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Fast Food Monopolies

Version 2
by

Samuel Harper

on 4 October 2012

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Transcript of Fast Food Monopolies

Explaining The Monopoly The Fast Food Industry The companies also have brand logo’s and slogans that are known (and trademarked), literally, worldwide, with even the furthest reaching countries being familiar with the famous ‘M’ for McDonalds, or the famous colonel of KFC. All of the companies have huge R&D budgets, so they can find out their best selling products, then make these better. An example of this would be McDonalds branching out into the breakfast industry, aswell as the café industry, serving Tea & Coffee, and in some countries even opening special cafe's, cheesily named McCafe’s. The first of the ‘Big Four’ to open was KFC. The first KFC store opened in 1930, but the restaurant only became a franchise in 1952. The Fast Food industry is currently dominated by the ‘Big Four’ – McDonalds, Burger King, YUM! Brands and Subway. Non-Price Competition exists when similar companies compete without lowering the price of their goods. Non-Price Competition For new companies it would be impossible to compete with the likes of Burger King, who have spent millions on advertising… Price Competition In the Fast Food market there are lots of examples of Non-Price Competition, for example.... The Market in the Fast Food industry is fairly concentrated, with 12 restaurants taking 71% of the market... This gives a concentration ratio of 12:71 McDonalds holds a 22% Market Share, with $30 billion in sales Although these companies have created huge barriers to entry for their industry, they have also created huge barriers to exit. The companies have specialist machines to produce their food, which could not be sold on to other companies. They have invested huge amounts in advertising, and these would become unretreivable costs. additionally, all of their staff would have to be given redundancy money. There is fierce price competition between all of the major players They all have regular offers on their products, for example Burger King has the ‘King of The Day’; McDonalds has the ‘Saver Menu’; Subway has the ‘£3 lunch menu’ and Domino’s Pizza's ‘Two for Tuesday’ Deal. Recent Changes To The Industry During the recent budget one of the main headline grabbers was the ‘pasty tax’. The aim was to: “apply VAT at the standard rate to all food which is at a temperature above the ambient air temperature at the time that it is provided to the customer”. As a result of the recession the fast food industry has grown so much that for the first time ever it now represents more than half of the meals consumed outside the home As of 2008 junk food advertising has been banned during or close to all programmes targeted at those under the age of sixteen, in an attempt by the UK government to reduce the popularity of fast food companies with youngsters. The majority of fast food retailers operating in the UK now advertise the nutritional information present in their products in response to the government’s Public Health Responsibility Deal. The Department of Health says that calorie labeling "makes people more aware of the energy content of their foods and does influence people's choices". 1. What are the 4 restaurants owned by the ‘YUM!’ company?
2. How many staff do McDonalds employ? 3. What is the concentration ratio in the fast food market? 4. In what year was fast food advertising banned, during certain programmes? 5. Which company has had the largest growth since the recession?
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