U.s. Fast Food Industry

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Industry Analysis
1. What are the primary driving forces in the U.S. fast-food industry in 2004?

Answer:

The primary driving forces in the US fast-food industry in 2004 are listed below-

• Health Consciousness of Consumers/Change in eating habits: Many consumers decided to start eating healthy and wanted food that are low in fat content, that has low cholesterol and fewer carbs. Many of the fast food companies especially the hamburger segments started to introduce grilled chicken sandwiches, salads and other low carbs burgers to appeal to the health conscious consumers.
• Flat industry Sales: The industry growth rate average was 3%, an indicator that the industry has matured and on the other hand, lower growth rates have increased
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They also engaged in merger or acquisition to boost sales and increase profitability.
• Diversification: Many in the fast-food industry are now diversifying outside their main core products and venturing into other products as a means of increasing sales and as a smart growth strategy. For example, Pizza hut started selling chicken wings and other non-pizza items, McDonalds, Wendy’s, burger king( to mention a few) started selling chicken sandwiches, McDonald for example started selling burritos breakfast, ice-cream, yoghurt etc. This has made products seen as substitutes now as direct competitors because of diversification.

2. Using Porter 's Five-Forces Model, assess the strength of each competitive force in the fast-food industry.

Answer:

A. Suppliers (Weak Force): As seen in the Yum! Brands case study, the suppliers are a weak force because-
• Since KFC buys in large volumes, it therefore gets the power to negotiate for a very
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