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Industry Analysis: Fast Food Industry

The document provides an overview of the fast food industry. It traces the origins of fast food back to 2nd century China and discusses how the modern fast food industry emerged in the late 19th century with the establishment of the first fast food restaurant in Britain. Currently, the global fast food industry is worth $862.05 billion and is expected to continue growing at 6.05% over the next six years despite facing threats from increasing health concerns and the rise of fast casual dining.

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Pratik Devarkar
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65 views

Industry Analysis: Fast Food Industry

The document provides an overview of the fast food industry. It traces the origins of fast food back to 2nd century China and discusses how the modern fast food industry emerged in the late 19th century with the establishment of the first fast food restaurant in Britain. Currently, the global fast food industry is worth $862.05 billion and is expected to continue growing at 6.05% over the next six years despite facing threats from increasing health concerns and the rise of fast casual dining.

Uploaded by

Pratik Devarkar
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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INDUSTRY ANALYSIS : FAST FOOD INDUSTRY

INTRODUCTION
When we think of the fast food industry, we assume it must have been established one or two
centuries back. Well, some part of it is true since the fast food industry’s major developments
happened in the late 19th century, but the roots of fast food can be traced back to the 2nd
century.

Let’s look at the history of the fast food industry. We nd that the concept of fast food
originated in the 2nd century at the time of the Han dynasty. At the time, people used to
cook their meals in their homes.

However, street stalls and restaurants that provided ready-made noodles and other meals
were present for travellers and other people who couldn’t cook in their homes. That’s
actually when the concept of fast food was initiated.

Later the industry evolved with time, and then in the late 19th century, the rst fast food
restaurant, with whom we can relate, was established in Britain. This restaurant offered Fish
and Chips like any typical fast food restaurant would offer.

From there onwards, people started consuming fast food, and its demand kept on increasing. As
a result, the fast food industry began to grow across the globe, and today here we are in a world
full of fast food chains.

Currently, the fast food industry is worth $862.05 billion, and it is predicted to continue to
grow at a rate of 6.05% in the next six years.

There are countless fast food chains present across the globe in the fast food industry. Two of
the most renowned fast food chains, Mcdonald’s and Subway alone, have around 80,000
restaurants worldwide.

The fast food industry also provides employment to millions directly and indirectly. It is
estimated that alone in the US, 36,834 people are working in the fast food industry directly.

Now that we have discussed how and when the fast food industry came into being and what
is its current position in the market. Let’s carry out fast food industry analysis to analyse
the industry more critically.
COMPETITION
Competition in the fast food industry is very high since newly entering brands must
compete with well-established top fast food brands. These already existing brands
have achieved economies of scale. Hence, they can produce at a low cost.

SUPPLIER POWER
Suppliers in the fast food industry possess a high power to in uence prices. Since
suppliers are supplying inputs for food, that is a necessity. This empowers them to set
prices for the buyers. Moreover, big fast food chains also avoid switching suppliers to
maintain quality. This also gives more power to suppliers.

BUYER POWER
Buyers have a high power in the fast food industry to substitute fast food chains
offering similar products. Since the products are similar in nature, this empowers the
buyers to consume the product from anywhere where it is better in quality and less
expensive.

THREAT OF SUBSTITUTION

This factor highlights the continuous threat companies face of getting substituted by
their competitors. Companies are substituted mainly by a competitor that offers good
quality products at cheaper rates.

Companies operating in the fast food industry face a high threat of substitution since
many industry brands sell similar products. The only difference is quality and price.

THREAT OF NEW ENTRANT

The last factor of the model highlights the threats companies in an industry face
from new entrants in the industry.

Threats of new entry are low in the fast food industry since there are high barriers
to entry. High xed costs, brand loyalty, and brand recognition threaten new
companies from entering the market.
MARKETING SEGMENTATION

TYPE OF SEGMENTATION TARGET SEGMENT


SEGMENTATION CRITERIA

GEOGRAPHICAL REGION DOMESTIC


APPROACH
DENSITY URBAN

TYPE OF SEGMENTATION TARGET SEGMENT


SEGMENTATION CRITERIA

DEMOGRAPHIC AGE ALL AGE


APPROACH
GENDER ALL GENDER

INCOME LOW AND MIDDLE

OCCUPATIONS STUDENT,EMPLOYEES

TYPE OF SEGMENTATION TARGET SEGMENT


SEGMENTATION CRITERIA

BEHAVIOURAL DEGREE OF LOYALTY “HARD CORE


APPROACH LOYALS”/”SWITCHERS”
BENEFITS COST BENEFIT AND
TIME EFFICIENCY.
SOUGHT

TYPE OF SEGMENTATION TARGET SEGMENT


SEGMENTATION CRITERIA

PSYCHOGRAPHIC SOCIAL CLASS LOWER, WORKING


APPROACH
LIFESTYLE NA
FUTURE OUTLOOK

According to the report, the global fast food market is expected to reach $931.7 billion by
2027, rising at a CAGR of 4.6% from 2020 to 2027.

The global fast food market is poised to witness signi cant growth during the forecast period,
owing to an increase in number of fast food restaurants, rise in number of working women,
tech-savvy ordering options, rise in demand for international cuisines, and change in consumer
taste and preference. However, factors such as high setup cost of restaurants and rise in health
concerns among the fast food consumers are expected to hamper the growth of this market.
Moreover, the rise of fast casual food is forecasted to negatively affect the fast food market
growth.

Conclusion
According to the report, the global fast food market is expected to reach $931.7 billion by
2027, rising at a CAGR of 4.6% from 2020 to 2027.

The global fast food market is poised to witness signi cant growth during the forecast period,
owning to increase in number of fast food restaurants, rise in number of working women, tech-savvy
ordering options, rise in demand for international cuisines, and change in consumer taste and
preference. However, factors such as high setup cost of restaurants and rise in health concerns
among the fast food consumers are expected to hamper the growth of this market. Moreover, the rise
of fast casual food is forecasted to negatively affect the fast food market growth.

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