Popularity of Fast Food Production Essay

Introduction The popularity of fast food production today is a direct result of busy families. In today’s society both husband and wife usually obtain full-time careers. These careers take up much of the family’s time and energy. Children of these families are usually very active in many extracurricular activities such as, Boy Scouts, football, baseball, and basketball. With all of the practice, games, and outings, these activities consume a great amount of the family’s time. In this fast paced life people find it more and more convenient to grab some food on the way home than to prepare a full meal for their family. Families find it more convenient to have someone else do the cooking and cleaning than to take more time away from each other and do it themselves. Single people find it easier to pick-up some fast food than cook a big meal for one person. It is also a result of the most obvious, people these days are just lazier than people in our past were. A person who forgot their lunch at home is more likely to choose fast food over a restaurant because of the cost difference. They could go to a fast foodrestaurant for fewer tk. than they could go to a restaurant where they would spend for one meal. Actually, it is the result of time and convenience and sometimes it is a result of the low cost. Popularity of Fast Food The growing popularity of fast food has brought about ruthless competition in the fast food industry. Fast food chains are constantly trying to please growing consumer demand by selling more food at lower prices. In order to do so, these fast food giants continuously incorporate new â€Å"efficient† business practices which provide better services to customers resulting in bigger sales and larger profit margins. In most cases, these practices are obvious. For instance, precooked hamburger patties, computer systems, and drive-throughs were each introduced to minimize production time in turn allowing for increased sales. Nevertheless, less obvious business practices have also been implemented which most consumers fail to recognize. All together, increased fast food popularity has led to the adoption ofbusiness practices involving the careless treatment of modern day farm animals. * First of all, fast food is prepared from unhealthy meat. Most animals raised as food for fast foodrestaurants come from â€Å"factory farms. † At each of these factory farms millions of animals live torturous lives. Fast food companies choose to purchase from these farms because they minimize all production costs and provide cheaply. * Fast Food Growth- Comparison * History Fast food is the term given to food that can be prepared and served very quickly. While any meal with low preparation time can be considered to be fast food, typically the term refers to food sold in a restaurant or store with preheated or precooked ingredients, and served to the customer in a packaged form for take-out/take-away. The term â€Å"fast food† was recognized in a dictionary by Merriam–Webster in 1951. Outlets may be stands or kiosks, which may provide no shelter or seating,[1] or fast food restaurants (also known as quick service restaurants). Franchise operations which are part of restaurant chains have standardized foodstuffs shipped to each restaurant from central locations. he concept of ready-cooked food for sale is closely connected with urban development. In Ancient Rome cities had street stands that sold bread, sausages and wine. Pre-modern Europe. In the cities of Roman antiquity, much of the urban population living in insulae, multi-storey apartment blocks, depended on food vendors for much of their meals. In the mornings, bread soaked in wine was eaten as a quick snack and cooked vegetables and stews later in the day at a popina, a simple type of eating establishment. In the Middle Ages, large towns and major urban areas such as London and Paris supported numerous vendors that sold dishes such as pies, pasties, flans, waffles, wafers, pancakes and cooked meats. As in Roman cities during antiquity, many of these establishments catered to those who did not have means to cook their own food, particularly single households. Unlike richer town dwellers, many often could not afford housing with kitchen facilities and thus relied on fast food. Travellers, as well, such as pilgrims en route to a holy site, were among the customers. United Kingdom In areas which had access to coastal or tidal waters, ‘fast food’ would frequently include local shellfish or seafood, such as oysters or, as in London, eels. Often this seafood would be cooked directly on the quay or close by. The development of trawler fishing in the mid nineteenth century would lead to the development of a British favourite fish and chips, and the first shop in 1860. A blue plaque at Oldham’s Tommyfield Market marks the origin of the fish and chip shop and fast food industries in Britain. After World War II, turkey has been used more frequently in fast food. As well as its native cuisine, the UK has adopted fast food from other cultures, such as pizza, Chinese noodles, kebab, and curry. More recently healthier alternatives to conventional fast food have also emerged. United States. As automobiles became popular and more