The Fast Food Industry Ananlysis

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Executive Summary

This paper consists of eight sections. Firstly, it is a brief introduction about entire fast food industry and definition of fast food.
Secondly, fast food restaurants began from drive-in restaurants and the first fast restaurant is McDonald’s. This section indicates the establishment and development of this industry.
Thirdly, the competition among current restaurants is quite fiercely and the largest competitor is McDonald’s. Moreover, each restaurant has specialized segment and unique products to attract certain consumers.

Fourthly, it is the Porter’s five forces model analysis. Threats of new entrants and substitutes are high. Also, rivalry among existing firms is quite high. In contrast, bargaining power of consumers and suppliers are low.

Fifthly, the current industry is on the mature growth stage because the growth rate is similar with GDP growth rate. However, this industry in certain developing countries is still on rapid accelerating growth stage and those countries are the future expansion markets.

Sixthly, the level of regulations in the fast food industry is medium but the trend is increasing.
Seventhly, there are three future trends of fast food industry. The restaurants should provide more healthy and low-calories foods to fit people’s changing attitude toward eating. Moreover, new social media like Facebook is useful tools for restaurants to expand. At last, POS system is also a future trend for restaurant management.

Finally, it is conclusion on the fast food industry’s current and future picture.

Table of Contents

Introduction……………………………………….……… 4 History…………………………………………………… 4 Competition……………………………………………… 5 Porter’s Five Forces Model……………………………… 6 Current market…………………………………………… 9 Industry regulations……………………………………… 11 Future trends……………………………………………... 12 Conclusion……………………………………………….. 13

1. Introduction
Unless you are in a particularly remote area, you cannot go far in developed countries without finding a fast food restaurant. The fast food is the term that food can be prepared and served quickly. In the United States alone, consumers spent about US$142 billion on fast food in 2006[1], so it is really a huge industry in the economic market. What is this industry now like? What is the future trend in the fast food industry? This report will answer these basic questions and also provide a detailed analysis in the fast food industry.

2. History
The fast food phenomenon began from the drive-in restaurants that built in Southern California in the early 1940s[2]. As the automobiles became popular and more affordable during that period, the restaurants wanted to take advantage of the rising numbers of cars, so they designed a kind of restaurant that let people order and eat without leaving their cars. Richard and Maurice McDonald owned such a drive-in restaurant. After running it successfully for 11 years, they decided to improve their operating style. So they redesigned the operating line to run less like an ordinary restaurant but more like an automobile assembly line. That is the first fast food restaurant in the world.

The beginnings of rapidly development of the fast food industry occurred in the late 1950s and early 1960s[3]. In this period, the restaurant expanded in the market by encouraging people to eat dinner out instead of cooking at home. The quick services provided by fast food restaurants attracted a large number of busy businessmen and lazy households. As a result, the industry began to develop faster than expected.

3. Competition

The United States has the largest fast food industry in the world. The competition within the industry is very keen. The large international companies in the industry are McDonald’s, KFC, Burger King, Subway, Pizza Hut and so on.

The following chart is the annual sales ranking among the different competitors[4]. The largest competitor is McDonald’s burger segment with more than $32...
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