n the article last month we discussed the key sustainability trends and strategies for 2015 and beyond. Continuing with that theme, let’s take a look at McDonald’s and a key strategy they will be implementing in 2016: the purchase of “sustainable beef.” Why is McDonald’s making this change? What are the business implications? What are the issues and concerns? What are the overall expectations?
First of all, here are some fast facts about McDonald’s:
Why is McDonald’s making this change? The reason is that it is all about their customers’ demands! Customers today are more conscious about food itself and they want to live a healthy lifestyle. They want to purchase sustainable products! To that end, customers look carefully at food labels, wanting to know where their food comes from. But now, the lifecycle thinking of today’s customer takes over with additional questions, such as how was the food grown or raised? Who were the people or farmers that produced it? How was the environment or land impacted? What were the growing practices? Were the animals treated with respect? These are all questions that producers and suppliers must now address in their supply chain.
Chipotle has been most successful with its marketing campaign about its all natural burritos. In a Business Week article last year, “McDonald’s Gives Itself a Year and Half to Get into Chipotle Fighting Shape,” the Chipotle success was discussed. On the West Coast today, McDonald’s has turned several of their restaurants into “learning laboratories” with the goal to obtain customer input on food, the environment and sustainable dining practices. Over 40% of McDonald’s sales are from Big Macs, Egg McMuffins and fries, so expect to see a focus on higher quality and premium ingredients.
What are the business implications? The management of McDonald’s has stated that the goal of sourcing “sustainable beef” is not a marketing gimmick or a risk management decision. Bob Langert, VP of Global Sustainability states that: “The move is a business strategy. Our definition for a sustainable supply chain is a supply chain that profitably yields high quality products without supply interruption, while leveraging its leadership position to improve the ethical, environmental, and economic impact of doing business with McDonald’s.” There is a growing trend over the last 7-8 years that has been taking place on the global impact of food production and the importance of sustainable food systems, and McDonald’s wants to become a major stakeholder.
What are the major implications? There has been a great deal of conversation about what the definition of “sustainable beef” really is and means. The company also believes that it may be purchasing “sustainable beef” already. McDonald’s realizes the potential ambiguity, yet is most comfortable with the customers and the marketplace determining the definition and requirements, such as measurements and verification. McDonald’s is also depending upon the Global Roundtable for Sustainable Beef (GRSB) with its supply chain stakeholders to develop these guiding principles. Collaboration among customers and suppliers is a key success factor.
What are the expectations for McDonald’s? The number one reason is brand image. As with many companies, McDonald’s has received a number of negative comments and feedback such as with service problems, dietary concerns with high fat products, and employee pay issues. By moving to a “sustainable beef” marketing strategy, McDonald’s hopes to regain customer trust and build upon its brand respectability.
Bob Langert provides a great management overview: “We see sustainability as something appealing to the masses, to all consumers. Sustainability should be mainstream; it’s not a niche, it’s not a premium. The customer wants it and wants to do business with companies that share their values. They want to see companies like ours and those of our suppliers also doing things with a sense of purpose, that we’re not in the business to just make money but we’re to serve them with food that is safe, affordable, high quality, and now sustainable for our customers.”
Sustainability has become mainstream for McDonald’s and its supply chain. Has sustainability become mainstream for your business?