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Fast Food Industry Analysis

2018 - Cost & Trends


Fast Food Industry Analysis 2018

You likely know more about the fast food industry than you
realize. If you live in the United States - or pretty much anywhere
else - it’s everywhere. Off of every exit on the highway, and at
every rest stop. In the food court at the mall, and on the
commercial strips on the outskirts of town. In cities and at
airports.

What you may not have noticed, though, is the changing dynamics
within the industry. The last several years have seen an absolute
explosion of diversity in both restaurant concepts and menu
choices. This evolution reflects an industry that has been
responsive to changing consumer tastes as well as entrepreneurs
finding niche opportunities to profit.

And rest assured - those opportunities still exist in abundance.


The fast food industry is not without its challenges, but it’s clearly
still possible to profit in the face of them.

Get Familiar with Fast Food

The Industry
Globally, fast food generates revenue of over $570 billion - that
is bigger than the economic value of mostcountries. In the United
States revenue was a whopping $200 billion in 2015 - quite a lot
of growth since the 1970 revenue of $6 billion. The industry is
expected to have an annual growth of 2.5% for the next several
years - below the long term average but coming back from a
several year slump.

There are over 200,000 fast food restaurants in the United States
and it is estimated that 50 million Americans eat at one of them
every single day. The industry employs over 4 million people and
counting - restaurant franchises added over 200,000 jobs in 2015.

Consumers of fast food focus on taste, price and quality - in that


order. While the food is often highly processed and prepared in an
assembly line, these restaurants focus on consistency of
experience, affordability, and you guessed it - speed.

Fast food, specifically


Fast food restaurants, along with fast casual restaurants, make
up a segment of the restaurant industry know as Quick Service
Restaurants (QSR). This segment accounts for more than 50% of
sales in the entire restaurant sector. While Quick Service was once
dominated by fast food, fast casual continues to gain market
share.

The restaurants themselves are known to have a consistent,


simple look, feel and even music in each location. Customers
typically order and pay at a counter or window, and then take food
out or grab a tray to sit and eat. Meals are short, there is no table
service and condiments are usually centrally located rather than
table top.

Menus are also the same from location to location, and consumers
enjoy a recognizable, familiar experience no matter where they
are, with a dependable level of quality. Meal choices are
inexpensive, with options typically $6 or less with combo meal
packages combining “signature” mains with sides and a drink.
The United States fast food market continues to be dominated
byhamburger fast food restaurants, accounting for over 30% of
industry sales. However that market share is sliding, and Mexican
food in particular has been gaining.

QSR Sales - Top Five Segments by Market Share


Segment Market Share
Hamburger-focused restaurants 30%+
Pizza parlours 15%
Sandwich shops 12%
Chicken restaurants 8%
Mexican restaurants 7%
What are some of the bigger challenges facing the industry?
Perceptions of unhealthy menus.

Generally fast food has a reputation for unhealthy food, while


consumer tastes in the United States continue to drift towards
healthier options. While still a risk, this is not a new dynamic and
the industry is already fighting back successfully.
Poor working conditions and low wages.

Fast food restaurants generally pay low wages - so low, in fact,


that one recent study claims that over 50% of front-line fast food
employees rely on public assistance programs. Quite simply this
means people work full time jobs but cannot make a living wage,
and taxpayers close the gap.

Within the last several years employees have been organizing and
demanding increased wages - winning their fight in NYC and
several other major metropolitan areas. Fast food restaurants
have high human resource costs due to staffing the kitchen, the
counter and the cleaning crews - and any increase in wages
crunches the bottom line. Only some of these costs will be able to
be passed on to the consumer.
Cultural degradation.

Think about Taco Bell representing Mexican cuisine to many


Americans. Now you may love Taco Bell or you may hate it - either
way they are certainly a successful business - but please know that
it’s not real Mexican food.
Losing business to Fast Casual.

Related in part to concerns about healthy options, fast casual is


the fastest growing segment of the restaurant industry, and is
largely stealing market share from the fast food restaurants. The
food is still fast...but not as fast. It’s inexpensive...but not as
inexpensive. But the quality is at least perceived to be higher and
the menu choices considered to be more dynamic.

How is the industry responding to these


challenges?
Healthier options

Franchise concepts based on healthier ingredients and meal


choices continue to pop up, and the old stalwarts continue to add
healthy options to their menus. Locally sourced ingredients -
something that has been counter to much of the fast food industry
distribution model - are on the rise.

Major chains are promising to source fresher ingredients with less


additives, free-range chicken is showing up on more menus, and
some restaurants are offering vegetables as a main course or the
primary side. And a recent report claims that almost 50% of
restaurants with organic options have an average check size of $5-
7: that is fast food!
Higher prices and more efficient operations

Labor concerns are a stickier problem. Some of the increased


costs can be passed on to the consumer - but not all. Fast food is
desirable in part for the low price, and consumers are price
sensitive.

