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Fast-Food Restaurant Industry Analysis

Management 182

Lindsey Hicks
Eva Ho

Joshua Price
Suren Divanyan

May 16, 2002

Fast-Food Restaurant Industry

Dominant Economic Characteristics


Competition Analysis
Driving Forces
Competitive Position of Major Companies
Competitor Analysis
Key Success Factors
Industry Prospects and Overall Attractiveness

Dominant Economic
Characteristics

Dominant Economic
Characteristics
Market Size (2002)

Projected Sales ($Billion ) 407.8


Sales increase of 3.9 %
Locations: 858,000
industry employs 11.6 million people
Revenues ($billion) 131.7

Dominant Economic
Characteristics
Scope of Competitive rivalry
International : Most companies of the industry
operate stores in many countries and compete
with each other in specific country markets.

Dominant Economic
Characteristics
Market Growth Rate
McDonald's: Revenue 2.1 %, Earnings Per Share $1.47,
Operating Income 4%
Burger King: Revenue (1)%, Earnings Per Share N/A
Operating Income N/A
Taco Bell: Revenue 6%, Earnings Per Share 41%,
Operating Income 25%

Dominant Economic
Characteristics
Stage in life cycle:
Mature
Growth opportunity still exists in new countries
and markets
Diversification into related businesses attractive
for sustained growth
Introduction of new line of products and
services to differentiate from rivals is practiced

Dominant Economic
Companies in Industry Characteristics
There are 8 main companies that captures 89% of
fast-food Market

McDonald's 34.7 %
Burger King 15.8%
Taco Bell 9.6%
Wendy's International 9.5%
Subway 5.9%
Hardee's 4.6%
Arby's 3.9%
Dairy Queen 3.8%
Other 11.7%

Dominant Economic
Characteristics
Ease of Entry Globally:
Relatively hard to enter, because of strong
competition and high capital requirements:
In order to franchise the entrepreneur should be at
least $1 million worth
Efficient operations is the key to faster product
delivery and lower costs
Requires diverse supply materials, which complicates
entry
Customers are price sensitive and promotion driven

Dominant Economic
Characteristics
Exit of Industry:
Mergers and Acquisitions are common ways of
exit strategies (Ex. McDonalds acquired
Boston Market restaurant chain)
Companies like Taco Bell and KFC were parts
of a diversified company, which in 97 were
spun off as publicly traded companies

Dominant Economic
Characteristics
Technology and Innovation:
Automated Inventory Ordering System
Just in Time operations
Fast order taking systems
More efficient operations
Reduces operating costs
Increases profit margin

Dominant Economic
Characteristics
Processes and Innovation
Introduction of new order-to-make burger or
sandwich assembly process

Reduces waists
Increases food freshness
Increases customer satisfaction
Custom orders

Dominant Economic
Characteristics

Product Innovation

New products are introduced to meet changing


customer needs or to serve new market niches
Introduction of new sauces and burger
innovation
Burger Kings introduction of Vegetarian Burgers
Taco Bells new gorditas

Dominant Economic
Characteristics
Distribution Channels
Supply distribution is managed by the centralized
corporate headquarters because it enforces
standardization of supply materials and gives the
companies greater bargaining power
The product and services are distributed to customers
by individual stores

Dominant Economic
Characteristics
Products and Services
Products and Services are differentiated among
the rivals
Taco Bell is the most differentiated
McDonalds and Burger King are weakly
differentiated. They each have their own special
ingredients but offer the same satisfaction
Speed of delivery and freshness are the main
characteristics of product

Dominant Economic
Characteristics
Economies of Scale
Big companies have economies of scale in
purchasing, manufacturing, transportation, and
advertising
Bargaining power in supply purchasing
Lower per unit cost in mass manufacturing of pre-made
supplies
Transportation costs are distributed among several restaurants
in the same geographic area
Advertising aides many restaurants

Dominant Economic
Characteristics
Industry Location
Fast-food restaurants are strategically located in
most geographic areas with a population that
could sustain business
The big companies are also growing into other
national markets
For example, McDonalds operates in 121 countries

Dominant Economic
Characteristics
Capacity Utilization
Effective and efficient operations results in
lower burger or sandwich assembly costs, which
in turn results in higher profits margins
Capacity Utilization is important to spread high
fixed costs over greater number of products and
services produced

Dominant Economic
Characteristics

Profit Margin (1998-2002)

Moderate profit margins, 8.0 - 8.4%


Intense competition and price wars reduce profit
margins
Efficiency and cost reduction is key in sustained
profit margin

