EXHIBIT 2

JOHN K. VAN DE KAMP
Attorney General
DEPARTMENT OF JUSTICE


June 3, 1986

Consumer Law Section
Richard Cotton, Esq.
Dewey, Ballantine, Bushby Palmer & Wood, ADDRESS OMITTED



Dear Mr. Cotton:

On behalf of the Texas Attorney General's office and the California Attorney General's office, we want to thank you for your courtesy and co-operation in meeting with us to address the issue of food ingredient and nutrition labelinq by quick service restaurants. We feel the meetings with various industry members have been most helpful to our understanding of the practicalities of the situation. This letter is being sent not only to you, but to each of the companies. with which we met.

After these meetings, we reviewed the information we obtained from industry members, re-evaluated the information we obtained from the FDA and USDA, re-evaluated our various state laws, and spoke with the offices of the Attorneys General of approximately ten other states who have given Texas and California the authority to speak for them on this issue. Following this review, we have concluded the following:

A. The individual states are not preempted by federal law from enforcing labeling laws as they apply to packaged foods;

B. The arguments that the way in which most quick service restaurants serve their food, brings those foods within the definition of packaged foods, are compelling and thus ingredient labeling could be required;

C. If ingredient labeling on the boxes or wrappers used is required, this would present great difficulties to most quick service restaurants and, in our opinion, not be the best possible solution to the problems engendered by consumers not having ready access to product ingredient and nutrition information;

D. In discussions with various consumer groups it appears that consumer concerns do not require the consumer's immediate access to all nutrition information For instance, it is questionable whether the immediate disclosure of vitamin and mineral information is an important concern;

E. We do, however, feel that consumers should be given at the point of sale, ingredient information and important nutrition information -- i.e., calories, protein, carbohydrates, fat, cholesterol and sodium -- for the products served by quick service restaurants.

Based on these conclusions, we are left with the question of delivery mechanism. Our major concern is that any system developed be one which gets the information to consumers, -and at the same time, be practical for businesses to implement. With this. in mind, and keeping in mind the various state statutes, including those dealing with packaged foods, labeling requirements and the unfair or deceptive practices acts, it is our position that firms in the quick service restaurant business, should at a minimum, do the following:

(1) implement within four months, a program for disclosure of product ingredient and nutrition information.

(a) The ingredient information disclosed need not go beyond those disclosures required under federal guidelines for packaged foods, but should follow federal requirements in making the disclosures;

(b) The nutrition information need not disclose information on other than calories, protein, carbo- hydrates, fat, cholesterol and sodium;

(c) Suppliers or vendors of finished products or component parts of products need not be disclosed;

(d) The information disclosed can either be given on an item by item (i.e., tomato, pickle, etc.) basis or on a typical finished product (i.e., Jumbo King Chicken sandwich) basis;

( e) The nutrition information disclosed can be qualified by terms such as "the information disclosed provides typical averages because they are based on representative samples" or other similar terms. We would not consider the statements made to be misleading if the information becomes inaccurate because the customer asks for the item to be preparated in a special fashion.

(2) A delivery mechanism which takes into account both the customer's ability to digest the information provided and does not cause a slowing down of the restaurant's ability to provide quick service should be utilized. We feel such a system should include:
(a) A brochure type handout which provides the information outlined in (1)(a) and (b). Such brochure should be simple and should be easily understood by average customers. We see no need for a brochure to be 30 or 40 pages long.
(b) Notice regarding the availability, of the ingredient and nutrition brochure should be placed in the individual restaurants. This could be done on a rotating basis by table top signs, ceiling hangers, window or wall signs, signs on the backs of cash registers, tray liners, or an additional line on the menu board.
(c) Restaurants with "drive through windows" should place notice of the availability of the ingredient and nutrition brochure on the "pick up" window or on the drive through menu order board.
(d) The brochure should be easily obtainable by consumers. Various methods can be tried to determine which method most effectively delivers the brochures i.e., available from the counter help, available for self-pickup from a display rack at one end of the counter, available for self-pickup at a freestanding display rack, etc.
(e) Franchisors should supply each restaurant (franchisee or company owned) with a quantity of brochures sufficient to meet the reasonably expected demand, but in all cases no fewer than 300 copies per restaurant should be included in the first shipment. The franchisor should provide the brochures at no cost to each store.
(f) Each brochure should contain a telephone number which customers can call for further ingredient or nutrition infornation (preferably an "800" number).

