Business Strategy Analysis: KFC, Burger King, McDonald's

This report analyzes the business strategies of major fast-food companies, including KFC, Burger King, and McDonald's, exploring various aspects of their operations. The report begins with an overview of the fast-food industry's growth and marketing strategies, emphasizing the importance of an online presence and targeted marketing techniques. It then delves into a PESTEL analysis, examining the political, economic, social, technological, environmental, and legal factors influencing the industry. Porter's Five Forces model is applied to assess the competitive landscape, considering threats of new entrants, bargaining power of customers and suppliers, and the threat of substitutes. The report also examines pricing strategies like value pricing, penetration pricing, and bundle pricing. Furthermore, it highlights the opportunities and threats faced by KFC, Burger King, and McDonald's, including the demand for healthy food options, expansion possibilities, and the challenges posed by competitors and legal issues. The report concludes by discussing the evolving innovation of restaurants and the need for companies to adapt to changing consumer preferences. The report is contributed by a student and is available on Desklib, a platform providing AI-based study tools and resources.

business strategy
Module code:
6WBS0008/9
The continued dominance of the fast food giants
Lecturer: Sir Usman Gaba
STUDENT GROUP:
Abdulraheem Niazi Student
ID
19057979
Sabee ur rehman 19057784
Awais Nadeem 19058646
Talha dilbar 19057981
Word Count : 2350
Table of content:
Pestle

Poter’s Five Forces
Pricing Strategy
Opportunities and threats of KFC, Burger King and McDonald’s
innovation of restaurants
Bibliography
appendix 1
Abdulraheem Niazi

In today's world the industry of fast food Is growing rapidly and are evolving their marketing
strategies so that they can drive more customer traffic With the advancement of technology these
fast food companies need an online presence having a website is important So that the company can
showcase their new offerings and other items And upcoming deals . Another key strategy is Handing
out collectible items for children when they purchase kid meals Especially for children it becomes a
go to spot to spend more money (Rick Suttle,2019)
Another key strategy is market segmentation Can be achieved through market research study and
other demographic information’s we can also segment the market through activities and usage of
buyer. As the key strategies of fast-food Giants is evolving and improving day by day it is also inviting
a serious health issue obesity which is now common and a serious medical threat for the people (Dr
Sophie Hawkesworth,2018).
The growth of obesity and the increase in casual dining is due to the easy availability of unhealthy
foods and a change towards workplace jobs And the access of quick transport and tv set Are the
reasons if you look at UK The cost of NHS is around 5 billion pounds every year Where more than 1/4
of grownups are overweight (Dr Sophie Hawkesworth,2018).

Fast Food Industry PESTEL Analysis
In this section I will be discussing few factors which contribute In the fast food industry are as follow:
Political factor:

The political factors has a huge significance in the decisive or dynamic fast food industry
The factors depend country to country The political policies such as quality of food
sanitation and wages of worker are taken into consideration so that the standards are
met By the fast food businesses. The government legal authorities can or may intervene
to check packaging regulations and give legal support for adding healthy items of food in
the menus (adamkasi,2017)
Economic factor:
Due to the ongoing pandemic of COVID-19 the economy is in recession it has affected fast
food industry globally As consumers are spending more the eateries are putting more
focus on improving the customer service and availability of cheap food items But many
people with health awareness avoid these foods which has affected the sales. The fast-
food business can only be successful if it is operative, orderly and dynamic in nature
Social factor:
The fast food businesses are influenced by the healthy lifestyle and trends these days. The
fast food chains are forced to make changes and introduce healthy and clean eating items
as the consumers are now very much aware of what they are having in their diet because
of vast information online available and this trend has effected the industry sales as they
now tend to stay in shape and opt for healthy dishes so fast food chains now display
attractive healthy meals with detailed ingredients portions. Many cultures also resist on
consuming fast foods (adamkasi,2017)
Sabee Ur Rehman
Five Force Model (Fast Food Giants)
 Threat of New Entrants

