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Introduction
The fast food industry is a dynamic industry featuring a high density of franchising. It is also one of the most challenging new industries to operate in, due to an ever-increasing amount of operations competing for the same profits. Intense rivalry exists between concepts.
Competing and defending market share within the fast food market industry has always been defined as a challenging task. Operating within the current environment is even more demanding. This particular industry has been rocked by a number of trends requiring rapid and fundamental action.
25%
FAST FO D O CATERG RY O O ERS CATERG RY TH O
79%
Fig 1 average weekly household expenditure (dollars spent, 2008) The average household spends $171.20 a week on food and Fast Food category Total $683.10 FMCG$171.20 25% Others expenditure $511.90 79%
FMCG GROUP Food at home Food away from home alcohol Household supplies Total expenditure
Fig 2 New Zealand household FMCG expenditure (dollars per household per week, 2008) The chart above reveals that the food category is about 66% of the total FMCG expenditure, while the non-food category is 34% With 15% in the food category is for fast food consumption
The McDonald's moves come amid major upheavals in the fast-food sector. McDonald's is keeping a close watch on Subway, whose outlets cost less to set up than the $400,000 to $1.3 million for a McDonald's.
On another side, New Zealand fast food market becomes more multicultural More south-east Asian fast food comes into existence.
Fig 4 Indian Takeaway (Mr India takeaway near Kingsland train station)
Fig 5-1 / 2 changing share of the food services outlets (fast food retails vs. general food retails) From 2008, fast food category is 22.5%, to 2011 is 23.2% Gradually, FMCG group is increasing over the general food retails
80 75 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 2007
FAST FO D O TAKEAW AY FO D AT H M O OE
2008
2009
2010
2011
2012
Fig 6 changing share of the food takeaway and food at home (% of total food sales) From 2008 fast food takeaway is 42%, till 2011 is 49% Gradually, fast food takeaways are increasing over the general food at home from years to years.
Dominos pizza you got 30 mins; the door, its dominos; dominos, pizza delivery experts Kfc there s fast food, then there s kfc ; we do chicken right
get the
Subway subway eat fresh, the way a sandwich should be Pizza hut good stuff now yourre eating gather round the
Subway
8 Fast food market in NZ research report 2012 by kim
In an age travelling at the speed of light, we are all after a quick fix an easy lunch or a fast way out. Fortunately many of the fast food chains are coming to the party as far as healthy meals are concerned. Subway is one of the fastest growing franchises in the world with approximately 31,949 restaurants in 91countries as of November 2009. Many restaurant analysts attribute Subway's fast growth to the growing health concerns by restaurant customers, a trend that Subway has taken advantage of in its marketing .Subway has become the biggest seller of sandwiches
"In a lot of city centres it has replaced the donor kebab shop as a place where people go to get food and hang out after the pub." SUBWAY Specialist in hot and cold submarine sandwiches and salads, the SUBWAY chain has experienced significant growth in recent years as a "healthy alternative" to other fast food options. For health-conscious consumers, the SUBWAY chain has become a popular choice in the quick-serve category. With today's busy lifestyles, a meal on the go is a regular occurrence, yet many people are demanding more that just convenience - they want healthier choices. The '7 under 6' menu gives them exactly that - a low calorie, low fat option and great taste too. This is where the SUBWAY chain fills the gap in the fast food market for great tasting, healthy food.
Classic Sandwiches 6" BMT 6" Cold Cut Trio? 6" Meatball 6" Seafood & Crab 6" Steak & Cheese 6" SUBWAY Melt 6" Tuna Select Sandwiches 6" Asia go Caesar Chicken 6" Horseradish Roast Beef 6" Southwest Steak & Cheese 6" Horseradish Steak & Cheese 6" Honey Mustard Turkey with Cucumber 6" Southwest Chicken 6" Caesar Italian BMT 7 Under 6 Sandwiches 6" Ham * 6" Roast Beef * 6" Roasted Chicken Breast * 6" SUBWAY Club * 6" Turkey Breast * 6" Turkey Breast & Ham * 6" Veggie Delete *
CALS 456 470 510 395 361 380 450 CALS 383 354 409 439 266 350 521 CALS 264 245 291 260 244 261 200
FAT 23 26 27 17 13 15 24 FAT 15 15 18 21 3.4 12 30 FAT 4.2 3.7 5.2 3.9 3.4 4 2.5
KJ 1910 1960 2140 1650 1510 1590 1880 KJ 1600 1480 1710 1840 1110 1460 2180 KJ 1100 1030 1220 1090 1020 1090 840
1250 40 SOD CARB 800 960 1140 1140 1060 830 1870 45 39 42 42 44 40 41
McDonald's
With over 35,000 locations in 119 countries, McDonalds has a large chunk of the fastfoodmarket share; it serves 47 million customers each day, and employs 1.5 million people. McDonalds operates its own restaurants and franchises its brand to local businesspeople (about 70 percent of the world's McDonald's are franchise). McDonalds is well-established in Europe, Asia/Pacific Islands, the Middle East, and Africa. In Asia, the general management has indicated that there is significant potential in the China market. The corporation has adapted its menu items to local cultures, such as the Teriyaki Mac in Japan, variants of Filet-O-Fishing China, and using lamb instead of beef in India.
