FAST FOOD INDUSTRY Introduction Fast food is the term given to food that can be prepared and served very quickly. While any meal with low preparation time can be considered to be fast food, typically the term refers to food sold in a restaurant or store with low quality preparation and served to the customer in a packaged form for take-out/take-away. Outlets may be stands or kiosks, which may provide no shelter or seating, or fast food restaurants (also known as quick service restaurants). Franchise
operations
which
are
part
of
restaurant
chains
have
standardized foodstuffs shipped to each restaurant from central locations. The capital requirements involved in opening up a fast food restaurant are relatively low. Restaurants with much higher sit-in ratios, where customers tend to sit and have their orders brought to them in a seemingly more upscale atmosphere may be known in some areas as fast casual restaurants.
History The concept of ready-cooked food for sale is closely connected with urban development. In Ancient Rome cities had street stands that sold bread and wine. A fixture of East Asian cities is the noodle shop. Flatbread and falafel are today ubiquitous in the Middle East. Popular Indian fast food dishes include vada pav, panipuri and dahi vada. In the French-speaking nations of West Africa, roadside stands in and around the larger cities continue to sell—as they have done for generations—a range of ready-to-eat, chargrilled meat sticks known locally as brochettes.
The Start of Fast Food Culture
The concept of fast food pops up during 1920s.The 1950s first witnessed their rapid proliferation. Several factors that contributed to this explosive growth in 50’s were: (1) America’s love affair with the automobiles. (2) The construction of a major new highway system. (3) The development of sub-urban communities. (4) The baby boom subsequent to world war second. “Fast-food chains initially catered to automobile owners in suburbia.
On the go Fast food outlets are take-away or take-out providers, often with a "drivethrough" service which allows customers to order and pick up food from their cars; but most also have a seating area in which customers can eat the food on the premises. People eat there more than five times a week and often, one or more of those five times is at a fast food restaurant. Nearly from its inception, fast food has been designed to be eaten "on the go", often does not require traditional cutlery, and is eaten as a finger food. Common menu items at fast food outlets include fish and chips, sandwiches, pitas, hamburgers, fried chicken, French fries, chicken nuggets, tacos, pizza, hot dogs, and ice cream, although many fast food restaurants offer "slower" foods like chili, mashed potatoes, and salads.
Variants Although fast food often brings to mind traditional American fast food such as hamburgers and fries, there are many other forms of fast food that enjoy widespread popularity in the West. Chinese takeaways/takeout restaurants are particularly popular. They normally offer a wide variety of Asian food which has normally been fried. Most options are some form of noodles, rice, or meat.
Sushi has seen rapidly rising popularity in recent times. A form of fast food created in Japan. sushi is normally cold sticky rice served with raw fish.Pizza is a common fast food category in the United States, with chains such as Domino's Pizza, Sbarro and Pizza Hut. Menus are more limited and standardized than in traditional pizzerias, and pizza delivery, often with a time commitment, is offered. Fish and chip shops are a form of fast food popular in the United Kingdom, Australia and New Zealand. Fish is battered and then deep fried.The Dutch have their own types of fast food. A Dutch fast food meal often consists of a portion of French fries .
Business In the United States alone, consumers spent about US$110 billion on fast food in 2000 (which increased from US$6 billion in 1970). The National Restaurant Association forecasted that fast food restaurants in the U.S. would reach US$142 billion in sales in 2006, a 5% increase over 2005. In comparison, the full-service restaurant segment of the food industry is expected to generate $173 billion in sales.
Jobs and labor issues Today, more than 10 million workers are employed in the areas of food preparation and food servicing including fast food in the world. Employees are the backbone of the fast food industry. Proper training is crucial to the orderly and quick service customers expect. Yet, employee turnover can be as high as 200% per year. With such a turnover, owneroperators of franchise and non-franchise restaurants have the daunting task of constantly training an entirely new workforce. Policies and procedures need to be explained to each new employee.
Globalization
In 2006, the global fast food market grew by 4.8% and reached a value of 102.4 billion and a volume of 80.3 billion transactions. In India alone the fast food industry is growing by 40% a year. McDonald's is located in 120 countries and on 6 continents and operates over 31,000 restaurants worldwide. KFC is located in 25 countries. Subway has 29,186 restaurants located in 86 countries, Pizza Hut is located in 26 countries, Taco Bell has 278 restaurants located in 12 countries besides the United States.
Health issue Tran’s fats which are commonly found in fast food have been shown in many tests to have a negative health effect on the body. The fast food consumption has been shown to increase calorie intake, promote weight gain, and elevate risk for diabetes. The Centers for Disease Control and Prevention ranked obesity as the number one health threat for Americans in 2004. It is the second leading cause of preventable death in the United States and results in 400,000 deaths each year. FAST FOOD INDUSTRY IN INDIA INDIA – EMERGING MARKET FOR GLOBAL PLAYERS The percentage share held by foodservice of total consumer expenditure on food has increased from a very low base to stand at 2.6% in 2001. Eating at home remains very much ingrained in Indian culture and changes in eating habits are very slow moving with barriers to eating out entrenched in certain sectors of Indian society.. The growth in nuclear families, particularly in urban India, exposure to global media and Western cuisine and an increasing number of women joining the workforce have had an impact on eating out trends. FACTS AND FIGURES
Fast food is one of the world’s largest growing food type. India’s fast food industry is growing by 40% a year and is expected to generate a billion dollars in sales by 2005.The multinational segment of Indian fast food industry is up to Rs. 6 billion, a figure expected to zoom to Rs.70 billion by 2005. By 2005, the value of Indian dairy products is expected to be Rs.1, 00,000 million. In last 6 years, foreign investment in this sector stood at Rs. 3600 million which is about one-fourth of total investment made in this sector. Because of the availability of raw material for fast food, Global chains are flooding into the country. MARKET SIZE & MAJOR PLAYERS a) Dominated by McDonalds having as many as 75 outlets. b) Domino’s pizza is present in around 100 locations. c) Pizza hut is also catching up and it has planned to establish 125 outlets at the end of 2005. d) Subways have established around 40 outlets. e) Nirulas is established at Delhi and Noida only. However, it claims to
cater 50,000 guests every day. Major players in fast food are: •
MCDONALDS
•
KFC
•
PIZZA HUT
•
DOMINOS PIZZA.
