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The main purpose of the fast food industry is convenience for the customer and increasing no
of outlets depicts that the demand by the customer has been increased tremendously. Take away
and delivers along with the small stations along the bus stations or airports have also increased
the sales of the fast food.
The fast food industry is popular among customers because of the following reasons:
Free delivers
Accessibility
Transparency
Fast service
Break from routine cooking
Child friendly atmosphere
As the people are becoming more sensitive towards time because of their busy work schedules,
the need and demand for the fast food restaurants is also increasing along with that. Secondly
convenience is somehow becoming the priority of consumers which is being provided by the fast
food industry.
expanding by 10% annually and are currently estimated at about 1.4 billion. On an average
calculation fast food business in Pakistan and trend of eating habits of the locals in the country is
increasing almost 21% annually which means the growth of the fast food business is more than
20% on the annual basis which make it fastest growing business not in Pakistan but in the entire
world.
Demographics:
Pakistan has a population of 175 million people, which makes it the sixth largest population in
the world. Statistics demonstrate that growth in fast food is augmenting 20% annually, which
implies that this is one of the fastest growing businesses in Pakistan. Following is the data which
reveal that how population changes over the year in Pakistan and with the change in the
population consumption pattern of people changes as well. Now a days people prefer to eat fast
food because of changing trends and lifestyle.
Year
Population
Percent Change
2000
2001
2002
137.53
140.36
143.17
1.78 %
2.06 %
2.00 %
2003
146.75
2.50 %
2004
149.65
1.98 %
2005
152.53
1.92 %
2006
155.37
1.86 %
2007
158.17
1.80 %
2008
160.97
1.77 %
2009
168.18
4.48 %
2010
171.73
2.11 %
http://www.indexmundi.com/pakistan/population.html
Above given table describe the per year change in population of Pakistan with the change in the
percentage of population consumption of fast food also changes because of changing age groups
and taste of these group. People who are of young age including working class as well as
students, prefer to go out with friends for hangout and celebrate birthdays and enjoy eating fast
food. With the changing trends, taste of people also changes.
Geographics of Pakistan
Geographics
Tier 4 cities KPK
Tier 4 cities (Sindh)
Tier 4 cities (Punjab)
Quetta
Gujranwala
Bhawalpur
Hyderabad
Peshawar
Multan
Faisalabad
Rwp/islamabad
Lahore
Karachi
0%
5%
The dramatic shift toward fast food consumption is primarily because people prefer convenience
and good taste. Because of the emerging market trends in fast food industry, the taste among
mass is now changing. Above given graph represent that with the passage of time fast food
consumption in different cities of Pakistan change because of preference people are changing.
People are shifting from rural to urban areas because of job opportunities and having less time
due to tough routine they start consuming more fast food. Few people eat fast food just because
of fashion and they think that its status symbol.
13%
10%
5%
16 to 20 Years
21 to 25 Years
26 to 30 Years
36 to 40 Years
41 And Above
This graph represents people with different age group. We can see that largest percentage is of
people who are 21 to 25 year of age these are the people whose consumption pattern is different
from others they spend most of their money on food and prefer to eat junk food instead of desi
food. Students now spend large portion of their pocket money on fast food consumption.
Fast food industry is growing because the lifestyle in Pakistan is increasing and joint family
system in Pakistan is vanishing. There is growing trends of fast food consumption among youth.
People who are working in offices they also consume fast food because of the short breaks and
quick serving of food.
Go To Restaurants
50%
40%
30%
20%
10%
0%
In our focus group and from small interviews and questionnaire which we conducted for our
project in bachelors we come to know the reason why people belonging to different age groups
prefer fast food. The major reason why the trend is going towards fast food is the lack of
entertainment places in our country (i.e. Pakistan).
People believe in the change of place and environment although they know it is un-healthy meal,
yet they consume it. Now days friends even families usually visit fast food restaurant twice in a
week to have food and entertainment. Fast food restaurants which people frequently visit are
KFC, Pizza Hut, McDonalds, and Subway etc.
Larger proportion of females visits fast food chains than the male counterparts because female
usually go to fast food restaurant when their child want to eat junk food. According to a survey
(Pakistan Online Research) results demonstrated that the average frequency of visiting Fast Food
chains is almost once per week for both the age groups (male and female). Even though,
youngsters are more likely to visit more, still mature adults have demonstrated a higher
proclivity towards fast food consumption. 58% of people visit fast food less than once per week,
31% of people visit once to three times per week and 11% are those exceptional people who visit
and consume fast food more than three times in a week.
With a 4% increase in total value sales in 2013, following 2012s 5% increase, fast food has
experienced a good two years. The 3% growth in outlets in 2013 was encouraging, especially
given the added difficulty in both financing and operating additional locations since the
recession. This value growth was aided by the burgeoning fast casual dining environment, but at
10% value share, its impact was greater on trends rather than on overall sales. Excluding the 11%
growth for fast casual dining, fast food grew by 3% in 2013, a sign of strength given the relative
maturity of the category and the ever uncertain economic recovery. Its offerings, often positioned
on a value basis, have continually expanded since the recession and even began to cater to those
looking for a cheaper, but still healthy alternative. By continually re-emphasizing the
affordability of their classic menu items and the newer, more innovative ones, many chains were
successful in their recovery efforts since the recession.
Fast food in the US continued to be a highly fractured environment in 2013. Burger King,
Wendys, Subway and McDonalds combined accounted for 31% of total brand value sales in
2013, with McDonalds maintaining its category-wide dominance, at 17% value share.
