INFINITY BUSINESS SCHOOL BUSINESS STRATEGY GROUP PROJECT REPORT ON FAST FOOD INDUSTRY IN INDIA

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    INFINITY BUSINESS SCHOOL

    BUSINESS STRATEGY GROUPPROJECT REPORT ON

    FAST FOOD INDUSTRY IN INDIA

    Submitted To: Rear Admiral Dr Rakesh Chopra

    Submitted On: 19th March, 2010

    Submitted By: Group No:6

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    Roll No. Name806 Adnan Abbas815 Dhruv Mittal823 Jasveen Kaur 824 Kajoli Gupta831 Misal Anand839 Prerna Mehta847 Rohan Saraswat

    855 Shanu Kukreti863 Tushar Kashyap871 Kashish Hans

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    DECLARATION

    We declare that the work contained in this report is the result ofour own efforts. We have not copied it from any other printedsource.

    Submitted by:Group No: 6

    Submitted to:

    Rear Admiral Dr Rakesh Chopra

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    AKNOWLEDGEMENT

    We must express our deep sense of gratitude to Rear AdmiralDr Rakesh Chopra for his kind, liberal support as well of hisvaluable advice and directions, without which it would havebeen impossible for us to prepare this report.

    We also express our indebtness to Mr. Umesh Kumar,Assistant Restaurant Manager, Pizza Hut and Mr. for givingtheir valuable time to answer our questions.

    Submitted by:

    Group No :6

    3

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    TABLE OF CONTENTS

    SlNo. TOPIC PAGE

    1 Declaration 3

    2 Acknowledgemnt 4

    3 Introduction to fast food industry at large 6

    4 Company Introduction 8

    5 Product Market And Target Market 13

    6 Customer Behaviour 18

    7Firms 4Ps, Marketing Strategies, ListeningSystem 22

    8 Competition Analysis 27

    9 Firms Differentiation Strategy 33

    10 Firms Positioning Strategy 36

    11 SWOT Analysis 39

    12 Conclusion 43

    Appendix:Interesting Articles

    13 Bibliography 48

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    FAST FOOD INDUSTRY

    Introduction

    Fast food is the term given to food that can be prepared and served very quickly.While any meal with low preparation time can be considered to be fast food, typicallythe term refers to food sold in a restaurant or store with low quality preparation andserved to the customer in a packaged form fortake-out/take-away.

    Outlets may be stands or kiosks, which may provide no shelter or seating, or fastfood restaurants (also known as quick service restaurants). Franchise operationswhich are part of restaurant chains have standardized foodstuffs shipped to eachrestaurant from central locations.

    The capital requirements involved in opening up a fast food restaurant are relativelylow. Restaurants with much higher sit-in ratios, where customers tend to sit and have

    their orders brought to them in a seemingly more upscale atmosphere may be knownin some areas as fast casual restaurants.

    History

    The concept of ready-cooked food for sale is closely connected with urbandevelopment. InAncient Rome cities had street stands that sold bread and wine. Afixture of East Asian cities is the noodle shop. Flatbread and falafel are todayubiquitous in the Middle East. Popular Indian fast food dishes include vada pav,

    panipuri and dahi vada. In the French-speaking nations of West Africa, roadside

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    http://en.wikipedia.org/wiki/Restauranthttp://en.wikipedia.org/wiki/Take-outhttp://en.wikipedia.org/wiki/Kioskhttp://en.wikipedia.org/wiki/Fast_food_restauranthttp://en.wikipedia.org/wiki/Fast_food_restauranthttp://en.wikipedia.org/wiki/Franchisinghttp://en.wikipedia.org/wiki/Chain_storehttp://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Fast_casual_restauranthttp://en.wikipedia.org/wiki/Ancient_Romehttp://en.wikipedia.org/wiki/East_Asiahttp://en.wikipedia.org/wiki/Noodlehttp://en.wikipedia.org/wiki/Flatbreadhttp://en.wikipedia.org/wiki/Falafelhttp://en.wikipedia.org/wiki/Middle_Easthttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Vada_pavhttp://en.wikipedia.org/wiki/Panipurihttp://en.wikipedia.org/wiki/Dahi_vadahttp://en.wikipedia.org/wiki/West_Africahttp://en.wikipedia.org/wiki/Street_foodhttp://en.wikipedia.org/wiki/Restauranthttp://en.wikipedia.org/wiki/Take-outhttp://en.wikipedia.org/wiki/Kioskhttp://en.wikipedia.org/wiki/Fast_food_restauranthttp://en.wikipedia.org/wiki/Fast_food_restauranthttp://en.wikipedia.org/wiki/Franchisinghttp://en.wikipedia.org/wiki/Chain_storehttp://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Fast_casual_restauranthttp://en.wikipedia.org/wiki/Ancient_Romehttp://en.wikipedia.org/wiki/East_Asiahttp://en.wikipedia.org/wiki/Noodlehttp://en.wikipedia.org/wiki/Flatbreadhttp://en.wikipedia.org/wiki/Falafelhttp://en.wikipedia.org/wiki/Middle_Easthttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Vada_pavhttp://en.wikipedia.org/wiki/Panipurihttp://en.wikipedia.org/wiki/Dahi_vadahttp://en.wikipedia.org/wiki/West_Africahttp://en.wikipedia.org/wiki/Street_food
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    stands in and around the larger cities continue to sellas they have done forgenerationsa range of ready-to-eat, char-grilled meat sticks known locally asbrochettes.

    The Start of Fast Food CultureThe concept of fast food pops up during 1920s.The 1950s first witnessed their rapidproliferation. Several factors that contributed to this explosive growth in 50s were:(1) Americas love affair with the automobiles.(2) The construction of a major new highway system.(3) The development of sub-urban communities.(4) The baby boom subsequent to world war second.

    On the go

    Fast food outlets are take-away or take-out providers, often with a "drive-through"service which allows customers to order and pick up food from their cars; but mostalso have a seating area in which customers can eat the food on the premises.People eat there more than five times a week and often, one or more of those fivetimes is at a fast food restaurant.

    Nearly from its inception, fast food has been designed to be eaten "on the go", oftendoes not require traditional cutlery, and is eaten as a finger food. Common menuitems at fast food outlets include fish and chips, sandwiches, pitas, hamburgers, friedchicken, French fries, chicken nuggets, tacos, pizza, hot dogs, and ice cream,

    although many fast food restaurants offer "slower" foods like chili,mashed potatoes,and salads.

    Variants

    Although fast food often brings to mind traditional American fast food such ashamburgers and fries, there are many other forms of fast food that enjoy widespreadpopularity in the West.

    Chinese takeaways/takeout restaurants are particularly popular. They normally offer

    a wide variety ofAsian food which has normally been fried. Most options are someform of noodles, rice, ormeat.

    Sushi has seen rapidly rising popularity in recent times. A form of fast food created inJapan. Pizza is a common fast food category in the United States, with chains suchas Domino's Pizza, Sbarro and Pizza Hut.

    Fish and chip shops are a form of fast food popular in the United Kingdom, Australiaand New Zealand. A Dutch fast food meal often consists of a portion of French fries .

