Competitive Rivalry in Fast Food Industry
Competitive rivalry in fast food industry indicates how players in the first food industry strive to increase their market share and improve their profits margins. The fast food industry is also called Quick Service Restaurants. It is the industry that serves tasty morsels mostly for people living in the cities. On the other hand, competitive rivalry is the rivalry or competition that exists among firms in an industry. This rivalry is usually seen in form of the struggle for positions in the industry using different tactics like price competition, product introductions and advertising battles among others. It has a tendency of increasing intensity because firms both see and seize opportunities for enhancing their position or they feel the competitive pressure.
How competitive rivalry in the fast food industry is exhibited
- Expansion
Competitive rivalry within the fast food industry is seen when firms strive to offer products and services in different places. For instance, competitive rivalry is seen when western fast food firms enter the fast food industry in China. There are also emerging fast food companies in this industry. These entities make competitive rivalry intense because each of the firm strives to open more outlets in the industry with an aim of increasing sales.
- Suppliers
Fast food companies depend on suppliers heavily for the products that they need so that they can meet the needs of their customers. This means that suppliers have a strong power in this industry. Competitive rivalry is seen as companies in the fast food industry try to win suppliers.
- Substitutes
To gain more share of the market, companies in the fast food industry use different approaches in providing their fast foods to customers. For instance, some firms in this industry are targeting children. Some are offering toys and low prices to children as a way of increasing customers with young children. This is an approach that is aimed at including everyone and it is likely to make these firms profitable than others.
- Competition for customers
There are many choices for buyers or customers in the fast food industry. As such, customers are becoming more sensitive to prices and this makes them consider different restaurants. Therefore, there is a strong buyer power in this industry. For this reason, companies in the fast food industry are competing for customers or buyers.
- Potential entrants
The fast food industry does not have a level and equal competition field. Some restaurants offer healthier choices than others. Although the industry has competitive rivalry and product differentiations, new competitors can still open restaurants. Thus, the industry has low entry barriers exposing the current entities to competitive rivalry from potential entrants.
- Customer trends
More consumers are becoming conscious about unhealthy foods. As such, many consumers prefer restaurants that offer healthy food options. Firms in the fast food industry therefore have to strive to offer food options that meet the expectations of the consumers. These companies are competing to offer healthy choices to health conscious consumers.
Why it is important to understand competitive rivalry in fast food industry
Companies or restaurants in the fast food industry should understand the competitive rivalry that exists in the industry so that they can come up with effective ways of beating their competitors. Firms in this industry make money by selling more food at relatively low prices. Although profit margins on foods that these companies sell may not be high like in the other types of restaurants, the volume of the total amount of food that is sold makes up for the revenue that these companies lose. Therefore, understanding the competitive rivalry in this industry will enable companies or restaurants to come up with better ways of enhancing their competition so that they can sell more and beat their rivals.
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Sources
https://www.franchisehelp.com/industry-reports/fast-food-industry-report/
https://www.chinaabout.net/competitive-analysis-of-fast-food-industry-in-china-case-study-of-kfc-china/3/
http://group5wiki.wikidot.com/competitive