Arcos Dorados Holdings

Arcos Dorados

Type	Public limited company
Traded as	NYSE: ARCO
Industry	Restaurants
Founded	August 3, 2007
Headquarters	Buenos Aires, Argentina
Area served	Latin America and the Caribbean
Key people	Woods Staton (Chairman & CEO)
Revenue	US$ 0 3,797.4 million (2012)[1]
Net income	US$ 0114.3 million (2012)[1]
Number of employees	94,000 (2013)[2]
Website	www.arcosdorados.com

Arcos Dorados Holdings Inc. is McDonald’s largest franchisee in the world in terms of systemwide sales and number of restaurants.^[3] As of December 31, 2010, it represented 6.7% of McDonald’s franchised restaurants globally.^[4] As the largest operator of McDonald's restaurants in Latin America and the Caribbean, it has more than 94,000 employees, being one of the region's leading employers of young, first-time job holders. It serves more than 4.3 million customers daily and is the largest quick service restaurant (QSR) chain in Latin America and the Caribbean.^[3]

The company operates its McDonald’s-branded restaurants as company-operated restaurants and franchised restaurants.^[4] Company revenues depend sales made by company-operated restaurants and rental income from franchised restaurants. The rental income depends on the greater of a flat fee or a percentage of sales.^[4]

Business areas

Arcos Dorados operates in 20 countries and territories in Latin America and the Caribbean, including Argentina, Aruba, Brazil, Chile, Colombia, Costa Rica, Curaçao, Ecuador, French Guiana, Guadeloupe, Martinique, Mexico, Panama, Peru, Puerto Rico, St. Croix, St. Thomas, Trinidad & Tobago, Uruguay and Venezuela. The company dedicated itself as the organizer of the 2014 FIFA World Cup to provide customer service training to more than 15,000 World Cup volunteers.^[5]

History

McDonald’s has a long history in Latin America and the Caribbean, dating to the opening of its first restaurant in Puerto Rico in 1967. Since then, McDonald’s expanded its presence across the region, opening its first stores in Costa Rica in 1970, in Brazil in 1979, in Mexico and Venezuela in 1985 and in Argentina in 1986.^[6]

Arcos Dorados was formed on August 3, 2007, as a result of the acquisition of McDonald’s Latin American business by the region’s operations managers.^[7] Prior to the acquisition, Woods Staton, Arcos Dorados’ Chairman, CEO and controlling shareholder, was the joint venture partner of McDonald’s in Argentina for more than 20 years and also served as President of McDonald’s South Latin America division from 2004 until the acquisition. Arcos Dorados announced its initial public offering and became a publicly traded company on April 14, 2011 after listing its shares on the New York Stock Exchange.^[8]

Operations

With nearly $3.8 billion in sales in 2012, Arcos Dorados represents 5.6 percent of McDonald’s global sales.^[6] In Latin America and the Caribbean, it is the largest fast food chain and is more than three times the size of its closest competitor.^[9] Compared to the US, Latin America has fewer McDonald’s per person. There's one McDonald's for every 22,200 citizens in the United States. In Mexico, Costa Rica, and Panama there's one restaurant for every 254,000 citizens; in Brazil there's one for every 310,700 citizens; and in the rest of South America, there's one for every 317,400 citizens.^[10]

Company-operated and franchised restaurants

Arcos Dorados operates its McDonald’s-branded restaurants under two structures: Company-operated restaurants and franchised restaurants. Arcos Dorados owns, manages and operates approximately 75 percent of its restaurants.^[11]

Restaurants operated and managed by franchisees account roughly for the remaining 25% of affiliated locations. They receive technical and operational support from Arcos Dorados, including training programs, operations manuals, access to its supply and distribution network and marketing assistance.^[6]

McCafé locations and Dessert Centers

Launched in 1999, the McCafé concept is meant to attract new customers, particularly during breakfast and after lunch,^[12] in separate areas within restaurants where customers can buy lattes, cappuccinos, mochas, hot and iced premium coffees and hot chocolate. As of 2012, there were 334 McCafé locations in Latin America.^[11]

“Dessert Centers,” operate separately from existing restaurants,^[12] offering traditional McDonald’s desserts like the McFlurry and soft-serve ice cream. As of 2012, there were 1,952 Dessert Centers in Latin America. The first Dessert Center opened in Costa Rica in 1986.

