Question

1. How do you define the fast food market? What market structure best describes the fast food industry? Why?
2. Describe briefly what happened in the Fast Food industry until 2012. Which microeconomic/macroeconomic factors played a role? How did McDonald’s react to these influences?
3. Describe the current state of the fast food industry, including macroeconomic indicators, such as unemployment rate, wage rate, etc. How does the fast food industry compare to the overall state of the economy in the U.S.?
4. Which of the areas discussed by the IMF have the biggest potential impact on the fast food industry? How?

Answer 1

Definition

Fast food market refers to that market, brand, restaurant etc which is engaged in the production and distribution of fast food which are characterized as quick, easily accessible and cheap alternatives to home-cooked meals. Fast foods have an attractive commercial market which lays a strong emphasis on "speed of service".

Eg: fast food chain such as Subway which specializes on sandwiches and fast food chains specializing on burger such as Burger King.

Factors affecting fast food industry till 2012

• Natural Forces: Due to natural calamities 2011 brought higher food prices at unprecedented levels, in part because of crops and livestock being destroyed.
• Demographics :  2012 saw more food & beverage manufacturers improving the health and wellness, in part to meet various nutritional guidelines. That will mean reducing salt, fat and sugar and enhancing (and promoting) the health benefits in their foods. There is a growing widespread concern for healthy food alternatives.
• Technological Factors : Due to the vast development in the Internet sector, giving out personal information is now considered risky by most people, as mishandling of information is being a common crime these days. As a result fast food joints wanting to conduct surveys about their menus and service now have to be careful not to ask too personal data, and even if they do, they have to receive formal confirmation from the individual customers.

McDonald's

McDonald’s embarked on an ambitious revitalization of the brand following a series of events that had damaged brand perception to improve every aspect of the business.Based on substantial investments in research, food was revamped and reinvented, restaurants redesigned and staff morale boosted.

The changes were made like:

• Different menus for different age groups.
• Makeover for the restaurants and newer visual aspects.
• Encouraging a new attitude.

Current Macroeconomic Factors of U.S.

• Wage Rates : Considering the affordability present fast food is relatively cheap as easy to get.The fast-food industry, therefore, tends to thrive when the economy as a whole is on a downturn because that’s when most people turn to cheaper food options.
• Unemployment : In case of recessions, the largest fast-food chains would cut their prices and advertise more aggressively to their consumers in order to attract them.

Conclusion

The fast food industry as a whole is a flourishing sector in USA. The fast food shops now are trying to shift their focus on health food, greener food and natural products. The increased competition in the industry is also a matter of concern. As it is easier to establish a fast food shop, the completion has increased considerably, and companies now have to try harder to retain their existing customers and get new ones, keeping good knowledge of the macro-environmental factors that are guiding the course of betterment of this industry.

Impact of IMF

IMF is making policies which would help countries respond to Food Price Crisis. Fund is providing additional financing to some worst-hit countries. IMF coordinating action with United Nations, World Bank

Key Takeaways:

• This would indeed be a good opportunity for companies to set up their subsidies. Provide food at low prices.
• Already established companies must cooperate with the new policies.
• Engage in CSR policies to feed the needy.