The fast-food industry is changing everyday. There are new products being introduced in the market and new slogans being created. The companies in the fast-food industry will do their best to make the greater burger, and to make bigger and better fries.
Founded in 1953, Sonic has become the largest drive-in chain in the nation. Sonic was founded by Troy Smith, Jr. in Shawnee, Oklahoma. His dream was to own his own business. Sonic Drive-In keeps the 1950s alive through its chain of drive-in restaurants, each complete with speaker-based ordering systems and carhop servers - some on roller skates. Sonics top competitors are McDonald’s, Burger King, and Wendy’s. McDonald’s is the leading competitor in the fast-food industry. McDonald’s has the most restaurants with 12,380 locations and has over 364,000 employees. Burger King has 11,350 outlets in 57 countries and territories worldwide. About 75% is located in the United States. Wendy’s is the third largest quick-service hamburger restaurant chain in the world, with more than 6,600 restaurants in North America and international markets.
In Exhibit 1, this states the Porters Five Forces Model of Competition of The Restaurant Industry. Threat of new entrants: Because the profit margins are so small, cost is low and anyone can enter into the quick-service restaurant business. Bargaining Power of Buyers: The National Restaurant Association showed that three out of ten customers agreed that food that was prepared at a restaurant or a fast-food restaurant were an important factor in their everyday lives. The survey also stated that “three out of five customers plan to eat on the premises of quick-service restaurants and seven out of ten said that plan to eat takeout or delivery. (Hitt, Ireland, & Hoskisson, pg. 367)
Customers buy when they feel it is necessary giving them the upper hand on the industry. Bargaining power of suppliers: In the quick- service restaurant, the suppliers vary. They really do not rely distributors as large restaurants do. Threat of new substitutes: The restaurant industry is segmented into many parts: full service restaurants ($120 billion); quick- service restaurants ($110 billion); away-from-home managed institutions, examples: food services for schools and hospitals ($21 billion); and other food industries ($106 billion). (Marshall Jones, 1999). Rivalry among competi...
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...que product differentiation but find ways to reduce cost to stay ahead. There is not a perfect solution in the industry. No one can predict the economic because it is always changing. Sonics specialty menu has allowed the chain to differentiate. Through its increased marketing efforts, Sonic will gain brand recognition and increase its customer base.
Works Cited
• Hitt, Michael A; Hokisson, Robert E.; Ireland, RD. Strategic Management. 6th Ed., Masson, Ohio: Souht. Wester 2005.
• “Burger King.” Burger King Corporation. http://www.bk.com/
• “Answer.Com.” Burger King Corporation. http://www.answers .com/burger%20
• “McDonald’s.” McDonald’s Corporation. http://www.McDonalds.com/
• “Answer.Com.”McDonald's Corporation. http://www.answers.com/topic/mcdonalds-s
• “Marshall Jones& Co.” Restaurants. http://marshalljones.com/new_page_30.htm
• “Restaurant Business.” Sonic Says Payment Stalls Boosted Gains. http://www.restaurantbiz.com/restaurantbusiness/headlines/articles_display.jsp?vnu_content_id=1000853253
• “Wendy’s Restaurant.” Wendy’s International. http://www.wendy’s.com/
• “Yahoo!” Yahoo. Yahoo! Finance. http://finance.yahoo.com/?u
Today what is known as In-N-Out Burger was first founded by Harry Snyder and his wife Esther Snyder in 1948. The first location was in Baldwin Park California (ReferenceforBusiness.com). Now with over 200 locations in California, Arizona, Nevada, Utah, and Texas it has been ranked number one in many polls (ReferenceforBusiness.com). Today its headquarters are in Irvine California.
From a study completed by Chicago-based Research International USA completed a study called “Fast Food Nation 2008. The panel consisted of 1,000 respondents of ages 16-65 who provided their inputs with an online survey which was conducted between March 13 through 2008. Which was based on results on fast food restaurants like McDonald’s, Burger King, and Wendy’s are gaining popularity even through the economic hardship and recession. Marketing strategy has become more of influence on kids and young American’s. As population grows and the demand increases of fast food restaurants are expanding their stores to capturing more consumers. Fast food chains are also willing to change their menus to continue to gain and retain repeating customers. With each generation that passes, brings fast food chains into more homes and continues impacting lives.
Sonic is the largest drive-in chain in the United States. Under the slogan "America's Drive-In," a Sonic features fast service by roller-skating carhops and unique menu items that cannot be found at McDonalds, Burger King, or Wendys. Sonic restaurants operate in 27 states so it is smaller than leading fast food chains however it is still a significant competitor. Founded by Troy Smith and Charlie Pappe in 1953, Sonic went from a single root beer stand to a popular franchise. In 1973, Sonic restructured as a franchise company and later became Sonic Corporation. The company experienced financial decline due to the lack of consistency from its franchisees so they were bought out by Sonic Corporation and restructured. In 1995, Sonic introduced "Sonic 2000," an aggressive multi-layered strategy to further unify the company in terms of a consistent menu, brand identity, products, packaging, and service. The campaign was successful and Sonic's brand recognition increased. Strengths include a strong competitive nature, flexible strategies, and employee/franchisor relationships. Weaknesses include lack of communication and domestic expansion. Threats in the external environment include company size, employee turnover, weak economy, rivals in similar industries, overseas expansion, and slow growth markets. Sonic can overcome these threats with opportunities such as global expansion, increase in the number of quick service consumers, and appealing investment opportunities. Alternative strategies and recommendations suggest that Sonic should concentrate on a low cost strategy and focusing on niches such as the health food market.
Dess, G. G., Lumpkin, G. T., Eisner, A. B., & McNamara, G. (2012). Strategic Management: Text & Cases (6th Ed.). New York, NY: McGraw-Hill.
