McDonald's Case

Case Study: McDonald's

McDonald's is a chain of fast food restaurants. Its main products are hamburgers, sandwiches, french fries, menus for breakfast, soft drinks, smoothies, desserts and, recently, salads and fruit. It serves approximately 47 million customers a day.

In 1940, brothers Dick and Mac McDonald decided to create the company, entering the fast food concept 8 years after. However, his leap was in 1955 with the first franchise, taken by the executive Ray Kroc.

Over the years it has been extended to be a restaurant with a greater presence in the world, becoming a symbol of America, fast food, capitalism and globalization. McDonald's is the fast food chain in the world and provides a variety of sandwiches, snacks and other products. The fast food sector is running amok throughout the world, where every company is looking for a gap in the market and McDonald's has its place all over the world.

Interestingly, the product sold by McDonald's is basically the same worldwide, without adjustment of supply to the tastes of each country. Today, the "Big Mac" hamburger is the company's most famous triumph in the five continents and becomes a common point on the planet. Obviously, the secret of its success is to offer an unbeatable price-quality ratio.

However, fast food is a subject that creates a lot of controversy for several reasons. Throughout this case, I will focus on three of them:

1. Resources: the mass production of meat "is a huge bill on energy, water usage and CO2 footprint" says Brian Halweil, from the Worldwatch Institute in Washington. If the meat comes from deforested areas, the long-term costs are even higher. Increasingly, beef hamburgers come from Brazil, with 205 million head, the world's leading exporter. It is no coincidence that the financial group 3G, just bought most of Burger King, owned by three Brazilian billionaires. Cattle are the main culprit of deforestation in Latin America and Asia, according to Greenpeace.

2. Wages: the second hidden cost is the one that the state, especially in the U.S., has to take as a result of poverty wages in the fast food sector. The average wage of a worker at McDonald's in the U.S. is $ 15,000 per year. For workers, especially if they have dependent families, this is not enough to live or to afford health insurance. Therefore, the Federal Government should bear the cost through a "social grants", either providing health insurance under Medicaid government program, either through financial assistance to poor families. Forty million people in the U.S. receive food aid, food stamps or bonds called for food. And in a bizarre paradox, many of them are fast food workers. According to some experts, the social cost of these subsidies, specifically the McDonald's workers in the United States exceeds 195 million euros a year.

3. Health: the third externality is the cost of diseases related to fast food. According to a U.S. study, the cost of excessive consumption of meat in the U.S. is between 21,000 and 42,000 million euros a year. In Europe, there is growing concern about the consequences of increased meat consumption. Food Security and Nutrition (AESAN) warned last week that the loss of the Mediterranean diet in countries like Spain or Italy coincides with a worrying increase in the consumption of red meat. The United Kingdom has recommended this month the british to eat less than 70 grams of red meat per day to avoid a high risk of colon cancer. Note that a McDonald's Big Mac weighs 323 grams more or less. It also extends an epidemic of obesity and diabetes. 13% of young americans are obese. The Spanish government, for example, estimates that 2,500 million euros -7% of health care expenditure- corresponding to obesity.

To meet all these attacks, McDonald's makes a defense on its website explaining his company's policy to show that it is an honest company struggling to internalize externalities. Referring to the three points discussed above, the company says:

1. McDonald's is a company committed to the environment in which it operates, and works actively to ensure the sustainability throughout the supply chain to the restaurants. McDonald's is also concerned about the preservation of the environment with a policy focused mainly on three main priorities: energy efficiency, design / features of the packaging and design of the restaurants. McDonald's has reduced by 18% of waste generated by each restaurant and, in total, the company has cut about 320 tons of solid waste per year. Moreover, 87% of its packaging comes from renewable sources (paper or paper pulp) from certified