Fast-Food Chains Eye Adding 'Green' Buildings To Their Menus

NEW YORK -(Dow Jones)- McDonald's Corp. (MCD) wants to know: Would you like a side of green building with your Big Mac?

The golden-arches restaurants and some other fast-food chains are starting to look seriously at building their locations in an environmentally friendly manner, starting with some test stores. They are citing the desire to be responsible corporate citizens and to reduce costs through efficiencies as reasons to take this new path.

This change could open up a significant market for green-building technology companies. According to the National Restaurant Association, as of 2007 there were 250,000 fast-food restaurants in the U.S., the most recent figure available. McDonald's alone has 14,000 restaurants in the U.S. and 32,000 worldwide.

The latest "green" McDonald's store opened this week in Cary, N.C. It is the company's second in the U.S. to be built according to the independent, non- profit U.S. Green Building Council's Leadership in Energy and Environmental Design gold-level standard, which is the second-best out of four LEED levels. The first such store in the U.S. opened near Chicago in August 2008.

Some of the buildings' features include lamps that use light-emitting diodes, energy efficient appliances and heating and cooling systems, daylight-harvesting technologies, sustainable and recycled materials, low-flow toilets and recycling bins.

Bob Langert, McDonald's vice president corporate social responsibility, said in an interview that by the end of the year there will be 10 McDonald's locations worldwide built to green standards, up from seven now. The first such restaurant opened in Sweden in 2000, but in the past two years green building has been taken much more seriously by the Oak Brook, Ill.-based company, he said.

"We have been accelerating our efforts to learn more and test more," Langert said.

Company officials are analyzing data from the Chicago and Cary stores to determine what green-building measures work best and to evaluate response from employees and customers.

McDonalds is also leading by example on green building. Its corporate headquarters recently received the USGBC's highest LEED certification of platinum, Langert said. Other restaurant chains and their franchisees including Denny's Corp. (DENN), Chipotle Mexican Grill Inc. (CMG) and Subway, part of Doctor's Associates Inc., are testing green-building practices at some locations as well.

Milford, Conn.-based Subway designed an environmentally friendly building plan called eco-stores for its franchisees, opening its first eco-store in Kissimmee, Fla., in November 2007. The company now has six stores built to green standards and 10 more in development or construction, Elizabeth Stewart, marketing director and head of the sustainability initiative for Subway, said in an interview.

"We do expect more franchisees to open eco-stores in the future, and/or take eco-store elements and incorporate them into their new or existing stores," Stewart said. "We also anticipate these numbers will increase as people, in general, become more familiar with the importance and understand the benefits of sustainability programs. In fact, we expect that prospective franchisees will seek us out partly because of our involvement with green initiatives."

While Subway doesn't give its franchisees money for redevelopment, it provides guidance and its corporate standards include use of recycled paper goods and green cleaning supplies. At the corporate level, the company has been reducing its greenhouse-gas emissions and packaging materials, Stewart said.

Ric Richards, owner/operator of the Cary, N.C., McDonald's restaurant, said in an interview from inside his new store that McDonald's corporate gave him some money to rebuild what had been an older, existing location, as it usually does.

However, the company didn't recoil from the 10% to 15% premium he spent on green measures, Richards said. Corporate still gave him the same percentage it would have for a traditional renovation, even though it wound up being more money.

"I think the key thing is to understand it's one thing to invest more up front and it's another thing to understand the whole life-cycle benefits," said Langert. "Some of these things cost extra up front and there are efficiencies to be gained longer term." Richards said his restaurant uses 24% less energy than a comparable traditional McDonalds, including 85% less energy spent on lighting.

"Green design is important not only for environmental responsibility, but there is a business rationale here," Langert said. "By doing better, we're being way more efficient [and] we can save money."

Joey Terrell, a franchisee for Denny's, said in an interview that he recently opened his second store in Joliet, Ill., which was built according to LEED gold standards and included extra insulation, a white roof to reduce the need for cooling the building, LED lights and an energy-efficient water heater. Compared to his first restaurant in Mokena, Ill., which wasn't built to green standards, Terrell said he has already saved a significant amount of energy in the new store.

Also, he built the green store for less than Denny's corporate told him it would cost to build a new traditional store. Terrell said he accomplished this feat by closely managing the construction process and making smart choices. For example, he said that he saved $25,000 on his city water and sewer hook-up fees because he told the city he would be using 35% less water, and he paid $7,000 for an efficient water heater, compared with $18,000 for a traditional model.

Terrell said Denny's corporate architects offered him help when he called for advice.

Pete LaBarre, a Denny's franchisee in Colorado, said in an interview that all five of his locations are built according to green standards.

"You want to try to be as environmentally friendly as possible and it's really the little things that you can do from an operating standpoint that save us big dollars and have a positive impact on our clientele," LaBarre said.

Original article here.