Publications
Publications
- May 2023 (Revised November 2023)
- HBS Case Collection
Arcos Dorados: Decarbonizing McDonald's in Latin America
By: George Serafeim, Michael W. Toffel, Jenyfeer Martinez Buitrago and Mariana Cal
Abstract
This case describes the decarbonization strategy of Arcos Dorados—McDonald’s largest independent franchisee, operating in 20 countries and territories in Latin America and the Caribbean—and how the company measured its greenhouse gas (GHG) emissions, including those generated directly by the company and by all of its suppliers. Set in May 2022, the case also describes the challenges faced by the company to understand the composition of its carbon footprint, as well as the actions it has taken to reduce it. Under CEO Marcelo Rabach, Arcos Dorados was focusing on reducing its carbon intensity. While the company had made progress in reducing carbon emissions from its operations, it now needed to develop a plan to address emissions in its supply chain, which directly impacted the composition of its menu. Options to reduce the carbon impact of menu items included replacing (or mixing) the beef used in sandwiches with less carbon-intensive ingredients; shifting sales toward chicken-based meals; adding plant-based menu options; and increasing the share of sales driven by coffee and ice cream. The plan should align with the company's double-digit growth strategy while also controlling costs to maintain profit margins. Confronting these challenges, what was the best product mix and prioritization for these alternatives? Which products should get more resources to develop and market? How should the company forecast demand for these products? And how could they ensure that their efforts to reduce their carbon intensity would avoid hampering the company’s growth, especially given its context of fierce competition and macroeconomic and social disruptions?
Keywords
Environmental Accounting; Animal-Based Agribusiness; Plant-Based Agribusiness; Change Management; Forecasting and Prediction; Environmental Sustainability; Food; Growth Management; Supply Chain; Corporate Social Responsibility and Impact; Strategy; Agriculture and Agribusiness Industry; Food and Beverage Industry; Green Technology Industry; Consumer Products Industry; Latin America; North and Central America; South America
Citation
Serafeim, George, Michael W. Toffel, Jenyfeer Martinez Buitrago, and Mariana Cal. "Arcos Dorados: Decarbonizing McDonald's in Latin America." Harvard Business School Case 623-017, May 2023. (Revised November 2023.)