 Economies of Scale: Companies in a small-scale restaurant class have certain
competitive benefits, but the convenient development of a fast-service
restaurant undermines these advantages. The industry's saturation often
restricts how much the economies of scale will gain from (Datamonitor, 2019)
 Product Differentiation: While separating is a massive and required burden for
the industry's big fast-food chains, it does not prove difficult to overcome
private startups and thus a major obstacle to market access. (Datamonitor,
2019)
 Capital Requirements: Capital standards can soothe the preparation of
potential national players but are not a big challenge to private companies.
 Cost Disadvantages: These drawbacks derive from the fact that "existing
businesses already have commodity technologies, access to raw materials,
good location, public subsidy benefits and expertise". The intense saturation
and product similarities make it important for restaurants with large and small
fast service. Convenient locations. This is a significant hurdle to access
(Datamonitor, 2019)
 Threat of New Entrants (Cont.)
Channels of distribution:

Both industries around the industry need speedy and reliable networks but are
not inherently hard to obtain for newcomers. Often, multinational
corporations' economies of scale are not so high that smaller rivals would be
cut off. (Euromonitor International, 2019)
Control of the Government:
For bigger companies that have to comply with franchising laws, federal
regulations are more intensive. The standard set of government legislation for
smaller businesses is as follows: zoning, health care, safety, sanitation and
construction. These are normal for almost all new company and thus pose no
big challenge to new entrants. (Euromonitor International, 2019)
Findings:
Due to the absence of any entry barriers so critical that most private start-ups
can be challenged, there is a high danger for us from new entrants.
 Bargaining Power of Customers
While customer change costs are virtually zero, easy feed does not concern
customer loyalty because on average one-fifth of the population of the United
States eats daily in a fast-food restaurant." It is this amount that decreases
consumer control by diluting the impact of certain select customers. (SMO,
2018)
 Bargaining Power of Consumer’s
Wide fast-food stores give thousands of vendors a competitive offering
process to select from and choose from. They can quickly shift suppliers and
appear to pay for a substantial share of supplier's profits. The negotiation
power of suppliers is therefore significantly limited. (SMO, 2018)

 Threat of substitutes
The menace of alternatives is very
strong for too many businesses in the
fast service/burger industry, low
transition rates, comparable goods and
better choices. (Brown and Harwood,
2017)
 Competition among existing companies
A red ocean industry is characterized by
the limited service industry. Companies
battle in a saturated market for market share. The customer base is not
growing as quickly as the industry especially in hamburger chains. This leads
to intense business competition. (Brown and Harwood, 2017)
Pricing Strategies of Fast-Food Giants
At least once in their life, most people would go to a fast-food restaurant. However, can we
stop worrying about the price of the things on the menu rather than opening our pocketbooks
to pay? How much does a burger and fries cost for us? While fast-food restaurants use
numerous pricing methods, valued price, penetration pricing, custom prices and packaging
pricing are the most popular techniques. (Kline et al., 2018)
 Value Pricing: Assumes that costs for consumers are the key predictor of the
worth of a good. Price rises as an organization preserves or decreases the price
of a commodity. The ability of "super-sized" drinks and fries in a fast-food
restaurant is a perfect example of value pricing. (Schmeltzer, 2019)
 Penetration Pricing: It represents even less than what the usual sale price will
be to infiltrate the market in order to set the original selling price. The aim is
to reach a wider population and to grow the market share. The price would be
penetration. Restaurants also use penetration prices when offering a new menu
item. For e.g., the original purchase price of a new item may be set at 99 cents.
The purchase price would grow dramatically after the promotional period.
(Schmeltzer, 2019)

Bundle Pricing: is the selling act and the sale as a kit of two or more items to
spares customers' money. Restaurants of fast-food goods also use package
pricing. You may call it a food or a dinner. A consumer can buy a burger, fries
and a drink as a food for value far less than the cost of each item. (Schmeltzer,
2019)
Source: (McDonald’s, 2012)

Talha Dilbar
Opportunities and threats of KFC, Burger King and McDonald’s
Opportunities:
 Demand for healthy foods
There is a steady rise in preference for nutritious and healthy food worldwide. KFC should
incorporate
nutritious food choices further to lure new consumers and please existing ones. The influx of new
product lines to draw more consumers is also an enticement for Burger King. Yet more consumers
are
now becoming health conscious day after day. It is also a strong chance to add more choices on the
menu for health-conscious consumers. While McDonald's has launched a range of items around the
world in recent years, some of them have really struggled badly. However, the restaurant should not
be
infuriated. McDonald's should continue acquiring new products to meet the rising demands of its
consumers. And as for the pandemic going on all over the world, people are gradually venting away
for
healthier food to consume and to empower their immune system to protect themselves from the
corona virus which is still spreading like fire in the wild.
(Joe David, 2020)
 Expansion
Further extension is possible in the home country (USA). Likewise, the KFC has tremendous capacity
to develop in emerging regions. Customer perception is shifting, and now more people in developing
regions like India, Indonesia, and Nigeria are dining out with their relatives, friends, and colleagues.
As Burger King now works in dozens of the world's top developing markets, for example. It's China
and
India. According to some observers, Burger King is expected to expand more in these nations.
Accordingly, pursuing opportunities for growth in Bangladesh is worthwhile, as the business
currently has a very limited variety of restaurants in the region.
(Kiesha Frue, 2020)
Threats:
 Competitors
Evidently, the fierce competition is the greatest challenge to KFC. KFC's major rivals are McDonald's,
Burger King, Subway and Starbucks. As Burger King faces the challenge of vigorous competition from
all around the world. The company's biggest rivals include McDonald's, Subway, KFC, Taco Bell, Yum
Brands, Starbucks, Chipotle, Wendy's, Domino's Pizza, and Pizza Hut. McDonald's also have the same
competitors as KFC and Burger King.
(Joe David, 2020)

 Legal Threats
KFC has faced a lot of law suits over the years. For instance, Teesside Crown Court gave a penalty to
KFC £950,000 after two employees were scalded by boiling hot gravy (ITV Plc., 2017). Legal cases
have abilities to undermine a company’s credibility, which in serious case can endanger its survival.
As McDonald’s has been prosecuted several times for having ‘unhealthy’ products, reportedly with
addictive ingredients, leading to the obesity epidemic in USA (Novak, n.d.).
(Joe David, 2020)
 Public Awareness
Many people repute fast food as junk food. Well, they are not in the wrong. Several research
findings advise that junk food and sugary drinks are affecting both children and adults all around the
globe. Ailments and health conditions such as obesity, type 2 diabetes and high blood pressure are
at unprecedented levels due to spread of fast food and sugary drinks.
Consequently, policymakers and NGO's around the world are campaigning to build general
awareness of the effects of excessive food intake. Due to the pandemic going on worldwide these
NGO’s are encouraging people to consume healthy and nutritious food to help them cope up with
covid-19 after effects, weakness and make sure that people don’t get infected by this severe virus.
(Kiesha Frue, 2020)

Awais Nadeem
The indubitable swift evolution and innovation of restaurants is detachable but are all
restaurants moving fast enough to stay relevant in accordance to the taste and preference of
the consumer? Just like all the other industries, the restaurant industry faces diverse
challenges in order to keep up with the rapid pace of change driven by the consumer trends
and changing demographics. The rising spending culture of the millennial generation of
consumers is accelerating the industry’s response to such trends. Whereas , economic forces
continue to have an industry impact. GDP growth is slowing while the average household
income is decreasing, leaving consumers with less to spend.on top of it the rise in healthcare
and education have reduced spending on food.
“The challenge in a disruptive world is to be courageous. This is easier for small
companies. It’s harder to do when the numbers are very big, and the risks are very big.”
—CEO of brand name restaurant chain
As restaurants maneuver variety of challenges, they must innovate and adapt agile business
strategies that enable them to cost-effectively compete in this continuously evolving tech
environment. From the rise of mobile delivery apps to the challenges of labor inflation, the
restaurant industry undergo dynamic market changes. With globally renowned fast food and
casual dining closing locations and going bankrupt, for instance, subway and Friendly’s,
people haven’t stop eating out but as a matter of fact they’re spending more than ever.
However where they choose to go out is radically modifying. Fast food and casual dining
aren’t going away but they are fundamentally changing. Fast food is no longer just buttery
burgers with a side of fries it’s a meal at a sushi kiosk. For the most parts customers expect
on demand ordering and big players have struck deals with startups like uberEATS and
GrubHub in order to ensure greater reach and retain existing customers.
Trending innovation strategies
 Preferences for healthier food options
Consumers prefer eating at home and in case of dining out are inclined to consume
healthier and less processed foods hence restaurants have been making attempts to
influence consumption patterns.
 Modification of menu items
By showing the calorie counts of the products.
 Environment sustainability
Focusing on reducing food waste to manage rising cost and go green.

