United Kingdom Fast Food Industry Commerce Essay

The Fast Food in the United Kingdom industry profile is an indispensable source for high level data and analysis wrapping the fast food industry. It covers detailed facts on market structure and its segmentation, market size and segmentation, plus documented and graphical analysis of the key trends and competitive background, leading companies and demographic information.

The market predict for the fast food industry in UK is to generate total returns of $2.6

Billion by the end of 2013, with an expected complex annual growth of 3.5%.The market is broken down in to four segments: Quick Service Restaurants (QSR), Takeaways, Mobile & Street Vendors and Leisure Locations. Intrinsic and Extrinsic environmental factors have a remarkable consequence on fast food industry. Market segmentation in UK is as leisure (48%), QRS (37.2%), Take away (13.4%) and street and mobile vendors (0.9%), (Data monitor-B, 2009).

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Purpose and Benefits:

PESTLE analysis is an essential apparatus for understanding risks allied with market expansion or turn down and as such the situation, position, capability and trend for a business or organization. This analysis examines the impact of each of these factors (and their interaction with each other) on the business. And identifying means for change assists top-level to focus on pestle factors which are important and must given the main concern.

By this analysis, we can certify that what we do is associated positively with the factors of change which upset our global and also avoid taking action which directs towards malfunctioning and helps to adapt in a new environment.

A.

MACRO ENVIRONMENT ANALYSIS

POLITICAL FACTORS

The policies of the government have greater collision on an organization in that particular country. Government decision such as accumulation, diminution, alteration in stuff like policy and taxes has adverse affect in organizations established in that particular country. And the taxation policy is 15-17.5% in UK. Likewise, fast food industry is an inevitable. (G Johnson & K Scholes , 2005)

CORPORATION TAX

Corporation tax is a direct tax which is executed by the government, and organisation or industry pay directly depending on their profit. 30% is the standard corporation tax set for the business organisations but this rate is only applicable to the organisations whose annual profit exceeds more than £1,500,000. In the year, 2010, 21% is applied for those organizations that make profit less than £300,000 per year.

CARBON TAX

It is and environmental tax which is imposed due to the harmful gases it emanates likes carbon dioxide in the environment which affects environment. It is imposed to effect to minimize the emission of gases by the industries to guard environment.The Conservatives are planning to impose a carbon tax on British businesses in UK.

There should be labelling of genetically modified food as well and health and safety guidelines from the government sector.

ECONOMIC FACTORS

Market value of UK fast food is bid. The market anticipation for the fast food industry in UK is to engender total revenue of $2.6 billion by the end of 2013 with an expected complex annual growth of 3.5%.

Unemployment:

This factor influence and has greater impact in every organisations executing in the country. The figure of people unemployed in the UK has plummeted again, leaving the jobless rate at 7.8 %. Workers are perhaps agreeable to accept lower wages or shorter period of time stick on to their jobs in fast food industries. (BBC, 2010)

Affect of Inflation:

There are various ways in which it affects business industries. The inflation rate in UK is 5% in 2010.If there is the rise in prices of the products it has an undesirable affect on the organisations including the fast food industries. Increase in inflation force employees to demand higher wages in their working places in order to maintain their living standard and increase in the disposable income. Therefore, companies spend more on labours for well execution of their business. As a result, companies need to enhance their prices or products to maintain the profitability in the business. Recession also leads to increase sales of a product of the companies.

SOCIAL FACTORS

Population:

Fast food affects a community in many aspects. It is mainly geared towards the younger edge of the market. According to the census UK population is aging and most of the fast food organisations are concerned in this sector. So, fast food products are diminishing because people are concerned about their health.

Busy Schedule:

As we all know that UK has a very busy life – style which has positive affect on the UK food industry by choosing fast food rather than cooking in their own house for saving their time.

Health and Safety:

Government are concerned about public health and imposed rules on fast food industry that the foods that contains high sugar, salt or obesity should be avoided in order to maintain healthy life and protection from obesity.( M Purcell, 2008) Most of the people are being vegetarianism due to health concerns which affects fast food industry.

Animals right campaign:

Fast food key players such as Mac Donalds, Burger King , Pizza Hut, KFC etc are the main industries for producing and consumption of food from animals all over the global. Thus animals right personnel are concerned about the maltreatment towards the animals which are supplied to the players of the fast industry.

TECHNOLOGICAL FACTORS

Technology plays a vital role in fast food industries. It enhances the speed and saves time for the successful completion of its performance. For eg: systematic computerised system such as till counters helps to perform their operation in accurate time.

The use of online marketing about their products too has been very successful. The presence of the internet of the companies such as Mac Donald, KFC etc has been very solid factor to stand out in their business. The products that are delivered online also assist to a large amount to enhance sales and profit of the business.

LEGAL FACTORS

Food safety act

The Food Safety Act 1990 provides the framework for all food legislation in Britain. It is concerned with food safety and consumer protection in Great Britain. The main objectives of this law are as follows:

To ensure that the food is safe to public health and provide legality authority to the consumers. For e.g.: a child spills himself/ herself and he/she should be properly cared.