Competition Analysis

Competitive Analysis
Forces of Competitive Analysis

Rivalry among competing sellers


Potential of new entry into market
Pressures from substitute products
Supplier bargaining power and competitive
pressures
Pressures from buyer bargaining power
Other Factors which affect Fast Food Sellers

Competitive Analysis
Rivalry among competing sellers
In the fast food industry Competition is high
Many options for customers
Low prices/price wars
Many substitute products easily available
Customer decisions based on what is available at time
Advertising
Promotional incentives
Products differentiated

Competitive Analysis
Rivalry among competing sellers
Companies striving to better market share
Continuous growth into new markets, with new products
offerings and growth into new geographic markets.
Diverse menus and competitors willing to make exactly
what customers want.
Demand for fast food growing with the fast pace of life
around the world
Fast food restaurants are worldwide and have relatively
equal resources for growth

Competitive Analysis
Potential of new entry into market
Competitors well established
Brands well known around world
Customers like restaurants they know
Economies of Scale, with many world wide companies
entrants can enter small although difficult to establish
name in an already saturated market

Competitive Analysis
Potential of new entry into market
Advantages of large food chains
Lower costs due to buying volume
Already established name
Learning curve (they know what customers want and
have perfected speed at which to serve customers)
Established suppliers for specialized products
Established in most major metropolitan markets, in
prime locations

Competitive Analysis
Pressures from substitute products
In the food market there are many substitutes to any one
restaurant
Customers who desire more well rounded meals threaten
fast food
The traditional sit down restaurant is a threat to fast food
as customers are not in a rush
Then the grocery store with so many meals which can be
prepared in minutes poses threats for the fast food industry

Competitive Analysis
Pressures from substitute products
The food and grocery market currently is saturated with
many buyer and sellers making it difficult for any one
vendor to take over all head of market. The health of
vendors in the food industry depend heavily on the
preferences of the consumers in the market. Currently
more and more people are eating out, giving the fast food
industry many chances for advance. With so many
substitutes available sellers must continue to set
themselves apart from the rest to keep ahead of the
changing market conditions.

Competitive Analysis
Supplier bargaining power and competitive
pressures
Highly competitive
Suppliers who support rivals puts them in charge of
prices for commodities which rivals must have to
perform and compete well
As companies and suppliers work together, they can
benefit both as far as consistent revenue for the supplier
and on time deliveries for companies to cut inventory
costs

Competitive Analysis
Pressures from buyer bargaining power
With many fast food restaurants buyers switching costs
are low, which causes companies to lower prices and
increase incentives to keep customers coming back,
giving the customer power in price and product control
Prices: fast food restaurants are open books to
customers along with products prices so price changes
affect local competitors
Example the Whopper and Big Mac which are very
comparable hamburgers if the price of one was to go up
the sales of the other can benefit

Competitive Analysis
Other Forces which affect Fast Food Sellers
Many fast food chains are operating in many diverse
countries where customs and norms are very different
from one another. Because markets are so diversified
many chains must operate differently depending on the
particular market. For example in China many fast food
restaurants are rethinking the packaging used in service
because many people are beginning to drive and eat at
the same time while still in other markets this is not seen.
There are numerous other forces affecting the market in
particular areas but relatively few which effect the fast
food market as a whole.

Competitive Analysis
Key findings
The fast food industry is very strong with many sellers
and customers. Many competitive forces effect the
already established companies, which keep the prices
down and the quality of food up. All of this will keep
the big players in the game and will make it very
difficult for the new entrants to come in and take over.

Driving Forces

Driving Forces
Factors that effect Driving Forces

Globalization of the Fast Food industry


Opportunity for long term growth
Fast Food and differentiation of product
Forces with minor effect
Changing Societal Concerns and lifestyles
Uncertainty and business risk

Driving Forces
Globalization of the Fast Food industry
The fast food industry is a labor intensive market
requiring employees at all locations of business, this
does not give them the opportunity to cut costs with
cheap labor in other countries
Although the large scale of operations gives the
restaurants economies of scale in their purchase of
disposable items made for the particular chain such as
cups and boxes for food prepared

Driving Forces
Opportunity for long term growth
The fast food industry is already well established in
many countries across the the world. McDonald's is in
121, while Burger King is only in 57, with many other
sellers competing in varying markets across the world,
majority of sellers only compete locally
Although many that are already global look for the
industry to continue to expand into new markets as well
as with countries as the population of the world grows
and the demand for fast food increases

