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Fast Food Market: A Comparison of Burger King and McDonald's - Case Study Example

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The objective of the following study "Fast Food Market: A Comparison of Burger King and McDonald's" is to provide a retrospective look at the business rivalry between two major market competitors in the sphere of fast food: Burger King and McDonald's…
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Fast Food Market: A Comparison of Burger King and McDonalds
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Download file to see previous pages By 1967 Burger King had already acquired more than 220 outlets around the country and had achieved huge success in the fast food industry, this result prompted Pillsbury Co to purchase Burger King Corporation.2 By June 22, the acquisition had been completed and Pillsbury Co had acquired Burger King in exchange for 350000 shares of Pillsbury common and 60000 shares of convertible preferred3.
At the same time McDonald brothers sold their business to Kroc for the sum of 2.7 million, however, they did not retain the right to keep McDonald's franchise. By the mid-seventies both these companies faced similar problems: high costs of raw materials, rising labor costs as well as fierce competition in the market; however energy crisis was one of the biggest threats that the companies faced. In view of many experts at that time the industry could be adversely affected by high energy and fuel costs that might have restricted the mobility of potential customers4.
However as both of these companies provided their customers with "take -away" service the crisis did not have a profound effect on their businesses, even though high prices on gas hampered expansion policies of fast food restaurants, which was an important element in the business development of the companies. (In 1972, for instance, more than 80 % of the revenues of McDonald's came from the sales of the outlets owned by the corporation yet, 62% of profit was derived from rental incomes as well as franchising fees. The same holds true for Burger King).
In spite of the rising costs of energy and fuel, McDonald's and Burger King managed to adjust to an energy crisis and by the middle of the seventies, they had started implementing new marketing strategy-wide expansion in the regional market.
One of the reasons for the massive expansion of fast food restaurants in the regional area was the absence of competition in rural areas. Both McDonalds and Burger King implemented almost identical marketing strategy-they reduced the sizes of their restaurants. For instance, McDonalds Corporation introduced so called "Mini- Mac" (new types of restaurants destined for rural areas) which were much smaller than their traditional types of the outlets in large cities; whereas Burger King established several restaurants in rural areas which could host 40 or 50 clients, instead of 100 customers. ...Download file to see next pagesRead More
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