Analysis of the US Fast Food Industry: Market Leaders & Challengers

This report provides a comprehensive analysis of the US fast food industry, focusing on market leaders, challengers, and followers. It begins with an executive summary and an introduction to the industry's growth and revenue. The report then delves into the strategies of market leaders, specifically McDonald's, highlighting their advertising and franchising model. It identifies Yum! Brands as a key market challenger and analyzes their strategic plans for growth across their brands. The report also examines market followers, such as Fatburger, and their adoption of strategies similar to McDonald's. The conclusion summarizes the competitive environment within the US fast food sector, emphasizing the impact of various marketing strategies. The report utilizes data from Statista and references relevant marketing literature to support its analysis.

1
Running head: THE US FAST FOOD INDUSTRY
The US Fast Food Industry
Name of the Student:
Name of the University:
Author Note

2THE US FAST FOOD INDUSTRY
Executive Summary
The report intends to study the fast food industry in the United States. The first part of the report
deals with market leaders and its strategies, the second part focuses on the market challenger of
the industry and the third part aims to identify the market followers of the leader. The report ends
with a brief conclusion of the entire discussion.
Keywords: McDonald’s, market leader, strategies.

3THE US FAST FOOD INDUSTRY
Table of Contents
Introduction......................................................................................................................................4
Leaders of US fast food industry.....................................................................................................4
Market challenger............................................................................................................................5
Market Followers.............................................................................................................................6
Conclusion.......................................................................................................................................6

4THE US FAST FOOD INDUSTRY
Introduction
Over the past five years, the fast food industry of the United Staes has grown by 3.8%
and made a reached the revenue of $256 billion in 2018 (statista.com, 2018). At the same time,
the number of businesses in this industry has grown by 2.0% while the number of employees has
grown by 3.0% (statista.com, 2018). The report presents the marketing strategies adopted by the
industry and its leaders, followers and challengers.
Leaders of US fast food industry
McDonalds, having the largest market share holds the leading position in the US fast
food industry. The closest competitor of the McDonalds is Yum! Bran, which is the owner of
chains like Pizza Hut, WingSteet, KFC and Taco Bell. These leading five brands hold 40% of the
entire share of the fast food industry of the US (statista.com, 2018). In 2014, these brands
generated a revenue of over 198.9 billion US dollars in revenue, which is forecasted to rise above
223 billion dollars in 2020 (statista.com, 2018).
McDonalds became the market leader in the US by adopting certain market-leader
strategies. It became the leader of the fast food industry of the US by strongly focusing on
customer service, competition and marketing techniques. The following are some of the
strategies of McDonalds:
1. For long, McDonald’s strategy is to invest in the model of advertising and franchising
(mcdonalds.com, 2017).
2. The company aims its advertisements towards families and children.

5THE US FAST FOOD INDUSTRY
An example of McDonald’s strategy: The company designs its ad campaigns in such a way that
would appeal to the young generation.
Market challenger
A firm is considered as a market challenger if it has a market share below that of the
market leader, but possess enough presence that can be used to exert an upward pressure on the
company’s effort to gain more control (Kotler & Keller, 2016).
The market leader in the US fast food industry is McDonald’s. The market challenger of
McDonald’s is Yum! Brands Inc. since its market share is below that of McDonald’s. According
to the statistics, in 2017, McDonald’s reported a revenue of $22.8 billion (Downie, 2018). The
company continue to aim ta increasing its market share. In November 2018, its market capital
was $89.2 billion (Downie, 2018). As of 2017, the revenue of Yum Brands exceeded $5.9 billion
(Downie, 2018). The market capital of Yum, Brands in November 2018 was $27.8 billion
(Downie, 2018).
The strategic plans of Yum Brands plan is aimed to boost growth at Pizza Hut, KFC and
Taco Bell. The initiatives of these growth and transformation involve greater focus on the
development of the three iconic global brands, thus increasing its franchise ownership and
creating an efficient and leaner cost structure. To drive continued growth, it also focuses on the
development of the restaurants.
In April 2014, using the song “Old McDonald Had a Farm”, Taco Bell used the strategy
of encirclement attack on McDonald’s. A national commercial was carried out which depicted a
person who has grown tired of having Egg McMuffins since a long time and has decided to try
the new Waffle Taco of Taco Bell (Probasco, 2014).

6THE US FAST FOOD INDUSTRY
Market Followers
A company is said to be a market follower when it follows what the leader in its industry
does (Frösén et al., 2016) A market follower is maverick and does not like to take risk. It waits
and observes the actions of the competitor and adopts the same strategies of the leader.
Since McDonald’s is the leader in the fast food sector of US, the restaurant chain
Fatburger Inc. follows the strategies of McDonalds (Kotler et al., 2015). The following are the
strategies adopted by Fatburger that are similar to McDonald’s:
1. Fatburget focuses on customer satisfaction to succeed.
2. The company changes with the market demands of the consumers.
3. The company maintains their competitive advantage with superior convenience.
Conclusion
Therefore, from the above discussion it can be concluded that the fast food industry of
US is dominated by McDonalds due to its various marketing strategies. It has many competitors
in the form of market challengers. The various strategies adopted by the fast food companies
make the marketing environment of the nation’s fast food sector much more competitive.

7THE US FAST FOOD INDUSTRY
References
Downie, R. (2018). Who Are McDonald’s Main Competitors?. Retrieved from
https://www.investopedia.com/articles/markets/102815/who-are-mcdonalds-main-
competitors.asp
Frösén, J., Luoma, J., Jaakkola, M., Tikkanen, H., & Aspara, J. (2016). What counts versus what
can be counted: The complex interplay of market orientation and marketing performance
measurement. Journal of Marketing, 80(3), 60-78.
Kotler, P., & Keller, K. (2016). A framework for marketing management (6th ed.). Pearson
Education, Inc.
Kotler, P., Burton, S., Deans, K., Brown, L., & Armstrong, G. (2015). Marketing. Pearson
Higher Education AU.
mcdonalds.com. (2017). McDonald's: Burgers, Fries & More. Quality Ingredients. Retrieved
from https://www.mcdonalds.com/us/en-us.html
Probasco, J. (2014). Yum! Brands, Inc. (NYSE:YUM), McDonald's Corporation (NYSE:MCD) -
Taco Bell Continues To Attack McDonald's As 'Old Fashioned'. Retrieved from
https://www.benzinga.com/news/14/04/4457245/taco-bell-continues-to-attack-
mcdonalds-as-old-fashioned

8THE US FAST FOOD INDUSTRY
statista.com. (2018). Topic: Fast food industry. Retrieved from
https://www.statista.com/topics/863/fast-food/