Characteristics Of The Fast Food Sector Business Essay

There is a number of fast food brands in Srilanka and fast food outlets in Colombo can be successful over other fast food outlets in other areas of srilanka because Colombo is the commercial city and capital of Srilanka with a large number of busy population. Most of rich people live in Colombo as there is easy access to everything.

Colombo is divided into more than 10 parts for easy identification that are colombo1, Colombo 2… colombo7… Colombo 12. Colombo 1, 2,3and 7 are the popular destinations for high profit seeker fast food outlets as there is a large number of people ‘who don’t care price’.

In Colombo, most fast food outlets target upper class &upper middle class people only and sell junk food and beverages which contain chemicals that injurious to health. Although, and some target everybody and sell healthy food and beverages. So, there is a deficit of the high quality fast food outlets which focus everybody and sell affordable and healthy products. There is a market that can be appealed.

Research objective

This research will look into the internal and external barriers and find out ways and means of overcoming those identified and potential barriers for succeeding. Major objectives of this research as follows and segmented under 3 areas for better understanding and explanation.

Major challenges when starting up a new fast food outlet and to survive

Current trends

Unique hot selling food and beverages

Other international and local fast food brands in Colombo

People attitudes towards fast food

Poor Employee retention and satisfaction

Unnecessary costs

Benefits of selling healthy food and beverages

Benefits to society

Benefits to the outlet itself

Finding possibility of selling quality and healthy fast food and beverages at low prices

Identifying current healthy fast food and beverages

Identifying market places that sell quality ingredients for healthy food and beverage

Research background

Most of the hotel restaurants are situated in Colombo 1, 2, 3,4and 7 including 5 star hotels. There is a number of fast food brands that are Belly Buster, Belliniss, Bros T, Mr. Chicos Texas, Nandos, Deli market restaurant, Dine Mor, Domino’s Pizza, Hotel De Hijra, Mc Donald’s, Hotel De Pillawoos, Pizza Hut, KFC, Crescat Boulevard, Majestic city food court, Excel world Food Court, etc.

Most of the hotel restaurents are diversified and they sell fast food.

So, there is a huge competition to attract customers and this has lead to selling anything to make profits.

Research problem

Most of the fast food outlets are catering upper class and upper middle class (selling non affordable fast food) and selling non-healthy food &beverages.

No fast food outlet in Colombo seems to get off the current pattern. So this situation will be good enough to enter this business using a research with a new theme like “quality &healthy food and beverages to everybody”. If there is a possibility of starting up a new fast food outlet to outlet affordable quality and healthy fast food and beverages, how good it is.

People in Colombo or customers buy those highly priced and non-healthy food and beverages. Maybe, they are already informed of the bad effects of eating non-healthy junk food and the reason is they have no other option like, high quality fast food outlets which sell affordable healthy products.

So, if I could develop recipes for making healthy food and beverages at low prices and buy fresh vegetables and fruits at low prices it will be quite possible to sell affordable healthy food and beverages using strategies. In order to achieve this aim those issues need to be addressed.

Research methodology

This study will adopt qualitative research with the use of questionnaires, observations and interviews and to refer and study profitable and successful fast food outlets, success stories, etc.

The questionnaire is designed for measuring the customers ‘attitudes, perception and behavior when choosing the fast food outlets

One or two successful fast food outlets’ managers and its employees (especially waitresses and waiters) and one or two fast food outlets’ managers and its employees in fast food outlets which compete to get an adequate amount of consumers would be interviewed

A few fast food outlets in particular areas which attract more people than others and what people most consume at each fast food outlet and what the busiest day of each week is for each fast food outlet will be observed.

Research tools

Data collection methods and instruments- questionnaires

Interviews (only selected personnel)

Observations

Characteristics of the fast food sector

The fast food sector is one of the sectors of the food service industry.

Quick service- food and beverages need to be served very quickly. There should not be too much waiting to serve products.

Ease of access- fast food outlets should be easily accessible.

