Fast Food World: The Business of Fast-food Restaurants

The fast-food restaurant industry isn't struggling as much in the current recession as are other industries. Moreover, fast food purveyors may even be enjoying a global renaissance of sorts as emerging middle classes in China and elsewhere notice and appreciate the convenience and price value of food-to-go. Competition in the U.S. remains fierce as the big chains like McDonald's, Burger King, Wendy's, Kentucky Fried Chicken, Taco Bell, and Pizza Hut develop value menu strategies, test market breakfast ideas, remodel storefronts and packaging, welcome online ordering (including via text and iPhone), and sponsor special promotions or continue funding standard marketing campaigns.

McDonald's Corp., founded in 1940 and currently headquartered in Oak Brook, IL, offers popular meals featuring hamburgers, French fries, and soft drinks or milk shakes, plus chicken dishes and salads, meals just for kids, breakfast sandwiches and some desserts. The restaurants with their trademark yellow arches can be found in most metropolitan areas around the world as well as in small towns and at interstate rest stops across the U.S. A recent marketing ploy is the development of in-store coffee bars in all U.S. outlets.

Burger King, based in Miami, FL where it was started in 1954, also operates outlets in many overseas countries. Its food offerings are similar to McDonald's, with variations in size and occasional trials of unique items like ribs and fish. Sometimes a longer line at the drive-though station is what determines whether a customer chooses a Whopper at Burger King or a Big Mac at McDonald's when both chains operate in close proximity in urban or suburban areas.

Wendy's head office is in Ohio where it was founded in 1969. Along with standard hamburger-chain fare, Wendy's also offers baked potatoes, taco salads, and for breakfast, biscuits, French toast, and muffins. This restaurant company now belongs to a conglomerate that also owns Arby's, a smaller chain based in Atlanta and focusing on sandwiches. Higher prices for key menu ingredients have hit the smaller fast-food operators harder because the giants can usually absorb some losses (instead of passing along the price increases to customers) and can often negotiate better deals with suppliers. However, the conglomerate's CEO Roland Smith refuses to concede the field to McDonald's and Burger King and is currently mulling options for achieving a competitive edge.

Louisville, KY-based Yum Brand's quick-serve restaurant companies include Kentucky Fried Chicken, with headquarters in Salt Lake City, UT, Pizza Hut, based near Dallas TX, and Irvine, CA's Taco Bell. Famous for its buckets of fried chicken, KFC now also offers grilled chicken and pot pies. Its chicken wings are a favorite for football fans, and the chain has won sponsorship of the upcoming playoffs and Super Bowl XLIII. Pizza Hut operates in many of the same countries around the globe where McDonald's eateries can be found. Pizza, much like hamburgers, is an international food and is easily adaptable to local tastes. Tacos, buritos, and other Mexican specialties are on tap at Taco Bell outlets, where its spicy menu items are also available past midnight in many urban U.S. locations. Intense marketing, including showcasing of brand identities, helps these companies remain competitive.

Health concerns periodically surface as public health officials and activists point out possible links between increased obesity among the population and the spread of fast-food restaurants. Los Angeles even took the extraordinary step of banning the opening of such restaurants in a depressed area where apparently there are few supermarkets but already many small eateries supposedly selling only high-fat and low-nutrition items. New York City's chain restaurants are required to notify customers of calorie amounts for various menu items, either posting a notice or listing directly on menus. However, convenience is still likely to trump concerns over calorie consumption for most people.

Many teenagers have gained their first job experiences working as quick-serve cooks and order-takers at McDonald's and other chains. Mothers with young children quickly discovered the advantages of cheerful and clean places to take their charges, places where the young ones wanted to go and where kids were welcomed, sometimes with entertainment in addition to targeted menus. Office workers tired from hard days have learned how easy it is to order a pizza for dinner. In fact, almost everyone in this country has enjoyed a fast-food meal in the last month or two. Pretty soon this situation can be expected to be commonplace all over the world.

Mike Hughlett, "Drive-throughs done right ring up returns," Chicago Tribune

Matt Vella, "A new look for McDonald's", Business Week Online

"Fitch Upgrades Burger King's IDR to 'BB'; Outlook Positive", Reuters

Sarah E. Lockyer, "Wendy's/Arby's CEO Smith faces turnaround battle", Nation's Restaurant News

Richard Tedesco, "KFC takes wing title", Promo Magazine

Kim Severson, "Los Angeles Stages a Fast Food Intervention", New York Times

Aisha Al-Muslim and Mirva Lempiainen, "City Promotes Calorie Counting Rule", NY City News Service