By Lisa Baertlein
(Reuters) - McDonald's Corp is skirting a new San Francisco law that aims to curb toy giveaways in sugar- and fat-laden restaurant meals for children by selling its popular Happy Meal toys for 10 cents each.
The law, which goes into effect on December 1, requires that restaurant kids' meals meet certain nutritional standards before they could be sold with free toys.
McDonald's and other major restaurant chains would have had to reduce sugar, fat and salt in their kids' meals, while adding fruits and vegetables, to comply with the law.
"Rather than fight city hall, I am complying with the letter of the law," said McDonald's franchisee Scott Rodrick, who owns just over half of the 19 McDonald's franchises in San Francisco.
Rodrick and other San Francisco franchisees -- with the company's blessing -- plan to charge 10 cents to add a toy to the company's popular Happy Meals for children. The toys are not offered for sale without the purchase of a Happy Meal, the company said.
Proceeds from the San Francisco toy sales will be used to help build a new Ronald McDonald House in the city. Those facilities, which are operated by a McDonald's charity, give free or low-cost housing to families seeking treatment for a sick child.
McDonald's was a pioneer in using free toys to promote kids' meals and its success spawned me-too offerings from other chains.
FROM 'MCDOODLER' TO SHREK
It debuted the Happy Meal in the United States in 1979 with toys like the "McDoodler" stencil and the "McWrist" wallet. Modern offerings have included themed items from popular films like "Shrek" or sought-after toys like Lego or Ty Beanie Babies.
San Francisco late last year became the first major U.S. city to take on the toy giveaways, following a similar move by nearby Santa Clara County.
Under pressure from San Francisco and other cities, McDonald's and other restaurant chains have taken small steps to improve the nutritional profile of their meals for children.
McDonald's is giving its Happy Meals a makeover -- reducing the french fry portion by more than half and adding apple slices. Those new Happy Meals already are sold in California and will be available in all the 14,000 U.S. McDonald's restaurants early next year.
But the new Happy Meal still doesn't meet San Francisco's nutritional guidelines, which were based on recommendations from the National Academies' Institute of Medicine.
San Francisco Supervisor Eric Mar, who sponsored the San Francisco ordinance, said he still sees the law as a victory -- despite the maneuver from McDonald's.
"Our little local law had a major impact on the whole fast-food industry," said March "It's going to be slow, but at least we feel that we're moving them in the right direction."
Representatives from the Center for Science and the Public Interest and Corporate Accountability International were less charitable, calling the move by the world's largest fast-food chain "cynical."
Margo Wootan, director of nutrition policy at CSPI, said McDonald's response "clearly skirts the whole spirit of the law."
Wootan added that McDonald's has the creative muscle to come up with healthy alternatives that appeal to children.
"McDonald's knows how to make food fun," she said. "They just need to try to maker healthier food fun for kids -- use that marketing brilliance that they have to promote health instead of undermine it."
While cities and communities around the country have expressed interest in passing similar laws, McDonald's said it has no plans to challenge San Francisco's law.
"Certainly this is a smarter public relations move than a lawsuit," said Sara Deon, director of Corporate Accountability International's "Value the Meal" campaign.
(Reporting by Lisa Baertlein; Editing by Phil Berlowitz)