Marketing strategies for fast-food restaurants: a customer view

Ali Kara Assistant Professor of Business Administration at the College of Business Administration, Pennsylvania State University at York, Pennsylvania, USA Erdener Kaynak Professor of Marketing at the School of Business Administration, Pennsylvania State University at Harrisburg, Pennsylvania, USA Orsay Kucukemiroglu Associate Professor of Business Administration at the College of Business Administration, Pennsylvania State University at York, Pennsylvania, USA
Posits that, in recent years, a major food consumption trend in the USA and Canada is that more people are eating more meals outside their homes. It is predicted that this trend will accelerate in the future. As a result, fastfood markets will offer greater growth opportunities for marketers. Presents consumers perceptions of and preferences for fast-food restaurants in the USA and Canada. The results of this study may have very important implications for developing successful marketing strategies for fast-food restaurants. Findings of the study offer need-oriented marketing strategies for both franchisers and franchisees in the US and Canadian fastfood sectors to enable them to be more competitive in this fast-changing business environment.

Introduction
The fast-food sector is now more global than ever and international fast-food consumption continues to increase in popularity . Customers usually form perceptions of fastfood outlets. These perceptions may be formed by word-of-mouth communication, exposure to promotion from fast-food restaurants, past personal experience and other sources. Some perceptions may even be incorrect; they may differ from country to country . It is accepted that fast-food marketing strategies should have a sound understanding of consumers perceptions of and preferences for fast-food outlets and how they differ across cultures/countries. This understanding can be helpful in targeting countries/ cultures to promote fast food and improving or amending their restaurants perceptions so that customer demand can be increased. If countries/cultures differ widely in their perceptions of and preferences for a fast-food restaurant, promotional campaigns tailored to individual countries/cultures may be called for. In summary, international fast-food research requires the researcher to investigate customer perceptions and preferences and relevant multi-attribute criteria used for their decision. Therefore, in this study, the focus of attention is placed on the two relatively important international fastfood markets, the USA and Canada. In particular, how the perceptions of fast-food consumers differ across the two countries is examined. The overall goal of the study is to determine whether the same fast-food restaurants are perceived similarly/ differently across the two countries, and whether their positioning can be improved/changed through careful and selective promotion.

The US and Canadian fast-food markets

A major trend in the USA and Canada and in most of the industrial world is that more people are eating meals outside their homes. Recent studies suggest that one out of every two-and-a-half meals today is eaten away from home[1]. According to the Bureau of Labor Statistics, the share of total fast-food spending away from home rose from 33 per cent in 1975 to 39 per cent in 1980 and to 46 per cent in 1990. Even in the recessionary times, sales of fast-food franchises grew by 11 per cent. If this current trend continues, Americans and Canadians will consume more than half their meals outside their home by the end of the century, which will also account for nearly 50 per cent of their household food expenditures[2]. Of course, this trend is also signicantly dependent on a number of demographic and lifestyle changes that account for the signicant growth in meals consumed outside the home. However, currently, many types of fast-food outlets are beneting from this apparent trend. Owing to the relatively inexpensive costs and quick convenient service, fast-food outlets have become a home away from home for breakfast, lunch and dinner. In recent years, changing lifestyle and demographics of North American consumers are the mechanisms affecting change in the food industry . As a result, todays menus reect a marketing-oriented approach that looks at wholesomeness and a variety of foods. In most cases, menu redesign is the critical issue in meeting customer demands for nutrition and variety[3]. Since 1970, consumers have been spending less of their food budget at the grocery store while more and more of their food money is ending up in cash registers at restaurants and fast-food outlets. On the other hand, North Americans have developed a growing interest in the nutritional quality of the food they consume (e.g. low-calorie or fat-free

British Food Journal 99/9 [1997] 318324 MCB University Press [ISSN 0007-070X]

[ 318 ]