affordable following the First World War, drive-in restaurants were introduced. The American company White Castle, founded by Billy Ingram and Walter Anderson in Wichita, Kansas in 1921, is generally credited with opening the second fast food outlet and first hamburger chain, selling hamburgers for five cents each. Walter Anderson had built the first White Castle restaurant in Wichita in 1916, introducing the limited menu, high volume, low cost, high speed hamburger restaurant. Among its innovations, the company allowed customers to see the food being prepared. White Castle was successful from its inception and spawned numerous competitors. Franchising was introduced in 1921 by A&W Root Beer, which franchised its distinctive syrup. Howard Johnson’s first franchised the restaurant concept in the mid-1930s, formally standardizing menus, signage and advertising. The United States has the largest fast food industry in the world, and American fast food restaurants are located in over 100 countries. Approximately 2 million U. S. workers are employed in the areas of food preparation and food servicing including fast food in the USA. FAST FOOD INDUSTRY IN BANGLADESH Fast food culture was started in the early nineties. In Bangladesh it has mainly geared towards the younger end of the market and the employees of the corporate sector. The fast food culture in Bangladesh has taken the country by storm. The first fast food shop started its business in the Bailey road of Dhaka. After that, a number of fast food shops started to grow exponentially in different places of the Dhaka city. Local entrepreneurs are leaders in pioneering the fast food industry of Bangladesh. New brands i. e. Swiss, Helvetia etc. are to name of some Bangladeshi fast food shops formed in franchising system. In early 2000, Bangladesh experienced the entry of the first international brand of fast food franchise in the country. Pizza Hut and KFC entered into Bangladeshi market having franchise with Transom Foods Limited (TFL). Both Pizza Hut and KFC are subsidiaries of the world’s largest restaurant company Yum! Restaurants International. TFL has opened three Pizza Huts and three KFC outlets in Bangladesh in a span of five years. Pizza Hut opened its flagship restaurant in 2003 at Dhaka. Following its grand success in Dhaka, the Chittagong outlet was opened in 2005. The third Pizza Hut restaurant was launched in Dhaka in 2008. Meanwhile, Kentucky Fried Chicken (KFC) perceived as high-quality fast food in a popular array of complete meals to enrich the consumer’s everyday life. TFL successfully launched the flagship KFC in 2006 and gained attention of the people with its taste, high standard of hygiene, cleanliness, interior attractiveness, affordable pricing etc. Following its enormous success in Dhaka, the second and third outlets were opened in 2008. ————————————————- Globalization In 2006, the global fast food market grew by 4. 8% and reached a value of 102. 4 billion and a volume of 80. 3 billion transactions. In India alone the fast food industry is growing by 41% a year. McDonald’s is located in 126 countries and on 6 continents and operates over 31,000 restaurants worldwide. [20] On January 31, 1990 McDonald’s opened a restaurant in Moscow, and broke opening day records for customers served. The Moscow restaurant is the busiest in the world. The largest McDonald’s in the world is located in Orlando, Florida,USA[21] There are numerous other fast food restaurants located all over the world. Burger King has more than 11,100 restaurants in more than 65 countries. [22] KFC is located in 25 countries. [23] Subway is one of the fastest growing franchises in the world with approximately 39,129 restaurants in 90 countries as of May 2009,[24] the first non-US location opening in December 1984 in Bahrain. [25] Pizza Hut is located in 97 countries, with 100 locations in China. [26] Taco Bell has 278 restaurants located in 14 countries besides the United States. [27] Current Market Size Economists at the National Restaurant Association estimated total foodservice sales for 2011 at ? 313 billion, representing a 5 percent increase over 2010. That means consumers spent an average of ? 855 million per day on food away from home. According to the National Restaurant Association’s Foodservice Industry Forecast, fast food comprised the largest segment of this market, capturing 47. 8 percent of the Takas spent. The report attributes this success to â€Å"fast food’s ability to meet consumers’ desire for value and convenience. † It was further estimated that at least 64 percent of all fast food purchases were consumed off-premises. According to Technomic, Inc. , a food industry consulting firm, almost half of consumer food Takas are spent on meals prepared away from home. In addition, food expenditures rise significantly as income increases according to the Bureau of Labor Statistics’ Consumer Expenditure Survey Data. Industry Trends This significant trend of consumers purchasing prepared meals is so pervasive that the foodservice industry has coined a new term to describe it: â€Å"home-meal replacement. † Many businesses are shifting their focus to meet the growing demands of consumers: * Most supermarkets now include a deli, bakery, and a prepared-foods