    Business

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    http://en.wikipedia.org/wiki/Street_foodhttp://en.wikipedia.org/wiki/Brochettehttp://en.wikipedia.org/wiki/Cutleryhttp://en.wikipedia.org/wiki/Finger_foodhttp://en.wikipedia.org/wiki/Pitahttp://en.wikipedia.org/wiki/Fried_chickenhttp://en.wikipedia.org/wiki/Fried_chickenhttp://en.wikipedia.org/wiki/Chicken_nuggethttp://en.wikipedia.org/wiki/Tacohttp://en.wikipedia.org/wiki/Ice_creamhttp://en.wikipedia.org/wiki/Chili_con_carnehttp://en.wikipedia.org/wiki/Mashed_potatohttp://en.wikipedia.org/wiki/Saladhttp://en.wikipedia.org/wiki/Western_worldhttp://en.wikipedia.org/wiki/Asian_cuisinehttp://en.wikipedia.org/wiki/Ricehttp://en.wikipedia.org/wiki/Meathttp://en.wikipedia.org/wiki/Sushihttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Domino's_Pizzahttp://en.wikipedia.org/wiki/Sbarrohttp://en.wikipedia.org/wiki/Pizza_Huthttp://en.wikipedia.org/wiki/New_Zealandhttp://en.wikipedia.org/wiki/Street_foodhttp://en.wikipedia.org/wiki/Brochettehttp://en.wikipedia.org/wiki/Cutleryhttp://en.wikipedia.org/wiki/Finger_foodhttp://en.wikipedia.org/wiki/Pitahttp://en.wikipedia.org/wiki/Fried_chickenhttp://en.wikipedia.org/wiki/Fried_chickenhttp://en.wikipedia.org/wiki/Chicken_nuggethttp://en.wikipedia.org/wiki/Tacohttp://en.wikipedia.org/wiki/Ice_creamhttp://en.wikipedia.org/wiki/Chili_con_carnehttp://en.wikipedia.org/wiki/Mashed_potatohttp://en.wikipedia.org/wiki/Saladhttp://en.wikipedia.org/wiki/Western_worldhttp://en.wikipedia.org/wiki/Asian_cuisinehttp://en.wikipedia.org/wiki/Ricehttp://en.wikipedia.org/wiki/Meathttp://en.wikipedia.org/wiki/Sushihttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Domino's_Pizzahttp://en.wikipedia.org/wiki/Sbarrohttp://en.wikipedia.org/wiki/Pizza_Huthttp://en.wikipedia.org/wiki/New_Zealand
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    In the United States alone, consumers spent about US$110 billion on fast food in2000 (which increased from US$6 billion in 1970). The National RestaurantAssociation forecasted that fast food restaurants in the U.S. would reach US$142billion in sales. In comparison, the full-service restaurant segment of the foodindustry is expected to generate $173 billion in sales.

    Jobs and labor issues

    Today, more than 10 million workers are employed in the areas of food preparationand food servicing including fast food in the world.

    Employees are the backbone of the fast food industry. Proper training is crucial tothe orderly and quick service customers expect. Yet, employee turnovercan be ashigh as 200% per year. With such a turnover, owner-operators of franchise and non-franchise restaurants have the daunting task of constantly training an entirely newworkforce. Policies and procedures need to be explained to each new employee.

    Globalization

    The global fast food market grew by 4.8% and reached a value of 102.4 billion and avolume of 80.3 billion transactions. In India alone the fast food industry is growing by40% a year. McDonald's is located in 120 countries and on 6 continents andoperates over 31,000 restaurants worldwide.

    KFC is located in 25 countries. Subway has 29,186 restaurants located in 86countries, Pizza Hut is located in 26 countries, Taco Bell has 278 restaurants located

    in 12 countries besides the United States.

    Health issue

    Trans fats which are commonly found in fast food have been shown in many tests tohave a negative health effect on the body.

    The fast food consumption has been shown to increase calorie intake, promoteweight gain, and elevate risk for diabetes. The Centers for Disease Control andPrevention ranked obesity as the number one health threat for Americans in 2004. Itis the second leading cause of preventable death in the United States and results in400,000 deaths each year.

    FAST FOOD INDUSTRY IN INDIA

    INDIA EMERGING MARKET FOR GLOBAL PLAYERS

    The percentage share held by foodservice of total consumer expenditure on food hasincreased from a very low base to stand at 2.6% in 2001. Eating at home remains very much

    ingrained in Indian culture and changes in eating habits are very slow moving with barriers toeating out entrenched in certain sectors of Indian society.. The growth in nuclear families,

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    http://en.wikipedia.org/wiki/National_Restaurant_Associationhttp://en.wikipedia.org/wiki/National_Restaurant_Associationhttp://en.wikipedia.org/wiki/Turnover_(employment)http://en.wikipedia.org/wiki/KFChttp://en.wikipedia.org/wiki/Subway_(restaurant)http://en.wikipedia.org/wiki/Taco_Bellhttp://en.wikipedia.org/wiki/Weight_gainhttp://en.wikipedia.org/wiki/Centers_for_Disease_Control_and_Preventionhttp://en.wikipedia.org/wiki/Centers_for_Disease_Control_and_Preventionhttp://en.wikipedia.org/wiki/National_Restaurant_Associationhttp://en.wikipedia.org/wiki/National_Restaurant_Associationhttp://en.wikipedia.org/wiki/Turnover_(employment)http://en.wikipedia.org/wiki/KFChttp://en.wikipedia.org/wiki/Subway_(restaurant)http://en.wikipedia.org/wiki/Taco_Bellhttp://en.wikipedia.org/wiki/Weight_gainhttp://en.wikipedia.org/wiki/Centers_for_Disease_Control_and_Preventionhttp://en.wikipedia.org/wiki/Centers_for_Disease_Control_and_Prevention
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    particularly in urban India, exposure to global media and Western cuisine and an increasingnumber of women joining the workforce have had an impact on eating out trends.

    FACTS AND FIGURESFast food is one of the worlds largest growing food type. Indias fast food industry is growingby 40% a year and is expected to generate a billion dollars in sales.The multinational

    segment of Indian fast food industry is up to Rs. 6 billion, a figure expected to zoom to Rs.70billion. In last 6 years, foreign investment in this sector stood at Rs. 3600 million which isabout one-fourth of total investment made in this sector. Because of the availability of rawmaterial for fast food, Global chains are flooding into the country.

    MARKET SIZE & MAJOR PLAYERSa) Dominated by McDonalds having as many as 75 outlets.b) Dominos pizza is present in around 100 locations.c) Pizza hut is also catching up and it has planned to establish 125 outlets at the

    end of 2005.

    d) Subways have established around 40 outlets.e) Nirulas is established at Delhi and Noida only. However, it claims to cater50,000 guests every day.

    Major players in fast food are: MCDONALDS

    KFC

    PIZZA HUT

    DOMINOS PIZZA

    SUBWAY

    The main reason behind the success of the multinational chains is their expertise inproduct development, sourcing practices, quality standards, service levels andstandardized operating procedures in their restaurants, a strength that they havedeveloped over years of experience around the world. The home grown chains have inthe past few years of competition with the MNCs, learnt a few things but there is still a lotof scope for improvement.

    REASON FOR EMERGENCE

    Gender Roles: gender roles are now changing. Females have started working outside.

    So, they have no time for their home and cooking food. Fast food is an easy way outbecause these can be prepared easily.Customer Sophistication and Confidence: consumers are becoming moresophisticated now. They do not want to prepare food and spend their time and energy inhouse hold works. They are building their confidence more on ready to eat and easy toserve kind of foodsPaucity of Time: people have no time for cooking. Because of emergence of workingwomen and also number of other entertainment items. Most of the time either peoplework or want to enjoy with their family.Double Income Group: emergence of double income group leads to increase indisposable income. Now people have more disposable income so they can spend easily

    in fast food and other activities.

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    Working Women: working women have no time for cooking, and if they have then alsothey dont want to cook. Because they want to come out of the traditionally definedgender roles. They do not want to confine themselves to household work and upbringingof childrens.Large population: India being a second largest country in terms of population

    possesses large potential market for all the products/services. This results into entry oflarge number of fast food players in the country.Relaxation in rules and regulations: with the economic liberalization of 1991, most ofthe tariff and non tariff barriers from the Indian boundaries are either removed orminimized. This helped significantly the MNCs to enter in the country.Menu diversification: increase in consumption of pizzas, burgers and other type of fastfoods.

    CHALLENGES FOR THE INDUSTRYSocial and cultural implications of Indians switching to western breakfast food:Generally, Hindus avoid all foods that are believed to inhibit physical and spiritual

    development. Eating meat is not explicitly prohibited, but many Hindus are vegetarianbecause they adhere to the concept of ahimsa. Those seeking spiritual unity may avoidgarlic and onions. The concept of purity influences Hindu food practices. Products fromcows (e.g., milk, yogurt, ghee-clarified butter) are considered pure. Pure foods canimprove the purity of impure foods when they are prepared together. Some foods, suchas beef or alcohol, are innately polluted and can never be made pure. But now, Indiansare switching to fast food that contain all those things that are considered impure oragainst there beliefs. Some traditional and fundamentalist are against this transformationof food habit and number of times they provoke their counterparts to revolt against suchfoods. And that is what happened when McDonalds decided to enter the complexity ofIndian business landscape, counting only on its fast food global formula, without any

    apparent previous cultural training.Emphasis on the usage of bio-degradable products: Glasses, silverware, plates andcloth napkins are never provided with fast food. Instead, paper plates and napkins,polyurethane containers, plastic cups and tableware, drinking cartons or PET(polyethylene terephthalate) bottles are used, and these are all disposable. Many ofthese items are tossed in the garbage instead of being recycled, or even worse, merelythrown on the ground. This burdens nature unnecessarily and squanders raw materials.In order to reduce soil and water pollution, government now emphasis more on theusage of bio-degradable products.Retrenchment of employees: Most of new industries will be capital intensive and maydrive local competitors, which have more workers, out of business.Profit repatriation: Repatriation of profits is another area of concern for Indian economy.As when multinational enters the any countries, people and government hope that it willincrease the employment rate and result in economic growth. However, with themultinational operation, host country experiences these benefits for a short time period.In long run neither employment increases (because of capital intensive nature of MNCs)nor it increases the GDP or GNP because whatever MNCs earn they repatriate thatprofit back to their home country.