Ali Kara, Erdener Kaynak and Orsay Kucukemiroglu Marketing strategies for fastfood restaurants: a customer view British Food Journal 99/9 [1997] 318324

foods), becoming more health conscious than ever. The trend is low calorie, light and low fat, and the health items will supplement, not replace, the traditional menu. Burke Marketing Researchs extensive study of consumer attitudes indicates that Americans are eating better food only if it is easy and it tastes good. In general, consumers express concern about their health, salt intake and cholesterol, but those factors such as easy preparation, taste and appeal to children dominate their buying behaviour[4]. Increased customer service is also becoming an important factor in fast-food restaurants offerings. For instance, McDonalds Corporation makes service its primary focus. Dominos Pizza is testing a customer satisfaction guarantee as a replacement for its 30minute delivery guarantee. Burger King Corporation, with a lower media budget, has added modied table service and advertises a toll-free number for consumer complaints and suggestions[1]. The internationalization of fast-food outlets is proceeding in many different ways, including cross-border transfers of techniques, ideas and practices, in addition to direct investment activity and the development of cross-border alliances between leading fastfood retail outlets and their local counterparts. That is why we are seeing the opening of more fast-food outlets outside the USA than in the domestic market and the increasing numbers of host country fast-food outlets operated by major franchisers such as McDonalds recognizable international trading formats[5]. The objective of this article is to understand consumer perceptions of and preferences for fast-food outlets in the USA and Canada. Specically, the objective of the study is to answer the following questions. What are consumers perceptions of different fast-food outlets in the USA and Canada with respect to certain multi-attribute criteria? Are there any differences between US and Canadian consumers perceptions of and preferences for different fast-food outlets and meals? What are the managerial implications of these differences (if there are any)? The ndings are expected to have relevance to both fast-food franchisers and franchisees by helping them to prepare consumer-oriented marketing strategies.

fast-food outlets. To the best of our knowledge, previous studies of fast-food outlets have been limited to the description of the characteristics of the fast-food consumers in terms of some demographic and socio-economic factors and very few have been related to the behavioural and attitudinal orientation of fast-food consumers. Research conducted by Good Housekeeping evaluated the meals served by the popular fast-food outlets in terms of nutritional value, such as protein and calorie content. A study by McNeal et al.[2], on the other hand, attempted to explore nutritional perceptions of the selected fastfood meals held by consumers from different socio-economic backgrounds and with different nutritional knowledge. Another study by Miller and Ginter[6] argued that situational variation can be used to explain consumer choice and attitudes. Thus, they attempted to nd out the importance of attributes of fast-food choice on different consumption occasions. However, their analysis was very limited. In other words, they simply plotted the importance of prespecied attributes and compared the attributes for different fast-food outlets using mean rating values. Louviere[7] used fast-food outlets to forecast consumer choices. This study is useful in the context of the present study in terms of the identication of the attributes used to understand consumer perceptions of and preferences for fast-food outlets/meals. No previously reported research has investigated the perceptions of and preferences for fast-food consumers at cross-national/cultural level. This study focuses on the managerial relevance of consumers self-reported preferences and perceptions.

Study methodology
Fast-food restaurants and service attributes
Products and services geared to consumer interests in health, safety and environment have been playing an increasingly important role in the franchising industry of the 1990s. Studies indicate that Mexican dishes are the fastest-growing market segment among all quick-food service segments. From 1986 to 1990, traffic at quick-service Mexican fastfood outlets advanced by 42 per cent. In the past ve years, the number of Mexican fastfood entres on menus has swelled by 180 per cent[8]. In this study, fast-food product category was narrowed to include only those fastfood restaurants oriented towards hamburgers, sandwiches, pizzas, fried chicken, Chinese food, Greek food and Mexican food

Literature on fast-food research

There has been little work done in the past on consumer perceptions of and preferences for

[ 319 ]

Ali Kara, Erdener Kaynak and Orsay Kucukemiroglu Marketing strategies for fastfood restaurants: a customer view British Food Journal 99/9 [1997] 318324

(hamburgers or cheeseburgers still rank as the most popular items among US fast-food outlets[9,10]. Nine fast-food restaurants were used in the study: 1 McDonalds; 2 Burger King; 3 Taco Bell; 4 Pizza Hut; 4 Subway; 4 Kentucky Fried Chicken; 7 Fuddruckers; 8 Wendys; 9 Little Caesars; 10 others. Four of the nine restaurants specialize in hamburgers, two in pizzas, one in submarine sandwiches, one in Mexican food and one in fried chicken. According to the pre-test results, these brands were known or frequently consumed by 82 per cent of the consumers in the two samples. The next step was to identify the attributes that could be used to reveal consumers perceptions of the fast-food restaurants. Previous studies[2,6,7] helped to determine the multiattribute criteria on which consumers differentiate fast-food restaurants. Eleven attributes were elicited from the literature and they are also consistent with those suggested by Belk[11]: 1 price; 2 friendliness of personnel; 3 variety of menu; 4 service speed; 5 calorie content; 6 cleanliness; 7 convenience; 8 business hours; 9 delivery service; 10 novelties for children; 11 seating facilities.