Driving Forces
Fast Food and differentiation of product
Many fast food restaurants are diversifying their menus
example: Jack in the Box with tacos and rice bowls and also
the traditional hamburger. By differentiating in this way it
give customers more options which will keep them coming
back instead of going to a different place
This can be very important with many food restaurants
located close together the buyer preference of differentiation
is what keeps buyers coming back and not changing
restaurants
Other than different offering the food industry is very
standard

Driving Forces
Forces with minor effects
Technological Change
New technology can increase productivity and reduce costs

Customer base
Broad base of customers although some more than others

Product innovation
Changes in offerings and extras are very common in the
market, but innovation in food is rare

Driving Forces
Changing Societal Concerns and lifestyles
With many American's becoming more aware of their
health the traditional greasy and fatty food of the fast
food industry are changing their offering, with many
places offering veggie burgers and low fat products
The health conscious customers are also opting to eat at
home
There is also the opposite of this with many peoples
lifestyles getting so busy they do not have time to eat or
even prepare meals for their children and many fast
food restaurants benefit from this

Driving Forces
Uncertainty and business risk
With no agreements with customers this makes for no
predictable revenue
Although the health of the food industry has been very
strong over the past years
McDonald's revenue has gone up every year for the
past 10 years and they have no foreseeable reason for it
not to continue

Competitive Position of
Major Companies

Fast Food Industrys


Major Players

McDonalds
Burger King (Diageo)
Taco Bell (Tricon Global)
Wendys International
Subway
Hardees
Arbys
Dairy Queen

Top Three Analysis


McDonalds
Chairman and CEO
Jack M. Greenberg

Ticker
MCD

2001 Sales
$20,051,000,000

Major Industry
Food Service

Sub Industry
Fast Food

Country
United States

Currency
U.S. Dollars

Fiscal Year End


December 31st

Top Three Analysis


McDonalds (cont.)
Number of Restaurants
13,099

Number of Employees
1,500,000

Exchange
NYSE, CSE

Market Capitalization
37,918,000,000

Top Three Analysis


Burger King
Chairman, CEO and
President
John Dasburg

Ticker
DEO

2001 Sales
$8,500,000,000

Major Industry
Food and Beverages

(Part of Diageo Company)


Sub Industry
Fast Food

Country
United States

Currency
U.S. Dollars

Fiscal Year End


December 31st

Top Three Analysis


Burger King (cont.)
Number of Restaurants
8,248

Number of Employees
360,000

Exchange
NYSE

Market Capitalization
43,789,000,000

Top Three Analysis


Taco Bell
(Part of Tricon Global Restaurants)
Chairman and CEO
Country
David Novak

Ticker
YUM

2001 Sales
$4,800,000,000

Major Industry
Fast Food

United States

Currency
U.S. Dollars

Fiscal Year End


Last Saturday in December

Top Three Analysis


Taco Bell (cont.)
Number of Restaurants
6,444

Number of Employees
320,000

Exchange
NYSE

Market Capitalization
9,370,000,000

Competitor Analysis

Competitor Analysis
Which companies are in the strongest/
weakest position?
Strategic Group Mapping
A technique for revealing the competitive positions
of industry participants.

Competitor Analysis
Strategic Group Mapping

Competitor Analysis
Strategic Group Mapping

The positions of each company are represented by


the circles in the strategic group map.
The size of the circles represents each companys
respective share of total industry sales.

Competitor Analysis
Strategic Group Mapping
McDonalds
Growth
In 2001, McDonalds took actions to streamline operations in an effort to
realize sales growth through improved operations and customer service.
McDonalds plans to add up to 1,400 restaurants in 2002.

Geographic coverage
McDonald's serves 46 million people every day in about 30,000
restaurants in 121 countries.

Share of industry revenues


Market share: 34.7%
2001 Sales revenues: $14.87 billion

Competitor Analysis
Strategic Group Mapping
Burger King
Growth
In 2001, Burger King announced it is launching 14 new and improved
menu items.

Geographic coverage
Burger King currently operates 11,435 restaurants in 57 countries and
territories worldwide.

Share of industry revenues


Market share: 15.8%
2001 Sales revenues: $8.5 billion

Competitor Analysis
Strategic Group Mapping
Taco Bell
Growth
Taco Bell reported an increase in sales of 12% from the previous year in
December 2001.
Taco Bell dominated the Mexican QSR Sales with a 64% share as of year
end 2001.

