How to address the McFootPrint?
- Beef production, restaurant energy usage, packaging and waste account for 64% of McDonald’s total global emissions.
- McDonald’s expects to prevent 150 million metric tons of CO2 equivalents from being released by 2030, the equivalent of taking 32 million cars off the road for an entire year or planting 3.8 billion trees and growing them for 10 years
- A coalition of investors representing more than $6.5 trillion in assets has challenged fast food chain owners to put robust sustainability targets in place for their meat and dairy suppliers
“To create a better future for our planet, we must all get involved. McDonald’s is doing its part by setting this ambitious goal to reduce greenhouse gas emissions to address the challenge of global climate change. To meet this goal, we will source our food responsibly, promote renewable energy and use it efficiently, and reduce waste and increase recycling.”
Steve Easterbrook, President and CEO, McDonald’s Corporation
Climate change is the defining issue that is shaping our current and future generations. With the recent news of a coalition of investors, commanding $6.5 trillion in assets, targeting the fast food industry’s inaction towards the environment, influential people are beginning to take notice.
From the beef in your burgers, to the palm oil in your fries; from the plastic in your straws to the water in your soda; fast food not only affects the health of our bodies, but also the health of our planet.
So where does McDonalds fit in all of this? Although founded in 1948 by Maurice and Richard McDonald, a milkshake appliance maker called Ray Kroc was fascinated by their need for EIGHT malt and shake mixers. His intrigue led him to visit the brothers’ restaurant, and there he discovered a simple but efficient business model that allowed the production of a huge amount of quality food. He bought out the brothers in 1961 and today McDonalds is the world’s largest restaurant chain by revenue, boasting $21 billion dollars in sales last year. With a global presence this large, their carbon footprint is, needless to say, considerable.
Beef production, restaurant energy usage, packaging and waste account for 64% of McDonald’s total global emissions. Serving 70 million people in 40,000 restaurants in over 100 countries around the world, a small change will go a long way.
What is McDonalds doing NOW?
In support of action against climate change, the company aims to hit the following targets from 2015 to 2030:
- Reduce global greenhouse gas emissions by 36%
- Reduce emissions intensity by 31% (per metric ton of food and packaging) across the supply chain
McDonald’s will address its ambitious targets by implementing large-scale efficiency and sustainability improvements across its entire network, including adopting sustainable packaging, forestry and agriculture methods, supporting environmentally sound beef production, and switching to LED lighting and energy efficiency equipment in restaurants (low-oil volume fryers, high-efficiency hand dryers, low-spray valves).
For example, in 2017, the company allocated $5 million to restaurants around the globe to upgrade to LED lights, achieving a net cost saving of $14.3 million and a CO2 reduction of 100,587 metric tons (equivalent to removing 21,539 cars from the road for a year).
By committing to these targets, McDonald’s has become the first company in the world to address global climate change by setting a science-based target to reduce its greenhouse gas emissions. McDonald’s expects to prevent 150 million metric tons of CO2 equivalents from being released into the atmosphere from 2015 to 2030, which is the equivalent of taking 32 million cars off the road for an entire year or planting 3.8 billion trees and growing them for 10 years.
What else can McDonalds do?
Under the pressure from the competitors and the shift of consumption trends towards more environmentally friendly options, what should be McDonald’s next move to tackle this global threat?
Menu adjustment
Accounting for 1% and 13% of total consumption, plant-based burgers and milk are here to stay. So, with plant-based burgers already introduced by competitors, McDonald’s should urgently introduce ‘’green options’’ into the menu (patties, milkshakes) to avoid being left out of a new, growing market segment of environmentally concerned consumers. New options at prices of $15-20 (compared to the $8 classic ones) will not only widen the firm’s portfolio without cannibalising other products, but also will attract new customers with higher Willingness To Pay.
Vertical integration
With demand for plant-based meat soaring, the current suppliers already struggle to keep up with the pace. This fact creates another urgency for McDonald’s to search for suppliers that are able to serve its 40,000 restaurants worldwide. With the majority of the vegan manufactures having already established contracts with competitors this is at least challenging, but ‘’ If you can’t beat them, buy them’’, so McDonald’s could revert this threat into an opportunity by investing heavily into vegan meat facilities, which will enable them to control both the quality aspects and the price of plant-based products.
Carbon farming
The name of the game is “Farm-to-table 2.0”. New agricultural practices can draw down carbon from the atmosphere and into the soil and could ultimately help reverse the rise in global temperatures. And healthier, carbon-rich soil produces more healthful, nutrient-rich food. By supporting farmers, that are willing to shift to carbon-absorbing practices, and building long lasting relationships with them, McDonald’s can improve its products’ carbon footprint, while in the same time provide healthier options to its customers.
Reverse logistics
Between 33-50% of all food produced globally is never eaten (the value of this wasted food is worth over $1 trillion) and wasted along the food supply chain. 85% of this waste occurs during consumption, in restaurants, groceries, and homes. With one of the widest supply networks and 40,000 restaurants, 28,000 of which are easily accessible by car (drive-thru’s) McDonald’s can incentivise people to reduce their waste by establishing a loyalty program, that would reward them with discounts every time they recycle or reuse their favourite McDonald’s packaging materials.
All these measures will not only help McDonald’s comply with the upcoming regulation changes but also will help the firm to enjoy first movers’ advantages and establish its position as the most environmentally friendly fast food chain in the world.
How is the rest of the fast food industry responding?