comparable for marketing purposes. The two study areas have distinct characteristics with diverse socio-economic and cultural backgrounds. Survey questionnaires were hand distributed at home to 200 households in the USA and in Canada in the three predetermined cities where there are distinct demographic and socio-economic groups of households. After a one-week waiting period, the questionnaires were personally retrieved from the respondents with the aid of undergraduate university students. The questionnaire used in the study was adopted from Green et al.[12]. The questionnaire contained attribute by brand questions, pairwise comparisons of fast-food outlets, frequency of purchase, dollar amount of purchase, products purchased, and a comprehensive demographics and socio-economic factors section. The same research instrument was used in both regions.

Analysis and results

A total of 179 usable questionnaires was obtained from the US sample yielding an 89.5 per cent response rate; and 141 usable questionnaires were retrieved from the Canadian sample yielding a 70.5 per cent response rate and these response rates are acceptable by social science standards. Demographic and socio-economic characteristics of the sample from the two regions are presented in Table I. Table II shows consumers preferences for fast food in the two regions studied. There is a signicant difference between the USA and Canadian consumers as to the fast food they prefer (p < 0.05). While the US consumers place hamburgers at the top of their preference list, Canadian consumers prefer seafood. Pizza ranks second among US consumers while Canadians place hamburgers second. The US and Canadian consumers do not differ in terms of preferred fast-food consumption time. Most US and Canadian consumers prefer to eat in a fast-food restaurant between 11.00 a.m. and 3.00 p.m. The second most popular eating time for both US and Canadian consumers is between 3.00 p.m. and 8.00 p.m. Although there is a signicant difference between US and Canadian consumers in terms of the eating place, the most preferred fast-food restaurant for both US and Canadian consumers is close to their home. This conrms the importance of convenience in the selection of a fast-food outt. Table II also shows that there is a difference between US and Canadian consumers in terms of the price that they are willing to pay for fast foods. While most US consumers are willing to pay between US $3.00 and US $4.00,

Data collection
The data for this study were collected through self-administered questionnaires in the three neighbouring cities of Bedford, Dartmouth and Halifax, Nova-Scotia, Canada and the three-county region of YorkLancaster-Harrisburg, Pennsylvania, USA. In both regions of North America there are capital cities of the respective regions and they contain a sizeable percentage of urban population who are a major target market for fast-food outlets. In both major cities, a sizeable percentage of population makes a living from service, light manufacturing and resource-based industries. These apparent structural similarities between the two selected regions of North America lend credence to the study and help to ensure that the study results are

[ 320 ]

Ali Kara, Erdener Kaynak and Orsay Kucukemiroglu Marketing strategies for fastfood restaurants: a customer view British Food Journal 99/9 [1997] 318324

Table I Demographic and socio-economic characteristics of fast-food consumers Percentage USA Canada (n = 179) (n = 141) 57.2 42.8 100.0 61.1 38.9 100.0

Table II Comparison of US and Canadian consumers Percentage USA Canada (n = 179) (n = 141) 40.22 3.91 29.05 12.85 4.47 1.12 8.38 100.00 6.70 50.84 34.08 7.82 0.56 100.00 65.92 27.93 1.68 4.47 100.00 3.35 19.55 60.34 16.76 100.00 27.73 36.24 7.09 12.77 2.84 4.96 8.37 100.00 6.93 45.65 37.32 10.52 1.58 100.00 42.06 36.91 12.80 8.23 100.00 6.38 36.88 35.46 21.28 100.00

Characteristics

Characteristics Sex Male Female Total Age (years) Less than 25 25-45 Above 46 Total Income ($) Under 10,000 10,001-20,000 20,001-30,000 30,001-40,000 Above 40,000 Total Occupation Student Housewife Employed Other Total