Some franchises are working to reduce their labor costs. In other


words, figuring out creative ways to employ fewer people,
primarily by leveraging technology. Self-serve kiosks and mobile
apps for ordering and paying are the primary examples seen in
newer franchises.
Franchise Diversity
New micro cuisine franchises are gaining in popularity. We all
know about burger and chicken franchises, and we’ve seen rapid
growth in Mexican and Chinese options. How about Hawaiian
food? It’s already a popular opportunity for franchisees in
California. Experts predict 2018 will see an increase in these
“regionalized” menu options. Watch out fast casual!

Stronger flavor profiles have also started popping up in 2015 and


consumers are loving them. Sriracha isn’t an ingredient you would
expect to see on the menu...but it’s been declared a go-to
condiment for millennials...so it’s popping up left and right!
Non-traditional locations

Drive-thru and stand alone stores still dominate the fast food
landscape, but some chains are exploring new options such as
counter service within larger stores, catering and even delivery.
Looking to become a fast food franchisee?
Here’s what you should look for when evaluating your
options.
 Efficient operations. Fast food franchises benefit from
consistent delivery of both food and experience - look for
franchise opportunities with a proven and cost effective system.
 Effective marketing. As a franchisee you don’t have to
handle the marketing - but you sure want to make sure the
mother ship knows what they’re doing. With so many options
to choose from it’s important that a franchise can effectively
market their unique value proposition.
 Innovative menus. Menu options need to be creative and
offer both healthy and indulgent options. New plays on old
favorites, healthier versions of classics, or unique flavor profiles
like a spicy dessert are just a few examples.
 Know Your Niche. There is something to be said for the
traditional burger joint - some would say don’t fix what isn’t
broken - but increasingly specialty or regional food options are
gaining in popularity. Figure out what will work in your
community.
 Effective use of technology. Many franchises are using
the same exact model of limited service that launched in the
50's. Restaurants with kiosk or automated table ordering help
keep costs down. Look for an iPad.
Research your local market

This as important as studying overall industry trends - probably


more. Make sure you understand the local economic situation and
cultural context. Here are some examples of the types of questions
you should be asking:
 Is fast food a fit for the people of my community?
 Are they likely to explore new types of food? Or will they eat
burgers 7 days a week and twice on Sunday?
 Is this a particularly health conscious community?
 Are there specific regional flavors that resonate with the
locals?
 What does the area “need”? What other types of restaurant
options are nearby?
 What is the local labor force like?
The right opportunity is out there

The fast food industry is an institution - it’s here to stay. If you are
searching for a franchise opportunity, look for chains that fit your
local market, have some price flexibility, are willing to be creative
with the menu and are operationally efficient.

India's fast-food industry is


becoming a major market
McDonald's entered India in 1996, against the backdrop of a market that was
hesitant to try fast food and was still dependent on the "tiffin" lunch
boxes many lug to work.

Two decades later, things have changed. India's fast-food industry is


expected to double in size between 2013 and 2016, to $1.12 billion,
according to the Economist Intelligence Unit. And demographic trends mean
it could become the next mega-market for international fast food players.

The country's fast-food market today is only one tenth the size ofChina's,
said Ajay Kaul, CEO of Jubilant FoodWorks, a company that grants franchises
in India for Domino's Pizza and Dunkin Donuts. But unlike China, which saw a
decline in fast-food sales last year, India's market is expected to grow,
thanks to changing consumer preferences and the largest youth population
on earth.
"I would think it's a revolution waiting to happen," Kaul said.

India's population stands at 1.2 billion, but it has only a little over 2,700
chain fast food outlets, leaving most people unreached, according to
Euromonitor International. Fast food has yet to broadly expand beyond the
largest cities. India also has a new prime minister, Narendra Modi, who has
been a vocal advocate of increased foreign direct investment.

Read MoreMcDonald's outlook negative, but wage hike helps: analyst

"The [quick-service restaurant] market is still very nascent, and there is


ample space for more and more brands to come in and coexist," saidAmit
Jatia, vice chairman of Westlife Development, a firm that operates
McDonald's restaurants in western and southern India.

Jatia plans to establish 175 to 250 McDonald's restaurants in the next five
years across west and south India.

McDonald's tweaked about 70 percent of its menu for the Indian market,
according to Euromonitor. That meant staying away from beef in a country
where cows have religious significance, and appealing to a population that
tends to enjoy spicy food with options like McSpicy Paneer and Chicken
Maharaja Mac. They've also opened some 100 percent vegetarian
restaurants. (That said, contrary to perceptions, nearly 70 percent of India's
population is non-vegetarian.)

