SWOT on "SWOT Analysis of the Fast Food Business"

SWOT 10 pages (3127 words) Sources: 10

[EXCERPT] . . . .

New fresh takes and cultural cuisines are being adopted (Ingram, 2015; Spencer, 2015).

In keeping with BMG (2013), the industry is still diverse and there are a lot of opportunities to be explored. As can be expected of any competitive business sector, the challenges being faced are being resolved through innovation. According to Empire Company Limited (2015), the industry is offering their customers more choices. The health conscious individual can walk into a fast food restaurant and find a range of healthy options that suit his or her needs. The industry is becoming more creative and consumers can expect to eat healthy and fast. With the evolution of the industry, it is expected that profits will also rise (Spencer, 2015).

According to Burger King Worldwide, Inc. (2014), fast food companies that have international operations have more successfully overcome the market troubles of North America. McDonald's and Yum who have 60% and 50% overseas sales respectively, benefited greatly from their international operations. The companies have reported strong growth in sales. The markets in Russia, Eastern Europe, India and China are undergoing strong growth economically. As more people have more disposable income several are benefiting from better diets (Fast Food Restaurant (QSR), 2012).

Threats

According to Fast Food Restaurant (QSR) (2012), obesity and red meat related health concerns and the growing media focus on healthy eating might have an effect on the sales of burgers. The report indicates that huge number of restaurants currently selling the same burgers and at almost the same price might dilute the profits for individual restaurants in the industry. Hence, studies have shown gaining market share become harder in a saturated market. A fast food franchise that has a big marketing budget might hurt the burger sales of other restaurants when they have promotions unless the other restaurants come up with promotions to counteract the promotion (Fast Food Restaurant (QSR), 2012).

Consistent with Fast Food Restaurant (QSR) (2012), marketing is therefore a key business component in the fast food business. Bigger fast food chains like McDonald's and KFC may have an advantage over the small restaurants without a big brand backing them. The brand recognition they enjoy allows them to be picked up first by a customer walking down a street saturated by several fast food restaurants. However, saturation leads to lower profits for every individual unit. While the markets in the developed world may be saturated, this is not the case in the emerging economies. The emerging economies are not yet flooded with fast food restaurants but a new breed of customers is coming up in these economies with more disposable income. While the small brands are a threat to the big brands in the local market, globally the big brands dominate. The brand recognition of the big brands allows them to easily enter a new market in any emerging economy and start on a high note given the goodwill that the brand name enjoys (Fast Food Restaurant (QSR), 2012).

According to Fast Food Restaurant (QSR) (2012), the fast food market in the developed world is already saturated and the smaller restaurants are proving to be a threat to the bigger brands like the McDonald's. McDonald's reported that their growth has been minimal since 2012. As the government, the media and other organizations campaign against obesity, people are becoming more health conscious and they are opting for healthy food instead of the fast food offerings. The mainstream fast food industry is being threatened by local fast food chains that have local cuisines popular with the locals. The local fast food chains also offer their products at lower prices. The international operations are also facing problems with exchange rates especially the appreciation of the dollar against other world currencies. The prices of fast food industry are therefore affected by the price of the dollar and this affects their competitiveness with the local fast food chains (Fast Food Restaurant (QSR), 2012).

According to Fast Food Restaurant (QSR) (2012), while the dollar is not that unstable, the performance of the businesses depends on the strength of the currencies of the countries they are resident in. The financial markets are very unpredictable and some nations even devalue their currencies so doing international business becomes difficult. Most of the emerging economies have weaker currencies and the strengths of some of the currencies can be easily shaken by the shocks in the international markets. This uncertainty is not conducive for business (Fast Food Restaurant (QSR), 2012).

Consistent with Ruetschlin (2014), a researcher at a public policy organization named Demos, the industry is an epitome of the vulnerability of businesses to income inequality. Fast food chain workers have raised concerns over the disparity between their earnings and those of the senior executives like the executives at KFC, McDonald's and Domino's. McDonald's has identified that the disparity in income is a threat to its bottom line, but the management has not presented any measures to be taken to tackle the issue. The income inequality is extreme and this poses problems for the industry and the economy. The increasing number of workers taking up these low wage jobs is a problem to the economy. At the business level, such inequalities might negatively affect the brand and this is not good for business. McDonald's alluded to the problem when it made its SEC filing stating that the protests posed a risk to their shareholders in the coming years (Ruetschlin, 2014).

