September 26, 2010 Golden Growth

Volume 6 | Issue 3

In 2009, amidst the world economic crisis, Arcos Dorados, the largest restaurant operator in Latin America and the most important McDonald’s

McDonald’s has operated its brand in Latin America since 1967, when it established its first restaurant in Puerto Rico. Since then, the Golden Arches have spread to cover the entire region, with McDonald’s signs dotting the map in 19 different countries throughout Latin America.

In July 2007, McDonald’s Corporation granted the company Arcos Dorados a license to manage McDonald’s restaurants in Latin America. As a result, Arcos Dorados became one of the top 100 privately held companies in the region. Today the company is among the top five employers in Latin America. More than 100,000 employees serve an estimated 3.5 million customers a day.

Throughout the region, Arcos Dorados oversees a total of 1,800 restaurants, 263 McCafés, and 1,217 Dessert Kiosks. It has direct operations in Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curacao, Ecuador, Guadalupe, French Guyana, Martinique, Mexico, Panama, Peru, Puerto Rico, Saint Thomas, Saint Croix, Uruguay and Venezuela.

In recent years, the company has invested in projects to implement sustainable growth and offer a pleasant, more inviting experience for consumers. The results have been above satisfactory: In 2009, Arcos Dorados reached a record of $3.6 billion in total sales. This amount marks the largest revenue ever obtained in the history of McDonald’s operations in Latin America.

EYE ON THE ENVIRONMENT

In Latin America, Arcos Dorados has undertaken the responsibility that comes with its leading position in the fast food industry. It has opened three eco-friendly restaurants: the first in Brazil in 2008, the second in Costa Rica in 2009, and the third in Argentina in 2010. Its Brazilian eco-friendly location was the first restaurant in Latin America to receive LEED (Leadership in Energy and Environmental Design) certification.

Its Argentinean ecological restaurant opened in Pilar, a city in the province of Buenos Aires. Construction for the eatery required an investment that was 40 percent higher than the usual amount needed for a McDonald’s restaurant. The location currently employs 150 workers and has a Drive-Thru, McCafé, and Play Place included in its 650 square meters of construction.

These eco-friendly centers incorporate strategies to reduce the impact the restaurant has on the environment. They use less water and are more energy-efficient than conventional McDonald’s restaurants. They have LED (light-emitting diodes) lighting, as well as control systems that turn off certain lights when a sufficient level of natural lighting fills the interior of the restaurant.

In Venezuela, 19 McDonald’s restaurants have participated in a project known as “Proyecto Orgullo” with the goal of recycling cardboard materials. Since October 2009, when the project first began, the restaurants have recycled approximately 59.4 tons of cardboard. This operation has been recognized by McDonald’s Corporation as one of the best practices carried out in Latin America to help the planet.

From February to June 2010, Arcos Dorados recycled more than 53 tons of cardboard. According to the measuring standards issued by the University of Carabobo in Venezuela, this translates to the salvaging of 795 trees, 420,000 gallons of water, two gallons of petroleum, 106 cubic meters of sanitary waste, and the reduction of CO2 emissions by 1.4 tons.

The company currently has projects underway in Brazil and Argentina to use biodiesel in its fleet of trucks. The biodiesel is made from recycling the cooking oil used in McDonald’s kitchens. For this operation, cooking oil is collected in 20-liter cylinders located below fryers in the kitchen. Supply trucks, when delivering goods to the restaurant, pick up the used oil. The oil is taken to a plant where it is undergoes a process to transform it into biodiesel. The trucks use this fuel during their next trip to the restaurant, where they deliver goods and pick up more oil, thus completing the cycle.

In Brazil, McDonald’s restaurants use a total of three million liters of cooking oil every year. With the new biodiesel program, the used oil could be put to good use. If all of the oil is sent to be recycled into biodiesel, the amount produced could be enough to supply the entire fleet of trucks in Brazil.

In Mexico, McDonald’s joined with paper supplier Kimberly-Clark to produce a line of recycled materials called “Linea Verde” for its restaurants. The pilot project began with five restaurants using recycled napkins, paper towels, and bathroom tissue for its operations. Today, these recycled materials are used in every McDonald’s location in Mexico.