We sincerely hope that you agree that the program that we have outlined above is workable in your chain on a system wide basis.

If you are agreeable to resolving this matter in the manner outlined, please contact us in writing within two weeks indicating your agreement and detailing those steps you will implement. If we do not hear from you within that time, we will assume your firm is not interested in reaching an informal conclusion to our discussions and we will continue to weigh the other options open to our offices. Again, thank you for your cooperativeness throughout.

Very truly yours,
J0HN K. VAN DE KAMP Attorney General
ALBERT NORMAN SHELDEN Deputy Attorney General
ANS:ak:ar I

cc: H.T. Elkins, California Attorney General's office Steve Gardner, Texas Attorney General's office Consumer Section, Various Attorneys General John Horowitz

EXHIBIT 3

Dewy, Ballantine, Bushby, Palmer and Wood
July 21, 1986

Hon. Jim Mattox Attorney General of Texas Hon. John K. Van De Kamp Attorney Genral of California

Dear Messrs. Mattox and Van De Kamp:

On behalf of McDonald's Corporation I am responding to public statements made by representatives of your offices in recent davs concerning the company's announcement of a untary nationwide program to put nutrition and ingredient information about its products in its restaurants.

According to press resorts, Texas and California officials have charged that the company's nationwide program is in reality a reluctant concession to threats of legal action from your offices. These officials have accused McDonald's of misleading the public and of breaching an agreement to participate in a coordinated press announcement arranged by your offices. These charges are totally unfounded.

McDonald's has no desire to prolong debate about who deserves credit for making nutrition and ingredient information available to its customers in Texas, California and the rest of the nation. The important point is that we are all pursuing the same objective -- giving customers of all restaurants, quick-service and full-service, more of the information they might find useful to make informed choices about their food purchases. It is plainly in the interest of McDonald's and your offices that we work constructively together to achieve our shared goals. That, in turn, will require a better understanding on both sides of our respective positions and concerns. Accordingly, in an effort to clear the air and help put this misunderstanding behind us let me bring the following facts to your attention:

1. McDonald's decision to put ingredient and nutrition booklets in its restaurants nationwide culminates a process that began years before we had any contact with your offices. Over the past ten years the comoany has taken the lead among quick-service restaurants by distributing brochures setting out full nutrition information as well as brochures intended for persons on calorie-, sodium- or cholesterol-restricted diets. These materials have been placed in restaurants from time to time and have always been available on request from company headquarters. The company has always responded to consumers who wanted to know whether its products contained particular ingredients.

2. Earlier this year, before we had had any contact with your offices, the company again took the lead when it announced that it would also make complete ingredient information available from corporate headquarters to any customer who requested it.

3. This past April McDonald's announced a voluntary agreement with the New York Attorney General to launch an unprecedented program. The company announced that it would put complete ingredient and nutrition information in every one of its restaurants in New York state for a one-year trial period. The details of this agreement, including the language of a joint press statement, were carefully worked out and agreed to by both sides. It was clearly understood by both sides that this test program was voluntary.

4. Nationwide extension of the in-restaurant distribution program had been under active consideration for months before the company heard from your offices. As a first step in that direction, the company had already decided on its own initiative -- again before we heard from your offices -- to extend the New York test program to parts of New Jersey and Connecticut and ta the District of Columbia. This step-by-step approach allowed the company to continue refining its ingredient and nutrition booklets in an effort to meet most effectively the needs of its customers nationwide. The company's commitment of hundreds of thousands of dollars to this effort refutes any allegation that it had been planning a one-shot one-state approach until it heard from your offices.

5. The timing of McDonald's decision to put its ingredient and nutrition booklet in its restaurants nationwide was dictated by the company's progress in developing that booklet and its own judgment concerning the level of consumer interest. Contrary to the impression conveyed by statements reported in the press, neither of your offices threatened to initiate legal action against McDonald's. We continue to believe, as we told representatives of your offices at a meeting in Los Angeles on May 21, that nutrition and ingredient disclosure is plainly not now required of restaurants, quick-service or otherwise, under the law of Texas or California.