Geographic coverage
Taco Bell operates 239 of its total 6,683 restaurants in 14 countries
worldwide.

Share of industry revenues


Market share: 9.6%
2001 Sales revenues: $4.8 billion

Competitor Analysis
Conclusions
The three circles on the strategic map are very
close together, which suggests strong competitive
rivalry among the companies.
McDonalds is clearly the industry leader.
They have over one-third of the total market share.
They have advanced the furthest into the global market.

Taco Bell has the most growth potential.


Although they currently have a smaller market share, they have a
lot of potential if they increase their expansion globally.

Competitor Analysis
Conclusions (cont.)
Although Burger King has over 15% of the market
share, they do not have much potential for growth.
Burger Kings parent company, Diageo, is
planning to spin off the company in order to focus
more on beverages.
Burger King is quickly losing market share to both
McDonalds and Wendys International.

Competitor Analysis
Competitors Next Moves
McDonalds
Currently, McDonalds strategy is working well for them.
Being the market leader, they are under no pressure to
change the path they are currently on.

Burger King
Burger King has recently made some changes in
management and marketing that have hurt their operating
results.

Competitor Analysis
Competitors Next Moves

Burger King (cont.)


In order to improve their position, Burger King
has moved its focus from its current franchises to
seeking potential new franchisees.
Burger Kings new management is focusing on
strengthening the brand name through improved
marketing, product pipeline, cooking platform and
emphasis on service and friendliness.

Competitor Analysis
Competitors Next Moves
Taco Bell
In order to boost sales, Taco Bells parent company, Tricon
Global Restaurants, has been aggressively co-branding its
products.
Tricon Global consists of Taco Bell, KFC, Pizza Hut, and
has recently acquired Long John Silvers and A&W
Restaurants.
With the combined strength of the 5 companies, Tricon is
focusing its growth on international expansion.

Key Success Factors

Key Success Factors


The Key Success Factors of Fast-Food Restaurant
Industry are:

Convenient Locations
Clever Advertisement
Consistency
Food Quality
Food Innovation
Cost Control
Favorable Image & Good Reputation
Fast Services

Key Success Factors


Convenient Locations
Fast-food restaurants must be easily visible and
accessible for quick entry by the customers. An
establishment which is on the wrong side of the
street and does not take advantage of traffic flow
could be doomed to failure unless the unit is a well
established chain.
As competition gets tougher, the fast-food
restaurants strive to make their outlets more
convenient.

Key Success Factors


Convenient Locations
There are fast-food restaurants in shopping malls,
in hospitals, on military bases, and on college
campus, airports etc.
Some fast-food restaurants are operated in
convenience stores; therefore, they can be
accessed for quick entry by customers. For
example, McDonalds are operated in Wal-Mart.

Key Success Factors


Clever Advertisement
Advertising is an important element of the success
of fast-food restaurant industry. It can induce
customers to patronize the fast-food restaurant in
order to increase sales. For example:
The 1990 Super Bowl was a key advertisement
year for McDonald's. McDonalds promised to cut
prices of its bacon, lettuce, and tomato sandwiches
if the 49ers won or cut the price of the BigMac if
the Denver Bronco's won.

Key Success Factors


Clever Advertisement
Wendy's earned national recognition with their
"Where's the Beef?" campaign.
Burger King has used memorable campaign such
as Have it your way and We do it like youd
do it.

Key Success Factors


Consistency
Consistency of food is particularly important to fastfood patrons. It is a quality that attracts many
customers.
According to National Restaurant Association, 92.2 %
of the respondents strongly agreed or agreed that they
expect consistency from one visit to the next when they
patronize fast-food restaurants. Therefore, the one of
the key to a successful franchise of fast-food restaurant
chains is to offer exactly the same product or service at
numerous locations.

Key Success Factors


Food Quality
Many fast-food restaurants enact stricter quality
control guidelines for their food. It is because
stricter quality control can ensure food safety.
For example, McDonalds keeps tight control over
its suppliers shipping frozen prepattied beef to its
restaurants and drawing strict specifications for its
potatoes.

Key Success Factors


Food Innovation
The fast-food restaurant industry requires a product
innovation capability because of the changing tastes
of consumers. In order to succeed today, fast-food
restaurants must cater the tastes of consumers.
Many fast-food restaurants offers signature items,
and diversified menus in order to meet customers
needs. Many new products are always under
development in food lab kitchen for evaluation in
selected markets.