•
COFFEE DAY
•
BARISTA.
The main reason behind the success of the multinational chains is their expertise in product development, sourcing practices, quality standards, service levels and standardized operating procedures in their restaurants, a strength that they have developed over years of experience around the world. The home grown chains have in the past few years of competition with the MNCs, learnt a few things but there is still a lot of scope for improvement.
REASON FOR EMERGENCE
Gender Roles: gender roles are now changing. Females have started working outside. So, they have no time for their home and cooking food. Fast food is an easy way out because these can be prepared easily. Customer Sophistication and Confidence: consumers are becoming more sophisticated now. They do not want to prepare food and spend their time and energy in house hold works. They are building their confidence more on ‘ready to eat and easy to serve’ kind of foods Paucity of Time: people have no time for cooking. Because of emergence of working women and also number of other entertainment items. Most of the time either people work or want to enjoy with their family. Double Income Group: emergence of double income group leads to increase in disposable income. Now people have more disposable income so they can spend easily in fast food and other activities. Working Women: working women have no time for cooking, and if they have then also they don’t want to cook. Because they want to come out of the traditionally defined gender roles. They do not want to confine themselves to household work and upbringing of children’s. Large population: India being a second largest country in terms of population possesses large potential market for all the products/services. This results into entry of large number of fast food players in the country. Relaxation in rules and regulations: with the economic liberalization of 1991, most of the tariff and non tariff barriers from the Indian boundaries are either removed or minimized. This helped significantly the MNC’s to enter in the country. Menu diversification: increase in consumption of pizzas, burgers and other type of fast foods.
CHALLENGES FOR THE INDUSTRY Social and cultural implications of Indians switching to western breakfast food: Generally, Hindus avoid all foods that are believed to inhibit physical and spiritual development. Eating meat is not explicitly prohibited, but many Hindus are vegetarian because they adhere to the concept of ahimsa. Those seeking spiritual unity may avoid garlic and onions. The
concept of purity influences Hindu food practices. Products from cows (e.g., milk, yogurt, ghee-clarified butter) are considered pure. Pure foods can improve the purity of impure foods when they are prepared together. Some foods, such as beef or alcohol, are innately polluted and can never be made pure. But now, Indians are switching to fast food that contain all those things that are considered impure or against there beliefs. Some traditional and fundamentalist are against this transformation of food habit and number of times they provoke their counterparts to revolt against such foods. And that is what happened when McDonald’s decided to enter the complexity of Indian business landscape, counting only on its “fast food global formula”, without any apparent previous cultural training. Emphasis
on
the
usage
of
bio-degradable
products:
Glasses,
silverware, plates and cloth napkins are never provided with fast food. Instead, paper plates and napkins, polyurethane containers, plastic cups and tableware, drinking cartons or PET (polyethylene terephthalate) bottles are used, and these are all disposable. Many of these items are tossed in the garbage instead of being recycled, or even worse, merely thrown on the ground. This burdens nature unnecessarily and squanders raw materials. In order to reduce soil and water pollution, government now emphasis more on the usage of bio-degradable products. Retrenchment of employees: Most of new industries will be capital intensive and may drive local competitors, which have more workers, out of business. Profit repatriation: Repatriation of profits is another area of concern for Indian economy. As when multinational enters the any countries, people and government hope that it will increase the employment rate and result in economic growth. However, with the multinational operation, host country experiences these benefits for a short time period. In long run neither employment increases (because of capital intensive nature of MNC’s) nor it increases the GDP or GNP because whatever MNC’s earn they repatriate that profit back to their home country.
PROBLEMS OF INDUSTRY
Environmental friendly products cost high: government is legislating laws in order to keep check on the fast food industry and it is emphasizing more on the usage of bio-degradable and environment friendly products. But associated with this issue is the problem that fast food player faces - the cost associated with the environment friendly product. They cost much higher than the normal products that companies uses for packaging or wrapping their products. Balance between societal expectation and companies economic objectives: To balance a society’s expectation regarding environment with the economic burden of protecting the environment. Thus, one can see that one side pushes for higher standards and other side tries to beat the standard back, thereby making it a arm wrestling and mind boggling exercise. Health related issues: obesity: I.
Studies have shown that a typical fast food has very high density and food with high density causes people to eat more then they usually need. \
II.
Low calories food: Emphasis is now more on low calorie food. In this line McDonald has a plan to introduce all white meat chicken Mcnuugget with less fat and fewer calories.
TRENDS IN INDIAN MARKET Marketing to children's: fast food outlets in India target children’s as their major customers. They introduce varieties of things that will attract the children’s attention and by targeting children’s they automatically target their parents because Children’s are always accompanied by their parents. Low level customer commitment: Because of the large number of food retail outlets and also because of the tendency of customer to switch from one product to other, this industry faces low level customer commitment.
Value added technology services: There is continuous improvement in the technology as far as fast food market in India is considered. The reason behind that is food is a perishable item and in order to ensure that it remain fresh for a longer period of time. Earlier, Indian people prefer eating at home but now with the change in trend there is also need for improvement and up gradation of technology in food sector. Attracting different segments of the market: Fast food outlets are introducing varieties of products in order to cater the demands of each and every segment of the market. They are introducing all categories of product so that people of all age, sex, class, income group etc can come and become a customer of their food line.
The success of fast foods arose from the changes in our living conditions: 1. Many women or both parents now work 2. There are increased numbers of single-parent households 3. Long distances to school and work are common 4. Usually, lunch times are short 5. There's often not enough time or opportunity to shop carefully for groceries, or to cook and eat with one's family. Especially on weekdays, fast food outside the home is the only solution.
