The law isn't in place yet - a second review vote will be held next week - but it certainly is attracting a lot of attention. McDonalds has released a few statements, "We are extremely disappointed with today's decision. It's not what our customers want, nor is it something they asked for"  and the rest echo that sentiment. On one hand are the people who are insulted or feel as if their freedoms are being infringed upon by an overreaching nanny state, while on the other hand are people who applaud the decision and "balk at the sight of a child sucking on a salty [fry] or chicken nugget"  (Incidentally, this is the forum discussion that sparked my interest in the first place; can you guess which posts are mine? ;) )
In general, I do not believe that the demands of the populace on a free market will produce the safest, most ethical and highest quality goods. Such an ideal relies on one very large assumption: that the populace is fully informed and willing to and capable of making a decision. Everyone knows from everyday experiences that this simply isn't so - be it themselves struggling to make an informed decision in a society drowning in advertising and propaganda, or by watching others make less-than-intelligent decisions. This is why we allow governments to regulate the market, even in a capitalism-obsessed country like the US. Sometimes these bodies get overeager and overreach and begin infringing on personal freedom. That's why there needs to be a good system of checks and balances and a method of appeal. (Whether there is one available in this instance I am uncertain) I also believe this to be such a case - it is, frankly, a silly law put in place with good intentions.
For one, though the initial assumption made is that this affects only Fast Food restaurants, I suspect it would apply to any place that offers a kids menu. Plenty of sit-down restaurants offer child-sized options and also a "toy chest" or coloring books for the kids. I can't recall going to any restaurants when I was a child that didn't have some sort of little toy, although my boyfriend claims the opposite (I suspect it has to do with where we grew up). Would these restaurants be subject to this law too? The quality of the food served in such places is on par with that served at McDonalds (which is actually the "healthiest" fast food chain right now), usually chicken strips, nuggets, pasta or mini-pizzas - all of which are calorie-dense and fairly fatty, and likely served with fountain soda.
Another thing I was surprised about is the idea that toys are actively attracting children to McDonalds. Perhaps I was simply a practical tyke, but I realized quite early that everywhere I would have wanted to go would give me a toy and that the toys were generally cheap and boring. The place with the best toys was actually Jungle Jim's because they had foam airplanes and parachute guys, so if I had to choose solely based on the toy I would have always eaten there. But it was not so, because there was something more important to me than cheap toys: The Playplace!
There were three places in my town that had indoor playplaces: McDonalds, Burger King and Dairy Queen. And man, I went to those places every chance I got because I loved the ball pit. I know I'm not the only one - everytime I'm near young children and they're given a choice of where to eat, it is always a place that has a playplace. Clearly this has more value to children than a toy does; so... do playplaces encourage unhealthy eating? As I said in that thread, 
San Fransisco should ban play parks at fast food restaurants and then sit back and stew in the irony of discouraging both unhealthy eating AND vigorous play. Or perhaps the answer is to force all restaurants that have a children's menu to have a play park?Which was mostly hyperbole but it really does show where this train of thought logically concludes.
The last thing that jumped out at me is that... well... McDonalds isn't really that bad. They've come under a lot of scrutiny and consumer pressure lately and have responded by cleaning up their act and being fairly proud of it. For example, they offer juice and milk as an alternative to pop, and offer apple slices and caramel dip as an alternative to fries in their Happy Meals. So I decided to have a look at the actual nutritional information of Happy meals to see if they would, in fact, be affected by this law. First, the requirements laid down by the bill:
...restaurants may include a toy with a meal if the food and drink combined contain fewer than 600 calories, and if less than 35 percent of the calories come from fat. 
The San Francisco law would allow toys to be given away with kids' meals that have less than 600 calories, contain fruits and vegetables, and include beverages without excessive fat or sugar. 
The following chart shows the information about Happy Meal food aggregated from their website, with Canadian [6,7] and American  values:
The highest Calorie-wise is the cheeseburger-chocolate milk-fries combination, at 660 Cals (Can) and 700 Cals (US). If we always substitute apples for fries, this becomes 540 and 570 Cals, Can and US respectively. We now have a set of happy Meals that meet the first San Franscisco requirement: all Happy Meal permutations that don't involve soda and have apples instead of fries are under 600 Cals.
The second nutrition-related requirement is that a maximum of 35% of the Calories can come from fat. To get calories from fat, you simply multiply the fat in grams by 9, and to get the percent you divide the number of Calories from fat by the total number of Calories. 
Our fattiest Happy Meal that is under 600 Cals is still cheeseburger-apples-chocolate milk in the US and is actually nuggets-Sweet&Sour-apples-chocolate milk in Canada. We get 140 Calories from fat in the US and (14 + 1 + 1.5 + 2) * 9 = 166.5 Calories from fat in Canada. That means there is 24% calories from fat in the fattiest US meal and 33% Calories from fat in the fattiest Canadian meal. Note how each of these is still under the 35% maximum imposed by the new bill.
The last requirements are met under the conditions that the first two are: that is, you choose apples and juice or milk over fries and pop. You then have a non-fatty, non-sugary beverage (Natural milk fat and natural sugars from the juices wouldn't count as excessive) and you also offer fresh fruits. Therefore, if a parent ordered a Happy Meal with milk/juice and apples they could receive a free toy. Perhaps McDonalds isn't a good pick as the posterboy for this debate afterall!
Of course, it is obvious that McDonalds wouldn't impose such restrictions as only giving away toys with certain beverages and sides - instead they could simply opt to sell the toys instead of offering them for free or hope the bill doesn't even get passed next week. Another option would be to discontinue the Happy Meal altogether, and sell the meal components separately as some sort of "mini-meal" and sell toys separately at a small price. In the very end, there are plenty of loopholes available to restaurants who feel they can't or don't want to comply to this silly bill.
 L. Baertlein, "Law curbs McDonald's Happy Meal toys," Yahoo! News, Nov. 3, 2010. Accessed Nov. 8, 2010. http://news.yahoo.com/s/nm/20101103/hl_nm/us_mcdonalds_toys
 "Sad Faces Over Happy Meals, Island news Today, Accessed Nov. 8, 2010. http://www.inlandnewstoday.com/story.php?s=16760
 D. McGinn, "San Francisco toy ban takes the ‘happy’ out of Happy Meals," The Globe and Mail, Nov 4, 2010. Accessed: Nov 8, 2010. http://www.theglobeandmail.com/life/health/san-francisco-toy-ban-takes-the-happy-out-of-happy-meals/article1784976/
 "San Fran Bans Happy Meals," Convenience Store News, Nov 8, 2010. Accessed: Nov 8, 2010. http://www.csnews.com/top-story-san_fran_bans_happy_meals-57477.html
 "A not so happy meal," Coffeeshop, Blogger Support Forum. Accessed: Nov 8, 2010. http://www.google.com/support/forum/p/blogger/thread?tid=0f5fff7b2133c967&hl=en
 (Nov, 2010) McDonalds: Nutrition Calculator. [online] Avaliable: http://www.mcdonalds.ca/en/food/calculator.aspx
 (Nov. 2010) McDOnalds Canada: Nutrition Facts. [online] Avaliable: http://www.mcdonalds.ca/pdfs/NutritionFactsEN.pdf
 (Nov 2010) McDonalds: McDonald's USA Nutrition Facts for Popular Menu Items. [online] Avaliable: http://nutrition.mcdonalds.com/nutritionexchange/nutritionfacts.pdf
 F. Haynes, "How Do I Calculate My Fat Intake?," About.com [online] Accessed: Nov 8, 2010. Avaliable: http://lowfatcooking.about.com/od/faqs/f/fatcalcalc.htm
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