McDonald’s is not the only fast food company making changes in their business model towards sustainability. In January 2019, a coalition of investors representing more than $6.5 trillion in assets of the world’s six largest fast food companies, challenged fast food chain owners to put robust sustainability targets in place for their meat and dairy suppliers. They argued that “firms that fail to meet this challenge face regulatory and reputational risks that put their long-term financial sustainability under threat.”
In response, Carl’s Jr. and Burger King have already released their 0% beef burgers, a veggie burger made by plant-based meat companies (Beyond Meat and Impossible Foods, respectively). After several months of trial, sales have been higher than expected and meat lovers claim that the taste difference is minor.
Other companies such as KFC have also strengthened their commitment towards sustainability. Not only have they reduced their consumption of plastics (elimination of plastic bags, replacement of plastic straws with paper, etc.) and eliminated any antibiotics or palm oil in their products, they have also committed to sourcing 100% recoverable or reusable plastics for its consumer-facing products by 2025.
It seems that with the combined pressure of current and upcoming regulation, investors and consumers’ demands have lit a fire under the fast food business. As a result, the fast food industry is facing a major transformation and it is responding with a more sustainable and environmentally friendly business model.
This will not only help to create a “green” planet, but will enormously contribute to people’s health.
Elaine Cruz, Nimit Shah, Nick Pispas, Carmelo Renobales Aldamiz-Echevarria, Jack Nolan
McDonalds is showing to be ahead of the industry in the sustainability aspect. This will not only create a great impact in terms of climate change but is also a a smart business idea for them to transform their brand perception in regards to this topic. I believe that McDonalds will not only see the benefits in terms of the sustainability goal itself but aso it will be a relevant move to attract more customers in a more green environment which we are now facing. It will also add cost reduction to their P&L and potentially continue growing in a changing business environment.
Additionally, the fact that McDonalds is driving this change will create a more deep change in the supply chain of agriculture, making it more sustainable overall. The scale of McDonalds will impact the process of many small farmers as they will be required to comply with more sustainable production. In that sense McDonalds is a key starting point to help transform the industry.
Interesting post.
I have a couple of comments on the idea to target the “green segment” with a more vegan set of options:
1) a Consumer Who is vegan/green sensitive would probably never go to McDonald anyway, since he/she knows the core business of the company is beef burger, therefore I think that from a business perspective this segment is really hard to target
2) if they increase their vegan options they risk to be even more dependent on raw materials which are affected by climate changes (soy, crop, …). The unpredictability of the whether, indeed, makes sourcing more risky and expensive.
It is great to see that the largest food chain in the world is taking action. Based of the enourmous scale of McDonalds, even small changes made can have a large and far reaching impact.
On top of some of the suggestions in the blog, McDonalds could push further with simple changes. To start with, why not have recycling differentiation for the bins? Surely the burger packaging and the drinks cartons, for example, can be easily separated by customers and would drive a large decrease in carbon footprint. Secondly, with so many restaurants around the world, renewable energy to power them (not just more energy efficient methods) could make a huge difference, although it would obviously come at a high upfront capital outlay. Thirdly, looking into electric vehicles for its delivery operations in busy cities (i.e. last mile), as well as long truck journeys, could make a huge impact.
Hopefully these efforts will put pressure on McDonalds’ rivals and drive a change in the industry!
McDonald’s competitor, Burger King just started offering plant-based alternatives to its beef patty via a partnership with Impossible foods. Though this piece references the fact that McDonald’s has invested in plant-based products, I’m not sure if any of these products are sold at scale through the McDonald’s empire. Curious if McDonald’s (and other fast food burger chains) consumer base will be open to swapping the real thing for a vegetarian alternative; though I would think if McDonald’s can get the taste and price point right they are most of the way there. The only issue left to address is how you market the plant-based burger to McDonald’s customers…
Even though the theme here is how companies react to climate change and carbon emission is the major cause to this change, we don’t talk enough of the water footprint that’s embedded in everything that is produced, especially food. A beef patty requires a mind-blowing amount of water – 3500 liters, to produce. Agriculture consumes 70% of the water consumption in the world and most of them goes to the food that we ate. Climate change will only exacerbate either the water shortage or chances of flood so companies like McDonald will need to rethink how they strategize which menu they serve to lower their water footprint.
curious to see if the franchise model will represent a strength or a weaknesses in implementing some of these initiatives.
It is a necessary step that fast food chains need to take, to enhance their image. Sustainability is not only a buzz word but also an important step for businesses to succeed. I am curious to also understand the regulations in different countries concerning the food ingredients and how certain governments are pushing more towards a healthier and potentially a more sustainable food menu.
It’s quite interesting to read about McDonald’s initiatives towards a more environmental friendly biz model. It is imperative that the large fast food chain adjust to the changing consumer preferences as well. Nonetheless, I am very curious to see how the brand will successfully evolve towards a green menu. Several attempts have failed miserably, also due to the higher raw material and operational costs of having fresh healthy greens/meat alternatives as part of the menu.
In addition to offering plant-based items on the menu, I would also like to see what McDonald’s is doing to tackle food waste. I am also interested in what happens to the food items that do not sell – does it get tossed, do employees take it home, are some of them donated to food shelters? I believe by looking into where the product ends up would also open up more solutions towards end to end sustainability.
Educating their franchises to sustainable practices, offering green options in their menu and support the development of better farming techniques would be further initiatives the company could take!