Kentucky Fried Chicken About the Company KFC Corporation, or KFC, founded and also known as Kentucky Fried Chicken, is a chain of fast food restaurants based in Louisville, Kentucky. KFC is a brand and operating segment, called a "concept" of Yum! Brands since 1997 when that company was spun off from PepsiCo as Tricon
Global Restaurants Inc. The restaurants are known as Poulet Frit Kentucky or PFK in the province of Quebec in Canada. In France, however, the chain is known as KFC. KFC primarily sells chicken in form of pieces, wraps, salads and sandwiches. While its primary focus is fried chicken, KFC also offers a line of roasted chicken products, side dishes and desserts. Outside North America, KFC offers beef based products such as hamburgers or kebabs, pork based products such as ribs and other regional fare. The company was founded as Kentucky Fried Chicken by Colonel Harland Sanders in 1952, though the idea of KFC's fried chicken actually goes back to 1930. The company adopted the abbreviated form of its name in 1991. Starting in April 2007, the company began using its original name,
Kentucky
Fried
Chicken,
for
its
signage,
packaging
and
advertisements in the United States as part of a new corporate rebranding program newer and remodeled restaurants will have the new logo and name while older stores will continue to use the 1980s signage. Additionally, Yum! Continues to use the abbreviated name freely in its advertising.
Products The famous paper bucket that KFC uses for its larger sized orders of chicken and has come to signify the company was originally created by Wendy's restaurants founder Dave Thomas. Thomas was originally a franchisee of the original Kentucky Fried Chicken and operated several outlets in the Columbus, Ohio area. His reasoning behind using the paper packaging was that it helped keep the chicken crispy by wicking away excess moisture. Thomas was also responsible for the creation of the famous rotating bucket sign that came to be used at most KFC locations in the US. Menu items KFC's specialty is fried chicken served in various forms. KFC's primary product is pressure-fried pieces of chicken made with original recipe. The other chicken
offering, extra crispy, is made using a garlic marinade and double dipping the chicken in flour before deep frying in a standard industrial kitchen type machine. Kentucky Grilled Chicken - This marinated grilled chicken is targeted towards health-conscious customers. It features marinated breasts, thighs, drumsticks, and wings that are coated with the Original Recipe seasonings before being grilled. It has less fat, calories, and sodium than the Original Recipe fried chicken. Introduced in April 2009. Discontinued products The Colonel's Rotisserie Gold – This product was introduced in the 1990s as a response to the Boston Market chain's roasted chicken products, and a healthier mindset of the general public avoiding fried food. Purportedly made from a "lost" Col. Sanders recipe, it was sold as a whole roaster or a half bird.[28] Tender Roast Chicken – This product was an off-shoot of 'The Colonel's Rotisserie Gold'. Instead of whole and half birds, customers were given quarter roasted chicken pieces. For a time, customers could request chicken "original", "Extra Tasty Crispy", or "Tender Roast". Smokey Chipotle – Introduced in April 2008. The chicken was dipped in chipotle sauce then doubled breaded and fried. It has been discontinued since August 2008. Nutritional value
KFC formerly used partially hydrogenated oil in its fried foods. This oil contains relatively high levels of trans fat, which increases the risk of heart disease. The Center for Science in the Public Interest (CSPI) filed a court case against KFC, with the aim of making it use other types of oils or make sure customers know about Trans fat content immediately before they buy food. In October 2006, KFC announced that it would begin frying its chicken in trans fat-free oil. This would also apply to their potato wedges and other fried foods, however, the biscuits.
Advertising One of KFC's latest advertisements is a commercial advertising its "wicked crunch box meal". The commercial features a fictional black metal band called "Hellvetica" performing live, the lead singer then swallows fire. The commercial then shows the lead singer at a KFC eating the "wicked crunch box meal" and saying "Oh man that is hot". In 2007, the original, non-acronymic Kentucky Fried Chicken name was resurrected and began to reappear on company marketing literature and food packaging, as well as some restaurant signage.
KFC Business Strategy KFC fast-food chains are currently under the restaurant division of PepsiCo Incorporated. Some major threats include the changing attitudes of society toward healthier eating habits, KFC has more than 9,800 outlets located in 77 countries. In marketing, KFC restaurants are not restricted from locating within close proximity of other KFC restaurants. There are two alternative strategies for KFC. The first strategy involves keeping PepsiCo beverage division and snack foods division together, and a divestiture of PepsiCo restaurant division; selling Taco Bell, Pizza Hut, and KFC. Present Situation The organization is currently structured with two divisions under PepsiCo. David Novak is president of KFC. John Hill is Chief Financial Officer and Colin Moore is the head of Marketing. Peter Waller is head of franchising while Olden Lee is head of Human Resources. KFC is part of the two PepsiCo divisions, which are PepsiCo Worldwide Restaurants and PepsiCo
Restaurants International. Both of these divisions of PepsiCo are based in Dallas.
Strengths Strengths can be found internally in a company and can be used to the company’s advantage. The strengths identified are as follows: 1. KFC's secret recipe. The secret recipe has long been a source of advertising, and allowed KFC to set itself apart. Also, KFC was the first chain to enter the fast-food industry, just before McDonald's, which opened its first store a year later, and the "secret recipe" was the initial home replacement strategy.
2. Name recognition and reputation. KFC's early entrance into the fast-food industry in 1954 allowed KFC to develop strong brand name recognition and a strong foothold in the industry. The Colonel is KFC's original owner and a very recognizable figure, both in the U.S. and internationally, in their new logo. In fact, in the fourth annual LogoValue Survey, done by The Schecter Group, the KFC logo was the only one which significantly enhance the brand's image . 3. PepsiCo's success with the management of fast food chains. PepsiCo acquired Pizza Hut in 1977, and Taco Bell in 1978. PepsiCo used many of the same promotional strategies that it has used to market soft drinks and snack food. By the time PepsiCo bought KFC in 1986, the company already dominated two of the four largest and fastest-growing segments of the fast food industry. 4. Traditional employee loyalty.
"KFC's culture was built largely on Colonel Sanders' laid back approach to management" (Wright, p.433). Before the acquisition of KFC by PepsiCo, employees at KFC enjoyed good benefits, a pension, and could receive help with other non-income needs. This kind of "personal" human resources management makes for a loyal workforce. 5. Improving operating efficiencies by reducing overhead and other operating costs can directly affect operating profit. Due to the strong competition in the US, the fast-food chains are reluctant to raise prices to increase profit. Many of the chains are turning to operating efficiencies to increase profit. For many companies, operating efficiencies are achieved through improvements in customer service, cleaner restaurants, faster and friendlier service, and continued highquality products.
