Investing in Fast Food Industry

People’s life style has changed and among the scarcest resource is time. For this reason, people have been looking for easy and quick to cook meals. Fast food has provided the solution. It is estimated that 25% of all the Americans consume fast food daily. For kids aged between 6 and 14 years, consumes fast foods meals around 157 million times every month (Wilk, 2006).

The increased demand of the fast food industry has led to attraction of investments. The industry has attracted as many as 50000 fast food chains across United State. Currently, the largest fast food restaurant chain is McDonalds. There are as many as 500,000 places in the world that offer fast food services. The sales of the 400 largest fast food chains based in U.S. summed up to $277 in 2007 (Millstone & Lang, 2008). Given the current performance of the industry any investor may find it viable to invest his or her capital, so do I.

The fact that the industry has been doing well from an aggregate perception may not be an assurance for success for any investment done. This is because the micro and macro environment in the global economy is becoming more challenging with time. Globalization has impacted on competition and consumer tastes among others, which have had a great effect on operation of the industry (Weber, 20069).

The level of competition has intensified through product diversification, expansion of the already existing chains and entrant of new firms. This simply means that one has to explore various alternatives that can lead to a competitive edge (Aarnio, 2006). Brands like, Camille’s, Cosi Inc, Papa Murphy’s and Subway among others have been trying to take advantage of economies of scale through expansions. As a new entrant then, it’s imperative to design means of matching with the other players. To do this, I intend to make use of target costing to help reduce the overall cost.

The other challenge lies within the consumer taste and preference. At the moment, the demand by a consumer is being guided by the consciousness to health matters by the public. For example, almost 2 people for every 3 in U.S. are obese, and it’s believed that fast food is a major cause. Poppy and McDonalds have been blamed for not warning against the side effect of their products. For this reason, I intend to make use of products that put into consideration health aspect of life.

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