23.4 44.7 31.9 100.0

24.7 48.1 27.2 100.0

Favourite fast food*, ** Hamburgers Seafood Pizza Chicken Chinese food Greek food Others Total Eating time 7.00 a.m.-11.00 a.m. 11.00 a.m.-3.00 p.m. 3.00 p.m.-8.00 p.m. 8.00 p.m.-midnight Later Total Eating place** Home Place of employment Place of recreation Other Total Price willing to pay** (US$) Under 2.00 2.00-3.00 3.01-4.00 Above 4.00 Total
Notes: * Comparison based on 2 test ** Signicant at p < 0.05

13.5 18.3 29.9 23.6 14.7 100.0

14.2 21.5 32.1 22.7 9.5 100.0

16.1 38.7 43.6 1.6 100.0

13.9 39.7 45.4 1.2 100.0

most Canadian consumers are willing to pay between US $2.00 and US $3.00 for fast food. In determining the perceptions of fast-food restaurants for US and Canadian consumers, correspondence analysis was used in this study . Correspondence analysis (CA), has been described as a special case of canonical correlation analysis between sets of indicator variables[13]. Although it has been a popular data analysis technique in France for many years[14], it has only gained attention in the US during the last ten years[15,16]. CA is an exploratory multivariate technique that converts frequency tables into graphical displays in which rows and columns are depicted as points. It provides a method for comparing row and column proportions in a two-way or multivariate table. Mathematically, CA decomposes the 2 measure of association of the table into components in a manner similar to that of principal component analysis for continuous data[17,18]. CA portrays sets of data points in a joint space, usually dened by two or three dimensions[15,17]. The axes of the joint space are principal components identied in the analysis. The name correspondence analysis refers to the fact that the row and column scores are reported in

corresponding units, which permits the portrayal of the points in joint space and facilitates interpretation. The graphical output of CA is rich in information and it requires categorical data as input. If continuous variables need to be used as input, they must be converted to discrete form. In this study CA is applied to data on consumers perceptions of various fast-food restaurants in North America. The data on the multi-attribute criteria that inuence fast-food restaurant preferences were collected by using the 11 items listed earlier. An interval scale was used ranging from 1 (no inuence) to 5 (very strong inuence). To understand the inuence of a factor on respondents choices, only indicates a lot of inuence and indicates very strong inuence responses are used. Then the data were discretized by using the top and bottom two categories of the scale.

[ 321 ]

Ali Kara, Erdener Kaynak and Orsay Kucukemiroglu Marketing strategies for fastfood restaurants: a customer view British Food Journal 99/9 [1997] 318324

There are differences between the US and Canadian consumers in terms of the relationship between frequency of purchase and attributes considered important. Figure 1 illustrates the relationship between the frequency of fast-food purchases and factors considered important in fast-food restaurant preferences for US consumers. Figure 1 also illustrates that the frequent fast-food buyers in the US perceive that delivery service, variety, speed of service, quality, cleanliness and friendly staff are the most important inuencing factors of their fast-food restaurant preference. However, less frequent US buyers indicate that novelties for children, price and nutritional value are the most important factors inuencing their fast-food restaurant preferences. Hence, it seems that less frequent fastfood buyers are seeking price deals and promotions before visiting a fast-food restaurant as well as responding to their childrens requests. This nding offers important managerial implications in terms of fast-food marketers targeting strategies to frequent and/or non-frequent buyers. On the other hand, different factors were found to be inuencing Canadian consumers fast-food restaurant choices. Figure 2 illustrates the relationship between the frequency of fast-food purchases and the factors considered important in fast-food restaurant preference for Canadian consumers. It is interesting that price, location and novelties for children are considered to be the