Other recycling programs that Arcos Dorados has taken on in Mexico include recycling ink cartridges in its offices; using solar energy in several restaurants as a test project; and using recycled tires to create green roofs for restaurants throughout the country.

A PERSONAL TOUCH

The company considers its more than 100,000 employees to be the main representatives of the McDonald’s brand. In Latin America, Arcos Dorados has the reputation of being a “planting ground for future CEOs.” Workers are drawn to the company’s benefits, training programs, and opportunities for development and promotion. Many of the restaurant managers and company officials began their careers as McDonald’s employees, a sign of the growth opportunities available through the company.

Arcos Dorados offers a management training center known as Hamburger University in Brazil. It is one of just eight training centers run by McDonald’s throughout the world. In February 2010 it opened a recruitment center in São Paulo, Brazil. This center helps individuals interested in working at McDonald’s go through the application, interview, and evaluation processes in the same place. São Paulo is the Latin American city with the most McDonald’s locations, and the recruitment center streamlines the hiring process for both workers and the company.

The first McDonald’s in Argentina hired just 50 employees. Today, Arcos Dorados hires an average of 14 employees a day throughout Latin America. Its workforce represents 20 different nationalities and six languages.

According to Latin Business Chronicle ranking, the Golden Arches is the largest brand in the catering sector and the ninth top brand considering all economic sectors. In Argentina, the company is on the top of the list. In 2010, Golden Arches was listed by Fortune magazine as the 19th company in the Top 50 Employers ranking.

The Great Place to Work Institute also indicated the Golden Arches as one of the major employers in Latin America. The company was ranked among the top employers in various countries, including Peru, Venezuela, Uruguay, Brazil and Mexico. In Mexico, the brand ranked third in the “2010 Super Business Expansion” ranking, developed by Expansion magazine and showcasing the companies that develop a good working environment.

The Clarin newspaper’s IECO rankings place the Golden Arches 24 in a list of 50 Argentina companies. In the same country, the company was recognized by the “Innovation Awards in Human Resources,” promoted by Meta4, and it won first prize for its scholarship project in the category “Recruitment Practices, Retention and Development of Talents.”

In Panama, Golden Arches received the certification mark “Work and Life Balance,” becoming the first company in Panama and Central America to acquire an international certification like this, which is awarded to companies committed to balancing work and the personal life of its employees.

The Ministry of Education of Venezuela granted recognition to Golden Arches for the inclusion of people with disabilities in their staff.

HEALTHY, HIGH QUALITY OPTIONS

To ensure quality in its products, Arcos Dorados oversees the entire food production process, beginning with the lettuce heads planted in the fields of Latin America. Company officials regularly visit agricultural fields and food plants to keep in constant communication with providers. From the fields, Arcos Dorados oversees the picking, packaging, distribution, preservation, preparation, and point of sale steps.

The company has made menu changes in recent years to offer a wider variety of healthy options. Today its menu includes salads, 100-percent pure beef, grilled chicken, yogurt, juices, apples and carrot sticks. It has also eliminated the use of trans fats in the preparation of food items.

The company uses a relatively similar menu in all of the countries it serves, with a few variations depending on local preferences. In Argentina, the menu includes ice cream flavors such as dulce de leche; in Brazil, it offers coconut water; in Venezuela, McDonald’s menus include arepas, which are pancakes made from corn-based dough; and in Costa Rica it offers gallo pinto, a traditional dish made with rice and beans.

In 2009, Arcos Dorados opened 68 new restaurants, 41 McCafés, and 145 Dessert Kiosks in the Latin American region. It also redesigned 48 locations to include the new, simplified look of the McDonald’s brand. These new additions generated 5,000 more job positions in the region.

Throughout its operations in Latin America, Arcos Dorados has focused on giving customers a comfortable, enjoyable dining experience. Its new locations, as well as its remodeled restaurants, reflect this philosophy. Company officials credit the restaurant’s attractive look, coupled with menu options catered to customers’ current needs, to its ongoing growth in a region where its name is continually associated with leadership and success in the fast food industry.

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