section. Also, many offer fast-food service. * Boston Market has continued to expand its product lines and market share. * Famous chefs, such as Wolfgang Puck, are offering high-end prepared meals in upscale supermarkets. * Fast-food chains such as KFC, Pizza Hut and Taco Bell have formed alliances to offer multiple product lines under one roof. There are also several economic and cultural trends that have contributed to this growing demand: * Increasing number of women in the workforce * Increasing number of woman-owned businesses * Growing number of higher-income households * Americans working longer hours * Decreasing amount of leisure time * Premium placed on convenience * Trend toward purchasing personal services (i.e. , personal-trainers, house-cleaning services, home shopping services). According to Foodservice Solutions, a hospitality consulting firm: â€Å"Home-meal replacement is not a luxury today – it’s a necessity. People don’t want to take the time to cook; they have too many other things to do. People want high-quality prepackaged foods†¦ to make life easier. â€Å"| Entrepreneur Magazine selected â€Å"Personal Chef Services† as one of the top service businesses to start today: â€Å"Convenience-craving consumers are always looking for a way to do things better, faster and cheaper. Often, that means turning to a specialty-services entrepreneur who knows how to get the job done right. Those with culinary competence can likely find a hungry clientele among the ranks of America’s busy working families. â€Å"| Growth Potential of the Market Based on the National Restaurant Association’s Foodservice Industry Forecast, the percentage of food Takas spent away from home has grown from 25 percent in 1955 to 50 percent today. More importantly, the proportion of the food budget spent on meals away from home increases significantly as income increases. Households with incomes of ? 70,000 spent 81 percent more per capita (? 1,278 per person) on food away from home than the average income-reporting household (? 705 per person) according to the Consumer Expenditure Survey conducted by the Bureau of Labor Statistics. Also contributing to the potential growth in the market is the rise in affluent households documented by the Current Population Survey from the Bureau of the Census. From 1990 to 1994 the number of households earning ? 50,000 to ? 74,999 increased by 16. 4 percent; households earning ? 75,000 to ? 99,999 increased 36. 1 percent; and households earning ? 100,000 or more increased by 61. 1 percent in the same period. Affluent Households Gaining Ground Change in Number of Households| | Household Income| Increase (Decrease) in Number of Households| Percent Change| Less than ? 35,000| (1,638,000)| -3. 0%| ?35,000 to ? 49,999| (331,000)| -2. 0%| ?50,000 to ? 74,999| 2,310,000| +16. 4%| ?75,000 to ? 99,000| 1,841,000| +36. 1%| ?100,000 or more| 2,496,000| +61. 1%| Total| 4,479,000| +5. 0%| Source: Bureau of the Census A personal chef service is uniquely positioned to take advantage of the increasing demand for fast food, growing health concerns, and the rise in high-income households. Affluent working couples want â€Å"fast food,† but they want it upscale, healthy, and convenient. The founders of Truly Unique Personal Chef Service report that their business has grown 10 to 15 percent every year since opening in 1992. Many of their clients said they were getting bored with going out to restaurants and wanted something different. Customer Profile Creative Cuisine’s’ target customer will be families with two working, professional parents who are too busy to cook every night but are fed up with takeout and restaurant food. Their specific demographics are as follows: Household Income: Over ? 100,000 Age: 35 to 55 Education: College degree and/or advanced degree Marital Status: Married couples or high income single Job: Professional status (one or both partners) Children: Preferably ages 7 to 18 Homeowners: Preferably Location: Live in neighborhoods with high concentration of affluent families Customer Benefits Here are just a few of the benefits to customers if they hire Creative Cuisine: * 6 hours per week more free time (1 hour per day cooking/acquiring meal plus 1 hour per week grocery shopping) * Very convenient. * Meals customized to personal tastes * More variety * Health and nutrition benefits * Less stress * Client feels pampered * It makes life easier * Don’t have to cook * Less grocery shopping * Minimal kitchen clean-up * Peace of mind The Competition There are a handful of other personal chef services in the metropolitan area; however, since this is still a new business concept, there remains a large untapped market. Most competition for home-meal replacement exists from neighborhood restaurants, upscale fast-food outlets and supermarket prepared meals. Following is a competitive analysis of the various meal replacement alternatives: Fast Food Industry in 2012 at a Glance It is no secret: Americans love fast food. And its not just us! The Golden Arches have spread across the globe, and emerging markets are one of the fastest growing areas in the industry. But the fast food industry is not without its challenges, especially in the United States. From rising food costs, economic recession and changing