Fast Food Industry

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Table of Contents:

1) Executive Summary ………………………………………………P.2 2) Industry Structure Analysis ………………………………………P.2 3) Five Force Model ………………………………………………….P.3 4) Comparative industry structure analyses ……………………….P.5 5) Critical Success Factors Now ...……………………………..……P.5 6) Critical Success Factors in Future...………………………..…….P.7 7) Conclusion …………………………………………………………P.8 6) Appendix ………… ………………………………………………..P.9

Executive Summary:
Hong Kong is a city in which efficiency and speed are demanded and expected. This living style affected the eating habits of Hong Kong people. People tends to dinning out and are more interested in prepared food which can be served quickly or allow them to take away in order to saving time, fast food restaurant where provide western burger, chicken, and pizza. This paper analyzes the fast food industry structure in Hong Kong and evaluate whether this is an attractive sector to compete in by Five Force Model. Secondly, identify the “critical success factors” which performance in the sector now and in the near future.

Industry Structure Analysis:

The food service industry continues to grow in volume and revenue every year. Fast food industries have been the fastest growing business sectors in Hong Kong. According to a report by the Department of Census and Statistics, fast food receipts increased business receipts in $ 112.6 million increased by 6.7% in value and 2.7% in volume (Appendix 1). The fast-food industry in Hong Kong can be divided into two categories: local chains and international chains. McDonald's, KFC are the main international fast food chains popular among Hong Kong consumers. The local chains are all Chinese style, for example Cafe de Coral, Fairwood, and Maxim's.

Five Forces Models:

Threat of New Entries:

The threat of new entrants in the fast food industry of Hong Kong is moderate. The Major barriers are the distribution channels and the economics of scale. The starting capital required is relatively high in Hong Kong. According to a report of the Department Census and Statistics, the average operation expenses of fast food industry per establishment amounted to $2.24million. The continuous increasing in inflation rate , rental escalation and the policy of statutory minimum wage of $28 per hour brought a negative impact towards the industry and resulting in high investment costs for entry. Moreover, the industry is in mature stage, the rapid growth of fast food industry increasing the competition within the industry, they must spend a large amount of capital on advertising and specialized the products.

Rivalry of Competitors:

The threat of new entrants in to fast food market in Hong Kong is high. Fast food industry grows rapidly in Hong Kong. By a report from the Department of Census and Statistics, the numbers of fast food restaurants grow from 377 to 1040.Café de Carol, Maxim’s and Fairwood are the three largest local Chinese style fast food operators that are familiar by Hong Kong people. Many international fast food chains have also brought their business to Hong Kong, such as Burger King and Pizza Hut. Those fast food chains are popular by Hong Kong People as they have established strong brand image and identities. Therefore, make the newcomers more difficult to get a market place.

Threat of substitutes:

To compared with one generation ago, nowadays Hong Kong people become a dainty eater and change to cosmopolitan taste, these has produced a proliferation of many specialist restaurant furnish to young middle class, such as Italian, French, Japanese, Thai cuisines and also some fine-dining Cantonese restaurant. People may choose those restaurants or even meal at home rather than fast food, which they can choose based on their flavors and which with philosophy of quality, service and provide value to them.The threat of substitutes is high.

Buyers Power:

There are so many catering businesses in Hong Kong wherever in the territory....
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