economical of fast food chains in usa

7/29/2019 Economical of Fast Food Chains in USA

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Economical

The U.S. fast food industry is by far the largest in the world, spawning global fast

food brands such as McDonalds, Burger King, Subway and Wendys. In 2012, the

fast food industry generated total revenue of 195.19 billion U.S. dollars in more

than 300,000 restaurants, employing 4 million people. Many of thoseestablishments are operated as franchise restaurants, a concept that is very

common in the fast food industry. A parent company, such as McDonalds,

Burger King, Subway and Wendys permits its franchisees to operate branded

restaurants in exchange for a franchise fee or a share of the revenue.

Franchisees are supplied with uniform ingredients by the parent company or its

suppliers and are typically obliged to follow strict operational guidelines.

In 2012, Subway was the market leader in the U.S. fast food industry; other

major players include Wendys, Starbucks, Burger King, and Doctors Associates,

the company behind Subway. All these major players combined accounted for

less than half of the industrys revenue in 2012, indicating a highly competitive

industry with a low degree of concentration.

Over the last decade there has been increased focus on the quality of foodserved in fast food restaurants. Typically highly processed and industrial inpreparation, Fast food companies have responded by adopting healthier choicesand have had some measure of success, but the shadow of bad press still hangsover the industry.

Rising commodity prices have also significantly crunched many fast foodfranchises. With food and beverage inputs making up approximately 33% of

costs, higher prices for livestock, corn, wheat and more have seriously shrunkmargins over the past decade. In such a fiercely competitive space it isimpossible to force a price increase on customers, so profit margins are oftensouth of 10%. The recent economic recession did lower commodity prices, butthe recession brought on its own complications, and now prices for commodityinputs are on the rise again.

Fast food had been thought to be largely recession proof, and indeed theindustry did not suffer nearly as much as other discretionary spending sectors. Infact, there was some increase in consumer visits as people choose cheaper fastfood options over fast casual or traditional restaurant choices. But overall, therecession hurt spending, and consumers overall purchased less with each trip.Fast food franchises fared reasonably well but still felt some pain.

Busy citizens still need quick meal options, and fast food restaurants are fightingthese challenges with gusto. Now offering healthy choices to battle the stigma ofunhealthy food, some quick service restaurants now focus on fresh or organicproducts. From franchises focused solely on salads or healthy wraps to the lowercalorie options offered at traditional burger franchises such as Wendys orMcDonalds, consumers are able to make better choicesif they want!

Fast food franchises are also focusing on expanding into new product lines, suchas the coffee initiative in the McCafe. Intended to offer competition to Starbucks,McDonalds is luring customers back into their stores, hoping they will purchasefood as well. Many franchises have been exploring other meal times such as


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breakfast and the mid-afternoon snack for growth opportunities and to increasereal estate utilization.

The industry is most effectively battling saturation within the United States bycreating a much more diverse range of offerings. Despite the economic turmoil, the USfast food industry is growing at a faster pace than it was growing previously

Economic Performance

Burger king

RevenueUS$2.33 billion

Operating incomeUS$363.0 million

Net incomeUS$48.8 million (2012)

Total assetsUS$5.58 billion

Total equityUS$1.45 billion

Source- www.sec.gov.com

Mc Donalds

Revenue

US$ 7152.4 million (2012)

Operating income US$ 2287.2 million(2012)

Net incomeUS$ 1455.0 (2012)

Total assetsUS$ 3384.2 million (2012)
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Total equityUS$ 13884.1 million (2012)

Employees 420,000

Source- www.sec.gov.com

KFC

Revenue US$ 9.5 billion (2012)

Employees 190,000

Source- Wikipedia

Wendys

RevenueUS$ 02.431billion(2011

Operating income

US$ 0137.1 million (2011)

Net incomeUS$ 009.9 million (2011)

Total assetsUS$ 4.301 billion (2011)

Total equityUS$ 01.996 billion (2011)

Employees 42,800 (january 1st, 2012)

Source- Wikipedia

Subway

Revenue

$16.2 billion US$ (2010)
http://en.wikipedia.org/wiki/Equity_(finance)http://en.wikipedia.org/wiki/1000000000_(number)http://en.wikipedia.org/wiki/1000000000_(number)http://en.wikipedia.org/wiki/Earnings_before_interest_and_taxeshttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Equity_(finance)http://en.wikipedia.org/wiki/Equity_(finance)http://en.wikipedia.org/wiki/1000000000_(number)http://en.wikipedia.org/wiki/Earnings_before_interest_and_taxeshttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Equity_(finance)


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Source- Wikipedia

Conclusion

Future growth in the fast-food restaurant industry depends on how well

retailers are able to innovate, provide value for money, and keep up

and surpass competitors. People are now becoming more price-conscious, particularly

about the food products, and are shifting to fast food joints from their traditional habits of

eating out at restaurants frequently.

Despite the downturn in the economy, the fast food industry will remaina cornerstone of the economy, representing 4% of the US GDP andemploying 10% of the US workforce.

Sources

http://www.franchisehelp.com/industry-reports/fast-food-industry-report.

economical of fast food chains in usa

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