Reimaging

Arcos Dorados has been updating its McDonald’s restaurants throughout the region. Between 2010 and 2012, more than 260 restaurants were fully renovated ^[6] with larger gathering areas, warmer colors, contemporary furniture, artwork,^[13] large windows allowing more natural light and often have outdoor space with tables and umbrellas for outdoor dining.

Menu

Arcos Dorados’ menus feature the same core items as McDonald’s throughout the world, including hamburgers, fries, salads and chicken sandwiches, but also includes foods unique to the region. A few examples include a flan-like dessert in Peru, dulce de leche sundaes in Argentina and the McMollette (English muffin with refried beans, cheese and salsa).^[14]

A typical menu includes three tiers of options: affordable entry-level options, such as the Big Pleasures, Small Prices or “Combo del Día” (“Daily Extra Value Meal”) offerings; core menu options, such as the Big Mac, Happy Meal and Quarter Pounder; and premium options, such as Big Tasty or Angus premium hamburgers and chicken sandwiches.^[15]

Nutrition and well-being

Faced with increasing scrutiny of the McDonald’s brand worldwide, Arcos Dorados began implementing changes to its menu in 2007, including introducing side salads as a substitute for French fries, adding fruit in Happy Meals, and entrée salads.

In 2011, Arcos Dorados launched a new Happy Meal, with reduced sodium, calorie and fat totals.^[16] Now all Happy Meal combinations in Latin America contain less than 600 calories – less than one-third of the daily calorie intake recommended for children by the World Health Organization. They also include a serving of fresh fruit.^[17] Also in 2011, sodium in buns, McNuggets, cheese and ketchup were reduced by an average of 10 percent.^[16]

Arcos Dorados was the first restaurant chain in Latin America to publish all its calorie content in its restaurant boards in 2013.^[18] Nutritional information for McDonald’s food can be found in all restaurants at posters near the counter, and on paper mats that line the meal trays. Full nutritional information on every food item is available on its websites.^[19]

In 2011 Arcos Dorados launched a website, “Eat and Learn” in Brazil. The website includes nutritional guidelines, recipes and advice from doctors and nutritionists.^[20] Arcos Dorados also sponsors several educational, sports and well-being programs throughout Latin America and the Caribbean. One event is the McDonald’s 5K Women Run, (Las Mujeres Corremos)^[21] a regional event involving more than 60,000 women in 22 cities and 19 countries in Latin America.

Advertising and promotion

Through McDonald’s, Arcos Dorados sponsors several global sporting events such as the Olympic Games and the FIFA World Cup 2014 in Brazil.^[22] As part of its FIFA sponsorship, Arcos Dorados is training the volunteer force that will work on the FIFA Confederations Cup 2013 and 2014 FIFA World Cup in Brazil over the next two years. The online training will equip the volunteers with tips and strategies for interacting with people from different cultures. There will also be additional in-person training for those selected to work specifically in hospitality services.^[22]

The company uses similar advertising and in-store campaigns as McDonald’s. For example, the McDonald’s Monopoly campaign, which has been a global campaign for many years, is run in several countries in Latin America, including Chile, Argentina and Brazil.

McDonald’s has been targeted by advocacy groups to end advertising and marketing to children. In 2008, Arcos Dorados implemented McDonald’s Children's Marketing Global Guidelines which stipulate that the company communicate balanced food choices that fit within a child's nutritional needs; use its licensed characters and properties to encourage physical activity and promote balanced food choices for children; instill positive messages about well-being, body, mind and spirit; provide national information to help parents and families make informed choices, and engage third parties to help guide its efforts.^[23]

Employees

Arcos Dorados is one of the largest employers in Latin America with 94,000 employees. For most of its employees, Arcos Dorados is their first employer, with formal pay, benefits and training.