Wheelen, Thomas L. and J. David Hunger. Strategic Management and Business Policy, 13th Ed. Upper Saddle River, NJ: Pearson Education, Inc., 2012. Print.
The fast food restaurant industry, which includes quick-service and fast-casual restaurants, is highly segmented with the top 50 companies accounting for only 25% of the industry’s sales. The $120 billion industry includes over 200,000 restaurants with 50% of those specializing in hamburger entrees. (hoovers.com 2008) The major competitors in the industry include McDonald’s, Burger King, Taco Bell, Subway, and KFC – Chick-fil-A’s major competitor in chicken sales. Chick-fil-A’s unique position in the market, specializing in chicken-based entrées, has lead to a competitive advantage which the company has been able to capitalize on. Recently, many competitors have added chicken entrees in order to compete in the market segment. Through marketing strategies and company initiatives, Chick-fil-A has tried to stay distant from competitors, offering a fresh alternative to the ordinary fast food restaurant.
As a company, McDonald’s was first introduced in Des Plaines, Illinois in 1955. This was the very first McDonald’s restaurant, which all started in San Bernardino, California in 1954 when Ray Kroc approached the McDonald brothers with a business proposition to start a new company. In 1965 McDonald’s went public and was later, in 1985 added to the Dow Jones Industrial Average. (www.mcdonalds.com) The company has gone through quite a few changes with its changing CEO’s over the years, but the company seems to be on track with CEO Jim Skinner, named in 2004. Skinner was named the new CEO just in time to clean up after McDonald’s first ever quarterly loss. He succeeded by showing that McDonald’s revenue had climbed 11% during 2006 and net profits had climbed 36%. (Dess, Case 40 Pg. 1)
There is a larger number and types of entrants in the market Fine Dining Restaurants-Casual Dining Restaurants-Quick- Service Restaurants. Landscape of primary location is also a threat; there is a lack of customer parking which could possibly result in lower numbers of customers. Climate may also affect the businesses in general, low peak season and bad weather can cause problems for the business market if bad weather is expected, customers are more reluctant to go outside if not necessary. Potential entrants and encroaching concepts are also a concern due to factors such as low consumer switching and brand not being well known. Cost is also a threat although the primary target market is higher-wage earners consumers with less income will not frequent Rooms for Dessert they will seek substitute
Fast food outlets actually have been existed from millennia in China, India and ancient Europe. In the past, many people cannot afford to have a kitchen and this becomes the main reason they buy their food in fast food outlets (Reverse Your Age, 2013). The perception of fast food started to change in twentieth century. The first company that change the culture and perception of fast food was McDonald’s, followed by their future competitors such as KFC, Burger King, Wendy’s, Taco Bell, Pizza Hut and Subway. As they get a good appreciation from the customers followed by the impact of the globalisation, almost all of the fast food companies have been expanded their restaurant chain in many nations (Wojtek, 2013). Nowadays, with our busy life schedule and the increasing trend where women entering workforce promote an opportunity for the fast food industry to grow bigger. We can see the significant growth from the fast food industry as the industry itself has been generated over $160 billion in 2012 compared to their revenue in 1970 which only around $6 billion (Franchise Help, n.d.). With this significant growth, it does not mean that every company in this industry are successful. Some company has to closed some of their stores due to the lack of environmental research and preparation in entering a new country which commonly lead to the poor selling rate. The deeper explanation and points that is mention below will be also represent as the industry current state.
Another strength is Burger King’s franchise development having 90% of its restaurants franchised. The franchise concept allowed the company to grow with minimal capital expenditure and receive royalties and fees. Burger King went above and beyond and created a new model of its restaurant to attract mo...
CHANGING PREFRECE depended vastly on the fast food manus. For example we can mention about SALAD. Now salad was never considered as a part of fast food menu. But with the change of taste and preference, fast food chains like Windy, Taco Bell, and McDonald have introduced SALAD into their menus. This preference is not stopping only with salads. In 2002, McDonald’s introduced great tasting new products including premium salads, n salads plus menu; Chicken McNuggets made with white meat; Fish McDippers; Chicken Selects; and new breakfast offerings like the McGriddle sandwiches. Here as a fast food chain, McDonald did not have to introduce new dishes in their menus but with the impression and image in the market analysis, of increasing demand and chan...
Fierce and growing competition – big fast food companies like Burger King and Kentucky Fried Chicken are constantly competing with McDonalds for customers and trying to take the spot as the top fast food chain.
Burger King adds value through the good quality products served. What the customers perceives is what the customer gets and sometimes more than what the custome...
When society thinks about the local McDonald’s, they probably do not think “innovation’. That is because everyone has become accustomed to the many novelties that McDonald’s has introduced over the years. Some people do not even know that McDonalds was the leader in innovation being the first major international fast food restaurant, with the first drive-through window. What many people do not realize is that McDonald’s continues to drive innovation in fast food. Some times the innovation is well advertised, but other times they are designed so that customers will never even notice (Ritzer, 2004).
McDonald’s restaurant was founded by two brothers, Richard and Maurice (Dick and Mac) McDonald, in 1940. They initially opened the restaurant under the name McDonald’s Barbeque which was located in San Bernardino, California. The McDonald brothers had a vision of a drive-in restaurant that focused on quality food and good service. They served a simple menu consisting of 20-25, mainly barbeque, items. In 1948 after eight years of operations the McDonald 's brothers discovered that the majority of their revenue was coming from hamburgers. With this in mind, they decided to change the menu and set their focus mainly on hamburgers. They also changed the name of the restaurant to simply “McDonald’s” and adopted an assembly line approach in the production process. After continued