perceptions about health, many fast food franchises have been feeling some heat. But rather than flee from this challenge, the fast food industry has been adopting new practices and offering new products. Modern society is on the go, and there is plenty of demand for a quick bite at all times of the day. Fast food franchising opportunities exist in the â€Å"traditional† spaces like burgers and pizza, but are also sprouting up in healthy and unique ways as well. The Industry The fast food industry, also known as Quick Service Restaurants (QSR), has been serving up tasty morsels for as long as people have lived in cities. The modern system of fast food franchising is believed to have started in the mid 1930’s when Howard Johnson franchised his second location to a friend as a means to expand operations during the Great Depression. And oh how it has grown! As cars became commonplace, the drive-thru concept brought explosive growth to the idea of food-on-the go. â€Å"Fast Food† was added to the Merrion-Webster dictionary in 1951 and U. S. fast food companies are now franchised in over 100 countries. In the U. S. alone there are over 200,000 restaurant locations! Revenue has grown from $6 billion in 1970 to $160 billion last year, an 8. 6% annualized rate. Fast food franchises focus on high volume, low cost and high speed product. Frequently food is preheated or precooked and served to-go, though many locations also offer seating for on-site consumption. For stands, kiosks or sit-down locations, food is standardized and shipped from central locations. Consumers enjoy being able to get a familiar meal in each location, and menus and marketing are the same in every location. What’s Been Going Wrong? There have been challenges for the fast food industry in recent years that have been pressuring profit margins. The industry as a whole has proven robust enough to withstand these challenges, though some players have done better than others. Over the last decade there has been increased focus on the quality of food served in fast food restaurants. Typically highly processed and industrial in preparation, much of the food is high in fat and has been shown to increase body mass index (BMI) and cause weight gain. 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. Fast food companies have responded by adopting healthier choices and have had some measure of success, but the shadow of bad press still hangs over the industry. Rising commodity prices have also significantly crunched many fast food franchises. With food and beverage inputs making up approximately 33% of costs, higher prices for livestock, corn, wheat and more have seriously shrunk margins over the past decade. In such a fiercely competitive space it is impossible to force a price increase on customers, so profit margins are often south of 10%. The recent economic recession did lower commodity prices, but the recession brought on its own complications, and now prices for commodity inputs are on the rise again. Fast food had been thought to be largely recession proof, and indeed the industry did not suffer nearly as much as other discretionary spending sectors. In fact, 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 with each trip. Fast food franchises fared reasonably well but still felt some pain. Market saturation is also a relevant issue in the fast food industry today, at least in the U. S. There is a McDonald franchise is in almost every town, and it usually sits in a row with several competitors. With so many competitors which offer similar products there are fewer customers per location. Increasingly fast food restaurants are also losing market share to fast casual, a relative newcomer in the restaurant space. Where do we Go from Here? Busy citizens still need quick meal options, and fast food restaurants are fighting these challenges with gusto. Now offering healthy choices to battle the stigma of unhealthy food, some quick service restaurants now focus on fresh or organic products. From franchises focused solely on salads or healthy wraps to the lower calorie options offered at traditional burger franchises such as Wendy’s or McDonald’s, consumers are able to make better choices†¦if they want! Fast food franchises are also focusing on expanding into new product lines, such as the coffee initiative in the McCafe. Intended to offer competition to Startbucks, McDonalds is luring customers back into their stores, hoping they will purchase food as well. Many franchises have been exploring other meal times such as breakfast and the mid-afternoon snack for growth opportunities and to increase real estate utilization. The industry is most effectively battling saturation within the United States by creating a much more diverse range of offerings. Sure, there is a McDonalds in every town, but there are very few crepe franchises†¦yet! From new cultural cuisines to fresh takes on a traditional story, there are many moretypes of quick service restaurants than ever before. The fast food industry is still a large and diverse industry with plenty of opportunity. As one would hope, challenge is being answered with innovation, and fast food franchises are responding with new offerings, pricing and strategies to lure consumers back in. Non-traditional