Mcdonalds_Environmental_Saving_Capacity

In the modern era, environmental strategies are often at the forefront of many international corporations. The 2010 Munich Beer Fest allowed a chance encounter with an American McDonald's corporate employee who was making a convenient detour on his way to attending a seminar in Hamburg. This seminar was a meeting between promoters and researches of a relatively new McDonald’s energy efficiency development campaign, and respective European managers and Franchise owners all there to discuss the reduction in energy consumption in their kitchens. This then lead to a question of what has one of the worlds most iconic companies in the last 30 years done, or is doing, to improve their environmental friendliness, how such programmes can positively effect end results and what potentials lie in actually making a significant difference to our environment. McDonald’s restaurants environmental impact McDonald's Corporation, both directly and indirectly, stamps an impressive Carbon footprint on this planet. Exact publicly available figures on how much energy their restaurants alone consume are not readily accessible. However, an estimate can be deduced from utilising some of the information made available. From McDonald's Switzerland Environmental Report (2006): • 2005 Total Energy consumption (oil, gas and electricity) in restaurants was 59m KWh with a total of 145 restaurants. This equates to 0.4 GWh of energy usage per year per restaurant. McDonald's restaurants follow a similar design, using the same production techniques and similar types of kitchen appliances (Skanska 2009). Therefore, assuming the energy consumption figure above is approximately standard for all the 32,000 restaurants (Kitazume 2010) operating worldwide, then 12.8TWh of electrical energy per year is required to feed those 60 million daily visitors. To provide some context to this figure, a Strathclyde University analysis (2002) calculated that the average three bedroom UK household consumes 4200KWh of electricity per year. So, this equates to approximately three million, or 12% of all UK households equivalent, that McDonald’s restaurants power yearly. Even if one were to conservatively calculate the tonnes of Carbon produced by using EU-25 figures of 0.41 tonnes of CO2 per Mwh (Zmijewski 2010), then their worldwide restaurant footprint to keep the ovens running and customers warm is 5.2 million tonnes of CO2. One of the problems with these huge energy consumption, cost and carbon producing figures however, is that McDonald’s Corp don't directly pay for a lot of this electricity and fuel since approximately 80-85% (Wiki 2010) of their restaurants are franchise owned and operated, or by other leasing agreements. Therefore the grounds for McDonald's to improve their restaurants power consuming efficiency on a substantial world wide scale cannot merely be driven by financial advantages alone. This company certainly has had its share of negative publicity ranging from their management of their sourced raw products, to their part in global obesity. Accordingly, one could argue that improved public image is a major priority on the company's agenda, not merely necessary to draw in new clients, but even to maintain the loyalties of their current huge customer base. It is therefore likely that, up until recently, their development of Green ideas and strategies has been driven more by wanting to override some of these aforementioned negative issues than perhaps an obligation to do some good in the world. Efficiency improvements have the advantage of allowing quantitative results to be easier dictated to the public than perhaps other social benefits, such as the healthiness of their product. McDonald's has a history of reacting to social and public criticisms and counteracting these criticisms with aggressive campaigns. What they are discovering is that the environmentally positive changes they make can also earn them money by saving on costs. In addition to this, it has also been shown that companies displaying positive environmental outcomes can result in a direct increase in their share price. Accordingly, the opposite has the reverse effect with the recent BP oil disaster an extreme case of this idea in action. McDonald’s direct and indirect control of energy consumption in the Quick Service Food (QSF) industry has the capacity to significantly help the environment and, as will be discussed, improve public perception, individual owner and corporate results. As well as the focus of improving kitchen efficiency, where 80% of costs are incurred (mdcr 2009), McDonald’s can also influence supplier efficiencies because of their size. For instance, they are one of the European Unions largest beef buyers which in itself is an industry which has recently been under the environmental spotlight with regards to their associated GHG emissions (Brass 2010). In the US, they have more or less a monopoly over the 1.5 million kgs of Russell Burbank purchased annually. This particular species which they use for their french fries consume comparatively a lot of water to other breeds and is readily prone to rot, a problem remedied with chemical controls (Associated Press 2009). McDonald’s, as always, could be the classic target in this report, however its not a McDonald’s bashing exercise. Merely an example of the potentials of green strategy implementation into a major company. So what have been McDonald’s Green Strategy Implementations' At the corporate level, McDonald’s involvement in Green Strategies has been apparent for a number of years. More recently, a number of energy efficiency and waste reduction projects both at corporate, country wide and individual franchisee level are being actioned. Probably the most notable entrance into McDonald’s Green Strategy Program was its 'alliance' with the Environmental Defence Fund (EDF) in 1990. The EDF is an organisation formed in 1967 which has achieved many influential and far reaching results in its campaigns through changes in environmental legislation and reform Bills. One proudly publicised result was McDonald’s acceptance from their 1991 investigation that they change their polystyrene packaging to more environmentally friendly carton (EDF 2008). The effect of this decision resulted in not only McDonald’s' millions of tonnes of packaging waste and transportation being saved since its inception, but is a very good example of how the decision of this major QSR chain largely changed the industry standard. Whether the impetus for the initial change was through lead planning on McDonald’s