    PROBLEMS OF INDUSTRYEnvironmental friendly products cost high: government is legislating laws in order tokeep check on the fast food industry and it is emphasizing more on the usage of bio-degradable and environment friendly products. But associated with this issue is theproblem that fast food player faces - the cost associated with the environment friendly

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    product. They cost much higher than the normal products that companies uses forpackaging or wrapping their products.

    Balance between societal expectation and companies economic objectives: To balancea societys expectation regarding environment with the economic burden of protectingthe environment. Thus, one can see that one side pushes for higher standards and other

    side tries to beat the standard back, thereby making it a arm wrestling and mind bogglingexercise.

    Health related issues: obesity:I. Studies have shown that a typical fast food has very high density and food with

    high density causes people to eat more then they usually need. \II. Low calories food: Emphasis is now more on low calorie food. In this line

    McDonald has a plan to introduce all white meat chicken Mcnuugget with less fatand fewer calories.

    TRENDS IN INDIAN MARKETMarketing to children's: fast food outlets in India target childrens as their majorcustomers. They introduce varieties of things that will attract the childrens attentionand by targeting childrens they automatically target their parents because Childrensare always accompanied by their parents.Low level customer commitment: Because of the large number of food retail outletsand also because of the tendency of customer to switch from one product to other,this industry faces low level customer commitment.

    Value added technology services: There is continuous improvement in thetechnology as far as fast food market in India is considered. The reason behind thatis food is a perishable item and in order to ensure that it remain fresh for a longerperiod of time. Earlier, Indian people prefer eating at home but now with the changein trend there is also need for improvement and up gradation of technology in foodsector.

    Attracting different segments of the market: Fast food outlets are introducing varietiesof products in order to cater the demands of each and every segment of the market.They are introducing all categories of product so that people of all age, sex, class,income group etc can come and become a customer of their food line.

    The success of fast foods arose from the changes in our living conditions:1. Many women or both parents now work2. There are increased numbers of single-parent households3. Long distances to school and work are common4. Usually, lunch times are short5. There's often not enough time or opportunity to shop carefully for groceries, or

    to cook and eat with one's family. Especially on weekdays, fast food outsidethe home is the only solution.

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    COMPANYINTRODUCTIONMC Donalds

    Introduction:

    McDonald's is the world's leading food service retailer with more than35,000 restaurants in 119 countries serving 46 million customerseach day. McDonald's is one of the world's most well-known andvaluable brands and holds a leading share in the globally brandedquick service restaurant segment of the informal eating-out marketin virtually every country in which we do business.McDonald's is the

    leading global foodservice retailer with more than 31,000 local restaurantsserving more than 58 million people in 118 countries each day. More than 75%of McDonald's restaurants worldwide are owned and operated by independentlocal men and women.

    The strong foundation that he built continues today with McDonald's vision and thecommitment of our talented executives to keep the shine on McDonald'sArches for years to come. To read more about McDonald's history, vision andexecutives, click on their links in the left menu.

    We drive our business momentum by focusing on what matters most to customers.

    Our owner/operators, suppliers and employees work together to meet customerneeds in uniquely McDonald's ways. The powerful combination ofentrepreneurial spirit and System wide alignment around our Plan to Winenables us to execute the best ideas with both large-scale efficiency and localflair.

    Products

    McDonald's predominantly sells hamburgers, various types ofchickensandwichesand products, French fries, soft drinks, breakfast items, and desserts. In

    most markets, McDonald's offers salads and vegetarian items, wraps andother localized fare. Portugal is the only country with McDonald's restaurants

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    http://en.wikipedia.org/wiki/Hamburgershttp://en.wikipedia.org/wiki/Chickenhttp://en.wikipedia.org/wiki/Sandwicheshttp://en.wikipedia.org/wiki/French_frieshttp://en.wikipedia.org/wiki/Soft_drinkshttp://en.wikipedia.org/wiki/Breakfasthttp://en.wikipedia.org/wiki/Dessertshttp://en.wikipedia.org/wiki/Saladshttp://en.wikipedia.org/wiki/Vegetarianhttp://en.wikipedia.org/wiki/Wrap_(food)http://en.wikipedia.org/wiki/Hamburgershttp://en.wikipedia.org/wiki/Chickenhttp://en.wikipedia.org/wiki/Sandwicheshttp://en.wikipedia.org/wiki/French_frieshttp://en.wikipedia.org/wiki/Soft_drinkshttp://en.wikipedia.org/wiki/Breakfasthttp://en.wikipedia.org/wiki/Dessertshttp://en.wikipedia.org/wiki/Saladshttp://en.wikipedia.org/wiki/Vegetarianhttp://en.wikipedia.org/wiki/Wrap_(food)
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    serving soup. This local deviation from the standard menu is a characteristic forwhich the chain is particularly known, and one which is employed either toabide by regional food taboos (such as the religious prohibition of beefconsumption in India) or to make available foods with which the regionalmarket is more familiar (such as the sale of McRice in Indonesia).

    Advertising

    McDonald's has for decades maintained an extensive advertising campaign. Inaddition to the usual media (television, radio, and newspaper), the company makessignificant use of billboards and signage, sponsors sporting events ranging from

    Little League to the Olympic Games, and makes coolers of orange drink with theirlogo available for local events of all kinds. Nonetheless, television has always playeda central role in the company's advertising strategy.

    To date, McDonald's has used 23 different slogans in United States advertising, aswell as a few other slogans for select countries and regions. At times, it has run intotrouble with its campaigns.

    It operates via its restaurants and franchises to local business players(about 70% of the world's McDonald's are franchised [1].) . Thecorporations' revenues come from the rent, royalties and fees paid bythese franchisees, as well as sales in company-operated restaurants.McDonald's revenues grew 27% over the three years ending in 2007 to$22.8 billion, and 9% growth in operating income to $3.9 billion.

    McDonald's makes money by operating its own restaurants andfranchising to third parties. Of the 31377 McDonalds restaurants aroundthe world, 20505 (65%) are operated by franchisees, 3966 (13%) are

    operated by affiliates, and 6906 (22%) are company-operated. In the lastfew years, McDonalds has sought to enfranchise more and morerestaurants. For example, in 2007, it sold its businesses in Brazil,

    Argentina, Mexico, Puerto Rico, Venezuela and 13 other LatinAmerican/Caribbean countries to one franchisee [3]. Steering in thisdirection has resulted in greater cash flow (which increased by 12% in2007)[4], reduced spending on operations, and less corporate exposureto rising commodities prices.

    Both strategies have paid dividends- despite its size, sales have grownby a third since 2003[2]. Domestically, McDonald's continues to perform12

    http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indonesiahttp://en.wikipedia.org/wiki/Little_Leaguehttp://en.wikipedia.org/wiki/Olympic_Gameshttp://en.wikipedia.org/wiki/Orange_drinkhttp://en.wikipedia.org/wiki/United_Stateshttp://www.wikinvest.com/stock/McDonald's_(MCD)#_note-0http://www.wikinvest.com/stock/McDonald's_(MCD)?ref=topnav#_note-2http://www.wikinvest.com/stock/McDonald's_(MCD)?ref=topnav#_note-3http://www.wikinvest.com/stock/McDonald's_(MCD)?ref=topnav#_note-1http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indonesiahttp://en.wikipedia.org/wiki/Little_Leaguehttp://en.wikipedia.org/wiki/Olympic_Gameshttp://en.wikipedia.org/wiki/Orange_drinkhttp://en.wikipedia.org/wiki/United_Stateshttp://www.wikinvest.com/stock/McDonald's_(MCD)#_note-0http://www.wikinvest.com/stock/McDonald's_(MCD)?ref=topnav#_note-2http://www.wikinvest.com/stock/McDonald's_(MCD)?ref=topnav#_note-3http://www.wikinvest.com/stock/McDonald's_(MCD)?ref=topnav#_note-1
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    strongly despite a pullback in consumer spending and is even benefitingas consumers trade-down from more expensive eating options. At thesame time, international operations are driving profit growth. A growingglobal middle class, particularly in emerging markets like China, India

    and Latin America, is a massive opportunity for McDonald's. McDonald'saggressive efforts to expand its global presence- most notably in 2008Beijing Summer Olympics- have produced strong comparable sales andprofit growth.

