Rivals around the world

McDonald: a worldwide fast food king

McDonald’s has thousands of competitors, each seeking a share of the market. McDonald’s recognizes that it is up against not only other large burger and chicken chains but also independently owned fish and chips shops and other eat-in or take-out establishments. Therefore, a company like McDonald’s has to develop competitive strategies to differentiate themselves from their rivals. Actually, any organizations need to be in touch with their business environment in order to make sure that what they do fits with customer expectations. Especially, that expectations change over time and countries. Indeed, even huge corporation like them have to watch their back in order to remain in the top of their game. Moreover, the market segment in which McDonald’s operates is becoming increasingly competitive. But how this firm stills the number one in the global market scale? In this purpose we will look together how and why the American multinational remain on the top of his game in three crucial regions of the world.

First of all, if McDonald is the world’s largest chain of fast food restaurants is because the corporation serve around 68 million customers daily in 119 countries. But the secret of such success lies on a strong strategic competitive advantage that the company still building until now. Indeed, the impressive supply chain of the corporation is pretty well known. And it play a key role since it permits them to offer the lowest meal. Furthermore, McDonald does not hesitate to go to new markets with an extremely clever distribution channel.

Nevertheless, in this crowded market place, McDonald’s lead came under pressure largely because many others fast foods have either copied the trail blazing idea that was previously set by McDonald. Besides, McDonald’s recognizes the need to respond and it is looking to increase the competitive gap by:

adding greater value through innovation
making the process of visiting a McDonald’s restaurant less routine and controlled
enhancing the overall in house experience.
leading on all the social medias platforms

In addition, the following quote from Mister Don Thompson, chief executive officer of MacDonald’s, illustrates the three important aspects of the company’s strategy in order to gain and keep their competitive advantage:

“While the informal eating out market remains challenging and economic uncertainty is pressuring consumer spending, we’re continuing to differentiate the McDonald’s experience by uniting consumer insights, innovation and execution.” said Thompson.

In fact, McDonald’s now offers late night breakfasts, a new Dollar Menu, and is advertising vegetarian value priced meals in markets like India to attract more customers. The company also said that a new line of quarter pounder hamburgers, including a bacon habanero ranch version, was selling well. It has rolled out an egg white version of its popular McMuffin breakfast sandwich and has gotten rid of slow movers such as Angus burgers and its Fruit & Walnut Salad. Furthermore, the American corporation had changes the restaurant interior design and made it more technological friendly and modern. But above all, what we have to underline here that McDonald focus on the customer’s needs and demands which help them to see theirs flaws and fix it right away. And even more upgrade their services and products. A strategic position which differentiates the multinational company from her rivals. But also give them the ability to dominate and to be a head of the industry.

Burger King: after years of struggling
This post is a business analysis on the two important public corporations: McDonalds and Burger King. Both of them are competing in the fast food industry. To add, the fast food industry is one of the largest food services sectors around the world and one of the most competitive industry. This sector focuses on the lower prices strategy in order to attract customers worldwide. McDonalds and Burger King, both compete with all types of food retailers on the basis of prices, convenience, food qualities and customer services.

Regarding Burger King, the majority of their fast-food restaurants are locate internationally and are privately owned franchises. Whereas the majority of those franchisees are smaller operations, several have grown into major corporations in their own . At the end of the company’s fiscal quarter in September 2012, Burger King reported it had 12,667 outlets in 73 countries of these 66% are in the United States and 95% are privately owned and operated. The company locations employ more than 37,000 people who serve approximately 11.4 million customers daily.

Besides, Burger King is also redesigning it is restaurants, changing it is packaging, cleaning up it is cooking process and changing uniforms to reflect a more modern approach to food services. Finlay, these factors will contribute to a more desirable experience for customers. But Burger King does look rather old school and “out of touch” by not having the premium chicken wraps, salads and coffee drinks that have become the “most-have” in a fast food in 2012. Not having those items certainly has not helped in the battle to stay relevant. As far as improvement goes, Burger King’s core question should be: how to better present the value proposition? And how to better underscore what makes Burger King the ideal destination for fast food customers? In fact, there must be something McDonald’s and Wendy’s are not doing and something that can be tied back to Burger King’s specific promise to their customers. That would present a competitive advantage if introduced into the market. That is how Burger King will truly stand out.

A saturated domestic market…

It is unnecessary to talk about the supremacy of the brand with the golden arches in the North American market. However, smaller rivals such as Wendy’s, Burger King, KFC or Subway are upping their game with bacon sundaes and limited-time offers in North America. Wendy’s for instance is known for his square hamburgers and thick frosty shakes but recently introduced a pretzel bacon cheeseburger that appears to be chain’s best-selling new product in about ten years. And here we are only talking about the front runners of the competition. Indeed, Five Guys, Yum! and In-N-Out and others compose the second line of the pack.

