Arby's serves up its first CSR report; here's the beef
What compels a company to issue a corporate sustainability report when it hasn’t done so in its 52-year history?
Arby’s Restaurant Group, the sandwich fast food chain, issued its first CSR report this summer. PurposeFULL (PDF) includes four sets of initiatives: energy and water efficiency; youth empowerment; hunger relief; and using more natural ingredients in its sandwiches.
It’s a little bit of this and that.
Arby’s didn’t go so far as to install solar rooftops or reduce waste in its packaging with compostables , but it did reduce energy use in its restaurants by 15.2 percent and reduce water use by 8.6 percent over the last five years.
Hunger relief is likely the strongest parts of its social responsibility program. As part of its YouthFULL initiative, it raised $3.7 million for its No Kid Hungry campaign last year, which means its 3,300 shops each raised an average $1,120 or maybe $3 a day. Over the last five years, it raised $21 million for hunger relief and ran a summer lunch program.
In terms of sustainable ingredients, Arby's says it's transitioning towards getting rid of artificial colors and flavors and sourcing its chicken from those raised without antibiotics used in human medicine by 2017. It hopes to use only cage-free eggs by 2020. Okay, so the company is dipping its toe into sustainability — some other fast food chains already use cage-free eggs and avoid chickens injected with antibiotics.
The non-profits As You Sow and the Natural Resources Defense Council identified Arby's as one of eight food retailers doing a "poor" job in reducing plastic waste.
Asked why the company chose this year to issue its first CSR report, company officials did not respond. Promised responses to emailed questions never came.
We would have liked to know why now — why Arby's issued a CSR report this year? We also asked for some details about the programs.
We'd like to know if Arby's customers put the pressure on, asking for information on the restaurant chain's activities as a corporate citizen, or about its energy use or work with communities.
But maybe it is just about time for any corporation with more than $3.26 billion in sales (2014's total) and a retail presence in 48 states to get on the bandwagon of reporting on its environmental, social and governance (ESG) performance.
This is 2016, after all; most Fortune 500 companies are watching their environmental footprint and looking at their social responsibility benchmarking, according to CDP and the Ceres investor network for sustainability.
"Environmental disclosure is an enormous business opportunity, as recognized by an increasing number of businesses globally. Since 2010, the proportion of responding companies disclosing emissions reduction activities through CDP has grown from 47 percent to 89 percent," stated CDP about its survey of large companies and invitation to report on their environmental footprints.
The concept of "purpose" as an ideal driving a corporation has become something that companies need to adopt if they are to attract employees and investors.
And, according to the Forum for Sustainable and Responsible Investment (PDF), $6.2 trillion in assets in 2014 held by 480 institutional investors, 308 money managers and 880 community investment institutions applied ESG criteria in their investment analysis and decisions — whether public market or private equity.
Being transparent and communicative about your environmental and social footprint is the new norm in business, at least for
Moreover, consumers are more selective these about what products and companies they choose to support with their purchasing power. Considerations of a product's environmental footprint and how the company treats employees and workers and communities factor within supply chain buying decisions. Surveys tend to find that ringing particularly true among younger people.
Unilever, often regarded as a king of corporate sustainability, holds the position that proactively reducing carbon emissions along with waste and water use in its operations while improving energy efficiency and environmental and social responsibility not only helps the world but also drives sales and recruitment.
Take, as another example, the public viewpoint of perhaps Arby’s top competitor, McDonald’s: that proactively helping the environment and investing in lowering carbon emissions can shore up a reputation. (Read stories of McDonald's experience from its long-time sustainability VP Bob Langert, now retired.)
Piling on meaty sales at Arby's
Arby’s, which went private in 2011 and has been under new management since 2013, strategically decided to pursue millennials in recent years — 54 percent of its customers, according to Business Insider— a generation reportedly most particular about spending its dollars at environmentally and socially responsible companies.
Arby’s was purchased by the Roark Capital Group in 2011. A new CEO, Paul Brown, was hired in 2013 and with him a new marketing team and approach.
The chain has turned itself around since then. For 2015, it reported 8.1 percent growth in same-store sales — a key measure in retail that Business Insider described as "more than three times the growth rate of the quick-service restaurant industry as a whole." Arby's said in August, it scored 23 consecutive quarters of growth in same-store sales.
So clearly it's into building sales. And marketing appears to be a big part of how.
"Arby’s is on a roll!" said Forbes. "In the highly competitive Quick Service Restaurant (QSR) category, the company has outperformed its peer group for 14 straight quarters." The magazine went on to quote Arby’s Chief Marketing Officer Rob Lynch in attributing part of its sales success to "a marketing approach that continues to resonate."
Arby’s did not make Lynch available to GreenBiz.
Arby's four pillars
Arby's breaks down its CSR activities into four categories:
Arby's reported its energy efficiency achievement of 15.2 percent, which included $2,600 saved per restaurant per year since it switched out to LED lighting. It changed how it irrigated its restaurant lawns and saved 7.4 million gallons of water.
Among its various programs to support youth and fight childhood hunger, it has provided 24 million summer meals since 2013 in cities and towns where school lunch programs are the main meal providers for many kids. Many of its franchisees volunteer in Big Brother, Big Sister programs.
Over the life of its 30-year Arby's Foundation, the restaurant chain has provided 460 million meals and donated $77 million to hunger relief and youth empowerment.
SkillFULL is Arby's employee development program. It includes being a "Brand Champ" and letting employees put forth ideas. "The way our team members interacted with our guests had to match our brand’s renewed spirit. So, we created the Brand Champ program. Brand Champ is a form of brand boot camp that has evolved since its inception, becoming a yearly learning experience," Arby's stated.
However, the employee experience as reported on Yelp doesn't talk about empowerment.
Last year Arby's started "InspireU" with the U representing training: "InspireU is an intensive General Manager development program designed to develop skills and behaviors beyond job responsibilities."
FlavorFULL is about Arby's effort to transition to using more sustainably grown products, particularly in meat and eggs. It is a founding member of the U.S. Roundtable for Sustainable Beef.
Worthy intiatives. But for a company operating 3,300 stores in 48 states, Arby's is part of the big league and can join other Fortune 500 companies in taking big action on sustainability.