Fast Food Chain In Queensland Essay

Question:

Discuss about the Opportunities and Threats for the Fast Food Chain in Queensland.

Answer:

Introduction

The awareness regarding the consumer health has transformed the Australian food industry drastically in last few years. The demands of the industry are much focused on promoting the health awareness and nutritional contents mixed with the fast food (Shill et al. 2012). It is increasing consciousness among the customers that influence their food habits much significantly. In spite of generating more revenues from sales, the external influence is also affecting the fast food chains. Especially, in Australia, the competition among the fast food chains is the much considerable threat (Rutsaert et al. 2014). The study would thus analyze the recognizable opportunities and threats with the special reference to the famous food chain, KFC in Queensland, Australia. The identification of the underlying problem would provide the in-depth insight related to the subject matter. The application of the suitable methodology and analyzing the underlying literature would be beneficial for conducting this research.

Background

The fast food chains in the Australian market have the significant opportunities to grow. In last few decades, the continuous growth in the fast food market has set the parameter higher. Accordingly, the expectation level of the customers grew higher. By keeping pace with such higher expectations, the market has become much competitive (Hawkes et al. 2015). The associated threats and opportunities are the major focuses of every fast food chain located in the Australian cities. On one hand, it has been observed that the teenagers are quite fond of consuming the fast foods whereas they are becoming more health conscious as well. Hence, these fast food chains have been experiencing both the opportunities and threats. It has been observed that McDonalds has established the dominant position in the market. The identification of the market will reveal the major opportunities and threats in the fast food industry (Richards, Kj?rnes and Vik 2016). On the other side, the competitive scenario is also much specific that creates more obligations in establishing the strengthened and sustainable position (Powell, Harris and Fox 2013). For example, McDonald is the market leader in Queensland among the fast food chains. Hence, the other fast food chains are literally acing tough competition from this company. In order to deal with such threats, the fast food restaurant chains need to look forward to adopt more innovative business techniques, promotional strategies, pricing structure and food variations for attracting the customers (Garcia et al. 2014). The further study would highlight these specific areas while presenting the elaborated discussion regarding the significant threats and opportunities in Queensland market.

In the year of 1968, KFC opened the restaurant chain in Sydney, Australia for the first time. Eventually, the business started growing in a significant manner and started serving over 2 million customers in a week. Gradually, the store numbers grew over 600 across the Australian cities. Thus, the company became one of the largest food chains in the country (Kfc.com.au 2017). Customers can even order the food from KFC through online mediums. In addition to this, the effective promotion strategies are attractive enough to draw the attention of the potential customers. In spite of such enormous opportunities, this food chain has been experiencing significant threats from the largest food chain McDonald (Hatch 2017). The direct competition with McDonalds is quite challenging for the company to maintain long term sustainability. The further section of the study would provide the ideas of the threats and opportunities faced by the company.

KFC in Queensland (Market Profitability)

In Australian cities, it is reported that Collins Food has owned Sizzler and KFC Restaurants. It is informed this food chain could gather the most profitable revenues due to the KFC food chain in Queensland and other cities in Australia. The report highlights that these two restaurants have earned before taxes, interest, depreciation, and amortization of almost $74.6 million. As a result, the Financial Year of 2015 experienced the significant growth in revenue that was near about 0.5% or $574.3 million (Ausfoodnews.com.au 2017). It has been observed that the KFC has acquired the Northern territory and Western Australia and continued improvements in current business market. However, KFC is more fascinated about expanding the restaurant chain throughout the country and earn more revenues that are profitable for the company to strengthen the competitive position in upcoming years.

Problem Identification

It is notable that KFC has established their stores in different cities of Australia. The increasing demands of the fast food products among the customers are quite favorable for the business. It has been observed that McDonalds has established the dominant position in the market (Suwardy and Ratnatunga 2014.). The identification of the market will reveal the major opportunities and threats in the fast food industry. However, from the last few decades, the customers of Queensland and Sydney have been complaining about the poor quality of the meals. Moreover, they have gathered information about the preparation of the chicken meals, the preservation, the processing, and the ingredients. The customers find it much unhealthy and unhygienic to consume these foods (Richards, Kj?rnes and Vik 2016). Apart from such quality issues, KFC has been facing more challenges due to the significant promotions, product quality, and market share of McDonalds.

Research Aim

The aim of this research is to identify the potential opportunities as well as threats experienced by KFC in Queensland. The study would also attempt to recognize the market acceptability in terms of quality and price of the fast food items of KFC.

