Burger your health - it's all about private equity

I really like the way the trans-fats and sugars glow in this bacon cheeseburger image.

Last month the Ministry of Health released the final results of its 2008/09 New Zealand Adult Nutrition Survey, a survey of 4,721 adults carried out between October 2008 and October 2009. This is a self-reporting survey into dietary patterns, so it is hard to know how accurate the results are, given the tendency of respondents in such surveys to tell researchers what they think they ought to be doing, or would like researchers to think they are doing, rather than what they are actually doing. There is also the issue of how representative even a large sample is of actual behaviours across the population.

For this reason I find some of the results rather hard to believe, such as the one that 66% of female respon dents and 60% of male respondents choose whole-grain bread 'most often', when these breads do not make up even 50% of all the breads available in supermarkets, let alone the cheapest ones. This seems to be a 'tell them what they want to hear' answer, and I think retail sales patterns would give a much more accurate picture of how often these breads are really chosen. For the same reason I also wonder whether the dire rates of fruit and vegetable consumption reported (41% of males and 28% of females reported that they did not eat the recommended three or more servings of vegetables per day, while 45% of males and 33% of females did not eat the recommended two or more servings of fruit per day), may be even worse than this.

However, there can be no doubting that the population weight increase figures cited in the survey are accurate. The mean weight of males surveyed in 1997 was 80.4 kg, and in 2008/09 it was 85.1 kg. For females the figures were 68.7 kg and 72.6 kg. The mean height of New Zealanders did not change in this time, so all this growth was outwards, leading to an increase in obesity rates. The percentage of obese males went from 17% in 1997 to 27.7% in 2008/09 , while obese females went from 20.6% to 27.8% of the population.

Something else grew markedly in the same time frame, and that was the profits of fast food franchises. A month after the nutrition survey results came out, the business pages carried the news that the owners of the Burger King franchise in NZ, Australian private equity firm Anchorage Capital Partners, were about to sell it. According to the report of its purchase of the NZ Burger King franchise in 2009, ''Anchorage was formed in 2007, evolving from Interbank Capital Partners, a boutique private equity firm headed by Phil Cave AM, and targets underperforming businesses with enterprise values of between A$50m ($43.4m) and A$150m ($130.5m). The firm sold its investment in Australian fruit company Golden Circle following a share takeover by Heinz last December.''

In its first full year of owning and operating the franchise Burger King generated net profit of $6.8 million on revenue of $161.6m. Mark Bayliss, chairman of Burger King's immediate owner Antares Restaurant Group, was quoted as saying that the ''The important thing is it's now on a sustainable growth platform...We're passionate about building sustainable businesses that continue to grow sustainably in future, and to do that you need to really invest in the business.''

On October 17 the Blackstone Group announced that its private equity funds had agreed to acquire Antares Restaurant Group in New Zealand from Anchorage Capital Partners. According to its media release on the transaction, ''Blackstone is one of the largest private equity investors in the world with US$38 billion in capital committed or invested in 160 separate private equity transactions. Blackstone currently has US$17 billion of available equity capital to invest in further private equity transactions.'' Blackstone is a New York Stock Exchange listed company and considers itself to be ''one of the world’s leading investment and advisory firms''.


While Blackstone/Antares/Burger King are 'growing sustainably', something else is growing unsustainably, and that is the cost to the public purse of dealing with the damage caused by junk food consumption. A year ago the Associate Health Minister, Tariana Turia, professed herself to be delighted that public funding had been made available for an additional 300 'weight loss' operations (aka gastric bypass or 'stomach-stapling') over the next four years. This is to cost 8 million dollars. She did not say how many publicly-funded operations were already taking place, and how much they cost.

Commenting on the move, Dr Elaine Rush, Professor of Nutrition at the Auckland University of Technology, said that an Australian assessment of the cost effectiveness of obesity interventions for children and adolescents found that reducing TV advertising of high fat and/or high sugar foods and beverages directed at children was much the cheapest of the effective options, while gastric banding was by far the most expensive. (She also mentioned the really unpleasant side effects  associated with this operation, and how it could contribute to nutritional deficiencies.)

The reason why advertising restrictions cost the public almost nothing is that not only do they not involve high tech surgery, but any costs associated with them are borne by the user (the advertiser), not the taxpayer, whereas taxpayers fund the extra gastric bypass operations. Meanwhile the foreign investors in Burger King and other fast food chains not only pay nothing towards mitigating the damage their products do, but even profit from making it easier for Kiwis to eat themselves to death. 
 

What do we value more – public health or private equity profits? Hooray to my friend Reihana who answered that question by joining the Occupy Wall Street movement to tell the profiteers what she (and thousands of others) think of their anti-social behaviour. Here she is in Liberty Plaza, New York, with the Reverend Billy of the Church of Stop Shopping.