Arcos Dorados has a structured training program that helps with personal and professional development. McDonald’s University trains restaurant managers, mid-managers and owners/operators on best practices in restaurant and people management, sales, marketing and accounting. Additional management training curriculums are available for employees who want to advance within the company. More than 52,000 people from across Latin America have participated in McDonald’s University courses and educational activities.^[21]

A 2011 survey of 40,000 firms in Latin America and the Caribbean indicated that half of the companies across the region are struggling to find qualified employees. In April 2012, Arcos Dorados became one of the first companies to join the New Employment Opportunities (NEO) Program. Developed by the Inter-American Development Bank and the International Youth Foundation, the program helps to increase the employability of the region’s youth.^[24] Its goal is to increase job entry among poor and low income young people. Corporate participation in the program involves an initial investment from sponsors of $37 million in cash and in-kind resources.^[25]

Arcos Dorados is consistently ranked as one of the best places to work in Latin America. The Great Place to Work Institute ranked the company fourth among the top 25 best multinational employers in Latin America in 2012 and sixth in 2013,^[26] and it led the “Súper Empresas” (Super Companies) ranking by the Expansión/CNN magazine.^[27]

The company has strong relationships with unions in many countries and includes unionized labor among its workers. In Brazil, some unions have challenged the company on part-time or flexible working hours.

Charity

One of Arcos Dorados’ major charitable causes is the Ronald McDonald House Charities.^[28] As of 2012, there were 35 Ronald McDonald House Charities programs in 10 countries in Latin America and the Caribbean. This includes 16 Ronald McDonald Houses; 18 Ronald McDonald Family Rooms, and one Ronald McDonald Care Mobile, which was built to deliver pediatric care services to remote locations.^[6]

McHappy Day, McDonald’s global fundraiser for RMHC, raises money for various children’s causes, including the Ronald McDonald House Charities foundation, through proceeds from the sales of Big Macs.^[29] In 2012, McHappy Day in Latin America raised nearly $15 million for RMHC.^[30]

Environmental and social responsibility

Sustainable food sourcing

There are many myths and misperceptions about the quality of McDonald’s products, including ingredients and additives in its beef products. A recent television and online campaign by Arcos Dorados called “Beyond our Kitchen” or “Mas Alla De La Cocina” highlights the origin of the ingredients used in McDonald’s restaurants and ^[31] addresses questions about the quality of McDonald’s food by showing the farms where the beef, chicken, potatoes and vegetables come from and how the food is handled and processed before making its way to a McDonalds restaurant.

Globally, McDonald’s has worked with animal welfare expert, Dr. Temple Grandin, since the mid-1990s to help ensure animals in the supply chain are properly cared for.^[32] McDonalds is currently in discussion with its pork suppliers to explore ways to phase out gestation stalls for pigs and is working with producers and suppliers to develop traceability systems to prove that the meat it buys is not from farms that use gestation stalls.^[33]

McDonald’s became a member of the Global Roundtable for Sustainable Beef (GRSB) in 2012. The group is working to advance the sustainable production of beef through the commitment of stakeholders in the beef value chain.^[34] One hundred percent of Arcos Dorados’ beef and oil suppliers have committed to ending procurement of any goods produced as a consequence of any forest clearance from the Amazon.

Supply chain

All of Arcos Dorados food and paper suppliers comply with McDonald’s Supplier Workplace Accountability policy, which stipulates that workers are compensated and treated fairly, work in safe conditions and produce high quality foods and packaging.^[35]

Arcos Dorados also surveys and audits its suppliers in Latin America and the Caribbean to ensure their operations meet McDonald’s quality, health and safety standards. The company has check points throughout the supply chain to ensure food safety, cleanliness and consistency based on globally recognized, established industry standards including the International Organization for Standardization (ISO), the British Retail Consortium (BRC) and the Hazard Analysis Critical Control Plan (HACCP).

Reducing consumption

McDonald’s restaurants use a significant amount of energy, specifically in cold storage to protect food safety. During the past several years, Arcos Dorados implemented a restaurant maintenance strategy to reduce water consumption, energy utilization where possible and waste reduction at its restaurants.

As one example, the company developed a collection and storage system for the water generated through condensation from the air conditioning equipment. They used the collected water to clean external areas and to water plants, reducing daily water consumption at one restaurant in Brazil from 8,000 liters to 6,800 liters.^[36]

References

External links

• Official website