Market share
Around the world, fast food is a huge market, with the largest fast food marketshare in Europe going to the UK. Fast food is classed as burgers, pizza, chicken, sandwiches, fish and chips and fatty ethnic foods such as curry and Chinese takeaways. As people work longer hours, subsequently leaving them with less time in their lives, fastfood has become an easy option to save cooking. The global fast food market recorded good sales results in 2008 with further positive results anticipated in 2009 as the sector taps into consumers' desires for better value when eating out. Developments in the fast food sector in New Zealand have closely mirrored the trends of consumers for better value for money when eating out. The kiwis food lifestyle is changing with the introduction of the European timetables, not allowing most employees have their traditional lunches or dinners. The fact that consumers have less time to eat and are now more price conscious has helped the fast food chains grow.
2008 2010
Fig 10 fast food and takeaways increasing rate (dollars, 2008 -2010)
Promotion strategy
Sales promotions in the fast food industry are a marketing tool used on various scales by the chains. Special sales promotions may include limited time offers on items for specified time. It may also include special promotions such as McDonalds Monopoly, where consumers have a chance to win prizes, including coupons for free or discounted menu items. DISTRIBUTION CHANNELS The distribution of food products within the fast food industry is resolute. This intensive strategy leads to more exposure, increased brand awareness, and potentially higher sales. The distribution channel of fast food restaurants includes Producers, Intermediaries, Retailers, and Consumers. ADVERTISING EXPENDITURES Advertising expenditures for any major business can be expensive, especially when the market is saturated with competition that is willing and able to spend money on marketing and promotional advertisements. In the fast food industry, spending millions on a single food item campaign is not uncommon. Through print, radio, television, and internet ads, fast food chains can reach their target markets easily.
PROMOTIONAL TRENDS Some recent promotional trends include the utilization of android and mobile applications, age/gender specific advertisements, internet banner ads, Corporate Facebook and Twitter accounts, and nutritional or healthy options. Each of these trends is tailored to answer the growing demands of the consumer in todays economy. POSITIONING AND PLACEMENT The positioning and placement of fast food chains is easily identifiable: fast-food, at a great price, with a predictable taste! This position has set all fast food chains apart from their full service counterparts, and has created a market all of its own, with repeat customer base.
"Emphasis is on Return to Core Consumers, Commitment to Quality, Innovation and Differentiation and Unwavering Dedication to be 'Brilliant with the Basics." --burger king press
Differentiation & New Marketing Initiatives A number of chains have responded to the current environment by attempting to differentiate themselves from competitors, whilst at the same time making themselves more attractive to existing and new customers. McDonald's sought to distinguish itself by introducing a range of products, a new focus on store quality, and the new "I'm Loving' it" jingle. McDonald's new health focus involves new Go Active Happy Meals for adults that include salad, bottled water, a pedometer and advice to walk more. Other health initiatives include new low-fat dressing, more salads, and more nutritional information. So far the healthy initiatives have stood have stood the company in good stead. Another technology-based differentiation example include pizza hut "Pizza and Entertainment" promotion giving customers a perishable DVD movie (DVD's become inactive 48 hours after removal from packaging) free with pizza.
THE IMPLEMENTATION CHALLENGE While there may be compelling reasons for change, implementing new initiatives is a challenging task. What sells in one market market may not in another and new initiatives typically don't come without expense or risk to existing franchisees. Clearly, franchisors need to work very closely with franchisees on new initiatives. Franchise Organizations, which explores restaurant chain management, affecting system wide adaptation is a complex and challenging task. Successful adaptation requires not only an understanding of organizational change, but also an understanding of franchisor-franchisee relationship dynamics.
Bibliography
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NZ herald journal 2011 August Text book (add here by yourself) Coriolis FMCG retailing nz report.pdf Internet source from Mc Donald, SUBWAY,KFC General data statics from National Statics Bureau to produce the charts and diagram