Weaknesses Weaknesses
are also
found internally
like strengths.
Weaknesses,
however, can limit a company’s potential. The weaknesses for KFC are identified as follows: 1. The many sales of KFC lead to a confusing corporate direction. Between 1971 and 1986, KFC was sold three times. The first two sales, to Heublein, Inc and to R.J. Reynolds, left the company largely autonomous. It wasn't until the sale to PepsiCo in 1986 that changes in top management started to take place. These changes happened almost immediately after the sale. 2. KFC has a long time to market with new products. Because of the nature of the chicken segment of the fast food industry, innovation was never a primary strategy for KFC. However, during the late 1980's, other fast food chains, such as McDonald's, began to offer chicken as a
Menu option. During this time, McDonald's had already introduced the McChicken while KFC was still testing its own chicken sandwich. This delay significantly increased the cost of developing consumer awareness for the KFC sandwich. 3. Conflicting cultures of KFC and Pepsi Co. While KFC's culture was largely based on the Colonel's laid back approach to management, while PepsiCo's culture is more of a "fast track" attitude. Employees do not have the same level of job security that they enjoyed before the PepsiCo acquisition Problems Through an analysis of the strengths, weaknesses, opportunities, and threats of KFC, the following potential problem areas were identified:
1. No defined target market. The advertising campaign of KFC does not specifically appeal to any segment. It does not appear to have a consistent long-term approach. The U.S. has enormous changes in its demographics. Single-person households have increased from 12% in 1970 to 25% in 1995. With this kind of dramatic change, KFC does not have a proper approach to its target market. 2. Health Conscious Consumers. There has been a trend toward an increasingly healthy diet in America. This put KFC at an extreme disadvantage due to its fried product offering. 3. Increased Start Up Costs. Prime locations have increased in cost due to limited room for expansion. New technology has increased efficiencies, but resulted in greater
increased start up costs. Restaurant and equipment packages range from $500,000 to $1,000,000. Achievements: KFC is one of the most renowned world gastronomic brand names. Kentucky Fried Chicken products are currently offered in 80 countries worldwide and in more than 11,000 restaurants which are visited on a daily basis by almost 8 million customers. Globally, KFC employs approximately 290,000 people, Worldwide, a new KFC restaurant is opened almost every day. In 2004 the “KFC Excellent” range - three types of salad (Caesar, Garden and Mandarin) obtained the prize for “Worldwide Best Practice Award 2004” in the category of best product and best marketing campaign and its implementation in the restaurants. This prize is distributed each year by YUM Restaurants International.According to the ratings for “Most expensive world brands 2004” conducted by the American weekly ‘Business Week’, KFC was positioned 54th place; currently valued at 5.1 billion USD.
DOMINO’S
SIZE OF THE MARKET Domino's Pizza is one of the biggest and fastest growing international food joints in South Asia. The very first Domino's Pizza outlet in India opened in Jan, 1996 at New Delhi. Today, Domino's Pizza India has become a wide network of Pizza delivery and food chain. There are close to 220 outlets in 42 cities of India and the brand is the top most among the food delivery business. Domino’s Pizza outlets can be seen at major locations
of Delhi and NCR. Their home delivery is free with a guarantee of “Thirty Minutes Nahi to Free”. Although they are expert in delivering Pizzas on time, their eating joints and outlets are also good. We plan to have a total of 500 stores in 75-80 cities by 2010 to 2011. It would entail an investment of Rs 200 million during the period MARKET GROWTH During last four months, dominoes have opened outlets in Jammu, Panipat, Surat, Baroda, Nashik, Trivandum, Meerut and Patiala. While earlier, 70 percent of our business used to be in metros and mini-metros, now the ratio is 50:50 between big cities and smaller Tier II and III cities. Domino’s Pizza is expanding its base in India by opening 500 outlets to add to its current tally of 156 outlets, across 50 cities in India by 2011 with an investment of Rs.1, 000 crore. MARKET STRATEGIES Promotional and Advertisement Campaigns(Coupons and discounts) The '30 Minutes' Promise Use of Technology(Digital interactive Television, Internet on the PC, Mobile telephony) Premium Pricing Strategy Indian fast food industry and entry of multinational players Distribution strategies of fast food chains in India MARKET SHARE The organized pizza market in India is worth Rs.500 crore and Domino’s has a substantial 45% market share, and registered a healthy growth of 60% over last year. The main target for new outlets shall be metro cities though Tier II cities would also receive a fair amount of attention. Currently Domino’s sells around 35,000 pizza every day, of which around 1% are given free on account of its “30 minutes or free” model. 65
percent of its revenue comes from home delivery service; around 35 percent is from sales in premise. COMPETITORS Fast food is one of the world's fastest growing food types. It now accounts for roughly half of all restaurant revenues in the developed countries and continues to expand there and in many other industrial countries in the coming years. But some of the most rapid growth is occurring in the developing world; where it's radically changing the way people eat. People buy fast food because it's cheap, easy to prepare, and heavily promoted. This paper aims at providing information about fast food industry, its trend, reason for its emergence and several other factors that are responsible for its growth. India is a developing country with 2 percent of organized and 98 percent of unorganized sector. So most of the fast foods came into Indian market as India has a high growth in every sector. Some of the competitors of domino’s are McDonald's Pizza Hut Barista Coffee Day
MC Donald’s
McDonald's is the leading global foodservice retailer with more than 31,000 local restaurants serving more than 58 million people in 118
countries each day. More than 75% of McDonald's restaurants worldwide are owned and operated by independent local men and women. The strong foundation that he built continues today with McDonald's vision and the commitment of our talented executives to keep the shine on McDonald's Arches for years to come. To read more about McDonald's history, vision and executives, click on their links in the left menu. We drive our business momentum by focusing on what matters most to customers. Our owner/operators, suppliers and employees work together to meet customer needs in uniquely McDonald's ways. The powerful combination of entrepreneurial spirit and System wide alignment around our Plan to Win enables us to execute the best ideas with both large-scale efficiency and local flair.
Products McDonald's predominantly sells hamburgers, various types of chicken sandwiches and products, French fries, soft drinks, breakfast items, and
desserts.