6. In contrast to the situation in New York, McDon- ald's did not enter into any agreement with your offices, much less with the other unidentified states on whose behalf you were reportedly speaking. Following the May 21 meeting at which you told us of your concerns, we received a June 3 letter requesting us to implement voluntarily a detailed program for disclosure of product ingredient and nutrition information. We had several telephone conversations with your representatives late in June and reported that we would not be able to spell out the company's plans until after the 4th of July holiday. In a July 7 telephone call we told your representatives that the company had decided to extend its New York test program nationwide. We did not discuss the details of this nationwide program, but we told your representatives that we thought the company's plans would meet most, if not all, of your concerns. We offered to make the current draft of the booklet immediately available to your offices and to discuss any suggestions your offices might have about its specific content.

7. McDonald's did not breach any agreement to participate in some sort of coordinated press statement. In fact, McDonald's was never even asked to participate in a coordinated announcement. Nor was the company ever asked to withhold public announcement of its plans until you had issued a statement on this subject. When McDonald's made the decision to extend the New York test program nationwide, it naturally and quite properly sought to bring that decision to the public's attention.

Against this background, you will appreciate our sur- prise at the accusations made by your offices over the past few days. We can only conclude that there has been a serious and fundamental misunderstanding of our respective positions. We hope you will agree that further recriminations on either side can serve no useful purpose and that we should put this misunderstanding behind us. McDonald's is fully prepared to continue working constructively and in good faith with you and your representatives, as well as officials from other states, in pursuit of our shared goals.

If you think that a meeting with you or your representatives would help to clear up any remaining misunderstanding, please let me know. We would be pleased to meet with you or your representatives at your convenience.

Sincerely, Gerald M. Romberg cc: John Horwitz, Esq.

Exhibit 7

The Attorneys General of Texas, California and New York have concluded our joint review of McDonald's recent advertising campaign which claims that McDonald's food is nutritious. Our mutual conclusion is that this advertising campaign is deceptive. We therefore request that McDonald's immediately cease and desist further use of this campaign.

The reason for this is simple: McDonald's food is, as a whole, not nutritious. The intent and result of the current campaign is to deceive consumers into believing the opposite. Fast food customers often choose to go to McDonald's because it is inexpensive and convenient, They should not be fooled into eating there because you have told them it is also nutritious.

McDonald's calculated move to promote its food as nutritious is a giant step backward from the gains made last summer when McDonald's, at the insistence of our three states and together with the other major fast food restaurants, agreed to provide booklets to its customers giving the nutrition facts on its food.

With these booklets, consumers can make their own decisions whether or not to eat at McDonald's - and what to eat when they get there.

The new campaign appears intended to pull the wool over the publics eyes. Let's consider a few of the specific claims made in your ads.

• The ad discussing salt (sodium) content in foods says, "Our sodium is down across the menu." This is not true. That same ad lists four products (regular fries, regular cheeseburger, 6-piece McNuggets, and vanilla milkshake), none of which have had their sodium content lowered in the past year.

• The ad touting the 'real' milk in McDonald's shakes says that they contain 'Wholesome Milk, natural sweetners, a fluid ounce of flavouring, and stabilizers for consistency. And that's all."

  In fact, that's not really all. McDonald's own ingredient booklet shows that this milkshake actually contains artificial flavour, sodium benezoate and sodium hexametaphosphate, two chemical preservatives. This ad doesn't tell the whole story.

• The cholesterol ad emphasizes the relatively low (29 milligram) cholesterol content of the regular hamburger, but doesn't even mention the saturated fat content, much more relevant to those with cause for concern about heart disease.

These are but a few examples. The ad campaign continues in this overall vein, and has the tendency and capacity to deceive millions of McDonald's customers.

Copies of all ads used in this campaign are attached to this letter. In order to prevent further action by our three offices, we require that McDonald's discontinue this advertising campaign, and cease and desist from future advertising which falsely or deceptively portrays McDonald's food as nutritious.

A copy of this letter is being sent to McDonald's advertising agency, the Leo Burnett Company Inc. Notice is hereby given both to McDonald's and to the Leo Burnett agency that future advertising of this nature will be considered to be a violation of the Texas Deceptive Practices Act and as well as the relevant statutes of the states of California and New York.

Thank you for your immediate and responsible attention to this matter.