BUSINESS STRATEGY

THE CATERING SECTORTHE CATERING SECTOR

INTERNATIONAL HOSPITALITY MANAGEMENT

Group 3. 30th November 2001

BECKY DEADMAN, KATY EAGLE, LISA GALLAGHER, LAURA WALTON

Format of Presentation

•General Catering Sector - specifically looking at Fast Food

•What is Fast Food?

•An analysis of the market and competition with analytical tools

•Discuss external factors that affect the fast food sector

•Consider stakeholders

•Look into the future and forecast of the fast food market

•Conclusion

IN-STORE RESTAURNATS

PUB CATERIING

INDEPENDENT & CHAIN RESTAURANTS

OTHER CATERING

FAST FOOD

HOTEL CATERING

ROAD SIDE CATERING

THE CATERING

SECTOR

The Eating Out MarketFast Food

Pub Catering

Independent &Chain RestaurantsIn-storeRestaurantsRoad Side Catering

Hotel Catering

Other Catering

26%

22%22%

5%

2%

17%

6%

General Eating Out Trends

•The eating out sector has increased 32% between 1996 - 2001

•Higher Disposable Income

•Demand for Value For Money

FAST FOOD

•Food which is prepared and served quickly to customers on order

•Food may be takeaway or eat on premises

•In general Fast Food is collected from a counter, not table service

•Relatively cheap food

•Convenient

Fast Food Includes…….•Burger Bars e.g, McDonalds and Burger King

•Pizza Restaurants, Takeaway and Home Delivery Outlets

•Pasta Chains e.g, Bella Pasta

•Chicken Chains e.g, KFC

•Fish and Chip Shops

•Ethnic Takeaway

•Other Fast Food e.g, Jacket Potatoes, Sausages, Vegetarian Specialists and filled croissants

Key

Markets

BurgersPizzas

Fried Chicken

Juice BarsPasta

Sandwiches

Jacket Potatoes

Ethnic Takeaway

Traditional New emerging markets

Organic Specialities

0 1,000 2,000

£m

95

96

97

98

99

2000

Yea

rThe Fast Food Market

OtherEthnic TakeawayFried ChickenFish & ChipsPizza & PastaBurgers

Growth of Fast Food Market

•Domination of eating out sector

•Consumer spending doubled over the last 10 years

Market Structure

•Large Scale

•Characteristics

•Key Features

Market Environment

•Ease of Entry to Market

•High Failure Rate

•Competitive

Fast Food Customer Trends

•Core Market - Young, Social & Affluent

•Elderly & Cash Constrained

•Family Market

Regional Differences

•Similar throughout the UK

•North/ South divide

•Reasons for differences

High

Low

GROWTH

LowMARKET SHARE

BOSTON CONSULTANCY GROUP MATRIX

Ethnic takeaways

Sandwich shops

McDonalds

Burger King

KFC

Pizza Hut

Yo! Sushi

Wimpy

Harry Ramsdens

Wendys

PORTERS FIVE FORCES MODEL - FAST FOOD

Competition/ Rivalry New FF restaurants

Existing FF restaurants serving different types of

fast food.

Potential entrants Ease of entry into market.

Buyers- Customers Have so much choice

that they can now demand value for money and have

bargaining power.

Suppliers As a new company suppliers have the bargaining power

over the companies.

However if there are ample suppliers then the companies are able to choose. Substitutes

Increased ‘pub’ restaurants which are

good value for money. Retail food e.g.. Marks

& Spencer's

Factors Affecting the Catering Sector

Political

•The Governments reaction to Food Scares

•The encouragement of healthy eating

•Government encouragement for families to sit round the table

•Government legislation on employment

Economical

•High property and operating costs

•Increase in taxation

Social

•Increase in the young eating out

•Lifestyle changes

•Smaller fast food outlets have a reputation for poor hygiene

Technological

•Drive through

•Advertising and ordering on the internet

•Improved cooking techniques and facilities

Environmental

•Decrease in inbound tourism

•Foot and Mouth disease

•BSE crisis

•September 11th 2001 – Terrorist attacks

Stakeholders

• Customers

• Community

• Competitors

• Employees

• Suppliers

• Government

• Owners & share holders

• Financial lenders

The Future

2001 £m 2002 £m 2003 £m 2004 £m 2005 £m % change

Burgers 1,840 1,987 2,130 2,283 2,465 +34Ethnic takeaway 1,490 1,553 1,615 1,682 1,764 +18Pizza & pasta 1,021 1,115 1,189 1,267 1,352 +32Fish & chips 850 893 931 975 1,026 +21Chicken 691 751 807 865 932 +35Other fast food 126 134 141 150 160 +27Fast Food Total 6,018 6,433 6,813 7,222 7,699 +28

Restaurant Total 15,889 16,608 17,267 17,874 18,557 +17Other venues 1,344 1,395 1,451 1,503 1,565 +16TOTAL 23,251 24,436 25,531 26,599 27,821 +20

Forecast of the Eating out market 2001 - 2005

Source: Mintel Report - Eating Out Review. 18/06/2001

The Future

•Fierce Competition

•Keep prices down

•Consumers demand better quality of food & service and value for money

The Future

•Personal Disposable Income (PDI)

•The socio-economic status of the population

•The structure of the UK population

•Families will still remain a very attractive market to target

The Future

•New sales opportunities through the internet

•A “gap” in the children’s vegetarian market

•The concept of healthy fast food

Forecast•Pizza restaurants - key area:delivery

•Chicken & Burger bars - the market appears to be saturated

•Ethnic takeaway - Chinese & Indian remain popular but new competition from other ethnic

cultures

•Fish & Chips - remain an old favourite but new fish bars may start to compete

Conclusion•Easy to enter but hard to succeed

•Highly competitive, diverse and large market

•Growth markets are new ethnic takeaways

•Move towards healthy eating such as sandwich shops

•Positive outlook for the future

Thank-you for listening.

Any Questions?