SEC 302

2016
Fast-Food Sector
Fast-Food Sector in Turkey
Semin Eser Tolga Bozoğlu Deniz Sofu

SEC 302

2016
Fast-Food Sector
Fast-Food Sector in Turkey
Semin Eser Tolga Bozoğlu Deniz Sofu

OUTLINE 1. Description of the Sector 2. Value Chain for the Sector 3. Sector Dynamics 4. Significance of the Sector for Turkey 5. Current Problems of the Sector 6. SWOT Analysis Approach 7. Future of the Sector

1. Description of the Sector
Along with the technological developments, the socio-economic situations and the rush in the working environment in our daily lives, fast-food sector has grown simultaneously both in our country and the whole world since people get used to spent less time on eating during the day time. Fast-food as a word defined as the products that are; easy to produce and serve, has non-returnable container, can be eaten by hands, also, can be eaten by plastic fork and spoon and can be packaged as take-away. However, if it is not eaten quickly, it may spoil by its color, taste and smell. Fast-food sector is which customers can buy their food so easily and quickly, is different from the standard restaurants by having standard menus. Most of the fast-food restaurants are serving as self-service, but, you can also find some of them serving by waiters. The active companies in fast-food sector serve two types of fast-foods which are Western Style and Turkish Style. The examples of Western styles are as follows, hamburger, pizza, fried chicken, french fries, hotdog, donuts, apple pies, etc. and Turkish styles are lahmacun, pita, meat balls, döner, kebab, börek, kokoreç, etc. Although, most of the domestic and foreign companies are located in İstanbul, Ankara and İzmir, they also act at the rest of the Turkey as well.

2. Value Chain for the Sector

The function of the value chain is to deliver a valuable product or service to the market which is performed by a firm or a sector operating in a specific industry. According to Porter, Value Chain includes five major steps. It’s aim is to deliver maximum value with the minimum cost. Starting with Inbound Logistics, most of the fast-food sector restaurants are trying to make top-quality foods with reducing the costs. Most of the time, most of the big fast-food companies use frozen chicken instead of meat to reduce costs, and taking the products from the farmer, however, the little ones are taking the product from local grocery stores. Big proportion of the FMCG(Fast-Moving Consumer Goods) stores, use Coca-Cola and Pepsi-Co except traditional soft drink as Ayran. For the operations part, fast-food sector mostly uses oven for the preparation and storage, and focusing on evening times more than morning-lunch times. On outbound logistics part, the sector focuses on delivering the food on time, keep the control of the food qualified and to inspect the vehicles that are serving food. For marketing and sales, companies have their advertising campaigns using the usual media (tv, newspaper, internet, radio) and billboards and also, sometimes they have coupons or tickets to attract customer’s attention and to sell more products. Customer Service part recommends you free wifi, gift cards, play places for kids, free home delivery or sometimes free tours to their kitchen.

3. Sector Dynamics
Sector Dynamics part is divided to three parts; Market Size, Share in GDP and Import/Export Factors.
Market size of the fast-food sector in Turkey;

As it’s mentioned in Euromonitor, fast-food sector has a GDP of 2,063.5 and the total GDP in Turkey is 1,749,782. As we divided the sector’s GDP to the total GDP, we reached the number of %0.11 of a share in total GDP for the fast-food sector.
Turkey imports companies as; Mc Donalds, Burger King, KFC, Subway, Popeyes, Arby’s,etc., the factors for importing them is because, they are common, delicious and worldwide brands. Also, Turkey exports the foods like döner, çiğköfte and simit, because of its Turkish food, and cannot be made in foreign countries and thanks to the ones living far away from Turkey, European people met döner and really liked it. That’s another factor for Turkey exporting fast-food.

4. Significance of the Sector for Turkey Fast-food is a system that serves produced food to people in less time. This system provides benefits to people who are away from home and have less time. Changing lifestyles, expanded business trips along with exceptional working life, actualities as youthful individuals invest a great deal of energy in instructive organizations and more women take part in business life more than before, cause people spare their own time. The way that people couldn't save time for their essential needs, causes a bustling daily life, has prompted the improvement of a few areas. One of these divisions is the fast-food area which is serving such a large number of purchasers at short time. People invest less energy for eating and change their standard dietary patterns because of fast-food organizations. In any case, expanded number of fast-food endeavors these days makes it hard to settle on decision among options.

5. Current Problems of the Sector
In general, the structural problems in the economy, affects the fast-food sector like all the other sectors as well. Because of the economic crisis, investments in fast-food sector not surprisingly decreased. For the firms, who are giving franchise, this means not finding anyone to give franchise to. All the firms should work at a certain turnover rate, where they also have to serve at the lowest price with the highest quality. The pricing of the products is generally like the following; one-third of it for the materials, one-third of it for the other costs and the rest is for the profit. Since the key element that affects the competition in sector are the prices, an increase in the raw material prices can affect the profits and cause problems in pricing. Especially for the domestic firms, because, they are not organizing well, the sector is not well recognized and the researches about the sector are very limited. However, the firms that are setup by franchising could be followed from the International Franchising Association; it is really hard to reach the information, like revenue, about the other firms who are acting in sector.

