides equity research on McDonald's Corporation (NYSE: MCD) and Yum! Brands, Inc. (NYSE: YUM).

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In an attempt to fight back against the U.S. obesity problem the Mayor Bloomberg has proposed a ban on the sale of oversized sugary drinks in the city's restaurants, delis, and movie theatres. The ban would implement a 16-ounce limit on drink that contains in excess of 25 calories per 8 ounces. This ban could become hazardous for the fast-food industry as soft drinks carry high margins.

"The people of New York City are much smarter than the New York City Health Department believes," Coca-Cola said in a statement. "New Yorkers expect and deserve better than this. They can make their own choices about the beverages they purchase. We hope New Yorkers loudly voice their disapproval about this arbitrary mandate."

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McDonald's is the world's leading global foodservice retailer with more than 33,000 locations serving nearly 68 million customers in 119 countries each day. The company reported that comparable sales rose 3.3 percent in April. "Our focus on delivering great tasting food and an exceptional restaurant experience generated positive global comparable sales results in April," said McDonald's Chief Executive Officer Jim Skinner. "Amidst a challenging global economic environment, McDonald's ongoing commitment to optimizing the menu, modernizing the restaurant experience and broadening accessibility will enable us to continue to satisfy the evolving needs of our customers."

Yum! Brands is the world's largest restaurant company in terms of system units with more than 37,000 restaurants in over 117 countries and territories and more than 1 million associates. Yum! is ranked #214 on the Fortune 500 List and generated more than $12 billion in revenue in 2011. Their brands -- KFC, Pizza Hut and Taco Bell -- are the global leaders of the chicken, pizza and Mexican-style food categories.

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