Strategic Analysis of The fast-food industry in New Zealand 2022

Running head: NEW ZEALAND FAST-FOOD INDUSTRY
Strategic Analysis of The fast-food industry in New Zealand
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NEW ZEALAND FAST-FOOD INDUSTRY
Executive Summary
The report has provided strategic analysis of the fast-food industry in New Zealand
and has evaluated factors that In-N-Out Burger should consider to thrive in the New Zealand
fast-food market. A PESTEL analysis has been used to analyze the macro-environment
factors affecting the fast-food industry in New Zealand. Based on findings, PESTEL factors
have a great impact on In-N-Out Burger’s business operations in New Zealand. Also, the
researcher has focused on Porter’s Five Forces analysis which has mainly covered the
competitiveness in the industry and the supplier and buyer power.
Based on the strategic analysis of the industry, the New Zealand fast-food industry is
very competitive and faced by various challenges due to the presence of giants in fast-food
like Kentucky Fried Chicken (KFC), Burger Fuel and Pizza Hut. The report concludes by
giving recommendations on how In-N-Out Burger should understand the challenges of
venturing into the fast-food industry in New Zealand and consider its business macro-
environmental and competitive analysis to get an insight on how to improve their business
opportunities. The recommendations are well supported, realistic and based on the evaluation
of In-N-Out Burger’s current business activities and strategy.

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Table of Content
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
Company Overview...................................................................................................................3
Macro-environmental Analysis..................................................................................................4
Political..................................................................................................................................4
Environmental........................................................................................................................4
Socio-cultural.........................................................................................................................5
Technological.........................................................................................................................6
Economic................................................................................................................................7
Legal.......................................................................................................................................7
Competitive Analysis.................................................................................................................7
Threat of Substitute Products.................................................................................................7
Power of Customers...............................................................................................................8
Power of Suppliers.................................................................................................................8
Industry Rivalry.....................................................................................................................8
The threat of New Entrants....................................................................................................9
Conclusion and Recommendations............................................................................................9
References................................................................................................................................11

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Introduction
The fast-food industry in New Zealand started in 1971 through the opening of an
outlet by Kentucky Fried Chicken (KFC). In 1974, Pizza Hut opened its first outlet in New
Zealand while McDonald’s entered the market two years later. The fast-food industry in New
Zealand lies in the restaurant industry which is otherwise referred to as Quick Service
Restaurants with market size of $3 billion. New Zealand is a consolidated and dynamic
industry with various fast-food outlets including In-N-Out Burger, Hell Pizza, Georgie Pie,
and Burger Fuel with key drivers of the industry being cleanliness, value, consistency,
hospitality, and quality. In 2012, New Zealand had over 4,700 fast-food outlets, with
approximate total sales amounting to NZ $ 2.3 billion (Mohsin & Lengler, 2015).
The fast-food industry in New Zealand is changing rapidly with industry growth of
5.7% in the life cycle curve and thus being faced with various key issues and challenges
arising in the industry which include the rise of rent in commercial districts and stiff
competition. While there is a variety of competitors in the industry with big players in the
industry being Domino’s, Tango Holdings, Restaurant Brands and McDonald’s, restaurants
in the fast-food industry in New Zealand try to ensure that they understand the best strategies
which will enable them to thrive in the fast-food market in New Zealand. Therefore, the
report makes identification of the current factors that influence the fast-food industry in New
Zealand, specifically focusing on the In-N-Out Burger restaurant. The report covers PESTEL
analysis, Porter’s Five Forces analysis and gives recommendations on factors that In-N-Out
Burger Company should address to thrive in the fast-food industry in New Zealand.
Company Overview
In-N-Out Burger is a restaurant in the fast-food industry in New Zealand dealing in a
limited and specific product menu which includes grilled cheese sandwiches, Neapolitan
shakes, milkshakes, soft drinks, French fries, cheeseburgers, and hamburgers. Founded in the

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East Coast in 1948, In-N-Out Burger is valued by people who love hamburgers as well as
those who hate fast-food because the company believes that the needs of the customer should
be met, and that fast-food should be made from scratch (Muldoon, Youdale & O’Rourke,
2019). With its menu which is simple and minimal, the ordering process is always simple and
fast for both employees and customers. The company possesses a secret menu that is built
from traditional menu offerings.
Macro-environmental Analysis
Political
In-N-Out Burger’s operations in the fast-food industry in New Zealand are highly
governed and influenced by political factors on state policies and regional operations.
Notably, the fast-food market in New Zealand is majorly a target for initiatives of the
government that are aimed at the reduction of obesity and the improvement of health. For
example, the New Zealand government tries to make a reduction of the salt levels in a variety
of foodstuffs including many fast-food industry products thus affecting In-N-Out Burger,
leading the company to reduce the content of salt in its menu. Additionally, the New Zealand
government requires all restaurants dealing in fast-food to indicate the nutritional facts in all
their food offerings including calorie content, sugar and salt levels. Similar government
initiatives have been implemented in other countries including the Netherlands, France and
the United Kingdom. However, various reports argue that government initiatives on the
consumption of fast-food has minimal influence on the fast-food demand in the fast-food
market in New Zealand.