Flexibility- fast food outlets should be ready to accept returns or any customer request to change what they have already bought.

Limitation of the study

As mentioned below, there were limitations and difficulties such as;

Very limited local resources were available for reference

Some waiters and waitresses were reluctant to be interviewed.

There are a number of fast food brands in Colombo and therefore, some of them could not be studied

Chapter 1 summary

This is initially more focused on the introduction and background of the research by giving a brief introduction to the research. At the middle and latter parts of the chapter, it will elaborate the research objectives while taking about the nature of the fast food sector and research limitations. It has also discussed the significance and the gravity of the research and the research problem.

Chapter 2

Literature review

The term “fast food” relates to food that can be prepared quickly. Most of this popular type of food availed in packaged form called takeaways. The fast food industry has its roots in the for sale stands, that were part and parcel of ancient and East Asian societies. (Gaynor Borade, 2012)

The concept of fast food is generally associated with urban development. Fast food outlets today are elaborate quick service outlets. The franchise operations have generated restaurant chains that offer standardized meals across the globe. On account of a low capital requirement and popularity of fast food, fast food restaurants and drive through outlets are common throughout the world. Also known as sit-ins.These restaurants cater to the dry food demands of the younger generation, extremely tight adult work schedule. (Gaynor Borade, 2012)

Today, some fast food outlets sell dangerous food which contains chemicals that are injurious to health. Favorite chemicals used as part of the food making process are -titanium dioxide(found in dressings), azodicarbonamide (found in some subway breads),sodium phosphate(found in coffee in fast food joints)…(Uttara Manohar,2012).

Health problems that are brought on because of regular junk food eating-asthma, strokes, type 2 diabetes, cancer, liver disease, and cardiovascular diseases. (Uttara Manohar, 2012)

I found that some ladies and gentlemen have taken step forward written articles about the bad effects of fast food to convince people who are in the dark. They propose healthy food and beverages.

Does any of this sound appetizing? I think not. To indulge once in a while is all right; after all you are human enough to have cravings. What you shouldn’t do is indulge to a point where it qualifies as gluttony. Treat yourself to healthy homemade foods using fresh produce instead, coupling low-sodium ingredients and all-natural add-ons. Eat your favorite junk food meal twice a month, and not more. Spread the good word. (Uttara Manohar, 2012)

Eating Junk food now lead to obesity among most of youngsters and adults. (Uttara Manohar, 2012) So, needs quality and healthy food &beverages

As a result of a recent health revolution, fast food chains and restaurants have started the integration of all possible food nutrition in their menu. Hamburgers and French fries are probably the most famous fast foods, are nowadays made with the help of healthy low cholesterol fats, lesser oil, and whole wheat breads. Many hamburgers nowadays, have a high content of salads and vegetables in them and are made with sauces and prickles that are rich in vitamins. The fries are nowadays not deep-fried and have a low content of oil in them… (Scholasticus K, 2010).

Not only healthy food, Cleanliness &hygiene issues are relevant to the premises, equipment and staff. Tidy premises, smart uniforms and the use of protective gloves, for instance, can all have a positive effect on the perception of the food service operation as being clean and hygienic. (Cousins et al.2002)

A fast food outlet which sells healthy products is identified social responsibility and it can make profits as there are well educated and sensible people who support by writing and becoming customers of the fast food outlet which sells quality and healthy food and beverages.

Strategies

Normally, if any business needs to survive, it must develop strategies as the environment is always changing. There are marketing strategies, pricing strategies, etc.

There are various pricing methods such as; cost-plus, prime costing methods, backward pricing, rate of return pricing, profit per customer pricing, elasticity pricing and completion pricing(Cousins et al.2002).Marketing strategies, such as; market segmentation, porter generic strategies. There are numerous Pricing strategies such as; Loss leader, demand-based pricing, etc.

One of the major marketing strategies is market segmentation. Researching the market will facilitate the identification of consumer’s needs, wants, demands, goals and values as they relate to food and beverage products (Cousins et al.2002).there are many different ways to segment a market such as; geographic, demographic, psychographic and behavioral segmentations.