In
most
markets,
McDonald's
offers
salads
and
vegetarian items, wraps and other localized fare. Portugal is the only country with McDonald's restaurants serving soup. This local deviation from the standard menu is a characteristic for which the chain is particularly known, and one which is employed either to abide by regional food taboos (such as the religious prohibition of beef consumption in India) or to make available foods with which the regional market is more familiar (such as the sale of McRice in Indonesia).
Advertising McDonald's
has
for
decades
maintained
an
extensive
advertising
campaign. In addition to the usual media (television, radio, and
newspaper), the company makes significant use of billboards and signage, sponsors sporting events ranging from Little League to the Olympic Games, and makes coolers of orange drink with their logo available for local events of all kinds. Nonetheless, television has always played a central role in the company's advertising strategy. To date, McDonald's has used 23 different slogans in United States advertising, as well as a few other slogans for select countries and regions. At times, it has run into trouble with its campaigns.
BARISTA
Barista coffee was establishes in 1999 with the aim of identifying growth opportunities in the coffee business. Increasing disposable incomes and global trends in coffee indicate immense growth potential in one particular segment. Barista Coffee is a chain of espresso bars in India. Headquartered in Delhi, Barista currently has espresso bars across India, Sri Lanka and the Middle East. It was founded in 1997 by Amit Judge and was part of his group of companies. He sold part of the equity to first Tata Coffee. Then after he and Tata Coffee fell apart, Sterling then bought over the firm. In 2007, Sterling divested all their stake to Lavazza. Barista Coffee Company is currently owned by Lavazza, Italy’s largest coffee company At Barista Lavazza, we do all we can to make every guest feel comfortable and welcome. We serve nothing but the finest Arabica coffees and cuisine at great value prices. We have friendly and efficient brew masters who believe in service with a smile. And provide a cheerful, interactive ambience that makes guests wish their coffee breaks lasted just a little bit longer. To share our cup of joy, we have always stuck to our Italian roots, guarding them zealously to ensure that our espresso bars reflect the warmth and character of traditional Italian coffee houses. And in the process, make Barista Lavazza the place ‘where the world meets’. Our aim is to passionately deliver the highest levels of experiential services. Maintain consistency in serving the highest quality products and become a globally competitive organization – one that is driven by an insatiable thirst for excellence.
CAFÉ COFFEE DAY Café Coffee Day is a chain of coffee shops in India having its headquarters in Chikkamagaluru, Karnataka. A division of Amalgamated Bean Coffee Trading Company Ltd. (ABCTCL), it is commonly known as Coffee Day or CCD. It opened its first cafe in 1996 on Brigade Road in Bangalore, and today has the largest cafe retail chain in India – with over 800 cafes in 112 cities. Large number of coffee day cafes are located in Bangalore. The cafe chain has had much success riding, and to some extent creating, the cafe culture wave that swept across metropolitan India following strong economic growth resulting in an increase in youth spending power. It has even tied up with World Space and Micro sense to enable its cafes with satellite radio and Wi-Fi, respectively. Its first Wi-Fi cafe was opened on Lavelle Road, Bangalore. Café Coffee Day sources coffee from 5000 acres of coffee estates, the second largest in Asia, that is owned by a sister concern and from 11,000 small growers. It is one of India’s leading coffee exporters, with clients across the USA, Middle East, Europe and Japan. With its roots in Chikmagalur, the home to some of the best Indian coffees, Coffee Day has its business spanning the entire value chain of coffee consumption in India. Its different divisions include: Coffee Day Fresh 'n' Ground (which owns 450 coffee bean and powder retail outlets), Coffee Day Xpress (which owns 730 Coffee Day kiosks), Coffee Day Takeaway (which owns 9000 vending machines), Coffee Day Exports and Coffee Day Perfect (FMCG Packaged Coffee) division. It is entering the European market by opening two Cafés in Austria as well, making forays into Pakistan and Germany to set up cafes abroad. The strategy CCD has adapted is to place a cafe in every possible location where some business can be generated. So in Bangalore, in the main shopping district, there are six outlets in a 2 km radius and overall 120 cafes in Bangalore alone. Another model which CCD has adapted is to be present in educational institutions and corporate campuses either in the form of detailed cafes or its economical model of CCD express.
These innovative strategies have ensured that the competition is at bay and ensured CCD's dominance in the Indian market though many of its outlets are incurring losses. Cafe Coffee Day competitors include but are not limited to •
Barista
•
Cafe Mocha
•
Costa Coffee
•
The Coffee Bean & Tea Leaf
LITERATURE REVIEW
Zenk, S. et al. “Neighborhood Racial Composition, Neighborhood Poverty and the Spatial Accessibility of Fast Food Stores in Metropolitan Detroit”. American Journal of Public (2005); 95(4). Abstract: Residential environment is clearly related to health, specifically dietary health. In fact, many of the most serious chronic illnesses in the United States are associated with dietary deficiencies. Proper access to nutritious foods is essential to decreasing dietary related chronic illness. Supermarkets provide dietary health resources through higher quality and lower costs of nutritious foods. This study examines the spatial accessibility of supermarkets for 869 neighborhoods within Metropolitan Detroit with relation to community's poverty and racial composition. The percentage of residents below the poverty line serves as the measure of neighborhood poverty for the study. Supermarkets are defined as either a Supercenter such as Super Kmart or a full-line grocery store associated with a national or regional grocery chain such as Kroger. Spatial accessibility is equivalent to a Manhattan block. The study found that the distance to the nearest Supermarket increased with increasing levels of neighborhood poverty. While the distance to the nearest Supermarket was similar among the most impoverished neighborhoods, African American communities
