FAST FOOD INDUSTRY ANALYSIS NAICS NUMBER AND DESCRIPTION Its NAICS code is 722211, officially known as “Limited

-Service Restaurants.” The SIC code is 5812. This U.S. industry comprises establishments primarily engaged in providing food services where patrons generally order or select items and pay before eating. Food and drink may be consumed on premises, taken out, or delivered to the customer's location. Some establishments in this industry may provide these food services in combination with selling alcoholic beverages. INDUSTRY SIZE OVER TIME Competition between restaurants is intense, since dining options abound. And, while there are certainly dominant players in this industry (especially among fast-food purveyors), no one company has the market cornered. Fast-food industry includes about 200,000 restaurants. The industry has combined annual revenue of about $120 billion. Industry is highly fragmented: the top 50 companies hold 25% of sales. The industry is highly labor-intensive: the average annual revenue per worker is just under $40,000. Most fast-food restaurants specialize in a few main dishes Restaurants include national and regional chains, franchises, and independent operators Most fast-food restaurants use a POS (point of sale) system to take orders from drive-throughs and the register

PROFITABILITY

McDonald.31 billion. while the restaurant chain's menu changes in an attempt to appeal to local palates (sells beer in France. and income growth was down 23%. sales growth was up 9.52 billion.6 million.sales were 2.4%. Burger King. Jack in the Box.5%.21 million.sales were 23.55 billion.2%. sales growth was up 4.87 million. HOW PROFITS ARE MADE Competing on Low Cost In a synonymous industry. income was 4. However. sales growth was up 1%.sales were 798.9%. The increasing presence of McDonald’s restaurants worldwide is an example of globalization.6%. income was 186 million.sales were 2.Looking at the most successful fast food chains.2%. we can conclude that expanding in global markets is the best strategy. consumers can find a good burger at a comparable price from just about any of the competitors It is important to cut down on overhead cost of your firm in order to make the most off of your sales . and income growth was down 10. they have to adapt to local cultures and tastes (glocalization) in order to be successful. 2003). and chili in Mexico) are an example of glocalization (“Glocalization”. Sonic.54 billion. income was 118. and income growth was down 47. sales growth was up 3. income was 53. lamb in India. and income growth was down 22.

It offers limited menu. service. location. It is usually a part of a chain or franchise operation. and food quality and is often affected by changes in consumer trends. It offers limited menu. 2010). traffic patterns. and dine-in. traffic patterns. TARGET MARKET COMPETITOR CONCENTRATION The restaurant industry is highly competitive in terms of price. economic conditions. Fast food industry or Quick Service Restaurant (QSR) is characterized by its fast food cuisine and minimal table service. finished. and dine-in. drive-thru. and concerns about the nutritional content of quick service foods (“US Fast Food Franchise Industry Report”. cooked in bulk in advance. which provisions standardized ingredients and/or partially prepared foods and supplies to each restaurant through controlled supply channels (“US Fast Food Franchise Industry Report”. economic conditions. packaged to order. 2010). demographics. location. It is usually a part of a chain or franchise operation. kept hot. 2010). and available to take-out. kept hot. Fast food industry or Quick Service Restaurant (QSR) is characterized by its fast food cuisine and minimal table service. drive-thru. which provisions standardized ingredients and/or partially prepared foods and supplies to each restaurant through controlled supply channels (“US Fast Food Franchise Industry Report”. and food quality and is often affected by changes in consumer trends. finished. 2010).The restaurant industry is highly competitive in terms of price. service. and concerns about the nutritional content of quick service foods (“US Fast Food Franchise Industry Report”. . and available to take-out. demographics. packaged to order. cooked in bulk in advance.

Furthermore. and then managers must be careful not to place restaurants too close together. lest they cannibalize each other's sales. it becomes increasingly difficult to capture benefits. Comps are particularly important once a company reaches maturity. Some attributes of the competitive environment that can influence a restaurant’s failure are the business’s physical location. As a chain grows in size. Investors should also pay attention to trends in the dollar value of the average guest check. and how it differentiates itself from other restaurants in the market. The best. most profitable locations are established first.Top-line growth is typically generated in two ways. or "comps". Product innovations and menu-price increases are two of the most common ways to increase same-store sales. since they become the primary driver of growth. Remodeling existing locations is another way to boost guest traffic.1 million people. and usually the main driver of revenue when a company is in its early stages. This is very important for the American people since . Comparable-store sales. opening locations and boosting same-store sales. however. its speed of growth. Opening new doors is a straightforward strategy. is a valuable metric to examine when analyzing restaurants. making it the nation’s second largest employer outside of government. In addition to the problem of having less cash to handle ANALYSIS The restaurant industry employs an estimated 13. promotions and limited-time offers are widely used to attract diners. as this can shed additional light on what exactly is driving sales The environment in which the restaurant operates helps to determine its success or failure.

Inc. 62 Percent of adults who said they are likely to make a restaurant choice based on how environmentally friendly a restaurant is. REFERENCES Adamy. 2011.corporate-ir. Retrieved April 8. Since late 2006. The restaurant industry provides work for more than 9 percent of those employed in the United States.S. notably lower than other industries. The Wall Street Journal.5 billion — Restaurant-industry sales on a typical day in 2008. (2009).com/article/SB123664077802177333. for total employment of 15. from http://services. Sales per full-time-equivalent employee were $61.344 in 2006.jobs are now on the decline. $1. (the world's largest fast food market. combined with the housing slump and a weakening job market are taking a toll on restaurant spending in the U. (2010). 2010 10-K SEC Filing. The restaurant industry is expected to add 2 million jobs over the next decade. Retrieved April 26.wsj. The same food and energy inflation that is corroding consumer spending is also taking a bite out of company margins.Enhanced/SecCapsule. The high prices of commodities. 83 Percent of adults who said there are more healthy options available at quickservice restaurants than there were two years ago. Eating-and-drinking places are extremely labor-intensive.1 million in 2018. by far). McDonald's seeks way to keep sizzling. from http://online. the fast food industry's growth has been slowed by soaring food and energy prices. 64 Percent of adults who said there are more restaurants they enjoy going to now than there were two years ago.aspx?c=87140&fid=7105569 . 70 Percent of adults who said their favorite restaurant foods provide flavor and taste sensations which cannot be easily duplicated in their home kitchens.net/SEC.html Burger King Holdings. 2011. J.

com/2007/04/did-you-know-McDonald’s-and-burger-king. Retrieved April 21. (n. Retrieved April 23. Retrieved April 8.uk/business/2010/feb/04/burger-king-sales-fall Did You Know .d.nytimes. Retrieved April 7. from http://www. from http://www.amosweb. H. Retrieved April 7. (2010).org/wiki/Fast_food_restaurant Mifflin.com/cgi-bin/awb_nav. from http://chucks-fun.html Fast food restaurant. AmosWEB Encyclonomic. A. (2010). (2000).blogspot.franchisedirect.com/books/first/s/schlosser-fast. from http://www.pl?s=wpd&c=dsp&k=monopolistic%20competition US fast food franchise industry report.com/foodfranchises/fastfoodfranchiseindustrystudy/14/262 . 2011. 2011. Burger King sales fall again. (n.Clark.) In Wikipedia Online. from http://www. 2011.). 2011. 2011.McDonald’s and Burger King? (2007). Retrieved April 8.html Monopolistic competition. 2011. The New York Times: Books.guardian. from http://en.co.wikipedia.d.

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