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Environmental
Environmental factors affecting the operations of businesses are highly pronounced in
the fast-food industry in New Zealand since the techniques of producing fast-food are mostly
associated with low environmental concerns. Indeed, various protests have been witnessed in
the fast-food industry in New Zealand which mostly involves pickets, protest marches, and
demonstrations across New Zealand. Various cases that may affect the business operations of
In-N-Out Burger in New Zealand have therefore been experienced whereby fast-food is
termed as being falsely advertised as being nutritious thus risking the health of customers
who purchase fast-food regularly. Besides, the New Zealand fast-food industry is also
considered as being highly responsible for how animals reared for their products are treated
brutally. In response to such allegations, New Zealand restaurants dealing in fast-food should
ensure that they initiate various Corporate Social Responsibility (CSR) policies aimed at
reducing how their business impacts the environment and ensure that they provide an
environment that is friendly to their customers.
Socio-cultural
According to research conducted by Lee (2011) on the expansion of In-N-Out Burger
societies are shaped by their values, norms, and beliefs and thus people in different societies
unconsciously and consciously interact with each other. While In-N-Out Burger and the New
Zealand fast-food market has managed to regulate the unhealthy food reduction in their
menu, they have not been able to achieve success on the negative opinion of customers over
the issue. In general, fast-food’s public image in New Zealand has continued to decline as
people’s consciousness of the consequences of consuming fast-food continues to increase.
Over the decades, a rise in various social initiatives that are based on health have increased
including the high demand for organic and unprocessed food, and also the increased public

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knowledge on the causes and effects of heart disease and obesity, and how they are linked to
the consumption of high-fat food.
Further research conducted by Chand, Eyles, and Mhurchu (2012) shows that In-N-
Out Burger and other New Zealand fast-food outlets have resulted to forego the duper size
option for all its meals and substituting that with more healthy options in their menus,
including fruit, water, milk, salads, and fruit smoothies. The aspect has therefore resulted in
the New Zealand fast-food outlets being conscious about the services and products they offer
to their customers, improved relations with their customers and increased concern for the
society’s health and the environment.
Technological
The increased ease to access the internet has created various opportunities for high-
impact, low-cost marketing throughout various ranges of New Zealand industries and firms.
Notably, the fast-food industry in New Zealand is increasingly being judged on its anticipated
technological survey and online availability. Therefore, the lack of online presence bears the
ability to greatly destroy In-N-Out Burger’s business image if the company is viewed to be
not linked with the current world of technology. Internet-based opportunities for the
marketing of fast-food in New Zealand are many and of different forms ranging from multi-
layered, involved, intricate viral campaigns through website functionality and design to
simply being present in the media.
While In-N-Out Burger may have initially been slightly slow in catching up with
internet marketing benefits, the organization has currently embraced its potential. However,
inappropriate use of the internet may also prove to result in disadvantages for organizations in
the New Zealand fast-food industry due to negative reviews being posted in their social

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media articles about the firms’ products. Negative information, therefore, is transmitted
online due to the minimal regulation of access to information. In-N-Out Burger should ensure
that it carefully monitors its online presence and respond quickly to any false claims to
eradicate the potentially high damage to its reputation and ensure that it continuously provide
fast services to their customers and provides products of high quality.
Economic
In New Zealand, more traditional restaurants are not viewed as perfect substitutes for
the restaurants dealing in fast-food. In light of this aspect, many customers usually prefer
eating fast-food as compared to expensive traditional restaurants. In 2008, New Zealand’s
fast-food industry increased its revenue by 4.5% while demand increased by 4% (Braithwaite
et al., 2014). Customers may also choose to cook at home especially in severe recessions,
thus making a substitute for meals that are cooked at home with restaurant ones.
Legal
In-N-Out Burger’s specific legal environment of operation highly depends on the
particular market it operates. New Zealand’s laws require all staff handling food to be trained
in food handling hygiene at the expense of the company. In-N-Out Burger has put in place
systems that add additional control to the health agencies’ requirements. The aspect has seen
the organization having high standards on its dedication to the safety of food, which can also
be used as a tool for marketing its business by emphasizing their quality commitment.

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Competitive Analysis
Threat of Substitute Products
In-N-Out Burger faces the threat of substitutes since fast-food is readily available and
can be purchased from anywhere at the consumer’s discretion either through retail or food
service. However, quality, convenience, and public relation are the most differentiating
factors which reduce the threat of substitutes for In-N-Out Burger. While cooking at home is
a cheaper option, it lacks the convenience which is currently required by people. Therefore,
ready meals are a greater threat to fast-food based on convenience and price.
Power of Customers
Inside the fast-food industry in New Zealand, the bargaining power of buyers is
moderate thus increasing their price sensitivity due to minimum switching costs among
restaurants. Notably, key players in the fast-food industry in New Zealand try to reduce the
power of buyers by offering a range of products that cater to the whole customers, rather than
focusing on a particular segment. In-N-Out Burger has highly promoted the provision of
substitute products and offering quality products, an aspect that has greatly reduced the
consumers’ bargaining power.
Power of Suppliers
The supplier bargaining power has proved to be moderate in the fast-food market in
New Zealand due to the presence of a global supply chain that is highly competitive. Due to
the presence of more suppliers in the fast-food industry, it has proved hard to leverage any
significant power over fast-food restaurants. Pepsi and Coca-Cola have dominated the soft
drink supply due to their distribution channels globally, with the provision of refrigerators

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and drink dispensers to fast-food outlets. The strategy reduces consumer costs and markets
the companies’ brands (Sacks et al., 2015).
Industry Rivalry
Large international companies like McDonald’s have proved to increase the
competition in the fast-food sector in New Zealand, with the organization spending over $650
million in advertising in 2009 (Jacob et al., 2020). Additionally, local restaurants like Burger
Fuel have also increased the competition, with plans underway to open more branches across
the country. New Zealand’s fast-food industry is generally competitive due to the low cost of
switching between outlets and the increased fast-food restaurants that are highly aggressive in
fighting to provide cheap meal deals. Generally, while the competitive rivalry exerts a strong
force, it harms New Zealand’s fast-food sector.
Threat of New Entrants
Recently, there has been an increased demand for fast-food that has been attracting
foreign multinational entities as well as new investors who wish to venture into the fast-food
industry in New Zealand. Since New Zealand has put in place strong barriers to protect its
local investors, the threat of new entrants remains to be a less important source of
competition in the fast-food market. However, the fast-food restaurants in New Zealand still
require high capital, attractive outlets and product differentiation to sustain their businesses in
the country. The fast-food industry in New Zealand is dominated by various entities like
Domino’s, KFC, Burger King, Pizza Hut, and McDonald’s (Crawford, 2015).
The global brands are highly valuable and boast of strong customer recognition and
loyalty which is a reflection of their consistently good service and quality. Key players adapt
their techniques in marketing to suit social norms and local cultures to avoid customer
alienation and strengthen their brand. Therefore, the threat of new entrants in the fast-food

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industry in New Zealand is low since there are existing incumbent firms with a high market
share and expensive campaigns. However, social media platforms have given new entrants a
cheap way of marketing their products. Besides, fixed costs and initial capital for entering the
fast-food industry in New Zealand are low, thus encouraging new market entrants.
Conclusion and Recommendations
In-N-Out Burger should expect to face various challenges in the fast-food industry in
New Zealand. Most of the challenges are expected to arise from the organization’s external
environment, which includes increased government fast-food regulations and policies in New
Zealand. Other related concerns that may affect In-N-Out Burger’s operations in New
Zealand include negative publicity from failed internet marketing, concern on the
unhealthiness of fast-food and more protests questioning the fast-food businesses’ impact to
the environment. Therefore, In-N-Out Burger should understand the challenges of venturing
into the fast-food industry in New Zealand and consider its business macro-environmental
and competitive analysis to get an insight on how to improve their business opportunities. By
using the information provided in the strategic analysis of the fast-food industry in New
Zealand in this report, In-N-Out Burger can be able to work intelligently is setting their
business strategies and thus excel in the fast-food industry in New Zealand.

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References
Braithwaite, I., Stewart, A. W., Hancox, R. J., Beasley, R., Murphy, R., Mitchell, E. A., &
ISAAC Phase Three Study Group. (2014). Fast-food consumption and body mass
index in children and adolescents: an international cross-sectional study. BMJ open,
4(12), e005813.
Chand, A., Eyles, H., & Mhurchu, C. N. (2012). Availability and accessibility of healthier
options and nutrition information at New Zealand fast-food restaurants. Appetite,
58(1), 227-233.
Crawford, A. (2015). McDonald's: A case study in glocalization. Journal of Global Business
Issues, 9(1), 11.
Jacob, L., Stubbs, B., Firth, J., Smith, L., Haro, J. M., & Koyanagi, A. (2020). Fast-food
consumption and suicide attempts among adolescents aged 12–15 years from 32
countries. Journal of affective disorders, 266, 63-70.
Lee, P. C. R. (2011). The expansion of In-N-Out Burger (Doctoral dissertation, California
State University, Northridge).
Mohsin, A., & Lengler, J. (2015). Exploring the antecedents of staff turnover within the fast-
food industry: The case of Hamilton, New Zealand. Journal of human resources in
hospitality & tourism, 14(1), 1-24.
Muldoon, M., Youdale, R., & O’Rourke, J. S. (2019). In-N-Out burger: The perils of political
contribution.
Sacks, G., Mialon, M., Vandevijvere, S., Trevena, H., Snowdon, W., Crino, M., & Swinburn,
B. (2015). Comparison of food industry policies and commitments on marketing to
children and product (re) formulation in Australia, New Zealand and Fiji. Critical
public health, 25(3), 299-319.