Figure 1 Frequency of fast-food purchases and important factors for US consumers

0.20 Novelties Price 0.15 Nutritional Twice-a-month 0.10 Friendly staff Speed Once-a-month

0.05 Axis 2

Three-times-a-week Delivery service

0.00 Seating capacity 0.05 Once-a-week Quality of food Cleanliness Twice-a-week Variety

most important factors in fast-food restaurant preference by the less frequent Canadian buyers. This is, in fact, not much different from the attributes that less frequent US consumers consider important. On the other hand, statistically signicant differences were found between the frequent US and Canadian fast-food buyers in terms of the attributes perceived as important. Frequent fast-food buyers in Canada consider seating capacity, cleanliness, nutritional value, friendly personnel and variety as the most important factors which offer from the factors considered important by the US consumers. To understand the factors inuencing fastfood restaurant choice for different age groups, 2 analysis was performed separately on the two data sets. Cleanliness, nutritional value and quality of taste are closely associated with the last two age categories (46-55 and above 55) which are labelled older consumers. On the other hand, variety, price, delivery service and location are closely associated with the rst two age groups (12-17 and 18-24), which are described as young consumers. Speed and friendly personnel are closely associated with the age groups 25-35 and 36-45, which are labelled middle-aged consumers. These relationships, however, were different for the Canadian consumers. The older consumers in Canada consider nutritional value and seating capacity to be the most important factors inuencing their fast-food restaurant choice. On the other hand, price and novelties were considered important by the young Canadian customers. Middle-aged Canadian customers consider speed, quality, variety and service to be the most important factors inuencing their choice of fast-food restaurants. The differences observed in the Canadian sample also need to be evaluated in the context of possible differences in the denition of fast food and fast-food restaurant by consumers in the two countries. While hamburgers and pizza were the two favourite fast foods for American consumers, Canadian consumers indicated that seafood, hamburgers and chicken were the favourite fastfood items for them.

Discussions and implications

A key objective of marketing is to dene market segments so that the product can be differentiated from rival products to serve the needs of a given segment in the best way possible. In this comparative cross-national study, US and Canadian consumers preferences for and perceptions of fast-food

0.10

0.15

0.18 0.09 0.00 0.09 0.18 0.27 0.36 0.45 0.54 Axis 1

[ 322 ]

Ali Kara, Erdener Kaynak and Orsay Kucukemiroglu Marketing strategies for fastfood restaurants: a customer view British Food Journal 99/9 [1997] 318324

restaurants using correspondence analysis and multidimensional scaling were explored. These analytical techniques are particularly appropriate for analysing positioning of fastfood restaurants across different countries. The results indicate that there are signicant differences between the frequent fastfood buyers in the USA and in Canada in terms of the factors perceived important by fast-food consumers. Frequent buyers in the USA considered variety, speed and friendly staff as the most important factors of their fast-food restaurant choice while less frequent buyers indicated that price and promotional deals were the most important factors. On the other hand, frequent Canadian fastfood buyers considered seating capacity and nutritional value as the most important factors while less frequent buyers indicated, like their US counterparts, that price, novelties and location were the most important attributes. However, no differences were found between the US and Canadian consumers perceptions of the similarity of the fast-food restaurants studied. This is an important nding because fast-food restaurants perceived as similar can be viewed as direct competitors. The results of the study offer several managerial implications. First, they emphasize the differences between the perceptions and preferences of consumers in two culturally very similar nations (USA and Canada) for so-called commodity-type product/service, that is, fast food.

Second, the study illustrates that there are several product/service factors that consumers consider to make their decision on selection of a fast-food restaurant. It is incorrect to assume that the fast-food market has become a commodity market. The marketers who understand the factors that fastfood customers consider most important for their choice will emphasize those factors in their marketing strategies and can then differentiate (actual or perceived) their products/service. For instance, the customization that Fuddruckers offers increases the ability of consumers to control the number of calories in their meal and this is thought to be an important contributory factor to their success in the fast-food market. Finally, the results indicate differences between consumers preferences for fast-food restaurants in relation to age groups and in terms of frequency of buying within, as well as between, nations. This emphasizes the importance of target marketing for fast-food restaurants.

Limitations and future research avenues

The study has certain limitations which can be viewed as future research items. Although a sufficiently large sample from the two countries was used in the study, samples were not considered to be representative of the overall US and Canadian consumer. They represent urban consumers perceptions in the two regions only . A more representative sample might consider the differences within the two nations more carefully . Despite this caveat, however, samples used in the study are drawn from the general public and, therefore, lend themselves to generalization. The results of this particular study need to be replicated by collecting data at the consumption point. In other words, data might be collected in the fast-food restaurants during the actual consumption, therefore yielding more realistic information. Furthermore, a comparison of on-the-premises versus off-thepremises fast-food consumption behaviour might shed more light on this underresearched topic also. Another interesting future research agenda would involve the comparison of USA, Canada and Mexican consumers perceptions and preferences. The North American Free Trade Agreement (NAFTA) increases the importance of such a cross-cultural approach. Further research should examine fast-food consumption preferences at cross-cultural as well as cross-national levels. For instance, one may expect differences at a cross-national

