Blog #1: Quintin Young

            I read the report “Chain Restaurants in the US” by Nima Samadi.  The report displays information about the chain restaurants in the US restaurant industry.  The report includes eat-in restaurants such as Olive Garden or Longhorn Steakhouse and does not include fast food restaurants like McDonald’s and Burger King.

            The domestic market for chain restaurants is getting saturated because it is a mature industry.  This has caused the existing restaurants to become more competitive in pricing and product.  Because of the saturation, many of the major chain restaurant companies, such as Darden Restaurants, are now focusing more on international expansion.  I found this interesting because it creates more obstacles for companies and encourages more original ideas.

            I am interested in learning more about how the restaurant industry works behind the scenes.  I want to explore how they decide when or where to expand and when to hold on to what they have.  In addition to that I want to understand how they choose which other restaurants they should buy and which they should sell.  I also want to learn more about the companies’ marketing strategies and how they differ nationally and internationally. 

            The industry seems to be recovering from a recent decline in revenue and profits due to decreased consumer interest in expensive chain restaurants.  Many consumers are also becoming more health-conscious about where and what they eat.  Both of these instances have caused restaurants to change their menus to better reflect the needs of the market through both creating healthier dishes and promoting low cost meals. The report projected more growth for this industry in the coming years, but it will be difficult.  They will need to continue to be competitive when fighting for consumers.

            I found it very interesting that 64 percent of the market consists of people with and annual income of $75,000 or more.  I also found it interesting that most of the age groups spend relatively the same amount on eating out.   The highest percentage of income spent on dining out was 18- to 25-year-olds who spent 46.4 percent of their income, and the lowest being people older than 65 who spent 37 percent of their income.

Cited Source:

http://clients1.ibisworld.com.proxyau.wrlc.org/reports/us/industry/default.aspx?entid=1677

Blog #1: Jenna Wasserman

The article I read was “Fast Food Restaurant’s in the US”, by Nima Samadi. This article summarizes how the fast food industry functions and the factors in which affect it. As I read about this industry, I found consumers increasing awareness of the health risks from fast foods most interesting. This industry was affected on a much greater scale than I had expected and as a result, many changes have been put into effect to attract more consumers and provide healthier choices. It is interesting to see how when public opinion and views change, the fast food industry is forced to better market its product in order to gain more revenue.

I would want to explore further in my project how the fast food industry can be affected based on the suppliers a company chooses. As I have read in the book, Fast Food Nation by Eric Schlosser, the quality and consistency of a supplier makes a large difference in the success of a large franchise company such as that of McDonalds or Burger King. Any mistakes from a supplier can severely damage a business and it’s reputation. This caused me to understand that when building a new business, one needs to spend much time researching in order to prevent stupid decisions and careless mistakes.

This industry has a bright future with much potential. The advantage with this industry is that it has the ability to make changes based on the needs of the consumer. When consumers became much more health conscious, the fast food industry added healthier choices such as varieties of fruit and salads to improve revenue. This industry is lucky because it has the ability to make quick drastic changes when needed.

An interesting data point I found about my industry is that the total profit in 2012 was only 3.3%, which seems very low compared to the amount spent on revenues such as wages: 26.3 %, purchases: 31.0%, and other: 23.8 %. I would think that the profit in this industry would be much larger being that fast food restaurants are usually huge franchises. Places like McDonalds, Burger King, Wendy’s, and Subway seem to be everywhere, which would cause me to believe they are making much more capital than only a 3.3% profit of total revenue. Despite my own concern, there is a lucrative future in this industry for all the risk takers and determined entrepreneurs willing to give up time and money. 

           

Cited Source:  

Samadi, N. (2012, July). Ibisworld. Retrieved from http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1980

Blog #1: Candace Hunt

            The article “Consumer Foodservice Global Overview: Finding Growth in  a Fragmenting World” analyses how the food service industry was in 2010 and where it is projected to be through 2015 from a global prospective. This report projects the recovery progress from the year following the recession and years to come through examining the growth percentages of transactions, outlets, and sales in the food services industry and concludes that the industry will slowly continue to grow

                In 2010, while there was all around growth in percentages, full service restaurants were the most lucrative, producing half of the sales for the industry as whole. China is a main contributor to this, holding the most full-service restaurants world-wide. In fact, Asia is the strong forces behind the restaurant industry; Asia Pacific having 11,000 shares in 2010. I found this most interesting because the U.S. is so seemingly dominated by franchises and fast-food that I didn’t take into account that this may not be the case globally. 50% of chain sales come from North America however; our weak economy cannot globally dominate when the economies of other places such as Asia are so strong.

