Source: Radio New Zealand
123rf.com
Not even fast food giant McDonald’s New Zealand is immune to the rising cost of food, especially for key burger ingredient beef.
However, it recouped its spend on ingredients sourced in New Zealand last year with stronger earnings from its exports of them.
Around 90 percent of the fast food chain’s menu in its 170 restaurants across Aotearoa was sourced from local farms, and it spent $235 million on local produce in 2024, up from $218m in 2023 and $214m in 2022.
It exported more than $287m of local ingredients like beef, cheese and buns to its restaurants in export markets.
Aotearoa was now one of the chain’s top six countries supplying beef for its restaurants globally.
Last year, the American-owned subsidiary used 6000 tonnes of locally-sourced beef for sale domestically, and it exported nearly 30,000 tonnes of it, making up around 10 percent of New Zealand’s total beef exports.
McDonald’s New Zealand’s head of impact and communications Simon Kenny said globally the chain served 70 million people a day, using 2 percent of the world’s beef.
He said price swings locally could have a material impact on the operating costs of its restaurants.
“Like everyone’s seen in the supermarkets, beef’s been one of the biggest ones,” he said. “The beef we’re buying right now is over 20 percent more expensive than it was at the start of the year.”
He said that meant the patty that went into the cheeseburger was 10 cents more expensive than at the start of the year.
“On a product at that kind of cost, it’s a significant input cost that goes up. So yeah, we’re not immune to it.”
RNZ/Susan Murray
StatsNZ data showed food prices increased 4.7 percent in the year to October, and beef was a hotspot of the economy farmers were capitalising on.
Further data revealed meat exports hit $10 billion in the year to October last year, driven by sheepmeat and beef up $625m.
Processor ANZCO in Taranaki’s Waitara made around 500,000 patties a day from local meat supplies, he said.
But Kenny said beef was a commodity it had to buy on the open market.
“Ironically, because of the global demand for beef from other McDonald’s markets, and what we’ve seen this year with the increase in costs… because of those global dynamics, that does impact us domestically.”
He said price increases were considered very carefully, and assured that burger sizes had not changed, as they had global size specifications to stick to.
“McDonald’s is known for value,” Kenny said. “There’s a whole load of costs that we have to factor in to the business with our franchisees every year and then go, okay how do you manage margins but also keep giving customers good value?
“There’s a popular myth that the Big Mac got smaller, and we like to joke that probably your hands got bigger than they were when you were six years old in the ’80s or ’90s.”
He said labour costs for its 10,000 New Zealand staff had also increased.
The subsidiary’s profits saw a 43 percent fall on 2023, to $59,779,000 in 2024, according to company register documents.
The corporate reported it was “facing challenges” in meeting its ambitious scope 3 emissions reduction targets in the latest purpose and impact report.
It wanted to reduce its scope 3 forest, land and agricultural emissions in its value chain by 16 percent off its 2018 baseline of 62,836,186 metric tonnes of carbon dioxide to 52,782,392 megatonnes of carbon dioxide before the end of 2030. It hit 60,245,138 megatonnes in 2024.
It also wanted to maintain no deforestation across its primary deforestation-linked commodities.
But Kenny said New Zealand beef farmers were ahead of many global competitors in this space especially with traceability, even compared to Australia.
“Beef represents when you look at scope 3 emissions, by far the biggest single contributor to our global emissions profile is beef farming.”
He said it was about encouraging sustainable agriculture by ensuring there was best practice on farms, and emissions data and measurement were the first point of call in doing so.
“Actually, New Zealand’s in a really good place when it comes to how we produce beef – we just we have to measure it better and report back better.
“That then helps us report back to our global team and feed into those kind of metrics, versus any radical differences and changes to farming systems.”
A Big Mac. McDonalds
Kenny said farmers could “tweak” their systems to improve their impact, like considering regenerative farming principles and other emissions reductions
“I think in the next five years it’s going to be a lot of those kind of tweaks to farming systems and what we already do really well in New Zealand.”
Nearly 50 years ago, in 1976, McDonald’s opened its first restaurant in New Zealand in Porirua.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand