The Fast Food Market in the United Kingdom - Essay Example

Fast Food Market in the UK

Scope of the Fast Food Market in the UK

The fast food market in the UK covers all levels including locally, regionally, nationally and globally (Dey, 2016, p.1). The fast food market is everywhere. It is off highway exits, at bus terminuses, in food courts within malls, airports and major cities. A number of UK’s fast food joints operate regionally and globally. Good examples include Five Guys, Nando’s, Gourmet Burger Kitchen, KFC and Burger King. The chains, such as KFC, operate in other continents including Africa.

There are numerous segments as well as players within the fast food market. Sandwiches are mainly supplied by Subway, Thurstens and Greggs. Burgers are mainly supplied by Burger King and McDonalds. Pizza is mainly supplied by Pizza Hut. Chicken is mainly supplied by KFC. Other players include Chinese or Indian Takeaway.

Focus of the Essay

This study will investigate the fast food market in the United Kingdom. It investigates the scope of the fast food market to determine whether the market is growing or shrinking, its target customers and their characteristics and market competitiveness. It also highlights the business and products leading the fast food market, existing market gaps, areas which a competitor should focus on and whether there are opportunities for making reasonable benefits. All this information will then help make a critical evaluation as to whether the fast food is a viable market to start in the UK.

Is The Market Growing Or Shrinking?

The fast food market in the UK is actually growing due to the changing industry dynamics. Over the last years, the fast food industry has been experiencing an increase in diversity, both in the menu choices and concepts of the restaurants. The market has been responsive to diversifying customer preferences and tastes. It is largely benefiting from two major trends. To begin with, a number of people are having busy lifestyle, depriving them of time to cook for themselves, with majority of them getting attracted to fast foods due to affordable prices (Dey, 2016, p.2). Secondly, the diversity and quality of fast food in the UK is continuously improving. Due to increased lifestyle diseases, people are getting more concerned about their lifestyle, more so, what they eat (De Vogli, Kouvonen, & Gimeno, 2014, p.101). The focus on quality and healthy fast foods is encouraging more people to consume fast foods. Brands that have a premium focus and healthy image like Five Guys and Itsu Sushi respectively were good performer in 2015. Due to these trends, the fast food generally grew by 2% (Dey, 2016, p.10).

Target Customers

Through advertisements, fast food markets tend to target Hispanic youth, Black youth, teens and children (Boyland, Kavanagh-Safran, & Halford, 2015, p.1011). The industry’s marketing content is designed to particularly appeal to these groups. The teenagers and youth meet at fast food joints to hang out after classes. In addition, due to the numerous extracurricular activities, high schools students mainly take their lunch at the shopping malls as compared to their homes (Carroll-Scott, Gilstad-Hayden, et.al , 2013,p.111). Some students even flock fast food joints to have their informal meetings such as discussions.

According to Smith, Cummins, Clark and Stansfeld (2013, p.1), the secondary market for fast food in the UK is the working class. The working class has a busy life. They have no time to cook for themselves. In addition, the affordable prices of fast foods is quite attractive to them; they prefer to take affordable yet quality fries at fast food joints compared to other foods, which may be a bit expensive for their wages.

Finally, tourists are a good market for fast foods in the United Kingdom. While tourists seeks accommodation is some of the best hotels in UK, they take time to stroll around the shopping malls hunting for new trends in fashion. Since, they often lack time to have a full meal during their escapes, they opt to take quite bites in fast food joints (Osman, Johns, & Lugosi, 2014, p.239).

Characteristics of the Target Customers

The target customers have busy lifestyles, making them less ready to cook their own food (Burgoine & Monsivais, 2013, p.1). In addition, they are conscious about their spending habits; they prefer fast foods because they have affordable prices. Lachat and Nago (2012, p.336) note that they enjoy eating out. For instance, students, who are among the target customers, enjoy taking their food away from home and school. It is noted that also they prefer a higher speed of service. For instance, the working class is always in hurry to meet deadlines for their work and instead of eating at a restaurant where food takes long to be served, they prefer going to a fast food where they are served quickly. Finally, these customers like flavor and variety in what they are taking and hence opt for fried food (Morley, Scully, Martin, Niven, Dixon, & Wakefield, 2013, p.9).

How Competitive Is The Market?