Let’s not forget also that non-burger competition has also increased. Actually, in this category we can count Starbucks, Taco Bell, Dunkin Donuts, Pizza Hut and Domino’s Pizza. Further, we believe that Chipotle’s success in selling burritos may have reinvigorated the broader market for Mexican food. On the higher-end, McDonald’s has to compete with customers who are looking to healthier options at Panera, as well as the organic offering of Chipotle. Therefore, the brand fights back by offering more healthy menus and underline the quality of all their ingredients through advertising campaigns. And the uses of local suppliers. This growing competition and saturation on the market is a huge challenge for the number one of the fast-foods industry. The highly globalized segment of the world economy, markets where consumers have standardized preferences. Plus, the customers are driven with the curiosity to try news burgers recipes and concepts. Since, they exhaust all the golden arches menus so they look to new experiences or taste somewhere else. In addition, brands restaurants such as Taco Bell, Yum and KFC grew the same store sales: 7% and 4%, respectively, during the most recent quarter. Taco Bell is the only major competitor, in our view, to McDonald’s value proposition with premium items.

The North America fast-food restaurants market

Moreover, the firm has to cope with a really negative image in terms of health but also business practices ( see post on advertising) . Indeed, despite is important share in the American market, McDonald is not so love and it is positions as a cheap comfort food. In addition, the 14,098 restaurants are more often visited by low income profile. Indeed, the leader of burger has a quite good position. Regardless, he still represent the symbol of bad nutrition and excess. Even though, is not always the truth as we can read on this counting calories illustration from the Wall Street Journal, here bellow.

This shows us that Mc Donald apparently is not the worst among his competitors. Indeed, the giant of the fast-food is just before one of his newest competitors in the United-State: Shake Shack.

As regards, Shake Shack was started as a hot dog cart in Madison Square Park. Only after the food truck grew in popularity, they developed the concept. And only after several years in Madison Square Park did Shake Shack open a second location. It is a local food concept which is well known to be the best place for fries and a future serious rival for McDonald. For instance, New York Times restaurant critic Pete Wells reviewed Shake Shack and claimed that “you can get better fries just about anywhere.” Shake Shack recently debuted non-frozen fries at it Upper East Side location. Its legacy can be seen not just in the rush of good, cheap burgers, but in the growing recognition that certain fine dining values, like caring service and premium ingredients. In their early days, Shake Shack’s committed to better ingredients, like antibiotic and hormone-free “100 percent all-natural” Angus beef. With a stronger promise of sustainability, made from beef that is local, organic or grass-fed. Regarding their expansion plan, Shake Shack never expands until “the right leadership is in place”. From there, the chain only wants to go to places that have a community interested in embracing it. Yet, the newbie in the industry is processing fast ant efficiently since the company already possess fourteen restaurants. This type of concept went viral and was largely spread even out the United States. Indeed, this concept was adopt in France too and more precisely in Paris where such fast-food services took an important place on customers minds. In fact, “Le camion qui fume” for instance is the perfect example to illustrate the success of such concept in the city. Since, the food truck is today known to be one of the best places in the capital for having a delicious burger.

Formerly McDonald’s strongest competitor, Burger King has lost a lot of ground over the last decade in the American market. According to Advertising Age, McDonald’s was 101 percent ahead of Burger King in average domestic revenue per unit in 2010, more than double his lead from 10 years earlier.While McDonald’s is far ahead of the entire quick-service pack, at more than $34 billion, the chain’s domestic system-wide sales were triple it is closest competitor, Subway, in 2011 it is recent triumphs stand in sharp contrast to Burger King’s struggles.

A promising Asian market place and the European challenge.

China is the place where most fast-food chains, like so many industries, see big expansion. Mr Carucci thinks that China will be “the biggest growth opportunity for the industry this century”. If so, then Yum!, which has the greatest presence in China of any Western fast-food company will be celebrating. Since, around 30% of the company’s profits come from China, and in the next five years is expected to grow to 40%. India also looks like a profitable opportunity. In addition, others plans to grow more business in Russia and elsewhere in Europe. Given that around 75% of fast-food companies’ revenue in Europe comes from people eating in the restaurants (compared with half in America), older European outlets are being done up to make them more attractive places. What’s worth to mention is that Taiwan’s fried chicken fast-food chain Dicos has vowed to open 450 new chains each year, to total 5,000 restaurants by 2020 on the Chinese mainland. The fast-food chain that was launched in 1996 and has around 2,000 restaurants in Chinese second and third-tier cities now aims to enter first-tier cities including Beijing, Shanghai and Guangzhou according to the company’s top executive. This way, they moved the brand into direct competition with its Western rivals, such as McDonald’s Corp and Kentucky Fried Chicken Brands.

In Japan, for instance, McDonald’s and Burger King are facing strong competition from Mos Burger, in China by Kentucky Fried Kitchen (KFC), Pizza Hut, and local start-ups. Even in the small Greek market, McDonald’s is no match for local upstart Goody’s. While McDonald’s major competitor in the United Kingdom is Burger King, whereas in France is competitors are Quick, KFC and Subway.

Obviously,the golden arches’s corporation is facing a tough competition on every front and it is possible to see their sales weaker. However, in Europe and Asia we would not be surprised to see customers return to McDonald’s after trying all of the new offerings since many customers built an emotional connections with the brand. Plus, it is also a question if habits. Moreover, Bill Smead, a manager at the Smead Value Fund in Seattle, who holds shares in McDonald’s corporation is betting that the iconic chain will profit from the fact that it is an “emotional and legal addiction.”

“The company is in a normal down cycle. It benefited from the global recession that forced cash-strapped diners to trade down to McDonald’s. It also got a big bump from profit-boosting new drinks like lattes and smoothies“ Smead said.

Source: http://foodbeast.com/2013/08/07/why-some-countries-dont-have-mcdonalds-from-iceland-to-bolivia/