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Fast Food Market

By kalpana2301 May 15, 2012 926 Words
Fast Food Market

Market Overview:
Fast food as defined by English dictionary is cooked food sold in snack bars and restaurants as a quick meal or to be taken away. Fast food is any food that can be prepared and sold within a short span of time. Thus, fast food industry is composed of all those food outlets that serve preheated or precooked food. Fast food market is the sale of eatables (food and drinks) for immediate consumption either on the premises or in designated eating areas shared with other foodservice operators, or for consumption elsewhere. According to Research and Markets Report, the global fast food market has generated revenue of $252.9 billion in 2011, with a compound annual growth rate (CAGR) of 5.2% between 2007 and 2011.

Broadly, the market can be broken down into 4 major segments as follows: 1. QSR: Quick Service Restaurants provide full meal without any table service. 2. Takeaways: Consumers take the food off from these outlets to consume. 3. Mobile and street vendors: Individual mobile stalls and vans that provide freshly prepared food items for immediate consumption. 4. Leisure locations: Here, food and beverages are served for immediate consumption in the premises within leisure outlets like Malls, Theatres etc. Proportion of menu items offered by food category for twelve restaurants (top 10 restaurants plus Domino’s and Dairy Queen): A total of 2,781 menu items evaluated from twelve top restaurants represent the following data

Source: Menu composition Analysis (January 2010)
Proportion of Dollar/Value menu items offered by food category:

Source: Menu composition Analysis (January 2010)

Top 10 key players of fast food market:
Sr. No.| Parent Company| Restaurants|
1| McDonald’s| McDonald’s|
2| Doctor’s Associates| Subway|
3| TPG Capital| Burger King|
4| Starbucks Corporation| Starbucks|
5| Wendy’s Arby’s Group| Wendy’s|
6| YUM! Brands| Taco Bell|
7| YUM! Brands| Pizza Hut|
8| Dunkin’ Brands| Dunkin’ Donuts|
9| YUM! Brands| KFC|
10| Sonic Corp.| Sonic|
Source: QSR News

In order to understand latest trends in fast food market TGI i.e. Target Group Index studied consumers’ attitude and habits towards fast food in 15 countries and the following are the findings: 1. Fast food nations:

i. Out of 15 markets included in the study, 12 are the markets where majority of the people eat fast food. ii. USA and Australia constitute the largest proportion of the fast food market. iii. 90% of people, majority of which are young men aged between 18 years to 24 years, in the USA and Australia choose to have fast food. iv. Consumers least interested in fast food are from Europe and Latin America. v. In Spain and Brazil less than 50% said that they eat fast food. vi. In Hungary there are 35% consumers of fast food.

2. The factors affecting high level consumption of fast food: i. Convenience.
ii. Appealing ambience of the outlet.
3. Health awareness:
i. 66% of people in Canada say that they should try to eat healthy. ii. In Britain 23% of people agree that they always think about the calorie intake. 4. Availability of healthier alternatives:

i. Fast food industry is introducing lower-fat options for health conscious people.

Key drivers impacting the growth of market:
1. 24/7 work schedules: 24/7 business hours has enhanced the 24/7 demand of quick food. 2. Expansion of malls and supermarkets that provide space for fast food outlets. 3. Pricing: Survey suggests that people chose fast food because of its low price. 4. People’s desire for new fast food concepts.

In recent years there have been challenges for the fast food industry that are affecting the profit margins. The challenges can be listed as bellow: 1. Increased awareness of the negative health consequences of fast food. 2. Rising commodity prices.

3. Recession affected consumer spending resulting in overall less purchase. 4. Market saturation.
Challenges can be answered with innovation and thus, challenges can be converted to opportunities. For fast food the opportunities can be listed as below: 1. People are getting busier day by day. They need quick meal options. 2. Healthy offerings to health conscious consumers.

3. Expanding on new product lines.
4. Non traditional fast food franchises.
5. Bank tie-ups: Customers can redeem promotional freebies based on amount charged on their credit cards. 6. Movie tie-ins which include promotion of hit movies with offering of limited edition gadgets, collectibles and food items.

1. Fast Food: 2011 Global Industry Guide by Express Hospitality forecasts the fast food market to grow to a value of US$ 239.7 billion by 2014. It says that it would mark an increase by 19.2% since 2009. America is the largest consumer of fast food, accounting 47.4% of the global fast food market value. 2. According to express hospitality, QSR (Quick service Restaurants) is the largest segment of the global fast food market. It has a share of 70.9% of the total market value. 3. There are over 2,00,000 fast food outlets alone in the U.S. Revenue has grown to $160 billion in 2010 from $6billion in 1970, with a rate of 8.6% annual rate.

Chart 1: Data from

4. It is being estimated that fast food market would accelerate and CAGR for the five year period 2011-2016 is being anticipated to be 5.6%. The expected value of the market by the end of 2016 is $331.8 billion. (Source:

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