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Innovations

Another Continent Served

Arcos Dorados diversifies McDonald’s restaurants to suit Latin American tastes.

Courtesy Arcos Dorados

Arcos Dorados’ McDonald’s menu offers Gallo Pinto (pictured) as well as Chicken McNuggets.

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Visit a McDonald’s restaurant in Costa Rica and you can step to the counter and order Gallo Pinto, a local favorite that combines onions, red peppers, rice and beans. In Brazil you’ll find Pão de Queijo, a cheese bread in the shape of a tennis ball, on the breakfast menu. It’s all part of catering to local tastes, explains Woods Staton, chairman and CEO of Buenos Aires-based Arcos Dorados Holdings Inc. (NYSE: ARCO), which owns and operates 1,755 McDonald’s Corp. (NYSE: MCD) restaurants in 19 Latin American and Caribbean countries. He says offering staple items like Big Macs and Chicken McNuggets, as well as dishes that satisfy customers with varied geographic preferences, is an essential element of the company’s success. “We implement things in different countries in locally relevant ways,” says Staton, whose company is the world’s largest owner of McDonald’s franchises. “We don’t have a monolithic approach.”

Staton says Arcos Dorados (Spanish for golden arches) will continue to maintain the strength of the McDonald’s brand via marketing and involvement in local communities. Its April IPO raised $1.25 billion, $150 million of which will be used to open new restaurants and refurbish existing ones.

Taking care to create an inviting atmosphere where people can eat is just as important as any big marketing campaign, Staton notes. “We can always be very creative with ads and new products and sponsorship of the Olympics,” says the CEO, who points out that more than 4 million customers come to McDonald’s every day in Latin America. “But if we don’t have fresh, up-to-date stores, we aren’t taking care of our brand.”

Focusing on the physical structure of McDonald’s restaurants provides other brand-enhancement opportunities, Staton adds. For one, the company is increasing its focus on sustainability. He says McDonald’s restaurants in Brazil, Colombia and Costa Rica have achieved or are in the process of achieving LEED certification for meeting specific standards regarding the use of energy and recycled materials. Staton points to the Brazilian LEED-certified restaurant’s ability to capture 400 to 500 liters of daily condensation from air conditioners and use it to water plants and clean the building. “It gives us a competitive edge,” he says. “Customers appreciate that and come to us because we act responsibly toward the world and the legacy that we are leaving.”