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Strategic Review Analysis of the Fast Food Sector. Report produced by E. Moug, L. Jourdain, S. Pritchard, R. Smith and J. Wileman 27 th November 2001. Analysis of the Fast Food Market. Convenient Competitive prices Varied selection Wide target market Convenience of locations

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strategic review analysis of the fast food sector
Strategic Review Analysis of the Fast Food Sector

Report produced by E. Moug, L. Jourdain,

S. Pritchard, R. Smith and J. Wileman

27th November 2001

analysis of the fast food market
Analysis of the Fast Food Market
  • Convenient
  • Competitive prices
  • Varied selection
  • Wide target market
  • Convenience of locations
  • High labour turnover
  • Low labour costs
  • Unskilled labour
  • Relatively low–tech environment
  • Questionable nutritional value
product orientated
Product Orientated…

Product Orientated

An inward looking stance

Production capabilities

Manufacture product

Sales effort

Customers

The realisation of the ability to produce initially precedes the concept of the customer, i.e. pizza restaurants and ethnic restaurants moving into the take away area along with lower cost goods such as fish and chips take away.

or marketing orientated
…or Marketing Orientated?

Market Orientated

An outward looking stance

Market product and services

Consumer needs

Market opportunities

Customers

The desire to provide for the consumers wants is the primary initiative, i.e. branded chain restaurants such as McDonalds, KFC and Burger King. A pro-active approach rather than re-active.

d e e p l i s t analysis
D.E.E.P.L.I.S.T. analysis
  • Demographic

Population

Socio-Economic Groups

  • Economic

The Euro

Employment

Terrorist Attacks

  • Ecological

Foot and Mouth

GM Foods

Vegetarianism

d e e p l i s t analysis6
D.E.E.P.L.I.S.T. analysis
  • Political & Legal

Disability Discrimination Act

Minimum Wage

Food Legislation

  • Information
  • Social

Population

d e e p l i s t analysis7
D.E.E.P.L.I.S.T. analysis
  • Technology

Internet

Advances in kitchen Technology

New discoveries/developments

E.P.O.S system

competitive structure and environment
Competitive Structure and Environment
  • Split by branded and independent operators (see figure 1)
  • Sales grown through rapid expansion
  • Investment in marketing campaigns to stay in the public eye
  • Price wars – rivalry between major brands
  • To invest in the future and to stay competitive
  • Rebranding
consumer trends in the fast food sector
Consumer Trends in the Fast Food Sector
  • Increase in the interest of the takeaway market – a growth market
  • Women play a greater role in the workforce, more disposable income
  • Interest in healthy eating, vegetarianism, and heightened concern with regard to red meat
  • Competition from supermarket pre-prepared meals
burgers
Burgers
  • A decline in the sales of beef burgers due to foot and mouth disease and BSE fears
  • McDonalds suffered a fall in profits of 16% in Europe
  • Diageo are investigating the dispersion of the Burger King chain, followed closely by Wimpy

WHY?

  • More consumers are becoming environmentally and health conscious
  • High consumer interest in organic food
  • Desire for higher quality products as a result of more disposable income and safety fears
  • McDonalds is looking to expanding into other markets, i.e. hotels
  • Limited growth in the short to medium term (1 – 5 years)
fried chicken
Fried Chicken
  • Segment grew by 33%, between 1996 and 2000, to £633 million

WHY?

  • Customers areeating more chicken due to its perceived healthier image
  • The segment is at a higher growth rate than others in the market, perhaps due to recent health scares
  • Takeaway is increasing its share from 50% in 1998 to an estimated 54% in 2000
  • Takeaway chicken accounts for an estimated 80% of sector sales
  • Short term growth will be achieved by planned expansion and differentiation
ethnic takeaways
Ethnic Takeaways
  • Sales are expected to increase by 16% between 2000 and 2004

WHY?

  • Cheaper foreign travel to long haul destinations encourages interest
  • Increasing number of ethnic outlets
  • Chinese takeaways are more buoyant in terms of segment value
pizza and pasta
Pizza and Pasta
  • Popular with a large target market and is perceived as a healthy option
  • The pizza segment is moving more upmarket, e.g. Pizza Express, Ask etc
fish and chips
Fish and Chips
  • A broad age appeal, despite increasing competition
  • Those in low socio economic groups are among the most common consumers
  • The sector is in decline due to rising prices of both fish and potatoes
  • Lack of supplies
  • Success of relatively high market fish cafes
  • Many outlets have diversified their menu
  • In the long term, not a good market to invest into
sandwiches
Sandwiches
  • In 2001, sandwich consumption will account for over 13% of the total eating out market
  • The segment enjoys growth rates of between 7 and 8%
  • Product innovation
  • Appeals to the consumer
  • Satisfies nutritional demand for healthy eating
  • Suits the increase in busier lifestyles
  • 38% of sandwich eating working managers and 31% of sandwich eating women stop off for a sandwich
  • Growing affluence has increased sales
  • In the long term, growth in this sector will be obtained by sandwich delivery
salad market
Salad Market
  • 31% increase at current prices over the next 4 years
  • Driven by the demand for convenience and healthy foods
  • Key target markets are younger, pre-family, working consumers with busy lifestyles
  • Added value products will ensure growth
product life cycle to reflect market
Product Life-Cycle to reflect market

Pizza & Pasta

Fish & Chips

Profit

(£)

Chicken

Ethnic

Sandwiches

Burgers

Others

Time

stakeholder mapping burger king mcdonalds and k f c

Low Level of Interest High

Low

Employees (Part Time)

Employees (Full Time)

P

o

Suppliers

w

e

Customers

Lenders

Shareholders

The Chairman of Directors

r

Government

High

Stakeholder Mapping: Burger King, McDonalds and K.F.C.
stakeholder mapping fish and chip and sandwich shop independents

Low Level of Interest High

Low

P

o

Suppliers

Employees

w

e

Customers

r

Investors (Banks)

Investors (others)

Employees

Government

High

Stakeholder Mapping: Fish and chip and sandwich shop independents
sandwich shop stakeholder map variation

Low Level of interest high

Low

P

o

w

e

r

High

Employees

Suppliers

Customers

Investors (banks)

Investors (others)

Government

Owner

Sandwich shop stakeholder map variation
stakeholder mapping mcdonalds and pr t a manger
Stakeholder Mapping:McDonalds and Prêt a Manger

Low Level of Interest High

Low

Suppliers

Employees (full time)

Employees (part time)

Employees (part time)

Employees (full time)

Suppliers

P

o

w

e

r

Shareholders

Government

Chairman/Directors

Customers

Lenders

Government

Chairman/Directors

High

Customers

Shareholders

the short term future 1year
The Short Term Future (1Year)
  • Free of antibiotics Growth Hormones
  • Recession?
  • ‘Cash Rich – Time Poor’
  • Continued growth in fast-food market predicted
  • Sandwiches are they the future?
  • Charity related?
the mid term future 5 years
The Mid-Term Future (5 Years)
  • Affected by decreased travel and tourism
  • Shift toward healthier foods due to BSE F&M
  • The Fast food generation
  • Better quality all round service of fast food outlets
  • Labelling of food products
  • Lack of suitable new sites
  • What are the possibilities for growth?
the long term future 10 years
The Long-Term Future (10 Years)
  • Increase in Spanish population