Key Success Factors


Food Innovation
For example, McDonalds menu is often enhanced
with promotional products to add variety on
limited time basis. The menus are constantly
examined around the world in the light of
changing customers taste, as well as local
customs. In U.S., customers now have more
choices in McDonalds, including Fruit N Yogurt
Parfaits, McSalad Shakers, and Breakfast Bagel
sandwiches.

Key Success Factors


Cost Control
Cost control is important to the success of fast-food
restaurants because their revenues are based on
smaller average checks compared to the cafeterias,
theme restaurants, and fine-dining restaurants.
Low cost enables fast-food restaurants to make
higher profits and compete with rivals. For
example, minimum wage labor which has been
traditional routes this phase of fast-food restaurant
industry has taken to build up profit margins.

Key Success Factors


Favorable Image & Good Reputation
Fast-food restaurant which has a favorable image and
good reputation can bring confidence to the customers.
For example, McDonalds is one of the most powerful
brands in the world. It has earned the trust and
confidence of people the world over because of its
favorable image and good reputation. McDonalds is
known as a great place for kids and families; for
convenient, hand-held meals; for World Famous Fries
and Big Macs; and for outstanding value.

Key Success Factors


Fast Services
Accurate filling customer orders, and short
delivery times are important to satisfy customers
immediate needs of the fresh food.
Many fast-food restaurants have drive-thru service
because many people tend to be pressed for time.
Therefore, fast-food restaurants should continue
focus on improving the speed of drive-thru service.

Key Success Factors


Fast Services
For example, McDonalds enhance the drive-thru
experience by serving two cars at a time. In some
locations, McDonalds are using double-lane
drive-thrus. In other locations, the employees of
McDonalds use remote order-taking devices to
take order for the drive-thru customers during
busy periods.

Industry Prospects and


Overall Attractiveness

Industry Prospects and Overall


Attractiveness
Factors Making Fast-Food Restaurant
Industry Attractive
Factors Making Fast-Food Restaurant
industry Unattractive
Special Fast-Food Restaurant Industry
Issues
Profit Outlook

Industry Prospects and Overall


Attractiveness
Factors Making the Fast-Food Restaurant
Industry Attractive
Consumer Trend
Growth Potential
Healthy Profitability

Industry Prospects and Overall


Attractiveness
Consumer Trend
Nowadays, people are eating out more than ever
before. More people are cooking fewer meals at
home. According to National Restaurant
Association, more than 40 % of consumers say
that they are cooking fewer meals at home. In
1955, 25 % of household food expenditures was
spent at restaurants. In 2001, this figure grew to
46 %. In 2010, this figure is projected to increase
to 53 %.

Industry Prospects and Overall


Attractiveness
Growth Potential
Although fast-food restaurant industry is a mature
industry in U.S, there is room for it to grow locally
and globally.
Therefore, as long as the participants of the fastfood restaurants put the efforts into strategic plans,
marketing, product innovation etc., there are great
opportunities for growth in the fast-food restaurant
industry.

Industry Prospects and Overall


Attractiveness
Growth Potential
According to National Restaurant Association
(NRA), in 2002, the sales of fast-food restaurants
are expected to grow at a slower 3.7 percent rate,
adjusted for inflation to 1.3 percent and resulting
in sales of $115.2 billion, a $4.1 billion increase.

Industry Prospects and Overall


Attractiveness
Growth Potential
Even though the projected growth rate in 2002
will be low, a number of factors will combine to
generate additional sales this year. The factors
include an expected economic upturn later in the
year, the growing strength of major fast-food
restaurant brands and the continuing impact of
industry-favorable demographic changes.

Industry Prospects and Overall


Attractiveness
Growth Potential
Fast-food restaurant industry has tremendous
potential growth in other countries.
For example, the number and diversity of fast-food
restaurants across east China has mushroomed in
the past several years with no end in sight. In
China, there is enormous short-term and long-term
growth opportunities of the fast-food restaurant
industry.

Industry Prospects and Overall


Attractiveness
Healthy Profitability
Fast-food restaurant industry has a healthy profit
margin. The 2001 net profit margins of the market
leaders in fast-food restaurant industry are listed
as follows:

McDonalds
Wendys

Net Profit Margin


11.0%
8.1%

Industry Prospects and Overall


Attractiveness
Factors Making the Fast-Food Restaurant
Industry Unattractive
Rivals from Other Markets
Fierce Product/Price Competition

Industry Prospects and Overall


Attractiveness
Rivals from Other Markets
The competitive force will become stronger. The
fast-food restaurant industry has begun to suffer
increasing loss of market share to convenience
stores, prepared food offerings at grocery stores,
microwave preparation at home. Although not
large in absolute sense, these competitors are
capturing a large portion of growth experienced in
food service.