fast food franchises are springing up and gaining traction, and more creativity will always be welcome! Consumers are now on the look-out for new ways to eat fast and healthy. And as the industry continues to evolve and the economy strengthens, fast food franchise profitability will continue to grow. Porter’s five forces industry analysis for Krispy Kreme Saturday, January 29th, 2011 at 9:00 am. What is Porter’s Five Forces? Well I doubt there is any need to explain one of the most famous strategic tools around but just in case, it is a tool to analyse the external industry to find the root causes of profitability. Again seeing an example is useful and below is a five forces analysis of Krispy Kreme. Rivalry among existing competitors (High +++) * High concentration of rivals e. g. Starbucks and local chains * Static market growth * High fixed costs * Perishable products (food and drink) A large number of competitors in the industry are all competing for the same customers. Coffee chains (e. g. Costa, Starbucks) are all competing to be number one in the market and have similar corporate goals. While product differentiation is limited, there is fierce differentiation by product range, brand and store ambience (e. g. seating). There are zero switching costs for customers, which promotes price wars. Market growth is static, which promotes fierce fighting for market share, and there is saturation of competition due to the limited number of prime locations available for outlets. Smaller chains have to pay a premium for prime sites or settle for less desirable locations. Threat of new entrants (Medium +) * Large capital requirements required to build chain of stores * Favourable locations are already occupied * Economies of scale in distribution and raw ingredients (lower per unit costs due to the experience curve) * Product and brand differentiation Capital requirements for individual stores are low, however new entrants wishing to compete on a like basis with national store networks, distribution channels, brand equity development and advertising, face large capital requirements to gain market share. This is reflected in the large number of individual outlets compared with the small number of large, proven top specialty eateries. The UK commercial property market is landlord-driven and controlled; premium locations in the UK are scarce and command high prices with most of the favourable locations within town centres, airports and train stations already being occupied by existing competitors. Threat of substitutes (Medium +) * Large choice of alternatives with similar products e. g. energy drinks, cakes, biscuits, ice-cream, chocolate * No switching costs. Although a consumer can choose from multiple substitutes (e. g. desserts, pastries or drinks), speciality eateries compete based on convenience and opportunity. Most people buy from speciality eateries when travelling, shopping or meeting people. This is evidenced by the location of the eateries, which is concentrated around high footfall locations such as train stations, business districts and shopping centres. For a consumer this becomes a competitive choice rather than a substitute choice (e. g. do I buy a coffee from Starbucks or Costa). Other substitutes come from full menu eateries such as restaurants and fast-food outlets with a smaller threat from supermarkets. Bargaining power of suppliers (Low) * Vertically integrated businesses with only commoditised raw ingredients * Large number of suppliers to choose from and low switching costs Bargaining power of buyers (Low) * Buyers are fragmented and numerous * Although there are no switching costs for the buyer the food and drink market is part of the fabric of society Conclusions and Recommendations. Fast food consumers of Bangladesh, especially the university students, considered brand reputation as the most important factor when choosing fast foods followed by nearness and accessibility, similarity in taste, cost and quality relationship, discount and taste, clean and hygiene, salesmanship and decoration, fat and cholesterol, and self-service. The recent upset in the fast food industry of Bangladesh was created by the discovery of unethical practices conducted by several fast food businesses resulted in consumers putting their trusts on renowned fast food brands only. Thereby it is seen that the fast food houses with reputed brand name and recognition i. e. KFC, BFC, Pizza Hut, Coopers etc. are carrying out their businesses in a usual manner even in the toughest time of the industry. The majority of the fast food brands that passed with flying colors during the mobile courts inspection for quality maintenance were able to either establish or revitalize their brand reputation. Eventually as suggested by the research findings, the university students will select such fast food brands that have brand reputation. Besides the brand reputation, the other important factors were nearness and accessibility, similar taste of fast food, cost and quality relationship, discount and taste. In case of nearness or proximity and accessibility factor, consumers prefer to go to the fast food outlets that are close from their own home or study institutions. It is seen that the fast food shops in Bangladesh