Is the quick service restaurant industry a profitable industry to be in?
When assessing profitability within the US, companies make calculations according to General Accepted Accounting Principles (GAAP). However, when evaluating profitability that spans across international boundaries, non-GAAP calculations are made. Companies usually measure profitability by two factors, Operating income and net income (profit). Though there may be slight differences in the calculations between US and international principles, they both are integral when analyzing an industry’s profitability. According to Scharr and Rowe (p2, para 6), the overall restaurant industry’s after-tax net profit margin ranges from 3% to 6%. The quick service (or fast food)
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A key consideration is whether the privately-owned establishment uses storefront, food truck or kiosk positioning. These private establishments pose a threat and can often compete with any fast food chain, on a local level with as little as a unique concept. There has been an emergence of “fusion” foods taking over the Southland (So Cal) during the past decade, or so that can be a threat as well. The costs of switching from Tim Hortons to some “mom and pop” fast food establishment is meager. Consumers want quality and convenience at a low price. Typically, where private-owned establishments lack in economies of scale and brand recognition, they make up by carrying low overhead/low costs and product differentiation that attracts consumers, which can agitate the financial performance of Tim Hortons in those circumstances. Also, entering the market through a franchise, I many cases is affordable. Tim Hortons is Franchising fee is $500k (Scharr and Rowe p. 5). Franchises offer business support and training, which allows almost anyone to enter and manage a fast food restaurant’s operations (IBIS World, …show more content…
Also, from 2013 to 2014, there has been significant growth in Return on Equity (ROE) and Return on Asset metrics (ROA), 22% and 14%, respectively (appendix Analysis, Income Statement tab). The same holds true for its operational profits. It is apparent that Tim Hortons understands its internal processes regarding food waste minimization, human capital management and the exercising of economies of scale within their supplier relationships. Unfortunately, in the fast food restaurant industry, companies must also sell high volumes of product to sustain their competitive advantage. Tim Hortons must focus on bringing its percentage share of consumer traffic in alignment with its share in dollars in Canada then mirror those results within their US market strategies (data supplied by Scharr and Rowe p. 11-13). The appendix (competitive strategy tab) illustrates the competitive location and structure of Tim Hortons through strategic mapping and Porter’s Five Business-Level-Strategies matrix (Asynch 6.6 Generic Strategy
To analyze the economic conditions for Tim Hortons, firstly, we will talk about the worldwide economic situation and the specific economic condition in Canada, then shows how these factors that affect operation of Tim Hortons.
My organization, Trader Joe’s, is not an international business. Their stores are all located in the United States; therefore, I chose Whole Foods, who is a main competitor of Trader Joe’s for this assignment.
To become more efficient in its operations, Tim’s coffee shop should consider changes in its management style, human resource make-up, as well as its marketing and financial strategies. Incorporating technology into these aspects of its operations will greatly improve resource utilization.
PepsiCo can potentially acquire California Pizza Kitchen and integrate it in the company’s decentralized management approach. Since PepsiCo executives have experience in the quick service food industry, it should not be a reach for the company to successfully run this casual dining restaurant. For this venture to be successful, it is imperative that management cut down the operating costs at California Pizza Kitchen through the PepsiCo Food Systems distribution network and improve on the 3.1% operating margin that California Pizza Kitchen is currently operating at.
• Considering the two forces of competition and predict what McDonald’s Corporation might do to improve its ability to address these forces in the near future.
..., John E., Strickland, A.J. Thompson, Arthur “Whole Foods Market In 2006: Mission, Core Values, and Strategy”, Crafting & Executing Strategy 15th Ed., McGraw-Hill Irwin, 2007
This paper explores the business strategies Chipotle is using for operations. Analyzing financial and operations data to discuss areas of concern as well as areas where Chipotle Mexican Grill is doing well. Discussions will include the importance of Chipotle’s menu preparation strategy and menu integrity. The marketing strategies Chipotle is using to increase operations and strategies used to compete against rivals in the competitive environment. Concluding with an overall evaluation of Chipotle’s business portfolio.
p1, 2012). This is another socially conscious point that will be valuable when considering Tim Hortons strategic plan over the next decade.
The financial performance factors are the need to advance price-to-earnings ratio and the need to advance consumer base through the expansion into the global marketplace. Customer performance factors include recovering the company image by increasing organic business practices, advancing positive customer feedback, and implementing a home delivery service where it can be applied. Internal business process performance includes improving and increasing positive relationships with suppliers and farmers. Organizational learning and growth factors include providing larger advancement opportunities for employees and recovering the corporate culture with ethical farming and poultry handling. By implementing strategies with these factors in mind, Tyson Food will be able to achieve its goals.
...ense has decreased 82.8% from 2000 to 2004. All the above are contributing factors in Applebee’s achieving higher earnings, a 75% increase in net earnings from 2000 to 2004. Average shares has fall due to consistent share repurchasing programs by Applebee’s. Overall, the common-size analysis of the income statement are relatively consistent over the five years of study. Cost of goods has stayed consistent between 74%-75%, the Depreciation and amortization is between 9%-11%, income from Continue operations and Net Income are also both between 9%-10% in common-size analysis for income Statement. No unusual flutuations has been discovered.
Not having to answer to a corporate boss is the dream of many and the flexibility that owning a business franchise creates provides this option. Success is not reached by simply creating a business, however. The level of success is measured by the size and efficiency of the business. Business growth is the driving force of the economy. The additional jobs and revenues created when a business expands allow the economy to grow at exponential rates. One of the fastest and most popular ways to increase the size of a business is to turn it into a franchise, which can then be purchased by individuals. Franchising provides opportunities that are beneficial to both the parent company and the purchaser. The company that owns the business can expand without having to pay such a large initial cost to open a new store since the franchise purchaser pays a cost to open the business. As well, the company can regulate many of the business activities so that there is a sense of consistency throughout all of the locations. The purchaser is allowed to use the trademarks and goods of the franchise which already have a large market presence. As well, they are provided with training and work standards by the company to help their business run smoothly (Kalnins & Lafontaine, 2004, p.761). Looking at the business model of the world’s largest food retailer, McDonald’s, provides great insight into franchising and business growth in general as well a better understanding of a global business that utilizes the franchising technique.
I have selected Mc Donald’s as an organization on which I would be making this report. I would be discussing Mc Donald’s competitive advantages over other organizations by applying a Resource based view of strategy. This report would highlight the resources and capabilities Mc Donald’s has and how can it utilize those resources to gain competitive advantage over its rivals.
Subway is an American fast food restaurant franchise founded by Fred DeLuca and Peter Buck in 1965. Throughout the years, the company has gained substantial amount of growth in franchises and has become one of the largest single-brand restaurant chain in the world. Subway continues to display fierce commitment to provide a wide range of taste, healthier food choices while considering environmental footprint and creating a positive influence in the communities they serve. The objective of this report is to investigate and identify how Subway competes in the market through identifying the main performance objectives and examining the measures implemented within the operation, in order to maintain their desired level of performance. It will explore
How can McDonalds increase its sales, market share and profits in a fiercely competitive industry?
Burger King’s core competency is fast food restaurant franchises specializing in made to order, flame-broiled hamburger sandwiches, particularly the “Whopper”. Using the strategy of industrial organization to capture market share Burger King offers a similar product (hamburgers) in a different way (flame-broiled). This strategy of product differentiation is part of the firm conduct category that Burger King uses to set itself apart from its competitors. In order to compete with its fast food competitors Burger King accentuates its core competencies in its marketing and product strategies, thereby leveraging market share.