Industry Prospects and Overall


Attractiveness
Fierce Product/Price Competition
Competitions among rivals drive the prices
of fast-food items down; as a result,
industry profitability will be affected.
For example, McDonalds, Burger King,
Wendys always use 99 cents of burger
promotion campaigns to induce customers
to patronize them.

Industry Prospects and Overall


Attractiveness
Fast-Food Restaurant Industry Issues
Food Safety Issue
Health Issue
Toys Issue
Staffing Shortage Issue

Industry Prospects and Overall


Attractiveness
Food Safety Issue
Hamburger has become U.S. national food. U.S.
people eat more meat than any other people in the
world. The mad cow disease abroad (in Europe
and Japan) made people fear and concerned about
the food safety. As a result, the beef problem
brought some decline of the sales of fast-food
restaurants.

Industry Prospects and Overall


Attractiveness
Food Safety Issue
In U.S, since 1998 due to suspected bacterial
contamination, more than 100 million pounds of
meat has been recalled.
High-volume meat production makes it easy for
virulent strains of bacteria to travel far and wide.
Therefore, fast-food restaurant operators have to
ensure food safety control in order to give
sufficient confidence to customers.

Industry Prospects and Overall


Attractiveness
Health Issue
Nowadays, a growing number of people deeply
concern about the quality of their own diets and
their kid diets. Nutrition experts point out that fast
food is often high in calories, sodium, fat and
cholesterol. On the other hand, people with food
allergies or other health concerns often ask
specific questions about preservatives, artificial
colorings, and other additives.

Industry Prospects and Overall


Attractiveness
Health Issue
As people are concerned about their health, they
prefer to eat healthy food. As a result, some fastfood restaurants provide healthful offerings, for
example, vegetarian, and non-fried food.
Therefore, fast-food restaurants have to adjust
their menus and offer new products in order to
cater the changing tastes of consumers.

Industry Prospects and Overall


Attractiveness
Toys Issue
Many fast-food restaurants distributed toys with
the purchase of Happy/Kid Meals to induce
purchases. However, reports showed that some
toys have potential choking hazard to young
children. As a result, the fast-food restaurants had
to recall the toys that have problems. Customers
can return the toys for for free fries or drinks.

Industry Prospects and Overall


Attractiveness
Toys Issue
The largest fast-food toy recall came in December
1999 when Burger King recalled more than 25
million Pokemon balls that had been distributed
with kids meals. The U.S. Consumer Products
Safety Commission (CPSC) and Burger King said
the balls posed a suffocation risk to small children.
A 13-month-old girl suffocated on the toy and a 4month-old boy died when the ball-shaped
container lodged over his mouth and nose.

Industry Prospects and Overall


Attractiveness
Toys Issue
Problems with the safety of fast-food toy
promotions have affected the sales of fast-food
restaurant chains. Therefore, fast-food restaurants
should ensure high-quality and safety standards of
toys from the toy suppliers.

Industry Prospects and Overall


Attractiveness
Staffing Shortage Issue
Fast-food restaurants had a high employee
turnover rate because the compensation is
usually paid at minimum-labor wage.
According to the 1998 survey by the
National Restaurant Association, fast-food
restaurants had the highest employee
turnover on average with 117 %.

Industry Prospects and Overall


Attractiveness
Staffing Shortage Issue
Costs to find, fill, and train employee
replacements can bring high costs to businesses.
Therefore, fast-food restaurant operators have to
respond this problem. They should offer rewards
and incentives, e.g., health insurance, to retain
qualified and motivated employees.

Industry Prospects and Overall


Attractiveness
Profit Outlook
Much of the success of the fast-food restaurant
industry is dependent on the state of the overall
economy. Because of the current economic
downturn, fast-food restaurant industry has slow
growth rate.
An improving economy and continued growth in
disposable personal income will be the catalysts to
propel the fast-food restaurant industry into another
year of real growth.

Industry Prospects and Overall


Attractiveness
Profit Outlook
The fast-food restaurant industrys overall profit
prospects are above average; therefore, it can be
considered attractive/favorable even though fast-food
restaurant industry is highly competitive business.
If the industry participants continue to strengthen
their long-term competitiveness positions in the fastfood restaurant industry, expand sales effort, and look
for ways to protect their competitiveness, they can
earn good profits.

~END~