Fast food Industry

Submitted by:- Mohsana Iqbal

0911156

Almost everywhere you look you’ll see a familiar sign symbolizing our fast food nation. You find them on the corners of streets, off the side of interstates, airports, malls, schools, gas stations, your local shopping center, and even in hospitals. More money is spent on

French fries than on higher education, personal computers, or new cars! Looking at how our society has become faster paced, it is no

wonder less time is spent. Today, eating out definitely is part of our fast paced lifestyle, not just a special treat as it was in years past

Fast food Industry

Is a form of

Monopolistic Competition

Monopolistic Competition Monopolistic competition exists when a large number of sellers produce a product or service that is perceived by consumers as being different from that of a competitor but is actually quite similar. This perception of difference is the result of product differentiation, which is the key to success in a monopolistic industry. Products can be differentiated based on price, quality, image, or some other feature, depending on the product. 

Fast food industry, specifically talking about the growing trends in Pakistan we can observe the growth in number of fast food outlets, with various promotional activities being carried out to differentiate products from one another; hence becoming a part of monopolistic competition.

SOME FAMOUS FAST FOOD RESTURANTS IN PAKISTAN

KFC

Mc Donald’s

Subway

B.B.Q Tonight

Briyani Centre

Students Briyani

Lasania

Lal Qila

Salt n Pepper

Eat-on

Pizza Hut

Pizza Express

Indulge

THREE MAJOR FAST FOOD CHAINS IN PAKISTAN

KFCPresently KFC is branched out in nine major cities of Pakistan (Karachi,

Lahore, Rawalpindi, Faisalabad, Multan, Peshawar, Sialkot, Hyderabad,

Islamabad, Jhelum, Gujranwala, Sukkur & Muree) with more than 45

outlets nationwide

McDonaldMcDonald's Pakistan opened its doors in September 1998 at Lahore and

presently operating in six major cities with a network of 20 restaurants.

With a strong belief in the Ray Krock phrase when you are green you

are growing, McDonald's Pakistan has an aggressive plan to expand in

all other cities of Pakistan and is rapidly growing with the focus to

provide friendly and quick service restaurant experience to our

customers.

Pizza hutPizza Hut first started operations in Pakistan by opening its first

restaurant near Bank's Square on The Mall in Lahore. It then expanded

to Karachi and Peshawar. The maximum numbers of Pizza Hut outlets

are in the thickly populated city Karachi. Now it also has restaurants in

Faisalabad, Rawalpindi, Islamabad, Hyderabad, Quetta, Sialkot and

Multan.

First a few names were known to be capturing the markets large chunks like KFC, McDonalds, Pizza Hut and etc. but now almost every street

you turn to you will find a new restaurant etc. Not only have more producers entered along with increase in demand but the major market shareholders are facing tough competition and are facing shrinkage in

their market share.

The demand and supply curve for fast food industry has shifted outward

The Major reasons for this change are the new taste, fashion trends and lifestyle.

For example:-

First people preferred treats and celebrations indoors which meant all the cooking and eating took place inside homes but now people prefer going out.

Previously going out for any meal was only at times of special occasions, now people would go to any restaurant without having to celebrate a special event. In fact now even for regular meal people place their orders and receive home delivery rather than cooking it for themselves.

The increase in demand naturally attracted more suppliers, increasing competition and supply in the market

With the new lifestyle where people have less time it’s convenient to have readymade meals Etc.

These firms are working under very a quite elastic condition as it’s usually the case with firms under monopolistic competition.

This is because firms are working extensively on creating an image of offering a differentiated item and also because of extreme price

competition because of which we can all observe the discount offers, deals etc. being promoted by different fast food firms.

When consumers have so much variety (close substitutes available) then these non-price competition strategies and especially price fluctuations

can influence potential consumer preferences.

Non-price strategies like creating a brand image, quality, locality, availability etc. tends to encourage long run sales (that is consumers

coming again)

In short run firms operating in this industry might earn abnormal profits till the competitors enter the market.

Because of extremely competitive market new competitors enter and

prices are lowered down, so in the long run they earnNormal profit.

Firms under monopolistic competitive markets have somewhat control on their pricing if they are able to establish a strong image and brand

loyalty.

For example Pizza Hut is charging more than Pizza Express, but the customers whoare loyal customers of Pizza Hut would still go their but probably in the long run the high prices would force some customers to

go for close substitutes (Pizza Express).

So it is possible that a firm in this industry might earn beyond normal profits in the long run as well.

Macroeconomic factors have also influenced this industry in evryway.

Factors such as growth in population, global trading, employment rate etc. are some very important and have influenced this and all sorts of

industries operating in different type of competition.

Pakistan’s majority is youth, the population is increasing, it’s a

developing country, more job opportunities etc. leads to change in life style which influences our consumption and in Pakistan this is very

evident which is leading to willingness and ability to buy and supply in the market.