 Inclination towards global cuisines
Ethnic cuisines is prompting restaurants to diversify business. According to a survey
by NRA 80% consumers eat at least 1 ethnic cuisine per month.
 Focusing on generation Z
Restaurants are currently trying to appeal to millennials and are competing for the
attention of this social media savvy generation.
Understanding the new customer mindset: An opportunity
It initiated with millennials but the generation has impacted the entire span of entire
consumer mindset regardless of demographics. In this digital age the consumers are
constantly connected and have high expectation regarding quality, sustainability and
convenience. With the shedload challenges facing the industry, such as:
 Advancing technologies
 Increasing regulations
 Risk and opportunity
Restaurants needs to keep primary focus on innovations. Being the first mover or a fast
follower is not as important in a marketplace as being agile and ready to move fast. It
comes with being aware of weak signals in the marketplace along with having a
framework for innovation implanted in your organization in order to be in the position to
move when right time comes.
Johnny and Jugnu being the precedent of modern times open kitchen fast food startup
being utilized mainly by the age group of 18-35 is a affordable and hygienic option to the
consumers. The disk like gadget that lights up when consumers order is ready plays an
essential role in dealing with the psychology of waiting.

(Midnight, Corridor, Bhulakar and There, 2020)
(

Bibliography
 Hawkesworth, D., 2018. The Places Where Too Many Are Fat and Too Many Are Thin.
[online] BBC News. Available at: <https://www.bbc.com/news/health-45878325> [Accessed
13 November 2020].
 Suttle, R., 2019. Product Strategies for Restaurants. [online] Small Business - Chron.com.
Available at: <https://smallbusiness.chron.com/product-strategies-restaurants-37640.html>
[Accessed 13 November 2020].
 Free PESTEL Analysis. 2017. PESTEL-PESTLE Analysis of Fast-Food Industry. [online]
Available at: <https://freepestelanalysis.com/pestel-pestle-analysis-of-fast-food-industry/>
[Accessed 13 November 2020].
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 https://howandwhat.net/mcdonalds-swot-swot-analysis-mcdonalds/
 https://competitors.co/swot-analysis-of-kfc/
 https://pestleanalysis.com/swot-analysis-of-kfc/
 Lockyer, S (21st April 2011), Restaurant News, “McDonald’s Outlines Pricing Strategy”.
 Available at: http://nrn.com/article/mcdonalds-outlines-pricing-strategy. Lubin, G and
Badkar, M (2010), “15 Facts About McDonald’s That Will Blow Your Mind”.
 Available at: http://www.businessinsider.com/amazing-facts-mcdonalds-2010-12. 30
 McDonald’s Corporation (2012). Available at: http://www.aboutmcdonalds.com/mcd.html.
 McDonald’s Corporation (2012). “Recruitment and training at McDonald’s”. Available at:
 http://www.mcdonalds.co.uk/content/dam/McDonaldsUK/People/Schools-and-students/
mcd_recruitment_training.pdf.
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 es to Keep Workers from Flipping Jobs”. Available ahttp://articles.chicagotribune.com/2007
 -05-15/business/0705140540_1_restaurants-turnover-rate-karen-king
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 http://www.economist.com/node/16380043. The Scottish Government (25th February
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ThomsonBusiness Press. Pg: 1-201

Appendix B: Group Log
Syndicate Group: group 3
Group Members/ID:
19057979 (1)
19057784 (2)
19058646 (3)
19057981 (4)
Group Objectives:
1. Compelling all of the data together, so that no group member is left behind with
confusion
_________________________________________________________________________
___
2. _Helping each other out even its not their part
_________________________________________________________________________
_______
3. __making most out of the research , so we all get valuable and credible resources
_________________________________________________________________________
______
Team
Member’s
Name
Role/s Assigned
Tasks
Dea
dlin
e
date
Dea
dlin
e
met
Individual’s comments
1 Abdulraheem
Niazi
Pestle
Analysis &
Introductio
n
1st
Nov
202
0
Yes
2 Sabee Ur
Rehman
Group
Leader
5 forces
frame work
Pricing
strategies
3rd
Nov
202
0
yes
3 Talha Dilbar Opportuniti
es threats
to the fast
5th
Nov
202
yes

food giants 0
4 Awais
Nadeem
Overview
of the
report and
recommen
dations
7th
Nov
202
0
yes
The group should agree roles for each member at the beginning of the module. As
these changes then the log should be adjusted as necessary. The group log should
be submitted at the same time as Assignment 1. ONLY ONE COPY SHOULD BE
SUBMITTED PER GROUP. Please label the filename with the name of your group.
If any group member disagrees with the contents of the submission the member
should email the tutor to inform them of their disagreement.