"We have localized our menu and due to this, we are not just seen as an
international brand, but one which the people of India feel comfortable with,"
said Jatia.

Read MoreFast restaurants that are growing faster than Chipotle

KFC, owned by Yum! Brands, had a slight edge over McDonald's because of
its chicken-centered menu, which has worked well in India, said Arvind
Singhal, chairman of Technopak, a management consulting firm in India.

While the U.S. chains have "Indianized" their menus, Singhal said that only
partly explains the rising appeal of fast food in India.
The country has 356 million people between the ages of 10 and 24, giving it
the world's largest youth population, according to a United Nations report.
With more young people entering the workforce daily, growth in the
economy, a rising female work force, and increased mobility among
consumers, the traditionally difficult Indian market has become hungry for a
more diverse menu, Singhal said.

A challenge for America's fast-food joints in India has been to maintain the
cohesion of the global brand while still appealing to the local market, said
Kaul of Jubilant.

"There is an extent for localization," Kaul said. "You can't tamper with the
global brand, it has to be same as anywhere else in the world."

Kaul emphasized that a market like India, long dominated by homegrown


businesses, can be targeted through strategies other than just
customization. Domino's introduced its 30-minutes-or-free delivery in India,
for example, despite the country's famously difficult traffic jams. Today,
Domino's has more restaurants in India than any Western competitor does,
with more than 850 locations. McDonald's runs only 369 locations.

Read MoreGlobal middle class hungers for good ol' US fast food

Domino's now generates more than 17.2 billion rupees ($277 million) in
revenue, compared with $222 million for McDonald's. Domino's, which is
valued at $1.6 billion in India, has tried expanding its business by getting
Indian consumers to view pizza as a meal replacement, and not just a snack,
Kaul said.

When it comes to the fast-serve coffee industry, most Indians still refrain
from the American habit of daily, morning drinking before and during work.
To get around the cultural challenge, Dunkin Donuts entered the food
market, offering fast-food sandwiches—the only country where the chain
does so.
"What's important for an American brand to understand is that the Indian
terrain is atypical—consumers are clearly most demanding, and there is too
much focus on food," Kaul said.

LEATHER PRODUCTION

India Leather Industry Statistics Data

Pairs of leather shoes the Indian leather industry can produce


960 million pairs
annually

Annual revenue generated from the Indian leather footwear


$300,000,000
industry

Pairs of leather shoes produced in India each year 700 million

India’s share of the global leather trade market 3%

Number of people employed by the Indian leather industry 2.5 million

Footwear share of Indian leather exports 10 %


Share of India Leather
Top Ten Indian Leather Exporters
Industry

Tata International Ltd 12.4 %

Florind Shoes Ltd 9.5 %

Punihani International 7.2 %

Farida Shoes Ltd 6.4 %

Mirza Tanners Ltd 6.3 %

T Abdul Wahid & Company 6%

Hindustan Lever Ltd 5.8 %

Super House Leather Ltd 5.7 %

RSL Industries Ltd 4.6 %

Presidency Kid Leather Ltd 4%

Export value of leather and leather products in India


from 2010-11 to 2016-17 (in billion Indian rupees)
Export value in billion Indian
rupees174.18174.18224.57224.57259.96259.96338.22338.22368.43368.433
53.7353.7347.6347.62010-112011-122012-132013-142014-152015-162016-17
0100200300400500
2011-12

• 224.57
Data visualized by
© Statista 2018
About this statistic
Show source

Leather is one of the most widely traded products in the global market. It is a flexible and durable material
obtained from processing rawhide and skin of the various animal such as buffalo, goat, cow, sheep,
bovine, lamb, horse etc. India has the largest cattle population in the world. The leather industry in India
accounts for around 13% of the world’s leather production of skins. The growth in demand for leather is
driven by footwear industry followed by furniture & interior design industries and automotive industry. India
is world’s second largest producer of footwear and leather garments and accounts for 9.50% of the
world’s footwear production.

Tamil Nadu is the biggest leather market in India and Hong Kong is the largest leather export partner.
Rawhides, skin and leather are classified under HS Code 41. Let's take a look at the detailed analysis of
leather export from India including monthly values, leather obtained from animals, exporters, Indian states
and Indian Ports.