    The company experienced a dramatic turnaround in 2003, driven by atwo-pronged strategy. In the U.S., McDonald's focused on increasingsales at existing locations by renovating stores, expanding menu optionsand extending store hours. Internationally, McDonald's expandedaggressively, opting to franchise rather than operate at its new locationswhich provided new income with little overhead.

    Keeping in mind the obesity trends in western nations and in the face ofcriticism over the healthiness of its products, The company has alsoexpanded its menu in recent decades to include alternative mealoptions, such as salads and snack wraps, in order to capitalize ongrowing consumer interest in health and wellness. McDonald's primarilysells hamburgers, cheeseburgers, chicken products, French fries,breakfast items, soft drinks, milkshakes, and desserts.

    McDonalds in India

    McDonald's, a name that instantly triggers a smile for its scrumptiousburgers, has a wide network of outlets throughout the country.McDonalds in India is classified as partnership operated by Indians. Thecompany started its operations in India in 1996. In India, it is a 50-50

    joint venture partnership between McDonalds Corporation (US) and two

    Indian businessmen Amit Jatia and Vikram Bakshi. The company hasevolved special menu in the vegetarian category to suit Indian tastesand preferences. Taking in consideration the Indian culture, it doesntoffer any beef or pork items in India.

    Vision

    To be the best and leading fast food provider around the globe

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    Mission

    McDonald's brand mission is to be our customers' favorite place and wayto eat, and improve our operations to provide the most delicious fastfood that meet our customers' expectations.

    Values

    "Q.S.C. & V.". Provide good quality, services to customer. Have acleanliness environment when customer enjoys their meal. The value offood product makes every customer is smiling.

    The Five Forces Framework

    The Threat of Entrants : Large established companies with strongbrand identities such as McDonalds BKC, YUM, and WEN do make itmore difficult to enter and succeed within the marketplace; new entrantsfind that they are faced with price competition from existing chainrestaurants.

    Bargaining Power of Buyers: Low bargaining power of buyers.

    Bargaining power of suppliers: Bargaining power of suppliers withinthe fast food industry would be relatively small, unless the mainingredient of the product is not readily available.

    Threat of Substitutes: This could range from a competitive fast foodrestaurant to family restaurant to a home cooked meal.

    Competitive Rivalry: The strength of competition in this industry isvery high; the main rivals are BKC, YUM, and WEN. They compete withinternational, national, regional, local, retailers of food products(restaurants, quick service, pizza, coffee shops, and supermarkets).

    PESTEL Framework:

    PoliticaL:

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    The international operations of McDonalds are highly influenced by the individual statepolicies enforced by each government

    Economic:

    McDonalds has the tendency to experience hardship in instances where theeconomy of the respective states is hit by inflation and changes in the exchangerates.

    Market leader.

    Very high target market.

    Low cost and more incomes.

    The rate at which the economy of that particular state grows determines the

    purchasing power of the consumers in that country.

    Working within many social groups.

    Increase employments.

    Technological

    Advanced technology development. Quality standards.

    Environmental:

    Quality packing.

    Local manufacture using foreign supplies.

    LEGAL: Legislation for product.

    Sustained logo.

    SWOT Matrix

    Swot AnalysisStrengths McDonald's has been a thriving business since 1955 and 20 of the top 50corporate staff employees started as a restaurant level employee. In addition,67,000 McDonalds restaurant managers and assistant managers were promotedfrom restaurant staff. Fortune Magazine 2005 listed McDonald's as the "BestPlace to Work for Minorities." McDonalds invests more than $1 billion annually in

    training its staff, and every year more than 250,000 employees graduate fromMcDonald's training facility, Hamburger University.

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    Social:

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    The business is ranked number one in Fortune Magazine's 2008 list of mostadmired food service companies.

    One of the world's most recognizable logos (the Golden Arches) and spokescharacter (Ronald McDonald the clown). According to the Packard Children's

    Hospital's Center for Healthy Weight children age 3 to 5 were given food inthe McDonalds packaging and then given the same food without thepackaging, and they preferred the food in the McDonald's packaging everysingle time.

    McDonalds is a community oriented, socially responsible company. They runRonald McDonald House facilities, which provide room and board, food andsibling support at a cost of only $10 a day for families with children needingextensive hospital care. Ronald McDonald Houses are located in more than259 local communities worldwide, and Ronald McDonald Care Mobileprograms offers cost effective medical, dental and education services to

    children. They also sponsor Olympic athletes.

    They are a global company operating more than 23,500 restaurants in 109countries. By being spread out in different regions, this gives them the abilityto weather economic fluctuations which are localized by country. They canalso operate effectively in an economic downturn due to the social need toseek out comfort foods.

    They successfully and easily adapt their global restaurants to appeal to thecultural differences. For example, they serve lamb burgers in India and in theMiddle East, they provide separate entrances for families and single women.

    Approximately 85% of McDonald's restaurant businesses world-wide areowned and operated by franchisees. All franchisees are independent, full-timeoperators and McDonald's was named Entrepreneur's number-one franchisein 1997. They have global locations in all major airports, and cities, along thehighways, tourist locations, theme parks and inside Wal-Mart.

    They have an efficient, assembly line style of food preparation. In additionthey have a systemization and duplication of all their food prep processes inevery restaurant.

    McDonald's uses only 100% pure USDA inspected beef, no fillers or additives.Additionally the produce is farm fresh. McDonald's serves 100% farm raisedchicken no fillers or additives and only grade-A eggs. McDonald's foods arepurchased from only certified and inspected suppliers. McDonalds worksclosely with ranchers, growers and suppliers to ensure food quality andfreshness.

    McDonalds only serves name brand processed items such as Dannon Yogurt,Kraft Cheese, Nestle Chocolate, Dasani Water, Newman's Own SaladDressings, Heinz Ketchup, Minute Maid Juice.

    McDonald's takes food safety very seriously. More than 2000 inspectionschecks are performed at every stage of the food process. McDonalds are

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    required to run through 72 safety protocols every day to ensure the food ismaintained in a clean contaminate free environment.

    . McDonald's was the first restaurant of its type to provide consumers withnutrition information. Nutrition information is printed on all packaging and

    more recently added to the McDonald's Internet site. McDonalds offerssalads, fruit, roasted chicken, bottled water and other low fat and calorieconscious alternatives.

    Weaknesses Their test marketing for pizza failed to yield a substantial product. Leaving

    them much less able to compete with fast food pizza chains. High employee turnover in their restaurants leads to more money being spent

    on training.

    They have yet to capitalize on the trend towards organic foods.

    McDonald's have problems with fluctuations in operating and net profits whichultimately impact investor relations. Operating profit was $3,984 million (2005)$4,433 million (2006) and $3,879 million (2007). Net profits were $2,602million (2005), $3,544 million (2006) and $2,395 million (2007).

    Opportunities In today's health conscious societies the introduction of a healthy hamburger

    is a great opportunity. They would be the first QSR (Quick ServiceRestaurant) to have FDA approval on marketing a low fat low caloriehamburger with low calorie combo alternatives. Currently McDonald's and itscompetition health choice items do not include hamburgers.

    They have industrial, Formica restaurant settings; they could provide moreupscale restaurant settings, like the one they have in New York City onBroadway, to appeal to a more upscale target market.

    Provide optional allergen free food items, such as gluten free and peanut free.

    In 2008 the business directed efforts at the breakfast, chicken, beverage andconvenience categories. For example, hot specialist coffees not only securesales, but also mean that restaurants get increasing numbers of customer

    visits. In 2009 McDonald's saw the full benefits of a venture into beverages.

