McDonald's Plans to Improve Global Packaging System by 2025

McDonald'sCorporation MCD recently announced plans to improve its packaging system to reduce waste.

By 2025, the company plans to derive 100% of its guest packaging from renewable, recycled and certified sources with a preference for Forest Stewardship Council certification. Management also aims for recycling guest packaging at every restaurant.

The company plans to deliver smarter packaging designs and implement new recycling programs. It is also taking up initiatives to establish new measurement programs and educate restaurant crew as well as customers.

Notably, the latest initiative will be an extension to the company’s existing goal for 2020, which is to achieve fiber-based packaging from certified sources where no deforestation occurs.

Shares of the company have rallied 41.4% in the past year, outperforming the industry’s gain of 20.6%.

In Keeping With Environmental Ethics

The goals are part of McDonald’s efforts to meet the growing demand for food with ethics among consumers, especially millennials. With customers increasingly looking for companies with solid environmental and social ethics, McDonald’s is planning to work with leading industry experts, local governments and environmental associations to better its packaging and recycling practices.

An improving cash flow position allows management to take up such environment-friendly initiatives. Also, management believes that the company’s scale advantage puts certain responsibilities on the brand to make meaningful changes across the globe.

Sustainable Packaging a Priority

Sustainable packaging has always been on McDonald’s priority list. The company, in partnership with EDF, started focusinf on environment-friendly packaging around 25 years ago. The initiative eradicated more than 300 million pounds of initial packaging, recycled one million ton of indented boxes and reduced waste by 30% in the decade following the partnership. McDonald’s also joined WWF’s Global Forest & Trade Network program in 2014 and decided on using wood fiber for packaging.

McDonald’s currently uses renewable, recycled or certified sources for 50% of its customer packaging. Fiber-based packaging that comes from certified or recycled sources constitute 64% of the company’s total packaging. Notably, an estimated 10% of the company’s restaurants worldwide are recycling customer packaging.

Zacks Rank & Stocks to Consider

McDonald’s carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the same space include Darden Restaurants, Inc. DRI, Domino's Pizza, Inc. DPZ and Dunkin' Brands Group, Inc. DNKN, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Darden, Domino’s and Dunkin' Brands earnings for 2018 are projected to grow 16.4%, 33.5% and 12.4%, respectively.

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