Research Objectives

  • To identify the market opportunities and threats of the fast food chains in Queensland
  • To critically analyze the significant opportunities availed by KFC in Queensland
  • To discuss the impact of the potential threats for maintaining long terms sustainability of KFC in Queensland
  • To present some preferable recommendations for overcoming such challenges

Project Scope

The study would provide the insightful ideas about the potential threats and opportunities faced by the fat food chains in Queensland. The study also would present the reference of KFC to analyze the subject matter. The information gathered from this case study would be used as the secondary source for the similar studies in future. The ideas developed related to the threats and opportunities would be much helpful in understanding the demands of the business scenario for maintaining the long term sustainability.

Literature Review

The literature study provides the theoretical ideas related to the subject matter. The literature review would provide the conceptual ideas about the potential threats ad opportunities of the fast food chains by constructing the theoretical background (Herath 2014). The study would also present the research gaps by comparing and contrasting the sources.

Fast Food Industry in Australia

The fast food industry in Australia highlights the market dynamics by introducing the potential competitors. It is necessary to identify the major factors that have the clear influence on the industry. It has been observed that McDonalds has established the dominant position in the market. The identification of the market will reveal the major opportunities and threats in the fast food industry. The article presented by OECD implies that the fast food chains are facing more challenges due to the enormous competition level. However, on the contrary, Johnson (2014) argued that the customers prefer the food chain that can provide the high quality meals. The concerns related to the healthy aspect are also much noticeable in the fast food industry. The application of porter’s five forces analysis would provide the clear understanding about the recognizable threats and opportunities in the Australian market (Richards, Kj?rnes and Vik 2016).

Porter’s Five Forces Analysis

Porter’s five force analysis provides the clear understanding regarding the market components. These components have the significant influence on the products or services. Concentration on these components determines the market opportunities and threats for the long term sustainability. The components are structured further:

Figure 1: Porter’s Five Force Analysis

(Source: Allegretto et al. 2013)

  • Bargaining power of the customers (high): The emergence of the numerous fast food chains has been offering more choices to thee customers (Allegretto et al. 2013). The customers can easily bargain the prices and look for more benefits. Hence, the bargaining power of the customers is quite high.
  • Bargaining Power of the Suppliers (Low): The extensive food chain market is not much profitable in terms of considering the bargaining power of the suppliers. The availability of the more options is suggesting the lower risks on the bargaining power of the suppliers (Mialon, Swinburn and Sacks 2015).
  • Competitive rivalry (high): The dominant position of McDonald is the biggest threat for the food chain companies in Queensland. Moreover, the innovative business approaches of the other competitors are signifying the high level of the competitive rivalry in the country.
  • Threat of Substitutes (High): The different spicy meals and the suitable ambience for the customers are much attractive. The availability of the product variations, affordable prices, and nearby stores has made the company more demanding to the Australian customers. Especially, the stores are designed in such a way that people can visit with their friends and families and spend time while having feasible meals (Lowe 2014). The food variations available in the store are much demanding for the customers. Therefore, the threat of substitutes is quite higher.
  • Threat of New Entrants (High): the availability of the feasible market for establishing the fast food stores and the increasing demands of the customers are increasing the number of new entrants. Therefore, the threat of new entrants is quite higher. However, it is to be considered that the high cost of the business set up can be the determinant in entering the Australian market.

Opportunities and Threats

The fast food chain industry is much demanding to the customers in Australia. It has been seen that the youngsters prefer the fast food items. However, these demands of the customers are quite favourable for the companies in fast food industries. The dominant market position of McDonalds is quite threatening for the company (Tong and Wong 2014). It is increasing consciousness among the customers that influence their food habits much significantly. In spite of generating more revenues from sales, the external influence is also affecting the fast food chains. On the other hand, it has been observed that one group of customers are much fond of consuming healthy products. The food chain like Subway promotes the health aspects of the young generations. The company mixes healthy vegetables and ingredients in preparing the different fast food of customers’ choice. In compare to Subway, the company like KFC lacks the amount of vegetables and healthy ingredients (Magnusson and Reeve 2015) The health-conscious youngsters prefer the healthy food more. Therefore, the increasing challenges are affecting the sales ratio of KFC fast food items. It is thus specified that in spite of the numerous scopes or opportunities in the restaurant industry, there are significant challenges also affecting the business functions (Stanton 2015). However, by identifying these potential opportunities and challenges, the fast food chains need to bring more ideas about the specific solutions to maintain the long term sustainability.

