Having experienced a robust debate discussion on the strengths, weaknesses, opportunities, threats, and trends (SWOTT) analysis and strategic planning for a particular fast-food franchise, it is time to shift gears a bit and consider the competition in the fast-food industry. Read this article to frame this week’s discussion. Complete the following:
Identify 1 or 2 other major competitors in the fast-food industry, and describe their sources of competitive advantage.
Discuss a current issue that this industry faces. It could be favorable or unfavorable to the industry.
Which of the major competitors has the strongest competitive advantage and ability to overcome the barriers presented by the current issues identified and why?
Part 2: Based on the first initial of your last name:
Article for assignment: http://www.ibtimes.com/best-restaurants-usa-chick-fil-trumps-competition-mcdonalds-falls-out-favor-1990232
The fast-food industry faces stiff competition from full-service restaurants. This is mainly the result of a change in preferences among customers. The American Customer Satisfaction Index (ACSI) indicated that in 2015, customer satisfaction for fast-food outlets dropped by 3.8 percent to stand at 77 percent (Berger, 2015). Apart from competition arising from the full-service restaurants, the fast-food firms are in constant competition for customers. Chick-fil-A faces stiff competition from McDonald’s. McDonald’s main source of competitive advantage is a strong brand presence across the U.S. and other parts of the world as well. McDonald’s is one of the most popular fast-food outlets in the U.S. Another source of competitive advantage for McDonalds is presence in multiple locations. McDonald’s has more outlets compared to Chick-fil-A. According to a Huffington post, McDonald’s was only second to Subway with 14,098 outlets in 2012. Subway led with 24,722 outlets.
One of the current issue that the fast-food industry faces concerns perceptions of unhealthy foods or menus. Consumers increasingly perceive fast-food outlets as serving unhealthy menus that contribute to obesity, heart diseases, diabetes, and other lifestyle diseases (“AFP”, 2014). As such, consumers are looking for healthier menus. The fast-food industry has responded by adding healthier food options to their menus. Some fast-food outlets have added healthier food options to their main course, offering consumers the choice. For instance, some provide consumers with the opportunity for having vegetables included in the main course. There is an increase in franchise concepts that embrace healthier food choices for their customers. Another current issue is the rising popularity of the fast casuals. The fast casual is the fastest growing segment in the food industry (Shaw, 2014). Fast casuals offer cheaper prices, faster services, and foods that are almost equal in quality or even better to that offered in full-service restaurants.
The fast casuals currently hold the highest competitive advantage. This is because they offer healthier menus that are in line with consumers’ current tastes and preferences. The fast casuals have seem to fill the void between the fast-food industry and full-service restaurants. They offer customers with convenient and affordable menus that are slightly above that offered by fast-food outlets in terms of quality (Shaw, 2014). By combining convenience, affordability, and quality of foods served, the fast casuals have become a favorite to majority of Americans. This combination enables the fast casuals to overcome barriers relating to quality of foods and higher costs associated with fast-food industry and the full-service restaurants respectively. Fast casuals are likely to maintain high growth over the next five years.
The success of the fast-food franchise’s competitors lies on speed. Fast food outlets that actually serve customers in a quick manner often attract a large number of customers. Most people who visit fast-food outlets are often in a hurry to go to work or attend other businesses. On average, customers stay for shorter periods at fast-food outlets compared to the time they spend at full-service restaurants. The speed at which customers are served is a significant determinant of the overall customer satisfaction. This is contrary to full-service restaurants where order processing takes more time. In addition, customers take more time at full-service restaurants. Fast-food outlets often focus on smaller variety of foods that can be cooked and served quickly. Speed is of significant essence in fast-food outlets.
AFP. (2014, Nov. 11). Why fast food is slowly falling out of favor in America. Daily News.
Berger, S. (2015). Best Restaurants In USA: Chick-Fil-A Trumps Competition, McDonald’s Falls Out Of Favor. International Business Times.
Huffington. (2012). 10 Biggest Fast Food Chains In The U.S.
Shaw, B. (2014, Mar. 24). Fast Casual Continues to Dominate Restaurant Growth. The Motley Fool. Retrieved from https://www.fool.com/investing/high-growth/2014/03/24/fast- casual-continues-to-dominate-restaurant-growt.aspx
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