Chick-Fil-a and Religion Based Business
Chic-fil-A Case Study
Exhibit 1- Dominant Economic Features
The quick serve restaurant industry is a large with 2012 annual revenue of $169.7 billion spread over 190,000 businesses. Globalization of the industry is expected to add $186.2 billion in revenues by 2017. The economy and new health trends caused an average annual contraction of 0.7% across the fast food industry from 2007 to 2012. However, the industry was able to grow by 1.8% and 1.3% in 2010 and 2011.
The number of rivals has been increasing because of new entrants that take advantage of low capital that is needed to open a franchise. The franchise model has allowed companies to compete on a growing global level. The QSR companies have extended operations into Europe to take advantage of their affluent population, as well as, growing business in China and India as American brand image becomes more popular. Due to US saturation of the QSR, firms have found it prudent to expand into these oversea markets.
The demand for these restaurants is not fragmented as the customers are price sensitive and want to have food in a hurry. This price demand has caused a large amount of product differentiation because there is almost no cost associated with switching from restaurant to restaurant. The differentiation is not just among the food offered but also the hours of operation, meal incentives, contests, and types of location. McDonald’s has done a great job of utilizing meal incentives and contests. They use toys in their kid’s meals to build brand loyalty at a young age. Their monopoly contest is also a large loyalty driver; it keeps customers coming back to try and collect more game pieces to win prizes in the contest. This also raises the switching cost between McDonald’s and other QSRs. Chick-fil-A has restaurants in multiple kinds of locations including drive-thru only, mall, and stand alone locations scattered around a city. Having multiple locations in different kinds of stores gives the consumer
Exhibit 1- Dominant Economic Features
The quick serve restaurant industry is a large with 2012 annual revenue of $169.7 billion spread over 190,000 businesses. Globalization of the industry is expected to add $186.2 billion in revenues by 2017. The economy and new health trends caused an average annual contraction of 0.7% across the fast food industry from 2007 to 2012. However, the industry was able to grow by 1.8% and 1.3% in 2010 and 2011.
The number of rivals has been increasing because of new entrants that take advantage of low capital that is needed to open a franchise. The franchise model has allowed companies to compete on a growing global level. The QSR companies have extended operations into Europe to take advantage of their affluent population, as well as, growing business in China and India as American brand image becomes more popular. Due to US saturation of the QSR, firms have found it prudent to expand into these oversea markets.
The demand for these restaurants is not fragmented as the customers are price sensitive and want to have food in a hurry. This price demand has caused a large amount of product differentiation because there is almost no cost associated with switching from restaurant to restaurant. The differentiation is not just among the food offered but also the hours of operation, meal incentives, contests, and types of location. McDonald’s has done a great job of utilizing meal incentives and contests. They use toys in their kid’s meals to build brand loyalty at a young age. Their monopoly contest is also a large loyalty driver; it keeps customers coming back to try and collect more game pieces to win prizes in the contest. This also raises the switching cost between McDonald’s and other QSRs. Chick-fil-A has restaurants in multiple kinds of locations including drive-thru only, mall, and stand alone locations scattered around a city. Having multiple locations in different kinds of stores gives the consumer