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.
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I also find the low profit percentage very interesting. Based on the revenue and amount of some of these fast food franchises, it seems that the profit should in fact be higher. But at the same time, it demonstrates how important some expenditures are in this industry. Do you think that the companies spend to much money on expenses related to advertising and their reputation?
ReplyDeleteErik, I think that is a really good question! I too was surprised by that statistic, especially considering how long the lines for Subway and Einstein's are! I do think these franchises spend a little too much on their advertising though; anyone who would spend money at these types of food service industries knows what a McDonald's or Burger King is. Perhaps this revenue statistic will eventually increase, because like I said in my article, restaurants (at least QSRs) are starting to focus less on their appearance.
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