Climate change promises to negatively disrupt the operations and possibly profitability of fast food chains like McDonalds, as (i) weather disruptions and droughts lead to rising costs of agriculture and food; (ii) scrutiny and regulation over carbon emissions threatens to increase the cost of meat production; and (iii) costs of and pressures to reduce carbon emissions weigh on the company’s transportation costs.
McDonald’s Supply Chain
Generally, McDonald’s works with both independent farmers who supply raw food products (wheat, lettuce, cattle, etc.), and independent suppliers of packaging and equipment. McDonald’s takes advantage of its scale to maintain very close relationships with these partners.
The sourced ingredients move to food processing plants, which make products like buns and meat patties before being purchased by independently owned and operated distribution centers and delivered directly to McDonald’s restaurants. 
Costs of the Fast Food Supply Chain
It may be surprising to note that at the top of the chain, the agricultural industry uses 70% of global freshwater . Unusual weather conditions have had a major effect on raw and processed food prices. These events include (i) the US severe droughts that caused grain prices to spike in 2012 ; (ii) the uncommonly low rain in Europe and flooding rains in the US that had the same effect in June 2015 ; and (iii) the March 2016 drought in South Africa that killed 5% of cattle, causing cattle futures to spike . These effects are interconnected, as higher grain costs make it more expensive to feed livestock, making that meat itself more expensive.
Moving further down the chain to the food processing plants, there is a preponderance of evidence that meat production contributes to an enormous amount of greenhouse gases–10-25% of global GHG emissions are due to agriculture while 80% of agricultural emissions are attributable to livestock . The US EPA implementation of the Paris climate negotiations involves collecting GHG reports from 41 sectors, but excludes meat production at the moment . If and when this industry begins to be regulated, the costs for this section of the supply chain could become extremely high.
Finally, there is the connecting piece between all the supply chain components: the fleet of trucks traveling from farmers to distribution centers and distribution centers to restaurants. The fast food chain’s largest distributor, Martin-Brower, works with almost all of McDonald’s 15,000 or so restaurants in North America. They use one truck per restaurant with 2-3 deliveries/week, resulting in 30-45k truck deliveries a week total . Similarly, Northeast Foods, which works exclusively with McDonald’s delivering grains and baked products, uses 200 tractor-trailers and over 400 delivery trucks to make daily visits to the 15k North American locations . If and when regulations crack down further on carbon emissions in the transportation industry, this could prove to either block or mitigate the efficiency of the inter-supply chain transportation (thus increasing lead times), or it could make the chain more expensive.
What McDonald’s Has Done
It is important to note that McDonald’s is well known for its supply chain (it has been #2 on the Garter Supply Chain Top 25 list for 4 years in row) . McDonald’s also spends a lot of effort innovating ways to make its supply chain more sustainable, as evidenced by the company’s recent focus on Ethics, Environmental Responsibility, and Economic Viability in its Sourcing process. Since 2012, the company has gone from using 9.3% fiber-based materials in packaging to 53% in 2015, with a goal of 100% in 2020 . McDonald’s has also set and progressed towards equally impressive targets in sustainable coffee use and its beef, fish, and palm oil procurement .
What McDonald’s Should Do
McDonald’s should continue its work in mitigating global climate change, but the company also must focus closely on preventing the negative effects of this problem on its own operations. To mitigate the costs of unpredictable weather cycles, the company could hedge via agriculture futures or use its scale and close relationship with its suppliers to investigate their operations and develop and implement predictive models around the weather. They could also invest in research around advanced irrigation systems and synthetic water development.
For food processing, McDonald’s should help its other suppliers set goals for sourcing sustainable meat. As most of these suppliers’ biggest customer, McDonald’s should help with the large upfront costs as it is an investment in the future endurance of the company’s own supply chain.
Finally, for transportation, McDonald’s could similarly get closer to or acquire and consolidate its distribution networks (which differ by food product). They can either slowly invest in more energy efficient vehicles (an expensive option) or, more realistically, can make the truck routes more efficient by loading full trucks with many different products to go to each restaurant instead of having several underutilized trucks go from different distribution centers to just one restaurant each.
[Figure 1] http://marketrealist.com/2013/12/mcds-food-come-exploring-supply-chain/
[Figure 2] http://corporate.mcdonalds.com/mcd/sustainability/sourcing/priority-products.html