has already considering the factors by establishing their outlets near big corporate houses and private universities. Especially, in Dhaka city this practice is seen in Bailey road where majority of fast food shops are located. Near Bailey road, there are 3 girls’ school and collages, and 3 boys’ school and 2 collages in walking distance. Almost similar situation prevails in Gulshan, Banani area of the city where KFC and Pizza Hut outlets are situated near 3 private universities. It is understandable from the situation that the students studying at these institutions consider these nearby fast food outlets whenever they decide to consume fast foods. There is an opportunity here however, for new fast food shops to compete with the existing fast food outlets. Since establishing a new outlet in an already competitive business space is expensive and difficult, the new fast food businesses can introduce mobile fast food outlets. Through mobile fast food outlets, new fast food businesses can deliver their fast foods that are already cooked fresh in their shops, but kept hot and delivered to the students instantly with their own choice of accompanying taste enhancers i. e. tomato sauce, cheese etc. These mobile fast food outlets could be on top of a mini-truck, van etc. The similar taste of the fast food factor refers to the fact that no matter which fast food outlet a particular fast food item is bought from, the taste should be similar. For example, if a chicken burger is bought from an outlet of KFC, the taste would be similar to any other chicken burger bought from any other KFC outlet. The taste could differ from other fast food shops as the different business use taste as differentiating factor in case of food items. But the businesses have to keep in mind that too much difference in taste of similar fast food items makes the consumers confused. The cost and quality relationship is also an important factor considered by the consumers of fast food. If the cost of a fast food item is high, it is usually considered to be carrying high quality and vice versa. So, the businesses of fast food products have to be careful in setting the prices of the fast food items. The pricing should be such as it offers the right amount to value to the consumers in a competitive price that at the same time ensures adequate profit margins for the fast food businesses. Finally in terms of discount and taste factor, the consumers consider the availability of discounts in fast food outlets. Usually these discounts are offered as group discounts i. e. arranging a party or social gathering at a reduced price package etc. Consumers consider this option when choosing fast food products. They might not immediately use this factor but it puts the fast food shop in their consideration set for later use. This study recommends that the fast food producers or distributors at Dhaka city should focus more on the brand reputation, nearness or proximity and accessibility, cost, quality, discount, and similarity in taste factors. If they are able to fulfill these needs, university students of Bangladesh will be induced to buy and consume fast food whenever they are out of their houses. However, there is an ample scope to conduct further study on the preference factors used by the office-goers, housewives, and visitors in buying fast food to determine if there are any more common or unique factors prevailing among these different groups that might be important in making decisions regarding the choice of fast food items in Bangladesh. Abstract. Fast food industry is a high growing sector of Bangladesh. It is concerned with the tastes and habits of the people. The food-taking habit especially in fast food segment has been changing very fast over last decade among the people of Dhaka – the capital city of Bangladesh. The reasons could be attributed by the increase of awareness, growth of education, development of information technology, and expansion of television channels and print media in Bangladesh. Hence, this paper aims at identifying the preference factors of fast food consumers living in Dhaka city. This study was conducted among the university students who usually eat fast food at their leisure time. To conduct the study, a total of 250 respondents were interviewed with a structured questionnaire. Both descriptive and inferential statistics were used in analyzing the data. Multivariate analysis technique like factor analysis was performed to identify the preference factors of the fast food student-consumers of Bangladesh. Multiple regressions were run to identify the relationship between the factors identified and the overall preference of the consumers. Results show that the consumers give most importance on brand reputation of the food item followed by nearness to receive and accessibility, similarity of taste with previous experience, cost and quality of the food, discount and taste, cleanliness and hygiene, salesmanship and decoration, fat and cholesterol level, and self-service factors. This study suggests that the brand reputation, nearness and accessibility, similarity in taste, and cost and quality relationship should be emphasized to improve the attraction of the university students towards the fast food items in Bangladesh.