    Threats They are a benchmark for creating "cradle to grave" marketing. They entice

    children as young as one year old into their restaurants with special meals,toys, playgrounds and popular movie character tie-ins. Children grow upeating and enjoying McDonalds and then continue into adulthood. They havebeen criticized by many parent advocate groups for their marketing practicestowards children which are seen as marginally ethical.

    They have been sued multiple times for having "unhealthy" food, allegedlywith addictive additives, contributing to the obesity epidemic in America. In

    2004, Michael Spulock filmed the documentary Super Size Me, where hewent on an all McDonalds diet for 30 days and wound up getting cirrhosis of

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    the liver. This documentary was a direct attack on the QSR industry as awhole and blamed them for America's obesity epidemic. Due in part to thedocumentary, McDonalds no longer pushes the super size option at the divethru window.

    Any contamination of the food supply, especially e-coli.

    Major competitors, like Burger King, Starbucks, Taco Bell, Wendy's, KFC andany mid-range sit-down restaurants.

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    Strengths Weaknesses

    1. Strong brand name, image andreputation.

    2. Large market share.

    3. Strong global presence.

    4. Specialized training formanagers known as theHamburger University.

    5. McDonalds Plan to Win focuses

    on people, products, place,price and promotion.

    6. Strong financial performanceand position.

    7. Introduction of new products.

    8. Customer focus (centric).

    9. Strong performance in theglobal marketplace.

    1. Unhealthy food image.

    2. High Staff Turnoverincluding Top management.

    3. Customer losses due tofierce competition.

    4. Legal actions related tohealth issues; use of transfat & beef oil.

    5. Uses HCFC-22 to makepolystyrene that iscontributing to ozonedepletion.

    6. Ignoring breakfast fromthe menu.

    Opportunities S-O Strategies W-O Strategies

    1. Growing health trendsamong consumers.

    2. Globalization, expansion

    in other countries(especially in China &India).

    3. Diversification andacquisition of other quick-service restaurants.

    4. Growth of the fast-foodindustry.

    5. Worldwide deregulation.6. Low cost menu that will

    attract the customers.7. Freebies and discounts.

    1. Focus on Plan to win to attractcustomers and expansion in othercountries (S5, O2, O6).

    2. Expansion in market share by moreinvestments in Asia (S2, O2).

    1. Minimize customers lossesby provide low cost menuand discounts (W3, O6,O7).

    Threats S-T Strategies W-T Strategies

    1. Health professionals andconsumer activistsaccuse McDonald's of

    contributing to thecountrys health issue ofhigh cholesterol, heartattacks, diabetes, andobesity.

    2. The relationship betweencorporate levelMcDonald's and itsfranchise dealers.

    1. More control on franchisedealers to maintain McDonald'sreputation and quality (S1, T2).

    2. Provide new product and keepinnovation (S7, T3).

    1. Applying 0 grams Trans fatin all worldwide McDonald's(W1, W4, O1).

    2. Transfer from HCFC-22 toHFC (hydrofluorocarbon)-free (W5, T6)

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    Grand Strategy Matrix

    The Boston Consulting Group (BCG) Matrix

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    Quadrant II Quadrant I

    Quadrant IVQuadrant III

    Rapid Market Growth

    Strong

    Competitiv

    e

    Position

    Weak

    Competitiv

    e

    Position

    Slow Market Growth

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    MCDONALDS

    PRODUCT MARKET & TARGETMARKET

    Product Market

    Is a market for a good or produced service and is a mechanism that

    allows people easily to buy and sell products. Services are oftenincluded in the scope of nth term.

    The product/service market consists of all types of consumers; however,groups of consumers have similar needs and wants. Beginning withmarket research; identifying your groups with shared characteristics;combining these groups into larger markets; and selecting your targetaudience which includes your target market. Before we create aneffective advertising message, it is important to know who we are talkingto.

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    Question

    Marks

    Cash Cows Dogs

    Relative Market Share

    Position

    Industry

    Sales

    Growth

    Rate

    StarsMCD

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    Target Market

    Is the market segment which a particular product is marketed to. It is

    often defined by age, gender and/or socio-economic grouping. A targetmarket is usually found after segmenting and analyzing the wholemarket. Target market selection depends on- 1. Number of competitorsin the market 2.The preference/choice of customers 3.value attached tothe product which company wants to convey to the market

    The process of determining who your target audience is begins withsegmenting the consumer market; finding the right niche. This processbegins with identifying groups of people with certain sharedcharacteristics within a broad market. The categories of characteristicsare geographic, demographic, behavioristic, and psychographic. Thencombine these groups into larger market segments according to theirmutual interest in the products utility or benefit. From these segments,choose your target market. Your target audience includes your targetmarket. The target market in the previous McDonalds example is theperson(s) who makes the purchase. Target audience is larger than thetarget market.Segmenting the business market is just as complex as segmenting theconsumer market. Business markets are identified by using many of the

    same variables used to identify consumer markets. Additional variablesused are business purchasing procedures, SIC Code, or by marketconcentration.In order to create an effective advertising message, it is important toknow who your target audience is. The target audience includes the end-user, the person who makes the purchase, and the one who influencesthe purchasing decision.McDonalds main target audience is made up of children and theirparents. The children influences their parents purchasing decision.

    Therefore, McDonalds advertising message is directed toward thechildren, as well as their parents.

    McDonald's target market is divided as follows:

    DEMOGRAPHICAL SEGMENTATION:

    Family McDonalds provides the comfortable and I am Lovin itenvironment for any family outing making it a place where both theadults and the children can sit together and a enjoy a Happy Meal.

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    Gender Both working men and women equally find it a place wherethey can stop to pick a quick grab which is both economical andconvenient at the same time.

    Age Kids, working professionals and elderly people

    Income Targets the middle class income group with its low priced mealcombos.

    GEOGRAGHIC SEGMENTATION

    Is a market segmentation strategy whereby the intended audience for agiven product is divided according to geographic units, such as nations,states, regions, counties, cities, or neighborhoods. Earlier McDonalds

    operated only in the US and then recognizing opportunitiesinternationally expanded its network to a number of countries.

    McDonald's is expanding by targeting new customers. When we think ofthis fast-food restaurant chain, the image that comes to our mind istypically a family restaurant with lots of screaming kids running around.Ronald McDonald, the company clown, Happy Meals and playgrounds inthe parking lot. The truth is, at first McDonald's target customers werechildren. But research showed that even though they had been hugely

    successful with this campaign, they were in fact missing a much largercustomer base: adults. Research proved that adults consume moreburgers than children do, so McDonald's decided to go after two newgroups of target customers: teenagers and adults. They unveiled new adcampaigns that were much slicker and sophisticated than previous ones,while at the same time promising potential new customers a burger foradults called an "Arch Deluxe." But look carefully and you will see,despite the new name, what changed here was not so much the burger,but rather to whom the burger was being sold.

    CONSUMER BEHAVIOUR ANALYSISConsumer Behaviour is the behaviourof individuals when buying goodsand services for their own use or for private consumption. It is the studyof when, why, how, where and what people do or do not buy products. Itis affected by many uncontrollable factors like social, political, economic,

    legal, technological, ecological as well as psychological factors.

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    Changes in consumer preferences

    Consumer preferences that gravitate towards more nutritional food (seeNatural & Organic Foods Consumption and Health & Wellness)

    decrease the appeal of eating at McDonalds. As these consumer trendscontinue to shift towards the mainstream, public perception ofMcDonald's becomes increasingly negative. These changes may climaxin lawsuits or media publications like Super Size Me, which criticizesMcDonalds products for causing obesity, and Fast Food Nation, whichdecries McDonald's business practices. Since McDonald's is the mostrecognized brand name in the fast food industry, these negative publicityevents have widespread impact on its brand equity. Furthermore,because there are many alternatives to fast food (such as cheap dine-inrestaurants, street vendors and convenience stores), the corporation'ssales depend on its ability to maintain its brand name and attract newcustomers. The introduction of salads and public nutrition campaigns areexamples of McDonald's efforts to adapt its business model to changingtrends in the market.

    Firms 4Ps &Marketing Strategies,

    A marketing strategy blends the elements of the marketing mix, alsoknown as the four Ps (product, price, placement, promotion). Thepromotion element involves communication, and one type ofcommunication is advertising. The advertising strategy combines theelements of a creative mix. This mix includes the target audience,product concept, communications media, and the advertising message.

