Australia Fast food Essay Example

  • Category:
    Marketing
  • Document type:
    Assignment
  • Level:
    Undergraduate
  • Page:
    3
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    2190

A situation Analysis of the fast food industry

Introduction

A situation analysis is a report on the current market trends of the fast food industry. It is a collection of the past and present information on the industry, the environmental impacts, the market and customer analysis that may influence the company’s future goals. The Fast food market is divided into four groups; the quick service restaurant, the takeaways, the street vendors and leisure locations. Our focus will be on the quick service restaurant (QSR), the category where the Hungry Jacks falls.(Marketline 2011).

Company Analysis

Hungry Jacks is a fast food restaurant that caters for the people of all ages. It is a franchise of the burger king and it is owned by Jack Cowin. It has expanded well through purchasing the ailing Wendy’s chain. The restaurant specializes in fast food as it is the target of most consumers and also because it is cheap and affordable for the students and other young people alike. Our goals have been to be the best in the industry, to increase our sales by giving outstanding customer service and offering quality in our products (hungryjacks.com.au). In terms of showing of the quality of their products, hungry jacks has included the detailed ingredients in their menus as most people feel that the products on the menus that contain complicated and detailed information to contain more quality (slideshare.net). The restaurant services 10% of the market just below 16% for KFC and 17% for MacDonald’s. (Seymour n.d). The restaurant has the favorites are the whopper and the tender crisp and grilled sandwiches which are a trademark of the burger king franchise. The Marketing strategies include introduction of a healthier menu that caters for the population that seeks healthy eating. Due to this the company had changed their slogan to ‘hungry jack’s makes it better’ from the earlier one of ‘burgers are better at Hungry Jack’s.

Marketing Analysis

The industry deals with fast food and drinks, fast food refers to food that is prepared and served fast. This type of food includes burgers, sandwiches. The fast food contributes a significant amount of energy, total and saturated fats, sodium and sugar to the diet if eaten consistently.(Brindel et.al 2008). The fast food restaurants have a market share of 60% and as Reuter’s reports, the industry is doing well with an expected increase in market volume of 3.6% in the next five years (Anon 2011). Another research report indicates that there was a decrease in the market value of 0.4% in 2011 to reach a value of $5072.5 million.The prediction being that in 2016 the market value will be $5.767.1 million an increment in value of 13.6% from 2011.(Marketline 2012). According to this research out of the four segments of the fast food industry, quick service restaurant contribute the largest portion of the market value estimated at 66.4% of the total market value while the takeaways contribute 28.4% of the total market value.

According to the Australian food statistics in the value chain for food in Australia 2011-2012, the retail sales for restaurants and cafes were 14% (DAFF 2012). The fast food industry serves a large population of Australians, research found that out of 1,200 customers surveyed said they enjoyed drive thro’s. With the economic crisis and a fast pace world, most Australians are turning to cheaper, quick meals most preferring the hamburgers.(Seymour n.d). Research shows that the low income communities are the ones who eat most of the fast foods than the affluent in the community (Block,scribner and Desalvo 2004).

Watson and Markey (2011)indicate that the price of fresh food is increasing as compared to the processed foods and hence support the information by Seymour that majority of Australian families opt for meal deals of processed foods. In contrast to this the Australian bureau of statistics has shown that there was a decline in the expenditure of takeaway food services in the year 2011-2012 (DAFF 2012). There are around 3300 fast food outlets across Australia (Lyndal,et.al 2011)and in a survey in 2007, almost all the outlets served approximately 1.64 billion fast food or takeaway and majority of the takeaways were also fast food.

Most Australians prefer eating the food produce from the country; they prefer what is convenient, affordable, and enjoyable and value for money. Research shows that almost half of the Australian population spend a third of their weekly wages on fast food and eating out (Australian Bureau of
Statistics 2006; ABS 2011) Other factors that determine what choice of food the Australians go for include; the region or location where they live or work, the company they keep, for example it is hard for an individual to eat healthy food when in the company of people who eat fast food.. Another factor is the culture, beliefs and family values (Ross, Palmer and Huczko 2010).Most customers indicate that the reason they opt for fast food is because of their busy lives.