To ensure that the food is served should meet the expectations in (quantity and quality) forms

To ensure they advertise and label the product in a proper way which do not mislead consumers.

ENVIRONMENTAL FACTORS

Fast food outlets have been responsible for high amount of litters and waste. For eg: we probably don’t think that eating a burger emerges carbon, but it is true that whatever we do we donate towards the resources we use. The organization concerned with protection of environment has held, which is “keep Britain Tidy” . And they found McDonalds which is responsible for most of the burger wrappers, condiment sachets and plastic straws.

. The litters found in the streets have been divided among the all the fast food brands or companies as given below:

1. McDonald’s – 29%

2. Unbranded fish and chips/kebab – 21%

3 .Greggs -18%

4. KFC – 8%

5. Subway – 5% and other branded coffee 5%

Ultimately, the analytical tool helped us to understand the prons and cons of the fast food industry and their success and failure of the strategy. This analytical tool (PESTLE) helped to determine industry’s attractiveness (profit potential) and can be influential in general performance.

B:

MICRO ENVIRONMENT ANALYSIS (PORTER’S FIVE FORCES):

Porter’s five forces is a framework for the industry analysis and strategy development introduced by Michael E. Porter in 1979. It is a way of assessing the potential profit of different industries which provide the starting point for strategic analysis even profit criteria may not apply.

POWER OF BUYER:

Despite the population of UK do not go for fast food, but many of the people plump for it or as consumers. Many of the big players in UK such as Mc Donald, KFC, Burger King .Etc, spend hugely in the fast food industry through advertising and other promotional activities to improve brand image towards consumers because they are the essential part of the business to survive. And leads to customer loyalty and decreases buying power.

For e.g.: milk in the grocery sector in UK, where there is few retailers’ dominance that means few large customers relate for the majority of sales. Thus, buying power increases.

If such gift items in fast food industries help to enhance some degree of customer loyalty, nonetheless, buying power can be strengthened to some extent, low switching cost is insignificant.

In the fast food industry, the buying power can be accessed as reasonable.

POWERS OF SUPPLIERS:

The factors increasing buying power are the converse to those for buying power. It is very crucial for the fast food industry for the continuous, reliable supply of food with a quality and low cost which is applicable even in the fast food industry. By this we can figure out the reliability of fast food chains. As we all know, fast food industry are not only engaged with single sort of food but they can also create profit by other varieties. Suppliers are the main source of firm when there are few substitutes, they might also refuse to work with the firm, and therefore, it is vital for food industry to maintain good relationship with each other in order to get success.

The leading food industry in UK is 3663 because it exceeds its sales which exceeds 1 billion pound per annum.

For e.g.: star football players have succeeded in raising their plunder to enormous levels but leading football clubs, their buyers struggle.

THREATS OF SUBSTITUTES

Substitutes are services of products that offer a same benefit to an industry’s products. For eg: trains are substitute of cars. Likewise in fast food industry there are other forms of food service providers as well as food stores, eg: Sainsbury, ASDA, Somerfield, etc provides ready serve their food to the customers.

Fast foods are cheaper. Therefore, the substitutes do not have a power to dominate fast food industry in terms of various foods and services they provide.

Eventually, the advantage which substitutes have with comparison with their substitutes is that they facilitate with diversity of products and there is the matter of health and safety towards fast food outlets which has been criticised by public and government. Consequently, substitutes in the whole market propose its consumers with more liberty or alternatives to organize their fast by delivering various ranges of food products. The threat of substitutes has been accessed as moderate in fast food industry.

Threats of entrants:

The entry into the UK fast food market does not involve huge investment. Individuals can enter without recognized brand name. Some companies execute their task as a franchise which enables the franchisee or the investor to help operating or fully operate a business. The franchisee pays for the cost to the franchisor and yield profit from the business from different strategies used by franchisor. For e.g. Mc Donald’s., have many out lets all over the world among them 25,400 are operates by franchisee.

Although it is not much expensive to execute a fast food industry but there is a threat to the entrants because there are key players who already set their brand images in front of the consumers. The already existing players are very strong established for the new entrants to compete with (Data monitor-A, 2009).

COMPETETIVE RIVALRY

As we are all concerned about fast food industry that they cover large market and focus on large part of UK population therefore it has been mushrooming every year.

There is very low risk of business failure which as a result attracts more new entrants. Former fast food industry wants to increase their number of outlets as a result they want to survive in the industry for longer time period by employing more employees and execute for longer period. Each industry wants to be better than each of their competitors. Therefore, to float in the business, the main thing that the industry needs to maintain is attractiveness, i.e. profitability.

Eventually, UK is mushrooming with fast food industry, in recent globalisation. It is not much easier to enter into the market. There are challenges in entering into the fast food industry as well opportunities to receive success.

Despite the dark cloud on the horizon, fast food industry is one of the most important food outlets in the context of UK.