Kfc Case Study

4507 WordsFeb 11, 200919 Pages
Q1) what are the driving forces in the fast food industry in 2004? Ans: - The main driving forces in the fast food industry in U.S fast food industry were the economic, social and technological factors. Economic factors:- a) Inflation rates: - Food prices, worldwide have shot up over the decade or so. Food cost is the highest expense in the chain’s total costs; thus inflation of food costs would result in profit margins being squeezed. For e.g. in the case study, it says that the cost of chicken has increased from $1.20 in 2001 to $2.50 in the year 2004. That is an increase of over 100% percent. Chicken segment of the fast food industry is particularly hurt by this sudden price rise ,as customers are not ready to pay more for their meals. Thus , inflation is one of the major economic forces that is affected the fast food industry in 2004 b) Trends in the growth of income: - Higher divorce rates and more women working (over 50% work outside and that is expected to increase to over 65% says in the case study) has resulted in more people buying food from restaurants. Greater affluence, rising incomes also mean that people can also afford to buy higher quality food and demand better service which has influenced people away from traditional fast food restaurants to higher end restaurants like dinner houses which provide better quality of food and better service. Thus, people are still interested to eat outside but now demand better service and quality of their products. c) Labour costs: - Labour cost is second in the terms of total costs of the restaurant chains. Restaurant chains are increasingly finding it difficult to employee people in it restaurants as the population of the 16-24 age category has reduced significantly over the years as the population in the U.S is ageing. To compound this problem, labour turn over in the fast food restaurants is very high

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