    Product: Value-priced, fast-serviced mealPrice: Value-pricing (offering just the right combination of quality andgood service at a fair price)Place: Strategic location of most Mc Donald fast-food outlet is found inpopulated and easily accessible areas (eg; retail areas, airports, busystreet) or most certainly locating closely where its top 3 competitors arealso doing business eg;Burger King, Subway etc..Promotion: Mc Donald has engaged in many short-term incentives forconsumer promotion through limited value menus, promotional games to

    promote old/new items on the menu e.g.; Happy Meal toys, Big Mac

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    Hockey Contest, card games etc..And McDonald focuses its ad campaigns on its overall Mc Donaldexperience and active life style.

    Business Strategies

    McDonalds has pursued two strategies since 2003. To keep up withrapidly changing consumer preferences, demographics and spendingpatterns, McDonald's has introduced new items (Premium Chickensandwiches and the Angus Beef Burger) and campaigns to create morehealthy foods (Premium Salads). The strategy reflects the philosophythat novelty, as opposed to loyalty to traditional products, is the keydeterminant of sales in the fast food industry.

    McDonalds has also focused on increasing sales at existing restaurantsinstead of opening new ones. To do so, McDonald's has remodeledmany restaurants, kept stores open longer and increased menu options.Nevertheless, new McDonalds restaurants are still opening around theworld at a rapid rate.

    COMPETITIVE ANALYSIS

    GLOBAL COMPETITION

    Although McDonald's is the clear leader of the fast food industry in termsof revenues generated and restaurants established, it faces competitionfrom other fast food chains, which are introducing new productsthemselves.

    Major direct competitors in the (hamburger-based) fast food industryinclude:

    Burger King Holdings is the second largest hamburger fast foodchain. Although more of Burger Kings restaurants are franchisedthan McDonalds restaurants, Burger King Franchise revenues trailbehind that of its competitor, mainly due to the McDonalds sizeadvantage.

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    Wendy's is the third largest hamburger fast food chain. It has alower operating margin that McDonalds, so it is likely to be morenegatively impacted during a recession.

    Yum! Brands runs Kentucky Fried Chicken, Taco Bell, Pizza Hut,Long John Silvers, and A&W All-American Food Restaurants.Currently, Yum! brands are dominating the China market, posing achallenge to McDonald's attempts to enter the market. WhileMcDonalds Corporation focuses on its flagship brand, Yum! splitsits resources among a wide variety of restaurants.

    In addition to the above competitors, McDonalds also competes withnon-hamburger-based fast food restaurants, local and national dine-inrestaurants (such as Red Robin), pizza parlors, coffee shops

    (Starbucks), street vendors, convenience stores and supermarkets.

    McDonald's is first in the Fast Food Hamburger Restaurant category forrevenue followed by Burger King and then Wendy's.

    The Fast Food Hamburger Restaurant industry is dominated byMcDonald's, who possesses approximately 90% of the market share forthis component. The FFHR is a $67 billion segment. Burger King issecond behind McDonalds with a 4% share of the segment. The QSRsegment and FFHR category are extremely competitive because each

    FFHR restaurant offers similar menus and prices.

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    DOMESTIC COMPETITION

    The percentage share held by foodservice of total consumer expenditureon food has increased from a very low base to stand at 2.6% in 2001.Eating at home remains very much ingrained in Indian culture andchanges in eating habits are very slow moving with barriers to eating outentrenched in certain sectors of Indian society.. The growth in nuclearfamilies, particularly in urban India, exposure to global media andWestern cuisine and an increasing number of women joining theworkforce have had an impact on eating out trends.

    FACTS AND FIGURES

    Fast food is one of the worlds largest growing food type. Indias fastfood industry is growing by 40% a year and is expected to generate abillion dollars in sales by 2005.The multinational segment of Indian fastfood industry is up to Rs. 6 billion, a figure expected to zoom to Rs.70billion by 2005. By 2005, the value of Indian dairy products is expectedto be Rs.1, 00,000 million. In last 6 years, foreign investment in thissector stood at Rs. 3600 million which is about one-fourth of totalinvestment made in this sector. Because of the availability of rawmaterial for fast food, Global chains are flooding into the country.

    DIFFERENTIATION STRATEGY

    Firms differentiation strategy is an approach under which a firm aims todevelop and market unique products for different customer segments.Usually employed where a firm has clear competitive advantages, andcan sustain an expensive advertising campaign. This strategy calls youto sell non standardized products to customers with unique need. Insome or the other form all the firms uses various differentiation strategyto make their products or brand standout as a provider of unique valuesof customers in comparison with its competitors.

    The firm follows various differentiation strategies to be in league in themarket as well as within its customers. They follow

    PERSONNEL DIFFERENTIATION STRATEGY

    The company is a leader in terms of the strategize training it gives

    to its personnel with its main motto being as the way we do

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    business around here it. They have a well trained crew andmanagers who have long standing commitment to QSCV i.e.Quality, Service, Cleanliness and Value.

    CHANNEL DIFFRENTIATION STRATEGY

    Companies can more effectively and efficiently design theirdistribution channels and coverage, expertise and performance.Location is one of its key advantage as its franchisees areconveniently placed and hence are easily accessible by all. Theseoutlets are owned by other independent business players. ForExample in India, Delhi NCR region the McDonalds outlets are

    spread across the entire regi.on strategically placed at key placeslike malls, metros, popular hangouts, corporate offices etc.

    IMAGE DIFFERENTIATION STRATEGY

    Companies can craft powerful and compelling images to furtherenhance their brand value. McDonalds popular Brand symbolRonald McDonald with its colourful and happy appearance givesthe promise of fun and a good time to all its customers.

    Kentucky Fried Chicken

    About the CompanyKFC Corporation, or KFC, founded and also known as Kentucky Fried Chicken, is achain of fast food restaurants based in Louisville, Kentucky. KFC is a brand andoperating segment, called a "concept" of Yum! Brands since 1997 when thatcompany was spun off from PepsiCo as Tricon Global Restaurants Inc. Therestaurants are known as Poulet Frit Kentucky or PFK in the province of Quebec inCanada. In France, however, the chain is known as KFC.

    KFC primarily sells chicken in form of pieces, wraps, salads and sandwiches. Whileits primary focus is fried chicken, KFC also offers a line of roasted chicken products,

    side dishes and desserts. Outside North America, KFC offers beef based products

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    such as hamburgers or kebabs, pork based products such as ribs and other regionalfare.

    The company was founded as Kentucky Fried Chicken by Colonel Harland Sandersin 1952, though the idea of KFC's fried chicken actually goes back to 1930. The

    company adopted the abbreviated form of its name in 1991. Starting in April 2007,the company began using its original name, Kentucky Fried Chicken, for its signage,packaging and advertisements in the United States as part of a new corporate re-branding program newer and remodeled restaurants will have the new logo andname while older stores will continue to use the 1980s signage. Additionally, Yum!Continues to use the abbreviated name freely in its advertising.

    Products

    The famous paper bucket that KFC uses for its larger sized orders of chicken and has come

    to signify the company was originally created by Wendy's restaurants founderDave Thomas.Thomas was originally a franchisee of the original Kentucky Fried Chicken and operatedseveral outlets in the Columbus, Ohio area. His reasoning behind using the paper packagingwas that it helped keep the chicken crispy by wicking away excess moisture. Thomas wasalso responsible for the creation of the famous rotating bucket sign that came to be used atmost KFC locations in the US.

    Menu itemsKFC's specialty is fried chicken served in various forms. KFC's primary product is pressure-fried pieces of chicken made with original recipe. The other chicken offering, extra crispy, ismade using a garlic marinade and double dipping the chicken in flour before deep frying in astandard industrial kitchen type machine.

    Kentucky Grilled Chicken - This marinated grilled chicken is targeted towards health-conscious customers. It features marinated breasts, thighs, drumsticks, and wings that arecoated with the Original Recipe seasonings before being grilled. It has less fat, calories, andsodium than the Original Recipe fried chicken. Introduced in April 2009.

    Discontinued productsThe Colonel's Rotisserie Gold This product was introduced in the 1990s as a response tothe Boston Market chain's roasted chicken products, and a healthier mindset of the generalpublic avoiding fried food. Purportedly made from a "lost" Col. Sanders recipe, it was sold asa whole roaster or a half bird.[28]

    Tender Roast Chicken This product was an off-shoot of 'The Colonel's Rotisserie Gold'.

