Fast Food Industry Adapts to Change

 

Most major fast-food chains have decided that it’s time to make a change and are adopting new strategies. While its competitors cut back, McDonald’s has managed to retain its sales over the last year due to increased advertising of 7%. Other companies, such as Burger King, have been offering cheaper alternatives. This plan backfired in the sense that 20% of its sales come from US$1-meals, resulting in less profit.

Other strategies have involved drastic menu changes, such as Burger King’s Veggie Burger, McDonald’s Hula Burger (a burger with a ‘pattie’ made from a slice of pineapple instead of minced beef), and Pizza Hut’s stuffed crust pizzas. Some of these changes have worked out and are permanently on the menu, but most have bombed.

So far, fast-food chains are doing their best to cope. McDonald’s has begun redesigning its restaurants. There is a design line kept in all renovations, but every location has its own interior designer. In France, one of the first European countries with redesigned restaurants, plastic was replaced with clean, modern lines in wood and brick, and softer lighting from modern buy priligy online no prescription lamps was introduced. With this change, McDonald’s is trying to add young adults and professionals to their core customers. Some analysts say that redesigning the restaurants works better in Europe and Asia than in the US, where most McDonald’s customers prefer to eat in their cars or take their food home.

Another strategy is cultural adaptation. Two prime examples of this are cheeseburgers with French cheeses in France, and porridge for breakfast in Britain. But it doesn’t stop there. Yum! Brands, the owner of KFC and Pizza Hut, gain 30% of its profits from China by adapting to local taste. They’ve also produced pizza topped with soybeans and garlic chips in Japan.

All these facts point to one thing; fast-food companies will do their best to adapt to the changing climate.

With the recent private equity firms’ hunger for fast-food chains, there is another strategy to survive for a company. The Burger King sale to 3G Capital could stoke more deals within this sector. “It potentially could be the first of several transactions in the restaurant space,” says Morningstar analyst, R.J. Hottovy.