Hamburger and Wendy

Topics: Hamburger, Fast food restaurant, Fast food Pages: 6 (2104 words) Published: May 24, 2006
Executive Summary
Wendy's offers a variety of fast food. The food selection ranges from hamburgers, French fries, salads, chicken, potatoes, and chili. Wendy's income is based on the sale of fast food. The demand of Wendy's service is highly elastic. A change in price will affect demand for products. Wendy's market structure is an oligopoly and has two main competitors; McDonalds and Burger King. In an oligopoly, the market is dominated by a few large producers of a homogeneous or differentiated product. Because of their "fewness," oligopolies have considerable control over their prices, but each must consider the possible reaction of rivals to its own pricing, output, and advertising decisions (McConnell & Brue, 2005). Since there are many substitutes, Wendy's has to be willing to keep their prices and quality of food relative to competitors. McDonalds and Burger King offer substitutes to Wendy's food. Advertising and promotional offers can help Wendy's stay competitive. Wendy's also has to be observant of economic trends. Raises in inflation and food costs will affect the demand for fast food. However, inflation and food costs should also affect McDonalds and Burger King. Therefore, Wendy's market share should not be affected if they raise prices collectively with McDonalds and Burger King. In the future, there is a chance for a healthy fast food restaurant to enter the market. Society is leaning towards a more health conscience population and the fast food industry will have to adjust. Wendy's and its competitors currently offer salads. Wendy's should consider offering healthier menu items and increase advertising to gain market share. Investing in advanced technology will also keep Wendy's competitive. More technology will result in higher productivity and lower average total cost.

Description of Utility of the Good or Service
Wendy's is a fast food restaurant that provides an alternative to home cooked meals. The convenience of their products is not a necessity but can be considered as a luxury. In the past, women were not in the work force and stayed home to tend to household chores. Chores included tending to the children, cooking and cleaning. In the twentieth century, women had begun working outside of the home. In addition, there has been an increase with single-parent homes. The work day has also increased in hours. These factors have increased the demand for an alternative to home cooked meals. Wendy's offers fast food at an affordable rate. Time that would have been spent in the kitchen can now be spent with family or running errands. Fast food also serves as an alternative to traditional restaurants that seat customers and offer full course meals. The meals offered at traditional establishments are priced higher than fast food restaurants. In addition, the time spent at a traditional restaurant is significantly more than time spent getting food at a fast food restaurant. For added convenience, most fast food restaurants offer seating for customers who wish to dine-in. Description of Substitutes and/or Complementary Products

Wendy's competes in local, regional, national, and international markets. Wendy's mainly competes with Burger King and McDonalds on all market levels. Burger King and McDonalds offer the same types of foods as Wendy's. Each fast food chain, however, offers something that the others do not. For instance, Burger King and McDonalds sell fish sandwiches all year, while Wendy's only sells fish during Lent. On the other hand, Wendy's offers chili while Burger King and McDonalds only sell chili in certain markets, or not at all.

Wendy's doesn't offer many complimentary items. Items sold at Wendy's can be eaten alone or with other products. French fries usually complement sandwiches but can be eaten alone. Wendy's offer a combination meal that includes a sandwich, fries and a drink since the items are usually purchased together. With the change in...

References: CNN (2005). Wendy 's Frosty, Retrieved May 15, 2005 from
McConnell R. C., & Brue S. L. (2005). Economics principles, problems, and
policies, 16th ed. New York: McGraw-Hill/Irwin.
Muryn, Jack (n.d.). ch25. ECO 204, Retrieved May 26, 2005, from
Wendys (2005). Eating Better Together, Retrieved May 30, 2005 from
Wendys-invest (2005). Safe Harbor Statement, Retrieved May 30, 2005 from
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