NEWS > BUSINESS > SEC INVESTIGATING KFC OVER GRILLED CHICKEN
SEC INVESTIGATING KFC OVER GRILLED CHICKEN
May 10 2009
Washington, DC – With seemingly more attention than they can handle being focused on KFC and its new Kentucky Grilled Chicken the company is in what most would see as an enviable position. The free giveaway of the new chicken, promoted on the Oprah Winfrey Show, caused overwhelming traffic to restaurant locations across
the country prompting the company to issue rain cheques. In this harsh economy that kind of traffic is something most companies can only dream of, but now that national phenomenon has cast some unwelcome attention in the form of the SEC.
KFC has long been one of America’s most beloved fast food restaurants. Founded in 1929 the patented chicken recipe has taken the chain from its humble beginnings being sold at a gas station in Kentucky to an internationally recognized chain of restaurants. Throughout its history the chain, like all fast food companies, has played with its product line but the newest product may be landing the colonel and its parent company in very hot water with an impending investigation by the Securities and Exchange Commission.
“We recognize that companies alter their product line all the time but this particular product constitutes a substantial change not just to the menu, but to their corporate identity. They are Kentucky Fried Chicken after all. They are changing their core product and subsequently may be falsely representing their company to the public and to shareholders,” said an SEC official who preferred to remain anonymous. “Fried is in the name and that means they should be frying their chicken. By grilling they are fundamentally changing the nature of their product and therefore their corporate identity. The SEC is very interested in this development.”
Officially the grilled chicken is only an addition to the menu, not a replacement for the fried variety. Touted as a healthy alternative, it is the first time in the 80-year history of the company that it has offered chicken prepared in a way other than frying.
“KFC has been embroiled in a number of controversies in the past. From trademark issues, to worker problems, to animal rights protests, to trying to ban competing foods but this is the most significant threat they have ever faced. The SEC doesn’t really have a history of joking around with investigations and I can imagine if they have initiated this, they mean to pursue it,” said Scrape TV Business analyst Ken Green. “Simply put, the company represents itself as one thing but then produces an entirely separate product and that could mean a, if you’ll pardon the pun, a kind of cooking of the books. They recognize that healthy eating is in vogue and are now trying to exploit that in order to artificially inflate their
stock values. If we suddenly found out cocaine was healthy, Coca-Cola couldn’t just start selling it without getting in serious trouble.”
It’s not yet clear, despite the massive success of the free chicken promotion, if grilled chicken is around to stay nor how long the SEC investigation might take. It is seen as likely that even if the company ceased to sell the product they would still be liable to an investigation.
“Because you stop doing something bad doesn’t mean you are not still susceptible to investigation and prosecution for your actions. If you
break the law, you break the law and you are subject to prosecution. If KFC is deliberately manipulating the system in order to affect their stock value then they will see the repercussions,” continued Green. “Companies cooking the books and playing games with stocks are exactly the reason the country has fallen into this financial quagmire and so officials are going to be especially attuned to these kinds of actions, not matter how delicious they might be. It may not be long before the Federal government owns a piece of KFC, or whatever they will end up being called.”
Scrape TV News placed calls to the offices of KFC and their parent company YUM! Brands but received no response. KFC is continuing to offer rain cheques for the free chicken, but is not expected that giving the product away for free will protect them from prosecution.
William Ashford, Business Correspondent