Particular segments of the fast food industry can be the main signature dishes for one particular service provider for example Burgers are signature dishes for Burger King and McDonalds, Pizza for Pizza hut and Dominos. Many of the large providers have invested in brand building so as to attract the consumers (Marketline 2012).

Environmental Analysis

Research shows that environmental factors are contributing factors in the onset or prevailing obesity problem. Many organizations in the country are advocating for the use of organic products rather than the ones grown by use of chemicals or hormones. This has lead to the inclusion in some of the food outlets selling products that have come from organic raw materials (Ross,Palmer & Huczko 2010). This has been geared towards reduction in the obesity levels in the country. Some of the factors that have impacted the food industry and especially fast food industry are included below:

Political Impact

The Government has come up with anti-obesity measures due to increase in the population listed as obese. They developed the traffic light system which in many ways seems to be failing. In a press release the Australian food and grocery council indicated that the consumers should be encouraged to consider their own dietary needs as a plan for total lifestyle change (Gorelik 2008).The government has gone ahead to spearhead the change from obesity by providing support to the children nutrition and physical activity.

Economic impact

The fast food industry has contributed a lot to the growth of the economy. Statistics show that the gross domestic product grew by 3.4 % in 2011-2012, fast food industry is shown to have contributed 1.6% to the GDP and —, According to Duncan,Shi and Tyers (2004),as the populations aged, many of the old people ate less fast food and more healthier food. Hungry Jack’s has also been impacted by the economic challenges, this is has resulted from the economic recession and increased prices of real estate and unemployment, hence resultant effect has been an increase in the expenditure against the economic gain (slideshare.net).

Social impact

Food is known to be a bounding activity hence the fast food restaurants target the families by offering meal deals. The fast food has been known to be cheap and thus favorable for the socio-economic disadvantaged. This goes hand in hand with increased obesity among the poor in the society, though this is the case, it is still the affluent that are known to have access to many of the fast food outlets. The table below shows the differences from SE 4 (low income) to SE1 (high income) on the population that eats at fast food outlets (Reidpath et.al 2002).

Income category

Postal districts

Fast-food outlets

Population

Population per fast-food outlet

1,63,589

9,41,527

1,74,442

2,91,093

31,62,198

Technological impact

Information Technology has improved most retail sales by employing advertisements of the products. This can be through the Television and Radio networks as well as use of the internet. Dibbs (1996) indicated that Australia has the highest number of television adverts concerning food per hour. Use of technology in innovation of new products has also been employed, this involves research and application of technology (Earle 1997) to guarantee a better or new product hence the best recipes and best menus get the best customer approval and increased population that use the products. Use of social media can help keep the company on ‘its feet’ as it gets to read and respond to the various comments from the public as regards the food products. Introduction of free wifi spots in the restaurants has attracted many young people both school going and working class (Glessner 2007).

Legal impact

There were contentions on the labeling of fast foods with the right quantity of the ingredients so that people consuming these products might know what is contained. As a way of fighting obesity in children, laws have been put to govern what type of food commercials are advertised on the television during the tie when children are watching. The regulations that govern advertisement of products to children restrict the advertisement of unhealthy foods. This put a dent into the advertising of products through the media but still the quantity of people going in for fast food has remained stable. For Hungry Jacks, being a sponsor of the Eagles Heroes football club attracts many young people and children to the restaurants so as to meet with their favorite team (Hungry Jacks 2007; Jolly 2011).

Competitor analysis

The industry is fragmented with the major chains dominating in some of the products, this brings in rivalry, this is mitigated through the absence of high exit costs together with the leeway to increase capacity. The chains can increase their outlets while the dominant competitors increase their staff and work overtime.(Marketline 2012).The idea that competitors can co-exist alongside each other seems a farfetched idea due to the entry deterrence experienced by new competitors. Toivanen and Waterson indicates that the chances of a new competitor coming into an existing industry increases with the stock of outlets by the rival competitors (2005).This could be done by customers seeking variety and alternative options, it could also be possible through one competitor advertising its brands and in this there is a spillover and in the end it benefits the new competitor. Some of the major competitors are the McDonalds Corporation, Yum brands and the Dominos Pizza. Others are Eagle boys and Fasta Pasta.