After well identifying all the market segments that we can approach with good products, we can be sure that our business will be successful as we can satisfy the customers’ needs with the right product and also we can then get customer loyalty which ensures continuation of the business.

Price is the element of the meal experience that also relates to value (Cousins et al.2002). So, we need to ensure that there is strategic pricing where a high-priced product might not be perceived as a low quality product and also, a low priced product might not be perceived as a low quality product. Pricing strategies are so important to get customer loyalty.

Social responsibility

Recognizing social responsibility and being responsible for the welfare of the society can be ultimately a good strategy as there will be support from the society to keep the organization which has set a code of business and social ethics.

Social responsibility objectives stress the ethical aspects of a food service organization’s objectives. These include 1. Safety of products 2.working conditions 3.honesty for example, not offering or accepting bribes or other inducements, 4.equal opportunities and 5. Pollution and other environmental concerns (Cousins et al.2002).

So, when we are running the business ethically and abiding by law, the ethical society will give their vote for continuation of the business.

To indulge once in a while is all right; after all you are human enough to have cravings. What you shouldn’t do is indulge to a point where it qualifies as gluttony. Treat yourself to healthy homemade foods using fresh produce instead, coupling low-sodium ingredients and all-natural add-ons. Eat your favorite junk food meal twice a month, and not more. Spread the good word. (Uttara Manohar, 2012)

Employee motivation and retention

To succeed in any business we need a good staff or human capital that can be effective and efficient. Therefore, a fast food outlet must have appropriate recruitment and selection strategies, the right HR policy, and should keep the existing staff motivated to get the maximum productivity of them and prevent labor turnover.

When it comes to motivation of employees, we need to well understand and practice the current contemporary views and theories on motivation such as Elton Mayo’s the human relation movement,Rensis Likert’s the four systems of management, Douglas McGregor’s theory X and Y, Fredrick Hertzberg’s hygiene theory, Abraham Maslow’s hierarchy of human needs, Edgar Schein’s the psychological contract and career anchor, Amitai Etzioni’s the manager’s power and workers’ power, Carrot and stick method, etc (CTH,2011). out of them, Maslow’s hierarchy of human needs and Hertzberg’s two factor theories are well respected.

Maslow proposed a hierarchy of universal human needs representing the order in which these needs become motivators of human behavior. Human beings’ needs and desires are inexhaustible. As soon as one need is satisfied another appears to take its place. This is one of the most influential theories on motivation as it describes human needs and desires divided into sets or levels. The sets are physiological needs, safety needs, social needs, ego needs and self actualization.

Hertzberg found that factors associated with the job environment such as; compensation, supervision, working conditions, company policy, so on, create dissatisfaction and unhappiness on the job when they are inadequate; they become dissatisfied. But removing the causes of dissatisfaction doesn’t create satisfaction and it therefore doesn’t motivate performance. Hertzberg called these factors ‘hygiene factors’ (maintenance factors).

Hertzberg found that the factors that motivate consists of opportunities in the job itself for achievement and growth such factors as recognition, achievement, advancement, responsibility, the work itself. He called these factors ‘motivators’.

To start up a new fast food outlet other than buildings and equipment we need to understand corporate social responsibility that is ensuring that the fast food outlet sell quality and healthy products, the environment is not being polluted, etc , must have good strategies to win the competition and make more profits, and a great staff who can be productive.

Chapter 2 summary

This chapter is about literature reviews, various strategies, arguments and thoughts.

At the beginning, it discusses origin of fast food outlet and at the middle; it discusses healthy and non healthy fast food beverages and its effects with reviews. At the end, the current marketing strategies which are essential to survive are discussed and one of the crucial parts that need to be addressed to succeed a business is employee satisfaction and retention is discussed.

Chapter 3

Research methodology

This chapter will discuss and emphasize on the methodology of this research study. Initially, formation and conceptual framework is illustrated and thereafter, it will discuss selection methods of data, reviving, identifying of variables.