Research Gap

The major gap in this research study is the time constraints. The limited time frame is making the study more limited. On the other hand, it is notable that the business market has been undergoing drastic and frequent changes (Richards, Kj?rnes and Vik 2016). Therefore, it is necessary to assimilate the updated ideas in the research. Another major gap is found in making the assumptions in most of the areas. Until the study is associated with the real life scenario, the gaps would be remaining in the research process. The biasness and limited information sources are also considered as the major determinants in establishing an enriched knowledge regarding the subject variable.

Research Methodology

The research methodology determines the systematic analysis of the conducted research data. The application of the suitable research philosophy, approach, and techniques is necessary for analyzing the collected information related to the subject variables (Smith 2015). On the other hand, the proper selection of the data collection method is also much essential. In this section of the study, the use of the proper research methodology would be discussed.

Research Design

The research design provides the structured and systematic way of conducting the research data and analyzing it with proper justifications. The research design includes the relevant research philosophy, research design, and research techniques. The research philosophy is categorized into three divisions, such as realism, positivism,, and interpretivism. The positivism and realism philosophies deal with the extraction of the hidden truth and the realistic values whereas the interpretivism philosophy is concerned about the human interpretations and psychological explanation (Panneerselvam, 2014). Therefore, the use of the positivism philosophy would be justified for the study. On the other hand, the research approach is also classified into two categories, such as deductive and inductive approach. The deductive approach is concerned with the existing theories related to the subject matter whereas the inductive approach is suggesting the formulating of new theory. It is essential to analyze the subject by developing the understanding of the existing theoretical aspects. Hence, the use of the deductive approach would be applicable for this study. The research techniques are also categorized into three different types, such as exploratory, explanatory, and descriptive. The exploratory technique defines the exploration of the subject whereas explanatory provides the explanations of the variables (Creswell & Poth, 2017). However, on the other hand, the descriptive technique determines the clear description of the hypotheses formulated in the study. Therefore, the concentration on descriptive techniques would be appropriate for conducting this research study.

Data collection process

The study is based on the identification of the threats and opportunities in the fast food chain industry in Queensland. In order to collect the relevant data for the study, the mixed method research would be justified. The study will be based on both the primary and secondary data collection process. The secondary data will be collected from the secondary sources like website, journal articles, and books. The primary data collection process depends on two methods, such as quantitative and qualitative data collection process. It is necessary to gather responses from the people who have been experiencing the real life scenario. These respondents would be associated in this study to provide the ideas regarding the actual scenario.

In the quantitative data collection process, an online survey process will be conducted. In this online survey, the questionnaires including multiple choice questions would be distributed to 50 customers of KFC through Facebook. The respondents would select their suitable answer as per their preferences. On the other hand, the qualitative data collection process would include a telephonic interview session with 3 managers from KFC. The managers would respond to the questions asked in the interview. They might even reveal the strategic potentiality to overcome the challenges in the market.

Sampling

The application of the proper sampling process is necessary. In this study, the probability, simple random techniques would be used to conduct the survey among 50 customers of KFC. On the other hand, the non-probability, convenience sampling techniques would be applied to undertake the interview session of 3managers from KFC.

Data Analysis

The collected data requires analyzing in a technical way. It would be much helpful in understanding the real scenario if the data is properly analyzed. In this study, some of the software tools like MS Excel and SPSS software would be utilized to analyze the responses of the customers derived from the quantitative data collection process. The statistical techniques like regression, correlation, and feasibility analysis would be present in this study. The use of the diagrams, charts and tables would be attractive enough to present the collected data sequentially. The interpreter can be used during the interview session to memorize the conversation.

Time Schedule

Chart 1: Time Schedule

(Source: Created by the Author)

References

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Ausfoodnews.com.au, 2017. Collins Foods sees profit boost with KFC stores | Australian Food News. [online] Ausfoodnews.com.au. Available at: < [Accessed 27 Aug. 2017].

Creswell, J. W., & Poth, C. N. (2017). Qualitative inquiry and research design: Choosing among five approaches. Sage publications.

Garcia, J., Dunford, E.K., Sundstrom, J. and Neal, B.C., 2014. Changes in the sodium content of leading Australian fast-food products between 2009 and 2012. Med J Aust, 200(6), pp.340-4.

Hatch, P., 2017. Chicken to your door the next front in fast food fight. [online] The Sydney Morning Herald. Available at: < [Accessed 19 Aug. 2017].

Hawkes, C., Smith, T.G., Jewell, J., Wardle, J., Hammond, R.A., Friel, S., Thow, A.M. and Kain, J., 2015. Smart food policies for obesity prevention. The Lancet, 385(9985), pp.2410-2421.

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