• Threat of substitute product: LOW
McDonalds: even if competitors sell the same type of products it won’t be a direct substitute. McDonalds has its own secret recipes and it is difficult to copy them.
Burger King has its own inimitable recipes:
– Meat: their burgers are cooked with a unique technic, the flame grilling that requires specific grills. This technic gives a strong bbq taste to the meat.
– Burger King decided to communicate about its French fries because they have a very distinguishable taste
• Bargaining power of customers: HIGH
McDonalds & Burger king has to be specialized in the product that they offer to their customers because there is no switch costs for them. They have to enhance specialized products in order to keep loyalty customers. In fact, nowadays people suffers from financial crisis and their purchasing power is decreasing so they pay more attention to their expansive and they will not hesitate to switch to another fast food if this one is cheaper. Furthermore, way of life is changing and people are more aware of what they eat and looking for healthy food.
• Bargaining power of suppliers: LOW
McDonalds: The company has a high power on its suppliers. It controls them as subsidiaries because for lot of them McDonalds remains their main client. Nevertheless some suppliers aren’t dependent of McDonalds like Coca Cola or Danone.
Burger King chooses its suppliers after evaluating lots of criteria like delivery, timeliness and financial conditions. Each supplier has to become an approved suppliers and to maintain its quality of services.
• Threat of new entrants: LOW
McDonalds & Burger King: The enter in the market of Fast Food is easily accessible thanks to low starter cost and the fact that the atmosphere and the products are easily reproducible. But the fast food market is saturated and new entrants have few chances to obtain so many customers as the already leader companies on this market even if they set up this type of service.
• Competitive rivalry among firms: HIGH
McDonalds & Burger King have a big among of competitors, being in competition of a fast food company is easy. These two companies have direct and indirect competitors.
Direct competitors: Multinational like KFC, Subway…
Indirect competitors: Pizza stores (PizzaHut, Dominos Pizza, Pizza Rabbit…) and proximity outlets (bakeries, snakes, kebab…).
• Public regulation :
McDonalds & Burger King: Some governments are campaigning against junk food. For example in France they put in place advertising for this purpose with headlines like « Manger, Bouger » «Pour votre santé mangez 5 fruits et légumes par jour».
Author: Virginie Mialon
Editors: Maya Al Chaarani &Sandra Essafi
Burger War 