The fast food owners compete through the quality and quantity their products offer. Research has shown that the whopper cannot be compared to the Big Mac of McDonalds in terms of the energy available. The nutritional contents of their products are also a competition strategy. For example Hungry Jacks chicken burger has been known to contain more nutritious content than the cheeseburgers (Seymour n.d).

The major competitors have the number of outlets as follows; Dominos Pizza 845,780 for McDonald’s subways 1250 as opposed to 300 of hungry jacks (Markey and Watson 2011). The marketing analysis indicate that the competition between the fast food owners has to do with the prices for the products with McDonalds and KFC establishing cheaper products to attract the low income population. They also assure clients of a healthy and hygienic eating environment. Though the economy has suffered due to the economic recession, research shows that the fast food industry has continued to flourish (Markey and Watson 2011).

References:

Anonymous (2011) Research and Markets: Examine the Fast Food Market in Australia as the Industry is Forecasts to Increase at a CAGR of nearly 3.6% Within Five Years, Available [Online]:http://www.reuters.com/article/2011/05/20/idUS178698+20-May-2011+BW20110520

Australian Bureau of Statistics (2006). Australian Social Trends. Australian Bureau of Statistics.Canberra, Australian Bureau of Statistics.

Australia Bureau of Statistics (2011) Australian Bureau of Statistics. 2009-10 Household Expenditure Survey Australia Summary of Results. Canberra, Australian Bureau of Statistics.

Block PJ.,Scribner RA.,& Desalvo BK (2004)Fast Food, Race/Ethnicity, and Income: A Geographic AnalysisAm J Prev Med ;27(3):211–217 .

Brindal E,et.al (2008) Obesity and the effects of choice at a fast food restaurant. Obes Res Clin Pract. Vol 2:111-17

Department of Agriculture, fisheries and Forestry (DAFF) (2012) Australian food statistics, Australian Bureau of Statistics Available http://www.daff.gov.au/__data/assets/pdf_file/0007/2269762/daff-foodstats-2011-12.pdf.

Dibb, S. (1996) Television Food Advertising Aimed at Children: An International Comparative SurveyA Spoonful of Sugar. . Consumers International.

Hungry Jacks (n.d) Hungry Jack’s website available [online]:http://www.hungryjacks.com.au

http://www.slideshare.net/NikhilSen2/hungry-jacks-group-ns-final3-management-group-written-presentation-22413962

Glessner, L (2007) Fast food, Fast Internet: McDonald’s offers wireless internet Hot spots across the country.

Jolly,R (2011) Marketing obesity?, Junk food, advertising and Kids, Social policy Research paper No.9. Available [Online]: http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1011/11rp09#_Toc282609518

Lyndal W.,et.al (2011) Fast facts: The availability and accessibility of nutrition information in fast food chains.22(3) Health Promotion Journal of Australia Vol Australia Fast food: 184-8

, pp1-33. 33p..Australia Profile: Industry Food )FastMarketline (2012

Markey A.,& Watson,C (2011) Australia becomes fast food nation and moves to 11th position for spending on takeaway. News limited Newspapers. Available online http://www.news.com.au/national-news/obesity-levels-show-australia-is-the-chubby-country/story-e6frfkvr-1226064083008

Reidpath DD., et.al (2002)
An ecological study of the relationship between social and environmental determinants of obesity, Health & Place, Vol 8(2); pp 141-145.

Ross J., Palmer M.,& Huczko T (2010) Food consumption and consumers,Who,What,Where and Why?South Australian food centre.Available [online]: http://www.pir.sa.gov.au/__data/assets/pdf_file/0005/165974/safood_consumers_report.pdf

Seymour B (n.d) Burger wars. Available [online]http://www.7perth.com.au/view/today-tonight-articles/burgers

Toivanen, O.,& Waterson, M (2005) Market structure and entry: where’s the beef? RAND Journal of Economics, 36, pp. 680–99