Economic Analysis of the Fast Food Industry in Houston - Essay Example

number Fast Food Industry in Houston Introduction A fast food restaurant refers to an establishment that engages in a line of production techniques whose goal is to produce food that is meant for immediate consumption. People can consume it on or off the premises of the restaurant. Consumers are required to place an order over the counter before they can be served. The fast food industry has gained popularity throughout Houston because of the ease with which people access processed food. The industry generates huge income for government, employees and the fast food establishments (Ritter, P.1). In the past 3 years, the fast food industry has realized tremendous growth. The value of the fast food industry is anticipated to keep rising at a rate of 4 percent every year because of the increased demand of fast food in the region. Most people who take food in fast food restaurants usually have busy schedules. This implies that they cannot manage to prepare their own meals in an appropriate manner. This state of affairs has made most people develop great reliance on fast foods. The main players in the fast food industry in Houston include McDonalds, Burger King, Pizza Hut and KFC (US Fast Food Franchise Industry Report). Studies reveal that McDonalds recorded $30,025 million worth of sales in 2009 while Burger King generated sales amounting to $9,600 million. These figures demonstrate that the fast food industry has gained popularity and that fast food appeals to most people in the region. In Houston, the fast food industry realized a growth of 4 percent in 2009 (US Fast Food Franchise Industry Report). This growth reflects that the establishment of the fast food market is just what people need to complement their daily food needs. Fast food restaurants process meals and drinks that fit the diverse desires of their customers. As a result, most people with busy schedules or those who have less affinity to cook opt to take their meals in fast food restaurants. In the recent years, there has been an explosion of the demand for fast food thus leading to the rapid growth of the fast food industry in Houston. Houston in Texas ranks second with regard to the demand for fast foods. The population that demands fast food in Houston is aged between 12 and 30 years (US Fast Food Franchise Industry Report). This is because these people have the greatest disposable income. As a result, most fast food establishments in the region are usually set up in places where such population can manage to access them easily. Factors influencing demand and supply The demand for fast food in Houston is projected to expand in the future. This is because of the various factors that influence the demand and supply of products. The tastes and preferences of consumers influence the demand for a product. For example, the US is described as a fast food nation. This means that most people in the region are attached to fast foods. Most people prefer to consume food from fast food restaurants because of their good price and suitability that makes it possible for people to cook. Moreover, because of the consumers desire to reduce food wastage, they prefer to take fast food. This state of affairs has made most people prefer fast foods to cooking food at home (Ritter). It is evident from the graph above that an increase in the expected prices causes an increase in demand. Thus, there will be a right ward shift of the demand curve. The availability of substitutes and compliments also influences the demand for fast food in Houston. There are many establishments that offer different kinds of fast food in the region. This state of affairs has led to a growth in competition in the fast food industry. In this case, only the restaurants that offer the best food in the market have been able to stay ahead of the rivalry. Supermarkets also offer convenience foods thereby tampering with the growth of the fast food industry. However, the growing popularity of the fast food industry has led to reduced demand of convenience foods in places such as supermarkets. However, since there has been an explosion of fast food restaurants in Houston, most restaurants charge affordable prices in order to boost their competitiveness in the industry. The wages that the employees are paid in fast food restaurants also influences the demand for meals and drinks in the region. Restaurants such as McDonalds and Burger King are known to reward their workers fairly thus making them productive in the restaurants. The customer service of the employees is amazing thus leading the restaurants to have a higher number of customers than other fast food providers in the region. Therefore, it is evident that when a company structures the wages of its employees in an appropriate manner, the demand for its products goes up (Suttle, p, 1). Moreover, the organization is forced to supply more because of the increased demand so as to prevent the prices from rising. Need for government regulation in the industry In order for businesses to operate in accordance to the expectations of their customers, it is important for the government to set up measures that regulate the operations of the businesses. In the case of the fast food industry, it is important for the government in Houston to set measures whose focus would be to ensure that the industry is sustainable. For example, the government requires banks to inject capital into the fast food industry so as to make sure that the industry has the ability to expand and safeguard itself from collapse in case of a recession. By facilitating the injection of funds into the industry, potential market failures within the industry are addressed. Most fast food restaurants fail due to lack of sufficient capital to sustain them in the market (Suttle). Therefore, with the support of the government, the weak restaurants would be in a position to contend efficiently with other major fast food providers in Houston. Moreover, the government also needs to regulate pricing in the industry to ensure that weak restaurants are not driven out of the market by the dominant restaurants in the region. Summary and conclusion Therefore, it is true that the fast food industry is a major source of revenue around Houston. Moreover, it is apparent that the fast food business is growing at a fast pace because of the increased demand of fast foods by a majority of residents in Houston. The preferences of the people are slowly shifting from cooking their own food and opting to take food that is offered by fast food restaurants for convenience purposes. To be competitive in the industry, most restaurants are encouraged to ensure that they pay their employees fair salaries thus boosting their productivity and improve their customer service skills. Moreover, the government has been noted to play a key role in terms of ensuring that the fast food industry operates in accordance with the consumer laws act. Moreover, it has advocated banks to offer financial support to fast food restaurants thus ensuring that the industry is protected from adverse effects that are associated with recession. Moreover, it ensures that small restaurants are capable of coexisting with other major players in the industry. Therefore, true that the success of the fast food industry in Houston is attributed to financial support by banks, observation of government regulations and adequate response to customers’ tastes and preferences. Works Cited Ritter, Ian. "The State of the Fast Food Industry." 2009. CBS Interactive. web. 24 Nov 2012. . Suttle, Rick. "Fast Food Industry Analysis." 2012. Hearst Communications. web. 24 Nov. 2012. . "US Fast Food Franchise Industry Report." 2012. Franchise Direct. web. 24 Nov. 2012. . Read More