Afterward, study development is shown. After this, the realization and practice of this study comes under the sections of sample selection, data collection method, and data analysis and summarizing.

Micro culture(internal)

Internal culture for starting up a new fast food outlet and survive

Cost

Employment and employee retention

Location, etc.

Macro culture(immediate)

Influence of politics, promotions, etc.

Increase of fast food outlets

People’s attitudes toward fast food, etc.

External macro cultural issues

Other competitive industries

International fast food brands, etc.

Factors influencing starting up a new fast food outlet and surviving

The above segmented factors (micro culture, macro culture and external macro cultural issues) are being examined and assessed under organizational and national levels.

Hypothesis development

Three hypothesis have been developed to study the impact of the variables

Hypothesis 1: Micro culture-high initial cost, difficulty of finding employees and retaining them, poor location and lack of customer attractions, competitors’ hot selling food and beverages will be the barriers to start up a new fast food outlet.

Hypothesis 2: Macro culture- increase of low quality fast food outlets in Colombo and they are creating a bad picture amongst the existing fast food customers towards fast food outlets will result in difficulty of attracting customers and maintaining goodwill.

Hypothesis 3: External macro cultural issues- international fast food brand outlets will do more promotional activities to attract more and more customers. As a result, the new fast food outlet will not be able to attract a plenty of customers.

Operationalisation of variables

Concepts

Variables

Indicators

Source form

How to find answers

factors influencing starting up a new fast food outlet and surviving

Internal culture for starting up a new fast food outlet and survive

Cost

Interviews with the fast food managers

Employment and employee retention

Interviews with the fast food managers

Risks

Interviews with the fast food managers

Hot selling fast food and beverages

Interviews with the fast food managers and questionnaires

Macro culture(immediate)

Increase of fast food outlets

General opinion of the public

questionnaires

Political influence

Competitors’ offers and promotions

Observations and Interviews with the fast food managers

Market place

Interviews with the vendors

External macro cultural issues

International fast food brands in srilanka

Interviews with the international fast food brand outlet managers.

Other competitive industries

Methodology

Sampling and selection

10 customers of each of the fast food outlets ( Dine Mor, Pizza Hut, Mc Donald’s, KFC, Mr. Burger King ( situated in the Malay street of Colombo 2) are taken as samples to get answers for a few questions which are included in the questionnaire.

Data collection methods and instruments

A questionnaire is used to find hot selling fast food and beverages among different age groups and General opinion of the public towards the fast food outlets

Two or three successful fast food outlets’ managers including international fast food brand outlets’ and its employees (especially waitresses and waiters) and two or three fast food outlets’ managers and its employees in fast food outlets which compete to get an adequate amount of consumers would be interviewed to find answers for their cost of running the business, their classes of fittings and furniture, how they retain their employees, their hot selling products and how they interact with the public.

Interviews are with vendors who sell quality ingredients for making healthy food and beverages.

A few fast food outlets in particular areas which attract more people than others and what people most consume at each fast food outlet and what the busiest day of each week is for each fast food outlet will be observed.

Data analysis

As this is a qualitative research, this research would use deductive reasoning method.

Chapter 3 summary

This chapter discusses methodology of the research study. The structure, variables or the framework is considered. Thereafter, methodology, sample and data collection methods are declared.

Chapter 4

Data presentation, Analysis and discussion

This chapter is about data presentation, analysis and discussion. Most of the weighting is given to primary data since there was not a plenty of secondary data. It focuses on findings, discussion and analysis which cover hypothesis testing.

Findings

Data collected from the questionnaire

40 people were given the questionnaire. The findings are as follows;

All the 50 people recommended Dine mor, Pizza Hut, Mc Donald’s and KFC and only 19 recommended Mr. Burger king.

22 persons’ favorite fast food brand is Pizza Hut, 13 persons’ favorite brand is Mc Donald’s and the rest 15 persons’ brand is KFC

Their favorite fast food/s

Fast food Number of the people

Pizza 50

Hamburger 36

Chicken submarine 41

Veggie burger 37

Fried chicken 29

Other 23

‘Other’ included fried potatoes, fried meats, etc.