behalf, or more likely an emergent strategy formed by EDF's report, the end effect nevertheless, was environmentally and financially positive. McDonald’s was one of the first major international companies to take up membership in the Carbon Disclosure Project in 2000, an organisation with the largest data base in the world, containing thousands of organisations' details on GHG emissions and Climate Change Strategies (CDP 2010). Unfortunately data from the CDP is currently unavailable to the public. Nevertheless, this collaboration by McDonald’s Corporation to having participated in this project, coupled with their substantial listings in their websites of actual environmental actions being undertaken, strengthens their stance for their being shown as having environmental interests as a significant feature of their product. A recent international objective by McDonald's Corporation is focusing on reducing kitchen power usage by 3 % across the entire international operation (Guay 2010). Relatively 'obvious' strategies such as automated switch-offs, low energy toasters and low volume fat fryers are examples of how they are going to achieve this result. The most notable recent technical development is their Energy Management System which controls heating, ventilation and air conditioning and lights using motion sensors. Now, should 3% energy reductions be achieved internationally, McDonald's will in effect be saving 300GWh (80% of entire restaurant power consuming kitchen usage x 12.8TWh x 3%) per year and an 123,000 of CO2 emissions worldwide. Such results are productive, however end effect on share price increases or corporate image will not be greatly changed by such figures. The two main reasons for the former likely being the capital costs for new machines and installations and the fact that actual savings gained will benefit the the majority franchise operated restaurants, assuming that is, McDonald’s does not take a cut of the savings somehow. In terms of public perception, a 3% reduction in energy use, although useful, will not get too many heads turning nor changing peoples psyche about choosing to eat in McDonald’s restaurants purely because of this reason. Ultimately, this concept should be the goal of any firm pursuing green strategies. That is, to promote your establishment as the best place to go to, whether for service, price, quality, or in this case, what the company is doing for our planet. Simply put, McDonald's has not done enough to really stamp their ground in environmental policy across the board, hence has not yet seen significant financial benefits nor consumer compassion changed in this area. For McDonald's Green Strategies to have such an effect, they need to do something really quite radical as an industry leader. How can they really make a difference' There has been a recent flurry of world wide Green Strategy developments and trial restaurants, at various operational levels in McDonald’s restaurants. A city-wide initiative in Hamburg, Germany, lead to a nation wide incorporation of all restaurants now using low energy flouro light bulbs (McDonalds Corporate Responsibility 2009). This simple example enables the 1100 German restaurants to save 260MWh per year on their electricity bill. Other examples include individual restaurants using combinations of PV, heat recovery systems, small scale wind power, rainwater flush systems and flush-less urinals to either conserve water and energy use, or simply create their own electricity. Reductions of up to 40% water use in a Canadian site and 30% reduction in externally sourced electricity consumption in a Bremen, Germany trial have been established (amazonaws 2009). The promising Green Strategies undertaken at these various operational levels need to be incorporated as standard in the 1000 or so new restaurants (Yousuf 2009) still opening yearly world wide. Modifications also need to applied to existing buildings and to some extent this is happening presently. The UK operations are the ideal 'trial test country' to initiate such a programme of restaurant 're-powering' as, uniquely, approximately 70% of UK restaurants are corporate owned and operated (Wiki 2010). Hence, risk levels to individual operators while systems are being optimised and developed are eliminated as initial capital costs are absorbed by the UK's corporate backing. Currently 13 McDonald's restaurants in the UK have solar panels installed and trials are also being performed with small scale wind turbine systems (mcdonalds uk 2010). The benefits from the new Feed In Tariff scheme started in the UK in April 2010 are also accessible to businesses (DECC 2010) therefore well known calculated financial advantages and capital pay-off periods are already established for PV installations for example. It is certainly possible that a large number of restaurants could reduce energy and water consumption by up to 30%. Once the corporate owned restaurants are equipped and shown to be economically beneficial, then this would give other small franchise owners the drive to do the same. In the new green strategy game, corporations and businesses can kill two birds with one stone. They can improve their image in the public eye by being seen as a Green Company, but also profit financially by using sound decision making in determining which systems they choose to adopt to gain efficiencies. McDonald’s have made a number of improvements to their operations environmentally both through international and national corporate strategies and individual owners impetus. However, an analysis of their best 'Green' restaurant prototypes needs to be undertaken to come up with an ideal standard for all restaurants of the future. This could potentially lead to a change in QSR industry standards and create carbon savings on an enormous international scale. The concept of McDonald’s restaurants' roofs adorned with PV cells or a wind turbine atop their golden arches would clearly show the public that this building is doing something particularly positive for the environment. This type of bold structure would be as much a statement and advertisement as it is a practical implementation. Hence, public perception would be greatly improved and the accompanying reductions in water and energy consumption, will over the long term both lead to gaining wealth by bringing more people through their doors and by reducing fixed costs. If substantial energy savings be achieved by incorporating renewable energy systems directly into their buildings, then they as a company, the environment and their customers will all be lovin' it ®