Fastfood Conundrum

Dennis Lombardi, executive vice-president at WD Partners noted that the category has "some of the lowest price points and a high value perception [but is] not absolutely resilient, nor immune" to economic conditions.

On the plus side, profits have been holding up better than sales, largely due to the help of a weak dollar which helps international operations and the impact of lower commodity prices as worldwide demand for everything from potatoes to cheese slows. Labor costs are also down with the current buyers' market for jobs.

All of you should take note of the above mentioned point. More often than not in today's economy, we are talking about exchange rate and taxes as they are the salient factors that actually have an impinge on the profits and revenues of the companies. While you might be making huge sales overseas, you will not be drawing alot of money back to the home country if your currency is extremely strong as this makes other currencies weak.


Another interesting point to note is that research has shown that people are more into food that comes fast to them right now and that they do not have to queue for more than 5 minutes.


However, there seems to be a proliferation of product differentiation right now among the fastfood restaurants as they compete to see who is able to come up with better menus and new burgers.

With increasing variety, it will just take a longer time to prepare each unique orders. Fastfood restaurants thrive on the fact that they have a standard number of choices that the people inside the kitchen can predict. For instance, McChickens and Big Macs are the top choices so they are naturally well-trained in preparing them at lightning speed.


However, if you were to introduce more products, it will be hard for the people in the kitchen to fathom what choices the consumers are going to make.

In addition to that, the consumers will now take an even longer time to decide what they want at the counter, leaving the people behind waiting impatiently.


All in all, the fastfood restaurants have to be mindful about their strategy on product differentiation. While it is helpful to offer the consumers more choices, it is definitely imperile to make them wait for a longer period of time at the queue.
 
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