Competitive forces which mainly affect the fast food industry in United Kingdom include the power of suppliers, new entrants, power of buyers and substitution (Dey, 2016, p.5). There are various undifferentiated suppliers yet fast foods posses a high purchasing power as a result of high volume of sales. In terms of new entrants, the fast food market is dominated by high brand global Quick Service Restaurants (QSR) such as Domino’s, Pizza Hut, KFC, Burger King and McDonald’s. The brands are highly valuable and have a high customer loyalty as well as recognition. According to Lazonick, Hopkins, and Jacobson (2015, p.101), key players such as McDonald’s orient their marketing to suit their social norms as well as the local cultures. New players find it hard to venture into the market because their brands are not recognized (Lang, & Heasman, 2015, p.17). New brands do not have economies of scale. However, social media has made marketing communication fair and allow different firms to effectively communicate their marketing message. The initial fixed costs and capital outlay is low, motivating new entrants. Substitutes for fast foods are available, that is, people can purchase food anywhere, whether it is retail or food service. A new entrant can utilize the aspect of convenience. Convenience adds value and minimizes the threat of substitutes. While people can cook at their homes efficiently, it may be inconvenient for them because many people have busy lifestyles. There exists strong competitive rivalry. Specific chains are known to be the best producers of certain food products (Lang & Heasman, 2015, p.10). For example, Burger King and McDonald’s are at par in the production of burgers. Competition is cost based and many firms invest in their service and production processes to remain ahead of their competitors. For a new entrant, it could use brand as its branding weapon. The supplier power in the UK is limited due to a highly aggressive worldwide chain. Many suppliers within this business make it hard for them to control dominance of fast food firms.

Which Businesses or Products are The Market Leaders?

As per the year 2015, McDonald’s leads the fast food industry, with a value share of 15% (Dey, 2016, p.2). Outlets owned by companies had a value share of 6%, while various franchisees owned by McDonald’s accounted for the rest of the share. McDonald’s, being the leader, benefits from its strong iconic brand (fast food burger), as well as affordable prices and effective marketing. It also boasts a large network for its outlets. Dey (2016, p.2) notes that Yum has a market share of 9%. A large percentage of its share is derived from the iconic KFC fast food chicken brand. Greggs, which is ranked third, has a value share of 5%. It mainly leads in fast food bakery products.

Is there a Gap In The Market for a New Business or Product?

There exists a gap in the market in terms of diversification and convenience. Currently, when consumers visit fast foods, they have to consume only fast foods and the available soft drinks. Sometimes, people visit these joints just to have a good time. If beer was available at these joints, it would probably make their time at the fast foods more worthwhile. Furthermore, there are hardly any fast food joints that deliver products to their customers at home. Finally, culture is an important aspect in the food industry (Counihan, & Van Esterik, 2012, p.1) . The existing gap between culture and food needs to be bridged.

Which Part of The Market Should a New Competitor Target?

According to Hamel and Prahalad (2013, p.6), a new competitor in this market should focus on product diversification and customer convenience. The competitor should opt to offer beer at the joint. However, the beer should be offered under certain conditions in such a way that it offers the rest of the customers with a conducive environment as well. Home delivery is a brilliant idea for a competitor. Home delivery shouldn’t be made for pizza only. The competitor would attract more customers if it began home delivery of other fast food products as well. Finally, a new competitor could offer more nutritionally appealing fast food products. Health and nutrition is the ultimate aspect to focus on when it comes to fast food. If people are assured of eating healthily and nutritionally at a new joint, they are highly likely to visit it. In this case, healthy eating implies low salt, low sugar and low fat diets (Moodie, Stuckler, &et. al, 2013, p.671).

Is there Potential for Reasonable Profits?

Fast food chains draw high sales volumes due to the large number of people who opt prefer fast foods. They are quite profitable. However, UK already has chains which have strong brands and a strong customer loyalty. It is very difficult for a new chain to compete with these string brands. It is hard for a new entrant to attract customers who initially purchased products from the strong economic brands such as McDonald’s and Pizza Hut. A new entrant has to initially invest in building a string brand name through effective advertising. However, at times, advertising may take up a huge percentage of the chain’s capital compared to what it gains. A new entrant also has to pay more attention to other aspects such as convenience and diversification. In this case, convenience means home delivery or incorporating other products into the chain. Diversification means that the chain will be required to produce a variety of products which could be burgers, pizzas, fish, chips and chicken. All these aspects require huge investments which may be hard for a new entrant to meet. Moreover, even after making these investments, it may take quite long before the new chain can realize the required profits. Therefore, fast food is venture not a pleasant market to set up a new venture in the UK.