averaged
1.1
mile
greater
distance
to
the
nearest
supermarket than predominantly white neighborhoods. Relevant Data: Literature now associates residence in economically disadvantaged neighborhoods, after controlling for socioeconomic status, with a variety of adverse diet-related health outcomes. Disparities in Supermarket accessibility on the basis of race were evident among the most impoverished neighborhoods: the most impoverished neighborhoods, in which African-Americans resided, were on average were 1.1
miles
farther
from
the
nearest
supermarket
than
the
most
impoverished white neighborhoods. Mean distance to the nearest supermarket increased with each successive tertile of percentage poor for neighborhoods with a high proportion of
African Americans but remained approximately the same across all tertiles of percentage poor for neighborhoods with a low proportion of African Americans (predominantly white) . Inadequate accessibility to supermarkets may contribute to less nutritious diets and hence to greater risk for chronic diet related disease. Affordable public transportation needs to be improved integrating transportation routes with supermarket locations . Powell, Lisa M. et al. “Food store availability and neighborhood characteristics in the United States”. American lifestyle(2007 Mar); 44(3):189-195. Abstract: A 2006 study of the United States linked zip codes to census data, finding various statistics about the availability of grocery stores in accordance to neighborhood descriptions and demographics. There are distinct disparities between the access of blacks, whites and Hispanics to supermarkets, with a definite correlation in location, socioeconomic status, and race. Relevant Data: Low-income neighborhoods have fewer chain supermarkets with only 75% (p < 0.01) of that available in middle-income neighborhoods . Even after controlling for income and other covariates, the availability of chain supermarkets in African American neighborhoods is only 52% (p < 0.01) of that in White neighborhoods with even less relative availability in urban areas . Hispanic neighborhoods have only 32% (p < 0.01) as many chain supermarkets compared to non-Hispanic neighborhoods. Larger sized food stores such as supermarkets versus smaller stores and chain versus non-chain supermarkets have been shown to be more likely to stock healthful foods and to offer foods at a lower cost. Furthermore, given that low-income populations are less likely to have private means of transportation and given that the nature of food shopping involves either transporting multiple shopping bags or making
more frequent shopping trips, the mobility strategies for food shopping among low-income families will exacerbate the barriers to a limited number
of
available
local
area
supermarkets,
in
particular
chain
supermarkets. Indeed, several studies have highlighted the mobility constraints faced by low-income households in their daily activities including food shopping . A recent report finds that African Americans prefer to shop in chain supermarkets and that one of the key factors that influence these shoppers is transportation and location. Proximity is important—37% of African American shoppers travel one mile or less to their primary grocery store . Grengs, Joe. “Does Public Transit Counteract the Segregation of Carless Households? Measuring Spatial Patterns of Accessibility”. Transportation Research Board of the National Academies (2007); Abstract:
This study researched Geographic Information Systems,
technology that measures transit use on smaller scales, to address the problem of urban populations that depend on public transportation but have a lack of access to their everyday needs, including food. Relevant Data/Quotations: The analysis finds that over 7,500 households, representing 12 percent of New
York
City's
households,
do
not
have
reasonable
access
to
supermarkets. The study provides statistically significant evidence that poor accessibility is
associated
neighborhoods
both with
with
low-income
disproportionately
neighborhoods high
populations
and of
with African
Americans. Service Quality: An investigation into Malaysian Fast food consumers using DINESERV Keang Meng Tang, University of Newcastle Ursula Bougoure, Queensland University of Technology
As noted by Doran (2002), it is imperative that we seek to examine commonly accepted, western-based marketing theory in the context of
different countries to see whether such concepts explain the same phenomena in consumers from different countries. Whilst extensive research has been conducted on service quality over the past two decades (e.g. Bitner, 1990; Cronin and Taylor, 1992, Parasuraman, Zeithaml and Berry, 1988), relatively little attention has been paid to issues surrounding service quality in non-western countries, like the Asian region and in particular, Malaysia. Of the knowledge gained in the service quality literature, the work of Parasuraman, Zeithaml and Berry (1988) provides an approach to defining and measuring service quality, known as SERVQUAL. Incorporating five service quality dimensions of tangibles, reliability, responsiveness, assurance and empathy, SERVQUAL has been well utilised within the literature. This being said however, it is important to note that SERVQUAL has been found to possess certain limitations, particularly when applied across different service industries (eg: Babakus and Boller, 1992; Schneider and White, 2004). For example, DINESERV for restaurants was developed by Stevens, Knutson and Patton (1995), in response to findings that SERVQUAL was inadequate for the ‘unique’ restaurant environment (Dube, Renaghan and Miller, 1994). Prior research suggests that not all service quality elements (within tools such as SERVQUAL, DINESERV) are able to predict a consumer’s overall service quality perceptions or (OSQ) (Oliva, Oliver and MacMillan, 1992). Therefore, it is important to identify the importance of service quality and its dimensions in determining overall service quality (OSQ), as perceived by customers. By addressing this issue, firms can gain an understanding of the areas they should concentrate on when seeking to improve their overall service quality provisions (Oliva, Oliver and MacMillan, 1992). In the context of the fast food industry, it appears likely that service quality dimensions from DINESERV will positively effect overall service quality (OSQ) perceptions by Malaysian consumers. Thus, H1: Service quality (DINESERV) will positively effect Overall Service Quality perceptions (OSQ) for Malaysian fast food consumers.
