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9% to 734 units (Khun, 2009)
Additionally, James Moss, of Curzon Investment Property, has commented (Khun, 2009) that Dominos and Subway have been successful in the UK market as a result of their franchise models that are almost recession proof. In addition many investors (who want to own a franchise) have found these two chains to be exceptional investments. Additionally, many "Britons are also shunning posh business lunches and choosing instead to head to Eat or Pret for a sandwich (Khun, 2009,9)." The report also explains that "Independent operators (with fewer than five outlets) have increased their market share by 2.2% across the UK's top 10 cities to further fuel the feeling that many high streets are turning England into 'fried chicken Britain'(Khun, 2009,9)." The following chart illustrates the most popular cities for Fast Food in the UK.
Number of Fast Food Restaurants by City
London (central) (847 outlets)
2.3 Individual Chain Strategies
As previously written in the discussion, the QSR industry in the United Kingdom is composed of both British and multinational companies. This aspect of the investigation will focus on the individual strategies of one multinational company (Dominos) and one British Company. As it pertains to Dominos much of the success that it has realized in Britain can be attributed to the promotional and franchising strategies of the company. As it pertains to the company's promotional strategy, the products that it serves are universally popular and inexpensive as it pertains to feeding a single person or an entire family. During difficult economic times families look for ways to enjoy meals without spending a great deal of money on those meals. As it pertains to Franchising Dominos success in Britain has been so phenomenal because such a franchise is viewed as a sound investment. As such investors are more likely to choose Dominos over some other type of franchise (The previous sentences explain why).
In addition to the strategies of American companies operating in the UK, there are also some British companies that have developed some impressive strategies for this particular market. One such company is Pret (Pret a Manger). The company began in London in 1986, the founders being college friends ("About the Company" Available at: http://www.pret.com/us/about_our_company/about.htm [Accessed 11 August 2011]). In some ways this fast food restaurant is extremely different from Dominos. For one, it is a private company where as Dominos is traded publically. Pret does not allow franchising while dominos does. In addition, the company is well-known for its dedication to providing customers with organic food that is natural and free of preservatives ("About the Company"). . The small familiar nature of Pret has led to a great deal of success for the company. In fact, it opened its first store in the United States in 2000 and continues to expand, though not as rapidly as Dominos.
Although Dominos and Pret are drastically different companies, they have both been able to succeed in the United Kingdom. The reasons for this success likely lie in the ability of both companies to fully exploit their respective niches. For Dominos this means the encouraging of investors through franchising. Dominos also thrives on the popularity of its primary product, pizza. For Pret the exploitation of the niche means the offering up of simple products that are healthy and free of preservatives.
2.4 Industry strategy
In addition to the individual strategies present in quick service, the entire industry also has a strategy that is related to the strategies embraced by individual chains. The industry strategies involve entering into markets where there is a likely demand and providing consumers with inexpensive, quick service, often offering hot food. All restaurants in this industry regardless of size or brand recognition have policies that adhere to the aforementioned structure. These elements are essential and part of the very nature of the quick service industry.
The industry also appears to be propelled by a need to expand into every market possible. When expanding the restaurants in this industry often make a concerted effort to understand the market they are entering. For instance, McDonald's in India does not have any menu items containing beef, as the cow is sacred in India. It also has a few items incorporating Indian dishes to attract people who may be skeptical to try "foreign cuisine" egs: The Mc Aloo Tikki is a popular Indian dish which can loosely be translated to Mc Potato Cutlet. This type of adaptation to new environments ensures restaurants in this industry will be successful.
III. Chapter 3-Literature Review
Quick service restaurants in the United Kingdom enjoy a great deal of popularity because of the convenience and low cost they provide for customers. However, because there are a great many quick service restaurants in the country there exists a great deal of competition, which creates the need for unique promotional strategies. The purpose of this literature review is to provide some insights into the use of promotional strategies within the quick service restaurant industry globally and in the United Kingdom.
3.1 Quick service restaurant Industry
According to DiPietro & Pizam (2007) "Quick service restaurants (QSR), also known as fast food restaurants, are generally defined as restaurants that have limited service and limited menu items (DiPietro, 2007)." The majority of fast food restaurants have drive-thru service. In addition most restaurants in this industry do not sell alcohol and they do not provide customers with table service (U.S. National Adult Tracking Surveys, 2001). Additionally, MuUer and Woods (1994) defined quick service restaurants as having attributes of a reliance on a narrow menu, catering to extremely price sensitive consumers who develop "habit forming" purchases through top-of-mind advertising. This segment of the restaurant industry can also be described as having consumer demand for fast food, precise orders, clean restaurants, and hot food. The research also explains that
"The average check for these restaurants are low (often USD $4-6) and the transaction time is usually under 10 minutes. Quick service restaurants often have repetitive and narrowly defined job roles for hourly employees which often lead to a higher turnover rate than other segments of the restaurant industry (Ebbin, 1999). These are all characteristics that make quick service restaurants very different than other restaurant segments (Ninemeier 2000)."
According to Ninemeier (2000), nothing has had a greater impact on the foodservice industry than quick-service operations. The UK quick service restaurant industry was valued at USD $19.92 billion (UK£8.38b) in the year 2005. Additionally the industry is will likely grow at an average rate of 5% per year in current prices (Keynote Reports, 2006 quoted in Ninemeier, 2000).
Jones et al. (2002) explains that American companies have been extremely instrumental in the steady development of the quick service industry in the United Kingdom. The authors also explain that even though McDonalds is now one of the leaders in the UK market, it was Kentucky Fried Chicken (KFC) who established a presence in the UK first. In fact, the first KFC in the UK came in 1965 to Preston (Jones et al. 2002). Once KFC presented the idea of fast food to the UK it was more than a decade before the concept spread and became more popular (Jones et al. 2002).
The popularity of the fast food industry in the UK became cemented in 1974 when McDonalds opened its first store in Woolwich in South London. In a single decade McDonalds had established more than 120 franchised restaurants. These restaurants had also spread to different locations including the Midlands and the North West of England. The success of McDonalds in the United Kingdom served as a beacon of hope for other American Fast Food Chains. As such Burger King, Wendy's and Pizza Hut also setup shop in the UK market during the late 1970's. However, most of the companies did not enjoy the same rate of success as McDonalds did with its quick expansion. In addition this period was also met with an influx of British companies joining the ranks as quick service restaurants. These companies included Casey Jones, Wimpy, Spud-U-Like, Oliver's, and Mr. Big. Through the 1980's and 1990's, the large American chains such as Burger King and KFC were able to expand substantially throughout the UK. However some of the smaller chains were unable to keep pace and as a result they no longer have a presence in the United Kingdom.
Today the fast food industry continues to be amongst the most successful in all of the United Kingdom. There is a great deal of healthy competition and differentiation within the industry. The larger companies still lay claim to most substantial amount of the market share but smaller companies and British owned businesses also have a healthy footprint (this entire paragraph are conclusions I came to based on everything I read there is no source) in the market. As a result of the climate for quick…[continue]
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