                One interesting point about the industry that I found is although the North American sales in chains are strong; the expected growth in the future is stagnant. There are several well developed brands in the economy, but according to the report the expected new markets along with the demand for value pricing will slow down sale growth. It is suggested that for further progression in the industry, more chains need to be throughout China, India, and Brazil because of their strong foodservice success.  This makes me wonder why there is not a stronger presence of chains in these areas already. Were there setbacks in attempts to franchise there and if so what were they? Or were there even that many attempts? Are they present there and just failing?

                I feel that the future of this industry will continue to progress because the demand of food will always exist because it is a necessity; this is when economics comes into play. The people’s taste may change, and that could shift the demand curves for different types of food industries—such as fast food or cafés--up or down. However, the overall industry of food service will benefit from all of the combined demand, making progression overtime. 

Cited Source:

(2011). Consumer Food Service Global Overview: Finding growth in a fragmenting world. Global Briefing , Retrieved from http://www.portal.euromonitor.com/Portal/Pages/Analysis/AnalysisPage.aspx

Blog #1: Erik Gouze

The article that I read involved an analysis of casual dining, which is a sub-industry of the restaurant business, by food service analyst, Bethany Wall. Though casual dining receives a generally positive attitude, the industry has not been as successful as it could be because “price sensitivity has remained, showing that the behavior is more of a lifestyle shift rather than a recessionary behavior” (Wall). This was very interesting because during the recession, many consumers preferred cheaper method of dining, such as fast food. Though the economy has bounced back, consumers are still continuing those trends. Since an important part of any business is pleasing the costumer, it makes me question what consumers of the restaurant industry see as a good value. From this article, it seems that customers favor the price of a meal over the quality.

       Based on the article, it appears that the future of the restaurant industry will remain dominated by the fast casual and quick-service restaurants. This is because they provide the quick and cheap meals that consumers are looking for in these more conservative times. Also, because consumers prefer healthier foods and the government is pressuring restaurants to include healthier choices, the industry as a whole will need to adjust their menus. This will become evident in the coming months and years as restaurants begin this move toward better for you foods, or BFY. Finally, According to Mintel’s article on casual dining, the future will see this industry becoming much more innovative then it already is, including more deals and discounts, in an attempt to gain more customers, which I agree with. It seems that if restaurants do not become more inventive, then their business will fail. 

     An interesting fact about the restaurant industry is that during economic challenges, the industry as a whole will compete in pricing wars. As Bethany Wall explains, the restaurants will need a variety of strategies in order to standout in the industry and create more customer traffic.  

Cited Source:
http://academic.mintel.com.proxyau.wrlc.org/display/632865/

Blog #1: Maria Silverberg

The article that I read was “Quick Service Restaurants” by Eric Giandelone.  He summarizes what is happening to the quick service restaurants (such as McDonald's  Burger King, etc.) and how they are responding to costumers and vice versa.  What I find particularly interesting is how much of an impact the rising multiculturalism of America has on these quick service restaurants.  The article includes a graph that depicts how much growth each ethnicity is projected to have from 2007 to 2017.  Giandelone says that as their (Hispanic, Asian, African American) numbers increase, these kinds of consumers will be made “a key consideration” for QSRs.  Based on this article, I would love to explore the relationship between these quick service restaurants and certain demographics of costumers (such as age, race, and/or gender).  I feel like the marketing that goes into each franchise could vary greatly based on these relationships, and could ultimately affect the future of QSRs.  This article shows that the general future of QSRs is based on how well they recover financially from the recession.  I think the future of the fast food economy will be just fine, though.  The article states that QSRs are beginning to limit the focus on the luxury component of fast food, such as how aesthetically pleasing their restaurant is to the costumer, to limited time offers.  The latter is what will draw customers in deeper.  Another thing that will ensure the success of QSRs in the future is the increase in quality of food, in which Giandelone says customers have seen an increase in.  An interesting point about the restaurant industry is that there is a new act called The Patient Protection and Affordable Care Act.  This will call for every restaurant chain with more than 20 locations to list nutritional information for every item in a place where people can see it upon ordering.  Hopefully this lends a helping hand to the obesity issue that is currently spreading over America, and Americans will become more mindful of their future purchases at QSRs.

    
     Cited Source:

     http://academic.mintel.com.proxyau.wrlc.org/display/590705/#atom0

     Downloaded the Executive Summary PDF.