26 May 2017

Analysis of Fast Food Industry in 2013


Analysis of Fast Food Industry in 2013

As per the reports, given by franchise help, the Golden Arches which is the symbol of McDonald’s global fast food restaurants are one of the fastest growing areas in the fast food industry. In US, even though the Americans love fast food, there are a lot of challenges which includes rise in food costs, economic recession and changing perception about health,  fast food industry are feeling some heat. As a solution to the challenges, the fast food industry in US have adopted new practices and also offering new products. Some of the fast- food products are burgers, pizzas etc.

About fast-food industry

The fast food industry, also known as Quick Service Restaurants i.e. QSR, serves tasty food for people living in cities. The fast food companies are now franchised in over 100 countries. In the U.S. alone there are over 200,000 restaurant locations and the revenue has grown from $6 billion in 1970 to $160 billion last year, and an estimated increase of 8.6% every year.

Fast food franchises mainly focuses on high volume, low cost and high speed product. Here, mostly the food is preheated or precooked and served to-go.

Challenges faced by fast food industry

Due to the challenges in the fast food industry, there is a decrease of profit margins in the market. Popular books such as Fast Food Nation and documentaries like Super Size Me have increased public awareness of the negative health consequences of fast food. As per the reports, most of the food is high in fat and has been shown to increase body mass index i.e. BMI and cause weight gain. Fast food companies have responded by adopting healthier choices and have had some measure of success.

According to the reports, due to recession and rise of commodity prices, it has also significantly reduced many fast food franchises. During recession, there was some increase in consumer visits as people choose cheaper fast food options over fast casual or traditional restaurant choices. But overall, the recession hurt spending, and consumers overall purchased less. Fast food franchises fared reasonably well but still felt some pain.

In U.S, market saturation is also a relevant issue in the fast food industry. There is a McDonald franchise is in almost every town, and it is usually located with several competitors, which offer similar products. Due to this, there are fewer customers per location. As per the reports, due to increase in fast food restaurants, they are losing market share to fast casual, a relative newcomer in the restaurant space.

As a measure to the challenges, the Fast food franchises are also focusing on expanding into new product lines, such as the coffee initiative in the McCafe. Many franchises such as McDonald’s have been exploring other meal times such as breakfast and the mid-afternoon snack for growth opportunities and to increase real estate utilization.

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