Figure 2 Frequency of fast-food purchases and important factors for Canadian consumers
Twice-a-month Novelties Quality food Speed Once-a-week Friendly staff Location Service Price Once-a-month 0.05

0.10 0.05

0.00 Axis 2

0.10 Twice-a-week Three-times-a-week Cleanliness Nutritional Seating capacity 0.3 0.2 0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Axis 1

0.15

0.20

[ 323 ]

Ali Kara, Erdener Kaynak and Orsay Kucukemiroglu Marketing strategies for fastfood restaurants: a customer view British Food Journal 99/9 [1997] 318324

level among the three countries, there may also be certain differences at cross-cultural and regional levels within each country . Ethnic and regional food consumption differences between French and English Canadians may help to pinpoint important consumption trends. If there are similarities in certain areas, one could develop pan-regional or even centralized marketing strategies for fast-food chains.

References
1 Hume, S., Fast-food chains cook up ways to improve service, Advertising Age, Vol. 63 No. 23, 8 June 1992, pp. 3, 46. 2 McNeal, J.U., Stem, D.E. Jr. and Nelson, C.S., Consumers nutritional ratings of fast-food meals, Journal of Consumer Affairs, Vol. 14 No. 1, 1980, pp. 165-79. 3 Robichaud, R. and Khan, M.A., Responding to market changes: the fast-food experience, Cornell Hotel and Restaurant Administration Quarterly, Vol. 29 No. 3, November 1988, pp. 46-59. 4 Mueller, W., Are Americans eating better?, American Demographics, Vol. 11 No. 2, February 1989, pp. 30-3. 5 Treadgold, A., 1992: the retail responses to changing Europe, Marketing and Research Today, Vol. 17 No. 3, August 1989, pp. 161-6. 6 Miller, K.E. and Ginter, J.L., An investigation of situational variation in brand choice and attitude, Journal of Marketing Research, Vol. 16 No. 1, February 1979, pp. 111-13. 7 Louviere, J.J., Using discrete choice experiments and multinomial logit choice models to forecast trial in a competitive retail environment: a fast food restaurant illustration, Journal of Retailing, Vol. 60 No. 4, 1984, pp. 81-107.

8 Chaadhry, R., Mexican for the masses, Restaurant and Institutions, Vol. 102 No. 7, 25 March 1992, pp. 67-74. 9 Casper, C., Market segment report: Italian, Restaurant Business, Vol. 91 No. 2, 20 January 1992, pp. 127-36. 10 Casper, C., Hamburger market segment report, Restaurant Business, Vol. 91 No. 1, 1 January 1992, pp. 117-23. 11 Bell, R.W., An exploratory assessment of situational effects in buyer behaviour, Journal of Marketing Research, Vol. 11 No. 2, May 1974, pp. 156-63. 12 Green, P.E., Carmone, F. Jr. and Smith, S.M., Multidimensional Scaling: Concepts and Applications, Allyn & Bacon, Needham Heights, MA, 1989. 13 Deville, J.C. and Saporta, G., Correspondence analysis, with an extension towards nominal time series, Journal of Econometrics, Vol. 22, No. 1/2, May-June 1983, pp. 169-89. 14 Nishisato, S., Analysis of Categorical Data: Dual Scaling and Its Applications, University of Toronto Press, Toronto, 1980. 15 Carroll, J.D., Green, P.E. and Schaffer, C.M., Interpoint distance comparisons in correspondence analysis, Journal of Marketing Research, Vol. 23 No. 3, August 1986, pp. 271-80. 16 Hoffman, D.L. and Franke, G.R., Correspondence analysis: graphical representation of categorical data in marketing research, Journal of Marketing Research, Vol. 23 No. 3, August 1986, pp. 213-27. 17 Greenacre, M.J., Theory and Applications of Correspondence Analysis, Academic Press, London, 1984. 18 Greenacre, M.J., The geometric interpretation of correspondence approach, Journal of the American Statistical Association, Vol. 82 No. 397, June 1989, pp. 437-57.

[ 324 ]