Historically, McDonalds has maintained its leading share through aggressive marketing, valuebased promotions such as the Dollar Menu and its well-known free coffee promotion, and
innovative menu changes such as the introduction of breakfast pastries in 2013.
Fast food is expected to record a constant value CAGR of 3% to realize US$244.9 billion in sales
in 2018. Fast casual dining will drive much of the growth, although other fast food should
increase its value sales steadily as some consumers look to it for value and others are attracted by
the variety of healthier new products on offer. This diversification is likely to turn more
consumers into fast food fans, and help convert some of the aversion to the category, although
there will always be those who will eschew fast food.
food market was worth USD 477.1 Billion in 2013 and is expected to reach USD 617.6 billion in
2019, growing at a CAGR of 4.4% from 2013 to 2019.
The Major reasons for this change are the new taste, fashion trends and lifestyle
For example:
First people preferred treats and celebrations indoors which meant all the cooking and
eating took place inside homes but now people prefer going out.
Previously going out for any meal was only at times of special occasions, now people
would go to any restaurant without having to celebrate a special event. In fact now even
for regular meal people place their orders and receive home delivery rather than cooking
it for themselves.
The increase in demand naturally attracted more suppliers, increasing competition and
supply in the market
With the new lifestyle where people have less time its convenient to have readymade
mea
A lot number of firms each having a small portion of the market. As fast foods sector is
having uncountable number of sellers. For example: Pizza hut, KFC, Hardees, burger
king, pizza express, etc.
Fast food chain
MCDONALDS
KFC
SUBWAY
PIZZAHUT
STARBUCKS
BURGER KING
DOMINIOS PIZZA
DAIRY QUEEN
DUNKIN DONUTS
Papa johns
Source: forbes.com
United states
India
Pakistan
This table show top ten fast food chains and its presence in Pakistan, India and United States.
Apart from this the total no. of establishments are in great numbers which shows that there are a
huge number of sellers in this sector.
Differentiated products: variety in the product makes this model different from pure
competition model. Product differentiated in style, brand name, location, advertisement,
packaging, pricing strategies etc. as in fast food sector if we talk about pizza then the
pizza hut is differentiated from pizza express or other chains in the form of quality, price,
brand name. like pizza of pizza hut is considered of high quality having a good brand
image and thus buyers are paying high to have it.
Easy entry and exit: like now we can see a new fast food outlet every now and then. They
are around every corner, every stop, airports, malls, gas stations, local markets, even in
big hospitals.
These firms are working under very a quite elastic condition as its usually the case with firms
under monopolistic competition.
This is because firms are working extensively on creating an image of offering a differentiated
item and also because of extreme price competition because of which we can all observe the
discount offers, deals etc. being promoted by different fast food firms.
When consumers have so much variety (close substitutes available) then these non-price
competition strategies and especially price fluctuations can influence potential consumer
preferences.
Non-price strategies like creating a brand image, quality, locality, availability etc. tends to
encourage long run sales (that is consumers coming again)
In short run firms operating in this industry might earn abnormal profits till the competitors enter
the market.
Firms under monopolistic competitive markets have somewhat control on their pricing if they
are able to establish a strong image and brand loyalty.
For example Pizza Hut is charging more than Pizza Express, but the customers whoare loyal
customers of Pizza Hut would still go their but probably in the long run the high prices would
force some customers to go for close substitutes (Pizza Express).
So it is possible that a firm in this industry might earn beyond normal profits in the long run as
well.
KFC
McDonald
Hardees
Chicken burger
310
450
460
Zinger/Jalapeno
465
525
470
Fries
110
125
130
Nuggets
200
250
220
Fish burger
325
470
399
600
500
400
300
KFC
200
McDonalds
Hardees
100
McDonalds has higher prices as compared to other competitors like KFC and Hardees because of
their differentiated products. While Hardees fries have relatively higher price than others because
they offer more variety than their competitors and for the variety they charge more which
customer is willing to pay.
References:
http://ilm.com.pk/pakistan/pakistan-information/fast-food-industry-of-pakistan-
growth-and-history
http://tribune.com.pk/story/545822/per-capita-income-grows-just-4-3-this-year/
http://www.indexmundi.com/pakistan/demographics_profile.html
http://www.kfcpakistan.com/hot-menu.html
http://www.mcdonalds.com.pk/products/view/menu-pricelist
http://tossdown.com/hardeespk/menu
http://www.slideshare.net/hiren199/global-fast-food-market-industry-analysis-size-
share-growth-trends-and-forecast-2013-2019
www.thedynamics.biz/docs/CorporateProfile&PanelBook.pdf
http://www.brandsynario.com/fast-food-consumption-in-pakistan
http://www.seal.com.pk/2014/03/22/growing-population-and-its-effect-in-pakistan/
http://www.iiuedu.eu/press/journals/sds/SDS-2012/BME_Article6.pdf
http://www.euromonitor.com/fast-food-in-india/report
http://www.euromonitor.com/fast-food-in-the-us/report
http://www.statista.com/topics/863/fast-food/
http://www.statista.com/topics/863/fast-food/
India
USA
MC Chicken/Veggie
Rs.450
Rs.85
$1
Jalepeno
525
100
$2
Nuggets
200
125
$4.49
Fries
125
75
$1.59
Pakistan
India
USA
MC Chicken/Veggie
450
140
100
Jalepeno
525
160
200
Nuggets
200
200
300
Fries
125
120
$159
600
500
400
Pakistan
300
India
US
200
100
0
Mc chicken
Jalapeno
Nuggets
Pakistan
Fries
India
Chicken burger
Double cheese
United states
1
1.69
burger
nuggets
fries
2.99
1.39