Customer satisfaction has long been recognised as a process (Oliver, 1981) and is the difference between consumers’ perceived and expected performance of a product or service. In other words, customer satisfaction occurs when performance is higher than expected, while dissatisfaction occurs when performance is lower than expected. Overall, to gain customer satisfaction, some argue that organisations need to exceed predictive expectations of customers, rather than just satisfy expectations (Spreng and Mackoy, 1996). Service quality and customer satisfaction are inarguably fundamental concepts within services marketing theory (Spreng and Mackoy, 1996) and their relationship has seen increasing research interest over the years (Bitner, 1990; Dabholkar, 1995; Spreng and Taylor, 1997; Mohsin, 2003). While it is generally accepted that a positive relationship exists between service quality and customer satisfaction, there is debate (Shemwell, Yavas and Bilgin, 1998) with proposals of a causal link from customer satisfaction to service quality (Bitner, 1990), service quality to customer satisfaction
(Bolton
and
Drew,
1991;
Spreng
and
Mackoy,
1996;
Parasuraman, Zeithaml and Berry, 1994); suggestions that directionality varies according to the service situation (Dabholkar 1995) and even that there is no relationship under particular circumstances (Parasuraman, Zeithaml and Berry, 1985). Such contention within the literature has lead to repeated calls for further examination of this relationship (e.g. Rust and Oliver, 1994; Anderson and Fornell, 1994). In the case of fast food, however, it seems likely that high service quality will lead to increased satisfaction for consumers. Thus, H2: Service quality (DINESERV) will positively effect customer satisfaction for Malaysian fast food consumers. Intention to repurchase is an individual’s judgment about re-buying a designated service, taking into account their current situation and likely circumstances (Hellier et al., 2003). Within the literature, repurchase behaviour is seen as a form of loyalty, which according to Law, Hui and Zhao, (2004) and Oliver (1997) is a deeply held commitment to consistently repatronise a service in the future. Repurchase intentions
have a powerful effect on potential business profit with some reports arguing as much as 95 percent of profit arises from repeat purchases (Hoffman et al., 2003). As such, loyal customers are valuable marketing tools, telling friends and families of their positive experiences and creating new business and increased revenue for successful service organisations. Service quality is tied to desirable business outcomes, such as customer loyalty, which ultimately lead to increased profits (Schneider and White, 2004). As argued by Rust, Zahorik and Keiningham (1995), service quality generates consumer intention to return, which can translate into actual behaviours that may lead to increased revenues and profits. In the extant literature however, there are mixed findings as to the relationship between overall service quality and behaviors that are indicative of customer loyalty. For example, while Boulding et al (1993) and Rust and Zahorik (1993) provide empirical support that higher perceptions of service quality increases loyalty intention, Cronin and Taylor (1992) found that overall service quality did not effect repurchase intentions. Overall however, results tend to support this relationship and it seems likely that this will be the case for Malaysian consumers of the fast food industry. Thus, H3: Overall service quality (OSQ) will positively effect repurchase intentions for Malaysian fast food consumers. According to Schneider and White (2004), satisfied customers most likely will
become
loyal
which
can
then
translate
into
higher
profits
organizations. As such, the relationship between customer satisfaction and repurchase intentions has been examined with results implying that satisfied customers are more likely to intend to repurchase (Taylor and Baker, 1994; Patterson and Spreng, 1997). According to such findings, it appears likely that this will also be the case for Malaysian consumers in the fast food industry. Thus, H4: Customer satisfaction will positively effect repurchase intentions for Malaysian fast food consumers.
Sample and Research design A descriptive research design was adopted to do the survey with the help of the questionnaire. The study used non probability convenience sampling. The methodology of study is the interview method survey. The study is completely based on the primary data which is collected from different Fast food stores and the sample size taken for study is 100 people.
Tools and Methods of Data Collection: The interview is conducted for about 15 minutes with each person and collected the data. The tool for the collection of data is a questionnaire. The questionnaire has 15 questions.
Data Processing and Analysis:
The data processing consists of coding the data collected in the form of questionnaire. The data collected with the help of questionnaire is having the closed replies. One open ended replies have been taken for that if any problems they are facing and for the close ended the replies are measured using scales.
ANALYSIS & INTERPRETATION 1) VISIT
Frequency Daily
14
Weekly
38
Fortnightly
19
Monthly
9
Total
100
visit 38
40 35 30 25
19
20 15
14 9
10 5 0 Daily
Weekly
Fortnightly
Monthly
Interpretation:From the above table and graph, it says that majority of the customers visit the fast food retail store weekly (i.e. 38%) and minority of them (19%) visit fortnightly
2) PRICE RANGE
Range
Frequency
100-200
24
200-500
60
Above 500 Total
16 100
price range 70 60 50 40 30 20 10 0 100-200
200-500
Above 500
Interpretation:From the above table and graph, it says that majority of the customers are willing to spend money of price range 200-500 (i.e. 60%) and minority of them says that they will spend money of price range 100-200 (i.e. 24%) in the fast food retail store
3) Preference Frequency Brand image
21
Easy accessibility
29
Special offer
50
Total
100
preference of store 60 50 40 30 20 10 0 Brand image
Easy accessibility
Special offer
Interpretation:-
From the above table and graph, it says that majority of the customers (i.e. 50%) prefer special offers in the store and minority of them (i.e. 29%) prefer easy accessibility
4) Visiting hours Frequency
Morning
40
Afternoon
29
Evening
31
Total
100
45 40 35 30 25 20 15 10 5 0 Morning
Afternoon
Evening
Interpretation:From the above table and graph it says that majority of the customers are willing (i.e. 40% ) to visit the store on morning session and minority of them (i.e.31% ) of them visit the store on evening session
5) Preference of store due to friendliness of staff
Response
Frequency
Strongly disagree
2
Disagree
5
Neutral
44
Agree
40
Strongly agree
9
Total
100
50 45 40 35 30 25 20 15 10 5 0 Strongly agree
Disagree
Neutral
Agree
Strongly agree
Interpretation:-
From the above table and graph it says that majority of the customers (i.e. 44%) of them are neutral to prefer the store for friendliness of staff and minority of them (i.e. 40% ) of them agree that they will prefer the store for friendliness of staff
6) Preference of store due the variety of menu available in the store
Response Strongly Disagree Disagree
Frequency 5 15
Neutral
21
Agree
39
Strongly agree
15
Total
100
preference due to variety of menu 45 40 35 30 25 20 15 10 5 0 Strongly agree
Disagree
Neutral
Agree
Strongly agree
Interpretation From the above table and graph it says that majority of the customers ( i.e. 39%) of them agree that they will prefer the store due to the variety of menu and minority of them (i.e. 21% ) of them neutral about the variety of menu in the store 7) Preference of store due the service speed