INDIAN LEATHER EXPORTS IN 2017 – MONTH WISE


ANALYSIS

Leather exports from India stood at USD 823 million in 2017 and comprising of rawhide skins, finished
leather, leather goods, leather garments, leather footwear component, saddlery and harness. The country
recorded lowest sales in the month of February and recorded highest sales in September. The leather
export sale is inclined from May month after recording low sales in the first four months. Here is the table
representing the monthly values of export of leather goods from India in 2017.
Month Value (USD Million)

January 57.94

February 47.27

March 52.11

April 50.21

May 71.71

June 69.45
July 73.31

August 77.72

September 86.98

October 83.78

November 70.47

December 82.79

*Above stats are based on 2017 report

INDIAN LEATHER EXPORTS DATA – ANIMAL WISE ANALYSIS

In India, the leather is prepared from the rawhide skin of different animals like buffalo, goat, cow, sheep
etc. Majorly, buffalo skin and goat skin are used to make leather products that exports to the other
countries. It is recorded that from total leather exports 38.75% of buffalo and 28.23% of goat rawhide
skins have used for leather. Refer the below table to check the share value of animals used in leather
exports from India.
Animal (Rawhide Skins) Share Value (%)

Buffalo 38.75

Goat 28.23

Cow 17.80

Sheep 9.54

Buffalo Calf 3.83

*Above stats are based on 2017 report

LIST OF LEATHER EXPORTERS IN INDIA


There are more than 1100 leather companies in India currently exporting leather products in the global
market. Prara Leathers and Rahman Industries are the top market players of leather industry in India.
Here are names of some leather exporters in India.

 Prara Leathers Pvt Ltd


 Rahman Industries Ltd
 Farida Prime Tannery Pvt Ltd
 Tata International Ltd
 Super Tannery Ltd
 Blue Diamond Leders

At Export Genius, access the list of leather suppliers in India and know their trading activities including
price, volume etc. You will also get the list of leather buyers in other countries and select the right
business partner for your product.

INDIA’S LEATHER EXPORTS FROM ITS DIFFERENT STATES

As per Indian leather export data, the country is exporting this product from its 15 different states. These
are also the largest leather producing states in India. Tamil Nadu and Uttar Pradesh are the largest states
from where India exports leather and recorded share value of 51.98% and 37.98% respectively. In terms
of value, India exports of leather from Tamil Nadu and Uttar Pradesh stood at USD 428 million and USD
312 million respectively during the year 2017. In the given table below, check the export figures and share
value of leather exports from five biggest Indian states.
Indian State Value (USD Million) Share (%)

Tamil Nadu 428 51.98

Uttar Pradesh 312 37.98

West Bengal 32 3.92

Maharashtra 22 2.76

Himachal Pradesh 10 1.32

*Above stats are based on 2017 report

LEATHER EXPORT PARTNERS OF INDIA


During 2017, India has exported leather articles to around 100 countries of the world including Hong
Kong, Italy, China, Vietnam, Korea, Malaysia, Spain, Indonesia, Germany, Portugal, Turkey etc. India
exports of leather to its four biggest partners (Hong Kong, Italy, China and Vietnam) recorded 61.17% of
the total leather exports. In terms of value, the exports to these four countries worth USD 211 million,
USD 102 million, USD 96 million and USD 93 million respectively in 2017. Here is the table representing
trade figures of top five leather export partners of India.

Country Value (USD Million) Share (%)

Hong Kong 211 25.70

Italy 102 12.40

China 96 11.76

Vietnam 93 11.31

Korea 43 5.24
*Above stats are based on 2017 report

CHENNAI AIR DEPARTS MAXIMUM LEATHER SHIPMENTS

The leather exports of India in 2017 is done through 21 different Indian ports including air, land and sea.
Chennai air is the biggest port departing maximum leather shipments and recorded 38.79% of the
shipments from the total exports. Chennai air is followed by JNPT, Mumbai. Indian leather exports from
JNPT worth 24.86% of the total leather exports. Refer the below table and graphical presentation which
are representing the leather export figures at five biggest Indian ports.

Indian Port Share Value (%)


Chennai Air 38.79

JNPT 24.86

Chennai Sea 10.12

Panki ICD 9.45

JRY Kanpur ICD 3.93

*Above stats are based on 2017 report

LEATHER EXPORT PROMOTION COUNCIL OF INDIA

CLE stands for the council for leather exports is an autonomous non-profit organization in India. It is
entrusted with the export promotion activities and the plays a major role in the development of the Leather
Industry in India. More than 3500 companies in India exporting or manufacturing leather and its products
are the members of CLE. If you are in leather export business, you can contact to council for leather
exports to become a member and expand your business in the global market.

WHAT WILL YOU GAIN IN LEATHER EXPORT REPORT OF


INDIA?

Here is the Sample of leather export data of India including the major data fields that we cover in our
report and take a fair idea of trade report.

HS Code 41131000

Product Description Finished Leather Goat Suede Upper Leather

Animal Name Goat


Quantity 654

Unit SQF

FOB Value USD 1284.01

Unit Price USD 2.1

Importer & Exporter Name Available on purchase

Loading & Unloading Place Available on purchase