Ruetschlin (2014) additionally points out that operational issues are also indicative of the growing income inequalities. Consumers are becoming more dissatisfied with the services they are being given at the big fast food companies. Customer service ratings for Domino's, McDonald's, Burger King, KFC, Wendy's, Taco Bell and Pizza Hut fell below the industry average in the past year. Temkin Group, a consumer experience research company placed McDonald's, KFC and Taco Bell at the very bottom. Other studies give additional details concerning the neglect of consumer experience while profit metrics are paid more attention to by top executives. Drive-thrus have become key revenue sources for the businesses accounting for more than 60% of the sales made by the industry. According to a study conducted last year on performance of drive-thrus, the average service time rose while the order accuracy declined as customers depend on the window of the drive-thru to make their orders (Ruetschlin, 2014).

Moreover, Ruetschlin (2014) found that the low incomes earned by these restaurant workers forces some to take up second jobs. As well, the author indicates working such long hours may lead to fatigue and this leads to low quality work in both of the jobs taken. The inaccuracy of the orders may be attributed to fatigue on the part of the workers as they work extremely hard and do not rest long enough to rejuvenate. Paying the workers adequately can eliminate this threat and increase the level of customer satisfaction for the businesses (Ruetschlin, 2014).

According to Fast Food Restaurants (QSR) (2012), a number of forces have constrained consumer spending in this sector since 2007. The first factor was the caving in of the housing market that produced negative wealth effects amongst the consumers and so discouraged spending. Second, the energy and food prices have been rising and this resulted in an increase in inflation to a level that it outpaced wage increases and dropping spending power. Lastly, the job market in the United States deteriorated in 2008 and more than 480,000 jobs were lost in the private sector, while some other people had their job hours lowered. While big players like McDonald's saw continued growth due to a drop in consumer income and them seeking cheaper food, the sector did struggle. A number of factors have caused the rise in food prices in the recent past, including energy and oil prices, a weaker dollar and a significant proportion of grains being channeled to the production of ethanol. Such trends have caused the price of wheat and corn to increase (Fast Food Restaurants (QSR), 2012).

Conclusion

Fast food is food, which can be prepared fast and served just as fast. Demand for fast food varies with every region and location. The beginning of fast food can be traced to North America where people are busy and eat out a lot. Drive-thru and food-on-the-go is commonplace in North America. Various fast food chains have customized their offerings to match the needs of the people in the geographic location they serve as the preferences of the consumers vary with region. The rest of the world and Asia Pacific make up the fastest growing market. Higher disposable income and a liking for food habits from the Western world are some of the factors that have driven fast growth in the emerging economies. This report has analyzed the factors which may influence the growth of the industry. SWOT analysis has offered insights on the various factors that may curtail the growth of the industry and those that position it for… READ MORE

How to Reference "SWOT Analysis of the Fast Food Business" SWOT in a Bibliography

Related SWOTs:

Ebay: SWOT Analysis Company Overview SWOT

Ebay: SWOT Analysis

Company Overview

Ebay is an online auction site that was founded in San Jose, California. It was first founded as Auctionweb by its founder Pierre Omidyar (Gomes-Casseres,… read more

SWOT 5 pages (1739 words) Sources: 5 Topic: Business / Corporations / E-commerce

---

Fast Food Book Report

YUM! BRANDS

Casual dining, as the emerging market middle class develops, will become an integral aspect of the lives of many. As markets continue to grow and develop, the need… read more

Book Report 6 pages (2118 words) Sources: 18 Topic: Business / Corporations / E-commerce

---

Competitive Forces and SWOT Analysis SWOT

Competitive Forces and SWOT Analysis

Whole Foods Market Case Study

Trends in retailing of organic foods

The retailing market is affected by frequent changes that influence the companies activating on… read more

SWOT 4 pages (1257 words) Sources: 2 Style: APA Topic: Agriculture / Food / Culinary

---

Business Plan Shells Fine Dining Restaurant Business Plan

Business Plan Shells Fine Dining Restaurant in Melbourne, Australia

Product Profile

Marketing Plan

Legal Requirements

Human Resources Plan

Operational Plan

Financial Plan

Future Prospect

Business Plan Shells Fine Dining Restaurant… read more

Business Plan 10 pages (2902 words) Sources: 6 Style: APA Topic: Agriculture / Food / Culinary

---

New Business Plan Business Plan

Marketing Plan: Green 2U…

Marketing Plan

"Marketing Plan: Green 2U Natural/Organic/Local Business Catering"

This proposal will develop a marketing model for a sustainable, local/natural/organic catering company which would cater mainly… read more

Business Plan 18 pages (4846 words) Sources: 4 Topic: Business / Corporations / E-commerce

---

View 100+ more related papers  >>