Response Strongly disagree
Frequency 5
Disagree
20
Neutral
39
Agree
15
Strongly agree
20
Total
100
preference due to service speed 45 40 35 30 25 20 15 10 5 0 Strongly agree
Disagree
Neutral
Agree
Strongly agree
Interpretation:From the above table and graph it says that majority of the customers (i.e. 39%) are neutral about the preference of store due to service speed and minority of them are disagree that (i.e. 20%) of them prefer the store due to service speed
8) Preference of store due to good calorie content exist in the food
Response Strongly disagree
Frequency 9
Disagree
33
Neutral
19
Agree
31
Strongly agree
20
Total
100
preference for calorie content 35 30 25 20 15 10 5 0 Strongly agree
Disagree
Neutral
Agree
Strongly agree
Interpretation:From the above table and graph it says that majority of the customers (i.e. 33%) of them disagree that they will prefer the store due to the calorie content in the food and minority of them (i.e. 31%) agree that they will prefer the store due to the calorie content in the food
9) Preference of store due to the cleanliness and store atmosphere
Response
Frequency
Strongly disagree
2
Disagree
7
Neutral
25
Agree
40
Strongly agree
26
Total
100
preference due to ambience 45 40 35 30 25 20 15 10 5 0 Strongly disagree
Disagree
Neutral
Agree
Strongly agree
Interpretation: From the above table and graph it says that majority of the customers (i.e. 40% ) of them agree that they will prefer the store for ambience provided in the store
10) Preference store due the delivery speed offer by the store
Response
Frequency
Strongly disagree
4
Disagree
20
Neutral
15
Agree
41
Strongly agree
20
Total
100
preference due to delivary speed 45 40 35 30 25 20 15 10 5 0 Strongly disagree
Disagree
Neutral
Agree
Strongly agree
Interpretation:From the above table and graph it says that majority of the customers (i.e. 41%) of them prefer the store due to delivery speed that is offered
11) Satisfaction with the menu offer for my family
Response
Frequency
Strongly disagree
7
Disagree
16
Neutral
34
Agree
35
Strongly agree Total
6 100
preference of menu for my family 40 35 30 25 20 15 10 5 0 Strongly disagree
Disagree
Neutral
Agree
Strongly agree
Interpretation:From the above table and graph it says that majority of the customers (i.e. 35% ) of them agree that they are satisfied with the menu that was offered in the fast food store and followed by some of them are neutral about the menu for their family
12) Preference of store due to facilities offered
Response
Frequency
Strongly disagree
11
Disagree
20
Neutral
41
Agree
14
Strongly agree
14
Total
100
preference due to facilites 45 40 35 30 25 20 15 10 5 0 Strongly disagree
Disagree
Neutral
Agree
Strongly agree
Interpretation:From the above table and graph it says that majority of the customers (i.e. 41% ) of them says that they are neutral about preferring the store due to the facilities
13) Preference of store due to easy accessibility and locational advantage
Response
Frequency
Strongly disagree
4
Disagree
18
Neutral
15
Agree
45
Strongly agree
15
Total
100
50 45 40 35 30 25 20 15 10 5 0 Strongly disagree
Disagree
Neutral
Agree
Strongly agree
Interpretation:From the above table and graph it says that majority of the customers (i.e. 45%) of them agree that they will prefer the store due to easy accessibility and locational advantage
14) advertising strategy
Response
Frequency
Strongly disagree
9
Disagree
20
Neutral
33
Agree
28
Strongly agree
10
Total
100
35 30 25 20 15 10 5 0 Strongly disagree
Disagree
Neutral
Agree
Strongly agree
Interpretation:From the above table and graph it says that majority of the customers (i.e. 33%) of them are neutral about the advertising strategy provided by the store and followed by that customers agree the store for the advertising strategy
15) preference of store due to special offer and discounts
Response
Frequency
Strongly disagree
4
Disagree
20
Neutral
15
Agree
41
Strongly agree
20
Total
100
45 40 35 30 25 20 15 10 5 0 Strongly disagree
Disagree
Neutral
Agree
Strongly agree
Interpretation:From the above table and graph it says that majority of the customers (i.e. 41% ) agree that they will prefer the store because of special offers and discounts.
Major Findings •
This study indicates that majority of the customers visit the fast food retail store weekly (i.e. 38%) and minority of them (19%) visit fortnightly
•
This study indicates that majority of the customers are willing to spend money of price range 200-500 (i.e. 60%) and minority of them says that they will spend money of price range 100-200 (i.e. 24%) in the fast food retail store
•
This study indicates that majority of the customers (i.e. 50%) prefer special offers in the store and minority of them (i.e. 29%) prefer easy accessibility
•
This study indicates that majority of the customers (i.e. 44%) of them are neutral to prefer the store for friendliness of staff and minority of them (i.e. 40% ) of them agree that they will prefer the store for friendliness of staff
•
This study indicates that majority of the customers ( i.e. 39%) of them agree that they will prefer the store due to the variety of menu and minority of them (i.e. 21% ) of them neutral about the variety of menu in the store
•
This study indicates that majority of the customers (i.e. 33%) of them disagree that they will prefer the store due to the calorie content in the food and minority of them (i.e. 31%) agree that they will prefer the store due to the calorie content in the food
•
This study says that majority of the customers (i.e. 40% ) of them agree that they will prefer the store for ambience provided in the store
•
This study says that majority of the customers (i.e. 35% ) of them agree that they are satisfied with the menu that was offered in the fast food store and followed by some of them are neutral about the menu for their family
•
This study indicates that majority of the customers (i.e. 45%) of them agree that they will prefer the store due to easy accessibility and locational advantage
•
This study indicates that majority of the customers (i.e. 33%) of them are neutral about the advertising strategy provided by the store and followed by that customers agree the store for the advertising strategy
•
This study indicates that majority of the customers (i.e. 41% ) agree that they will prefer the store because of special offers and discounts.
Major suggestions: As majority of customers (38 percent) visit the store weekly especially weekends. So it is suggest to stores give special offers and discounts to capture more customers and retain loyal customers.
As study refers more customers are looking for the special offers ,so it suggest stores to more concentrate on the special offers but no compromise in the quality of food.
It is found that majority of customers are not fully satisfied with the friendliness of staff. So it is suggest that the stores should conduct soft
skill training and make them give more customer service .Regular monitoring of the staff behavior towards customers is also suggest here. Customers are happy with the MENU verities available in the stores .But it is suggested that add more customized menu and review the menu for every 3 months. As study shows that customers are not aware of the calorie contents exist in the food. So it is suggest that stores should display the calorie contents available in a particular food.
It is suggest the stores to concentrate on the areas of ambience and locational strategy.
Advertising strategy of the stores are not making attention the customers .So it is suggest the stores to think of the design of different innovative advertising campaigns.