Their favorite beverage/s

Beverage Number of the people

Soft drinks like, Coca Cola 50

Fruit juices (orange juice, avocado juice, etc) 50

Ice cream 45

Level of quality of the fast foods sold by the fast food outlets in Colombo

Number of the people

High (KFC, Pizza Hut, Mc Donald’s, Dine Mor) 50

Satisfactory (Mr. Burger king) 27

Not satisfactory –

Time they consume fast food

Number of the people

At morning 7

At noon –

At evening 43

Number of the people who like healthy fast food and beverages is 40

** Dine mor, Mc Donald’s and KFC appear to be popular fast food brands in Colombo. Their favorite fast foods include pizza, burger and fried chicken. The people believe that level of quality of the fast food outlets (KFC, Mc Donald’s, Pizza Hut, and Dine Mor) is high in Colombo. Majority of them consume fast foods at evenings. All of the people like healthy fast food and beverages.

Information gathered from the interviews

Cost

-Average cost of the interviewed fast food outlets per month is more than Rs.300, 000 this figure includes production cost and general administration cost.

-Initial cost to start a fast food outlet varies according to factors like, level of service, ambience, food and beverages, number of employees, etc.

Risks

-Food and beverages need to be processed in a quality setting otherwise they would be polluted.

-Food and beverage production should be limited prior to the past experiences of selling.

-employees would leave the organization if they are not well treated, etc.

Employee retention

-to retain employees there should be the right HR policy, effective employment of recruitment and selection strategies, reward systems, etc.

Hot selling food and beverages

-Pizza, burger, fried chicken, fried potatoes are amongst the hot selling fast foods and soft drinks like Coca Cola, fruit juices, ice creams are the hot selling beverages.

Competitors’ offers and promotions

-The competitors commonly use price reduction, ‘buy one and get one for free’ promotion, free home delivery, etc.

Raw material market place

-prices of fruit and vegetables have been increased recently and every market place tend to sell their products at higher prices. However, directly buying from the farmers is the cheapest way but this involves additional costs such as transportation, labor costs, etc.

Information gathered from the observations

-The busiest times for Mc Donald’s were during 3.00- 6.00 pm

-The busiest times for KFC were during 4.00- 7.00 pm

-The busiest times for Mr. Burger King were during 4.00-7.00 pm

-The above fast food outlets have been serving for a plenty of customers at the above mentioned time ranges.

-Most of the customers tended to consume fried chicken, fried potatoes, pizza and burgers. So, they were the hot selling fast foods at that time.

-the hot selling beverages were fruit juices and cool coffee

Analysis and discussion

Analysis 1

Hypothesis 1: Micro culture-high initial cost, difficulty of finding employees and retaining them, poor location and lack of customer attractions, competitors’ hot selling food and beverages will be the barriers to start up a new fast food outlet.

-High initial cost, difficulty of finding employees and retaining them, poor location and lack of customer attractions are the barriers to start up new fast food outlets.

-Starting up of a new fast food in Colombo does not involve high initial cost, difficulty of finding of skillful employees and difficulty of retaining them, difficulty of finding a place full of customer attractions and difficulty of making competitive fast food and beverages.

-Therefore, it is possible to start up this fast food outlet in Colombo.

Discussion 1

High initial cost can be ignored due to that my budget is above the found average cost to run a fast food outlet in Colombo per month.

Finding of skillful persons can be done using local sources such as recruitment agencies, newspaper advertisements, own website advertisements, etc.

Retaining of them can be done as this research identified strategies such as motivation strategies, pricing strategies, etc.

There were a number of places in Colombo which are full of customer attractions and a building can be taken on rent in such place in Colombo.

Healthy fast food and beverages are going to be made with the people’s votes and so, these definitely have a market.

