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Everyone know the answer which is fast food dominant the fast food
industry. But fast food is any food that can be prepared and served within
a short span of time. The concept encompasses all those restaurants and
store which sell or serve preheated or precooked food items to its
customers. The popularity can also be attributed to the fact that capital
investment necessary to build a fast food outlet (a non-franchisee outlet)
is relatively low.
At the global level, fast food industry has witnessed a tremendous growth
over the last few decades. In 1970, the Americans spent a total of $6
billion on fast food. In 2000, the spending increased to $110 billion. If the
estimated figures for the last 10 years are added, things become even
more interesting. According to the statistics, the industry experienced an
overall growth of 4.8 percent in 2006 alone. In the same year, the Indian
fast food industry recorded an amazing growth of 41 percent, with some
of the major International players entering the Indian market.
Other than McDonald's, the major players in the industry as of today are
Burger
King, Yum! Brand, Wendy's, KFC, Subway, etc. Each of these fast
food chains have numerous stores in different parts of the world.
Interestingly, a large number of these outlets trace their roots to the
United States. In fact, the fast food industry employs 2 million workers in
the United States alone, and thus, is considered an important pillar of the
US economy.
Over the last couple of years though, the industry has had to bear the
brunt of rising prices of food and energy. The fact that this industry has
always provided services at reasonable prices, is one of the driving factors
when it comes to its popularity. Price rise though, has forced these outlets
to hike the price of their products. At the same time, this industry has also
come under the scanner for some harmful effects of fast food. Add to it
the fact that the number of dining restaurants has also been growing over
the last decade or so, and you realize that its woes have just increased.
Fast food industry competition
According to the article in The Express Tribune written by Shahram Haq,
competition in fast food industry helps middle class contribute to growth.
In the beginning, the concept was only welcomed by the higher-income
segments as prices made the food unaffordable for middle or lower
income classes. Introduction of multinational food franchises, initiated in
the 1990s, was in the midst of non-existent local fast food restaurants.
Today, the trend is spreading fast and the industry experts believe this to
be just the beginning for the flourishing industry.
However, the industry has evolved since then as the restaurants now offer
promotions at various hours of the day and on different products to open
doors for the middle-class and low-income class. Presently along with the
high-end deals, franchises are focusing on medium- and low-end deals
which target the middle- and lower- income classes as they constitute a
much larger portion of the population of 180 million. Marketing is the
Franchising
Meaney (2004, p.11) defines franchising as a legal business
arrangement, governed and created by a contract, under which the
franchisor (owner/supplier) sells to a franchisee (retailer/buyer) the right
to sell certain goods and/or services of the supplier under specific, agreedupon conditions.
Franchising has been growing rapidly since 1950s. Many companies from
different industries, such as fast-food restaurants, hotel chains, car
rentals, have been actively using franchising to expand their operations
elsewhere. The franchisor, owner of the business idea, shares his knowhow with a franchisee. The latter can use the ready-made business model
in exchange for a fee. Such an approach is called business-format
franchising and the term franchising is generally used to refer to this
particular type. Consequently, franchisors began to expand their
operations across the borders by means of foreign partners. By doing so
franchisors managed to have their branches overseas without actually
investing venture capital. The franchisees in-turn were able to adopt a
ready-made business model to their local markets.
Nowadays franchising is a common way of doing business. Despite the
fact that many franchisees operate only one outlet, it is important to point
out that most franchised chains involve multi-unit ownership. This
organizational arrangement allows the franchisee to operate more than
one outlet in a particular franchise system.
Still the literature lacks the information about multi-unit franchising from
the franchisee perspective. It would be useful to know the motivational
factors that make prospective franchisees choose this type of ownership.
In addition, it is in the authors interest to find out what the challenges
and opportunities of managing multiple outlets under an area
development agreement are.
This survey focuses on the fast-food industry. This industry has always
been associated with franchising. Although in the market has become
saturated with fast-food restaurants, this type of business still has great
opportunities in other countries and keeps growing at a steady rate.
References
http://www.buzzle.com/articles/fast-food-industry.html
December 2014
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