Copyright 1998, Danialle L. Weaver. All rights reserved.

McDonald's Energy Recipe, Part Five

Regional purchasing plans

Eventually, once it becomes feasible, McDonald's will begin buying electricity on a regional basis, with each region including between three and eight states, Megacz says.

"Obviously, it makes sense for us to aggregate at the largest levels that we can," Langert says. "I think that's how we're going to get the best pricing, the best service, the best value."

It's unlikely, however, that McDonald's will eventually buy all its electricity and natural gas from one company, although the possibility hasn't been totally ruled out. Nor will McDonald's attempt to aggregate energy services for franchisees as it has for electricity. Aggregating electric demand made sense because it produced lower prices. But energy services are so intimately linked to the actual operation of the restaurants that headquarters feels it's best not to interfere in those sorts of decisions.

"Our role is to be subject matter experts," Langert says. "We don't do things by mandate from the home office. We set the overall corporate energy direction, and we help set up strategies for the procurement of electricity. We decide what will most benefit our stores in terms of energy management, cost reduction, et cetera. But in order to implement the change, we need to work hand in hand with our owner-operators."

Despite that official "hands-off" policy, franchisees have nonetheless been ordered not to sign any electricity related deals on their own.

"We don't want our owner-operators to be burdened with all the intricacies of deregulation," Langert says. "We want them to spend more time servicing the customer--making sure they don't run out of fries, that they've got enough staff, and that the bathrooms are clean. All those things are way more important, by the way, than our use of energy. Because in the end, it's impossible to grow our business unless they serve the customers first."

The company's entrepreneurial structure is typically considered one of its greatest strengths. However, it does pose some unusual challenges for energy suppliers because there is no single entity responsible for buying decisions, as is the case with a Sears or a Wal-Mart, says Maureen Anton, the McDonald's account manager for Commonwealth Edison.

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