    Instead of whole and half birds, customers were given quarter roasted chicken pieces. For atime, customers could request chicken "original", "Extra Tasty Crispy", or "Tender Roast".

    Smokey Chipotle Introduced in April 2008. The chicken was dipped in chipotle sauce thendoubled breaded and fried. It has been discontinued since August 2008.

    Nutritional value

    KFC formerly used partially hydrogenated oil in its fried foods. This oil containsrelatively high levels of trans fat, which increases the risk of heart disease. TheCenter for Science in the Public Interest (CSPI) filed a court case against KFC, with

    the aim of making it use other types of oils or make sure customers know aboutTrans fat content immediately before they buy food.

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    In October 2006, KFC announced that it would begin frying its chicken in trans fat-free oil.This would also apply to their potato wedges and other fried foods, however, the biscuits.

    Advertising

    One of KFC's latest advertisements is a commercial advertising its "wicked crunchbox meal". The commercial features a fictional black metal band called "Hellvetica"performing live, the lead singer then swallows fire. The commercial then shows thelead singer at a KFC eating the "wicked crunch box meal" and saying "Oh man thatis hot".

    In 2007, the original, non-acronymic Kentucky Fried Chicken name was resurrectedand began to reappear on company marketing literature and food packaging, as wellas some restaurant signage.

    KFC Business Strategy

    KFC fast-food chains are currently under the restaurant division of PepsiCoIncorporated. Some major threats include the changing attitudes of society towardhealthier eating habits, KFC has more than 9,800 outlets located in 77 countries. Inmarketing, KFC restaurants are not restricted from locating within close proximity of

    other KFC restaurants. There are two alternative strategies for KFC. The firststrategy involves keeping PepsiCo beverage division and snack foods divisiontogether, and a divestiture of PepsiCo restaurant division; selling Taco Bell, PizzaHut, and KFC.

    Present Situation

    The organization is currently structured with two divisions under PepsiCo. DavidNovak is president of KFC. John Hill is Chief Financial Officer and Colin Moore is thehead of Marketing. Peter Waller is head of franchising while Olden Lee is head ofHuman Resources. KFC is part of the two PepsiCo divisions, which are PepsiCoWorldwide Restaurants and PepsiCo Restaurants International. Both of thesedivisions of PepsiCo are based in Dallas.

    Strengths

    Strengths can be found internally in a company and can be used to the companysadvantage. The strengths identified are as follows:

    1. KFC's secret recipe.

    The secret recipe has long been a source of advertising, and allowed KFC to setitself apart. Also, KFC was the first chain to enter the fast-food industry, just before

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    McDonald's, which opened its first store a year later, and the "secret recipe" was theinitial home replacement strategy.

    2. Name recognition and reputation.

    KFC's early entrance into the fast-food industry in 1954 allowed KFC to developstrong brand name recognition and a strong foothold in the industry. The Colonel isKFC's original owner and a very recognizable figure, both in the U.S. andinternationally, in their new logo. In fact, in the fourth annual LogoValue Survey,done by The Schecter Group, the KFC logo was the only one which significantlyenhance the brand's image .

    3. PepsiCo's success with the management of fast food chains. PepsiCo acquiredPizza Hut in 1977, and Taco Bell in 1978. PepsiCo used many of the same

    promotional strategies that it has used to market soft drinks and snack food. By thetime PepsiCo bought KFC in 1986, the company already dominated two of the fourlargest and fastest-growing segments of the fast food industry.

    4. Traditional employee loyalty.

    "KFC's culture was built largely on Colonel Sanders' laid back approach tomanagement" (Wright, p.433). Before the acquisition of KFC by PepsiCo, employeesat KFC enjoyed good benefits, a pension, and could receive help with other non-income needs. This kind of "personal" human resources management makes for a

    loyal workforce.

    5. Improving operating efficiencies by reducing overhead and other operating costscan directly affect operating profit.

    Due to the strong competition in the US, the fast-food chains are reluctant to raiseprices to increase profit. Many of the chains are turning to operating efficiencies toincrease profit. For many companies, operating efficiencies are achieved throughimprovements in customer service, cleaner restaurants, faster and friendlier service,and continued high-quality products.

    Weaknesses

    Weaknesses are also found internally like strengths. Weaknesses, however, canlimit a companys potential. The weaknesses for KFC are identified as follows:

    1. The many sales of KFC lead to a confusing corporate direction.

    Between 1971 and 1986, KFC was sold three times. The first two sales, to Heublein,Inc and to R.J. Reynolds, left the company largely autonomous. It wasn't until thesale to PepsiCo in 1986 that changes in top management started to take place.These changes happened almost immediately after the sale.

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    2. KFC has a long time to market with new products.

    Because of the nature of the chicken segment of the fast food industry, innovationwas never a primary strategy for KFC. However, during the late 1980's, other fastfood chains, such as McDonald's, began to offer chicken as a

    Menu option. During this time, McDonald's had already introduced the McChickenwhile KFC was still testing its own chicken sandwich. This delay significantlyincreased the cost of developing consumer awareness for the KFC sandwich.

    3. Conflicting cultures of KFC and Pepsi Co.

    While KFC's culture was largely based on the Colonel's laid back approach tomanagement, while PepsiCo's culture is more of a "fast track" attitude. Employeesdo not have the same level of job security that they enjoyed before the PepsiCoacquisition

    Problems

    Through an analysis of the strengths, weaknesses, opportunities, and threats ofKFC, the following potential problem areas were identified:

    1. No defined target market.

    The advertising campaign of KFC does not specifically appeal to any segment. Itdoes not appear to have a consistent long-term approach. The U.S. has enormouschanges in its demographics. Single-person households have increased from 12% in1970 to 25% in 1995. With this kind of dramatic change, KFC does not have a properapproach to its target market.

    2. Health Conscious Consumers.

    There has been a trend toward an increasingly healthy diet in America. This put KFCat an extreme disadvantage due to its fried product offering.

    3. Increased Start Up Costs.

    Prime locations have increased in cost due to limited room for expansion. Newtechnology has increased efficiencies, but resulted in greater increased start upcosts. Restaurant and equipment packages range from $500,000 to $1,000,000.

    Achievements:KFC is one of the most renowned world gastronomic brand names. Kentucky FriedChicken products are currently offered in 80 countries worldwide and in more than11,000 restaurants which are visited on a daily basis by almost 8 million customers.Globally, KFC employs approximately 290,000 people, Worldwide, a new KFC

    restaurant is opened almost every day.

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    In 2004 the KFC Excellent range - three types of salad (Caesar, Garden andMandarin) obtained the prize for Worldwide Best Practice Award 2004 in thecategory of best product and best marketing campaign and its implementation in therestaurants. This prize is distributed each year by YUM RestaurantsInternational.According to the ratings for Most expensive world brands 2004

    conducted by the American weekly Business Week, KFC was positioned 54thplace; currently valued at 5.1 billion USD.

    DOMINOS

    SIZE OF THE MARKET

    Domino's Pizza is one of the biggest and fastest growing international food joints inSouth Asia. The very first Domino's Pizza outlet in India opened in Jan, 1996 at NewDelhi. Today, Domino's Pizza India has become a wide network of Pizza deliveryand food chain. There are close to 220 outlets in 42 cities of India and the brand isthe top most among the food delivery business. Dominos Pizza outlets can be seenat major locations of Delhi and NCR. Their home delivery is free with a guarantee ofThirty Minutes Nahi to Free. Although they are expert in delivering Pizzas on time,their eating joints and outlets are also good. We plan to have a total of 500 stores in75-80 cities by 2010 to 2011. It would entail an investment of Rs 200 million during

    the period

    MARKET GROWTH

    During last four months, dominoes have opened outlets in Jammu, Panipat, Surat,Baroda, Nashik, Trivandum, Meerut and Patiala. While earlier, 70 percent of ourbusiness used to be in metros and mini-metros, now the ratio is 50:50 between bigcities and smaller Tier II and III cities. Dominos Pizza is expanding its base in Indiaby opening 500 outlets to add to its current tally of 156 outlets, across 50 cities inIndia by 2011 with an investment of Rs.1, 000 crore.

