Subway Restaurants is moving forward with plans to source all its eggs from cage-free chickens, but the process will take years and may trim profit margins unless U.S. farmers make strides to meet growing demand for more humanely produced eggs.

The Milford-based sandwich franchiser launched breakfast offerings in April pledging that 4 percent of the eggs would come from cage-free chickens. However, Subway noted its goal is to source 100 percent of the eggs from hens not locked in boxes, as it does at its locations in the United Kingdom.

On Thursday, the Humane Society of the United States said Subway was recognized with a 2010 Corporate Progress Award given to corporations that have made demonstrable strides in reducing the suffering and advancing the welfare of animals.

"It's a good start in our mind," said Matt Prescott, a Humane Society spokesman, of Subway's move. He said the Humane Society isn't disappointed by the 4 percent initial number because the U.S. egg industry can't handle a 100 percent order from such a large chain at a time when demand for cage-free is increasing.

More Information

Shift may take years, cut into profits

Prescott said in addition to forcing an animal to live in a tiny space for its entire life, there are concerns that chickens in cages have higher incidents of disease than ones allowed to roam free. This issue is about protecting the food supply, he said, as much as it's a moral issue.

Toon Vanbeeck, a senior analyst with Ibis World, confirmed the U.S. egg industry is not prepared for a sudden switch to cage-free hens.

The United States produces about 90 billion eggs every year, 8 percent of which is made up of cage-free operations, including organic ones, he said.

But Vanbeeck, who is an expert on agricultural products, said demand is climbing but not high enough to force a massive overhaul of the industry, which would touch off capital investments in new chicken farms. He said he believes it will take years for Subway to hit its goal.

Increasing the use of cage-free hens may affect prices of the sandwiches, he said.

"It's definitely going to eat into the margin," he said of profit per breakfast sandwich. He said cage-free prices generally run at 60 percent more than those laid by caged birds, so it would appear Subway would have to absorb that difference to stay competitive against other breakfast offerings.

Subway Director of Corporate Responsibility Elizabeth Stewart wouldn't say what percentage of cage-free eggs would be used this year or whether the company was experiencing any price pressures.

In addition to Subway, restaurant chains including Wendy's, Denny's and Burger King have committed to using some cage-free eggs.

The eggs are purchased through a cooperative for Subway franchisees.

Stewart said the switch to 100 percent cage-free in the United Kingdom occurred because there are 1,376 restaurants there compared with 23,833 in the U.S.

"We know this is going to take time before we fully reach our goals, but we are proud of the commitment we have made and the steps we have been able to achieve so far," she said.