Analysis 2

Hypothesis 2: Macro culture- increase of low quality fast food outlets in Colombo and they are creating a bad picture amongst the existing fast food customers towards fast food outlets will result in difficulty of attracting customers and maintaining goodwill.

– increase of low quality fast food outlets and they are creating a bad picture amongst the existing fast food customers towards fast food outlets result in difficulty of attracting customers and maintaining goodwill

– starting up of a new fast food outlet is not affected from increasing low quality fast food outlets in Colombo.

-therefore, it is possible to start up this fast food outlet.

Discussion 2

Most of the interviewed and the questionnaire’s people’s attitude towards fast food is positive as they say that they do not consume fast food on behalf of every meal. They voted for healthy fast food and beverages this means a fast food outlet that sell healthy fast food and beverages can be started. This fast food has no bad effect from the people as they like fast food outlets which sell quality and healthy food and beverages.

Analysis 3

Hypothesis 3: External macro cultural issues- international fast food brand outlets will do more promotional activities to attract more and more customers. As a result, the new fast food outlet will not be able to attract a plenty of customers.

-International fast food brand outlets do more and more promotional activities.

-for starting a new fast food outlet, appropriate and competitive promotional activities were identified.

-therefore, it is possible to attract a plenty of customers

Chapter 4 summary

Presentation, analysis and discussion of research findings were elaborated and at the same time, it compares developed hypotheses in relation with findings.

Chapter 5

Conclusions and recommendations

This research’s aim is to find possibility of starting up a new fast food outlet in Colombo. Therefore, this research looked into the internal and external barriers and found out ways and means of overcoming those identified and potential barriers for succeeding.

When the following are satisfied it is possible to start up a new fast food outlet in Colombo.

Starting up of a new fast food outlet in Colombo does not involve high initial cost, difficulty of finding of skillful employees and difficulty of retaining them, difficulty of finding a place full of customer attractions and difficulty of making competitive fast food and beverages

Starting up of a new fast food outlet is not affected from increasing low quality fast food outlets in Colombo

For starting a new fast food outlet, appropriate and competitive promotional activities were identified

According to the research, therefore, it is possible to start up a new fast outlet in manta place, Colombo 2 which sells quality and healthy fast food and beverages.

Recommendations

-This fast food outlet should be open from 4.00-700 pm.

-This fast food outlet should get star rating as soon as possible to prove its quality.

-This fast food outlet should not sell soft drinks.

-It should develop a menu of healthy fast food and beverages other than the current ones.

-It should use more advertising to reach more customers.

-It should sell fast food fried chicken, pizza, burger, etc without other ingredients which make people fatty.

-It should have a good waste disposal system that ensures protection of the environment.

-It should build attractive exterior to attract customers

-It should maintain goodwill with customers

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Reference list

Books

COUSINS, JOHN.FOSKETT, DAVID.GILLEPSIE, CAILEIN. (2002)Food and Beverage Management, second edn.Harlow: Pearson Education Limited

JEFFREY, S. and CATHY, A. (2005) Hospitality Strategic Management, New Jersey: John Wiley &Sons

Articles

-Borade, GAYNOR. (2012) History of the Fast Food Industry. Fast food (March)

Available from: http://www.buzzle.com/articles/history-of-the-fast-food-industry.html

-Jathar, rutuja. (2011) Junk Fast Food. Fast Food, (September)

Available from: http://www.buzzle.com/articles/junk-food-list.html

-Manohar, uttara. (2012)Fast Food Facts: Effects of Fast Food. Fast Food, (March)

Available from: http://www.buzzle.com/articles/fast-food-facts-effects-of-fast-food.html –Mascarenhas, cherly. (2012) Healthy Fast Food Drinks. Fast Food, (April)

Available from: http://www.buzzle.com/articles/healthy-fast-food-drinks.html

-Perera, Mangala. (2012) Sri Lanka’s F and B industry now fastest growing sector. Business Times, (January)

Available from: http://www.sundaytimes.lk/120122/BusinessTimes/bt10.html

-CTH (2011) Human Resource Management Available from: www.cthresources.com , p. 24-34