    MARKET STRATEGIES

    Promotional and Advertisement Campaigns(Coupons and discounts) The '30 Minutes' Promise

    Use of Technology(Digital interactive Television, Internet on the PC, Mobiletelephony)

    Premium Pricing Strategy

    Indian fast food industry and entry of multinational players Distribution strategies of fast food chains in India

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    MARKET SHARE

    The organized pizza market in India is worth Rs.500 crore and Dominos has asubstantial 45% market share, and registered a healthy growth of 60% over lastyear. The main target for new outlets shall be metro cities though Tier II cities would

    also receive a fair amount of attention. Currently Dominos sells around 35,000 pizzaevery day, of which around 1% are given free on account of its 30 minutes or freemodel. 65 percent of its revenue comes from home delivery service; around 35percent is from sales in premise.

    COMPETITORS

    Fast food is one of the world's fastest growing food types. It now accounts forroughly half of all restaurant revenues in the developed countries and continues toexpand there and in many other industrial countries in the coming years. But some ofthe most rapid growth is occurring in the developing world; where it's radically

    changing the way people eat. People buy fast food because it's cheap, easy toprepare, and heavily promoted. This paper aims at providing information about fastfood industry, its trend, reason for its emergence and several other factors that areresponsible for its growth. India is a developing country with 2 percent of organized and 98percent of unorganized sector. So most of the fast foods came into Indian market asIndia has a high growth in every sector. Some of the competitors of dominos are

    McDonald's Pizza Hut

    Barista

    Coffee Day

    Subway

    Subway is an American fast foodfranchise that primarily sells submarinesandwiches (subs), salads, and personal pizzas. It is owned and operated byDoctor's Associates, Inc. (DAI). Subway is one of the fastest growing franchises inthe world with approximately 32,401 restaurants in 91 countries and territories as ofFebruary 2010. It is the largest single-brand restaurant chain globally and is the

    second largest restaurant operator globally afterYum! Brands (35,000 locations).

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    Subway's main operations office is in Milford, Connecticut, and five regional centerssupport Subway's growing international operations. The regional offices forEuropean franchises are located inAmsterdam, Netherlands.Australia and NewZealand are supported from Brisbane, Australia; the Middle Eastern locations aresupported from offices located in Beirut, Lebanon; the Asian locations from

    Singapore; India and the Latin America support center is in Miami, Florida. In the UKand Ireland the company hopes to expand to 2,010 restaurants by some time in2010

    Products

    Subway's main product is the submarine sandwich, or "Sub". Many stores also offerCookies, muffins, and Danishes which may be purchased in a variety of flavors.

    In 2001, Subway added seasoned breads and a line of specialty items to its menuand in 2003, most Subway markets switched their beverage contracts to supply

    Coca-Cola products exclusively, having previously left it up to the individual marketto decide whether to serve Coke orPepsi.

    In order to ink the current deal with Coca-Cola, Coca-Cola helped pay for the initialrollout of toaster ovens to all existing restaurants in North America. Subway gavecustomers the option to have their sandwiches toasted in response to increasedcompetition from a rival sandwich chain, Quiznos, which popularized toastedsubmarine sandwiches. In Australia, the introduction of Fresh Toasting enabled theSubway Franchise to prevent Quiznos from gaining market share. The TurboChefand Merrycheftoaster ovens are a microwave and convection oven hybrid. The dealwith Coca-Cola led to Quiznos switching to Pepsi chain wide, except in Canada.

    Subway menus vary by store, by country and by market. These are considered COP(country optional program), SOP (store optional program), MOP (market onlyprogram) but retain core items which are included at every store. The main food soldby the store is Submarine sandwiches, sold in "Six-inch", "Footlong", and the fourinch "Mini Sub" sizes. All Subway stores offer customers lettuce, tomato, onions, bellpeppers, cucumbers, olives, jalapeos and pickles, as well as market selectedoptions such as carrot, corn, radish and avocado. Like other fast-food restaurants,they offer "limited time offers" or LTO from time to time. In addition to their standardmenu, Subway also offers catering for all types of occasions. They offer "Giant

    Subs", which are a minimum of three feet long. These giant sandwiches can beordered in bulk and to nearly any specification, something which Subway haspromoted as a part of their campaign to tailor every sandwich to the individualcustomer's taste. Subway also offers sandwich platters, which consist of 5 footlongsandwiches per platter. Cookie platters are also offered. Each platter consists of 3dozen freshly-baked cookies.

    One of the chain's best-known sandwiches is the BMT, which originally stood forBrooklyn Manhattan Transit, but now stands for Biggest, Meatiest, Tastiest.[7] Thesandwich contains salami, pepperoni and ham. As of 2004, it was Subway's mostpopular cold sandwich in the United Kingdom. [8]

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    In 2006, the first kosherSubway restaurant in the United States opened in a suburbofCleveland, Ohio. Subway spokesman Jared Fogle was in attendance at theopening. "With slight modifications, such as no pork-based products, and the use ofsoy-based cheese, the menu is virtually identical to that of any other Subwayrestaurant."[9]. Since then, kosher Subways have opened in New York, Los Angeles,

    Kansas City, and Baltimore[10], as well as Livingston, NJ, and plans have beenannounced forMilwaukee, Boston, and one inside the JCC in West Bloomfield,Michigan, a suburb ofDetroit.[11] Some of these locations serve soy cheese, but mostdon't serve any form of cheese at all.

    All Subway restaurants in Muslim countries serve a halal menu. There are also atleast two Subway restaurants in the United States that do the same, three inCanada, and a growing number in the United Kingdom. The success of these storeshas been mixed, but the company will open more halal stores. [12]

    Subway also offers items other than sandwiches; breakfast items include such baked

    goods as bagels, egg & sausage sandwiches, and as of July and August 2006,"personal pizzas" are available in select markets to their menu. The personal pizzasare made upon order (as with their sandwiches) and heated "in less than 90seconds" (cooking for 85 seconds) as advertised on televised commercials.Breakfast and pizza items are only available in some stores. Most stores offeradditional toppings upon request. In November 2009, Seattle's Best Coffeeannounced that they'd signed an agreement to serve freshly brewed coffee as part ofSubway's breakfast offerings. [13]

    The 2009 Zagat Fast-Food Survey rated Subway as the best provider of HealthyOptions in the Mega Chain category. Subway was also first in the "Best Service"and "Most Popular" categories, although it was second overall behind Wendy's.[14]

    Advertising

    Subway uses the advertising slogan "Eat Fresh" to explain how every sandwich ismade on freshly baked bread, using fresh ingredients, in front of the customer totheir exact specification, by employees whom Subway terms "Subway SandwichArtists".

    In 2008, Subway began to offer "Five Dollar Foot-long" submarine sandwiches in the

    United States as a limited time only promotion. Customer response promptedSubway to make a "Five Dollar Foot-long Everyday Value Menu" that includes 8footlong sandwiches (Spicy Italian, Cold Cut Combo, Tuna, BLT, Black Forest Ham,Meatball, Veggie Delite & Oven Roasted Chicken) a permanent menu item.[15] Thejingle from the commercials advertising Five Dollar Foot-longs has gained somepopularity.

    In 2009, Subway brought back the "Five Dollar Foot-Long" sandwiches for a limitedtime. These sandwiches included every sub excluding Double Meat and Premiumsubs.

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    Also in 2009, the Buffalo Chicken sub was introduced to the "Everyday Value Menu"as the newest Five Dollar Foot-Long.

    In November 2007, Subway's US commercials featured the Peter Griffin characterfrom Family Guy in which he extols the virtues of its new Subway Feast sandwich. [16]

    Subway has also used instant win competitions based on the game Scrabble aspromotional tools.

    Subway also notably has a product placementtelevision advertisement campaign forthe US series Chuck, ongoing since its first season. As ratings dwindled in thesecond season, a campaign to "save Chuck" was launched by fans, which involvespurchasing a foot-long sandwich from Subway on April 27, 2009, the date of theseason finale. Tony Pace, Subway's marketing officer, reportedly called it the bestproduct placement the restaurant chain has done "in several years." [17]

    \

    Relevant Data:

    Low-income neighborhoods have fewer chain supermarkets with only 75% (p < 0.01)of that available in middle-income neighborhoods .

    Even after controlling for income and other covariates, the availability of chainsupermarkets in African American neighborhoods is only 52% (p < 0.01) of that inWhite neighborhoods with even less relative availability in urban areas .

    Hispanic neighborhoods have only 32% (p < 0.01) as many chain supermarketscompared to non-Hispanic neighborhoods.

    Larger sized food stores such as superm