6. SWOT Analysis Approach
Strengths:
* Quickest serving time among other food industries * Cost saving/systematic food preparation * Option to deliver food to houses, offices and other establishments * Customization of meal servings tailor-fit to consumers appetite * Positions in strategic location in populated areas * Flexibility on preparing food time * Locally adapted food menus * Children targeting
Weaknesses:
* Product development for new offering takes too long and does not change products often * Known to serve unhealthy meals * Limited menu offered to consumers * High employee turnover * High risk of stock out * High potential of spreading bad information through transoceanic * Current surveys reveal more focus on expansion than quality * Advertisements targeting children * High calorie foods * Not enough advertising
Opportunities:
* Increase in demand for fast-food worldwide * Growing dining-out market for especially young generation and middle-aged group * Continuous products and service expansion * Adaption on product and services to culture and traditions * Still open until late times
Threats:
* Consumers look for a healthier lifestyle * Industrialization * High number of foreign companies entering the fast-food market * Fluctuation between currencies * Growth in competition * The change in eating habits of the customers towards healthier foods

7- Future of the Sector
The population of the Turkey is increasing day by day so it affects the sector of food so the Turkish foodservice business sector is one of the developing markets in Europe. This Turkish Foodservice business sector is relied upon to encounter a development of 5.0% during 2016-2019. Fast-food restaurants show up before the customers searching for more beneficial, delicious and healthier choices than the hamburgers of Mc Donald's and Burger King. The customers no more consider the advantage cost adjusts. They consider the taste-experience and quick service. Substantial rate of young population combined with urbanization will fuel the development of Fast Food sector from 2016 to 2019. Also, the fast-food restaurants will remain the overwhelming channel while the traveling will be the quickest developing channel and growing of the tourism sector will increase the profit of this sector in the country.
In short future, fast food sector is expected to grow eventually, based on various main reasons which are stated below; * The growth of population in major cities * The increase in the single person households * The chance in the business life as it gets heavier and the working ours becomes longer * The increase of the role of woman in business life * The chance daily lifestyle of people as it gets more rapid and squeezed * The chance in the demographic preferences of people * The increase in the revenue of a family * The chance in the opinion of the families with children to switch from full-service restaurants to fast food as they can control their spending easily. * The increase of time spent in traffic

As all these happens, woman couldn’t find enough time to cook at home, where also family members have less time to spent on eating. Since people spent most of their time in traffic or at work, they want to spend their free time more efficiently. In conclusion of this, people more tend to eat outside at a fast food restaurant or bring their food from there.
Some numerical evidences in various different sectors are; the number of fast food restaurants were 150 thousand ten years ago, where it exceed 600 thousand in 2011. Also in 2006, the revenue of the sector was 5 billion dollars, where it raised to 17.5 billion dollars in 2015 with a growth of 350% in 9 years.
In 2014, fast food sector’s value growth demonstrate as the second most dynamic performance in consumer foodservice in Turkey because of the success of the chained fast food restaurants and coffee shops, which recorded 25% of current value growth in 2014. The increase in the number of shopping centres in Turkey is also a major factor behind this growth since the channels as more Turkish families started to spent their free time in shopping centres and consume fast food. An example for this is the new shopping mall in Istanbul named The Mall of Istanbul, which opened in 2014 and host 22 fast food brands both domestic and international.
Fast-food sector is expected to increase in value at a CAGR of 11% at constant 2014 prices over the forecast period, a stronger rate of growth than value CAGR of 10% recorded at constant 2014 prices over the review period. During the forecast period, the sector is expected to grow as well since the economic and political instability will continue and cause consumers to shift towards more affordable food services in the period of crisis.
As indicated by Euro-monitor's report, the eating-drinking out business sector estimated as 29 billion TL in 2012 is expected to surpass 32 billion TL in 2016. During the most recent 15 years, while the offer of bistros/bars and full service restaurants have remained practically the same, the offer of fast-food section has obviously expanded the last 5 years. When we read the numbers straightly, it would not be wrong to say that there is a yearly customary increase in fast-food sector and it has not demonstrated any decrease inside of the passing years. We might consider that there will not be any significant changes in the next years.
References
* HIZLI HAZIR YEMEK (FAST-FOOD) SEKTÖRÜNDE HİZMET VEREN İŞLETMELERİN ANALİTİK HİYERARŞİ PROSESİ İLE DEĞERLENDİRİLMESİ: PAMUKKALE ÜNİVERSİTESİ ÖRNEĞİ (BAYHAN, SOBA, BİLDiK, 2015) http://www.bjmer.net/Makaleler/482623681_3%20id402%2036-47.pdf * FAST FOOD SEKTÖR PROFiL ARAŞTIRMASI (YURTMAN, 2001) * http://www.ito.org.tr/itoyayin/0002059.pdf * http://www.gastronomi-mutfaksanatlari.com/FileUpload/ks241201/File/turkiye%E2%80%99de_fast_food.pdf * http://www.ipsos.com.tr/node/1023 * http://www.researchandmarkets.com/research/b77c7x/turkish * https://www.linkedin.com/pulse/20140630062749-6431541-restaurant-business-in-turkey-but-in-what-formats-lies-the-future * http://www.euromonitor.com/consumer-foodservice-in-turkey/report * http://sektorlernedurumda.blogspot.com.tr/search/label/Fast%20Food%20Sekt%C3%B6r%C3%BC * http://www.ipsos.com.tr/node/1023 * http://www.dunyagida.com.tr/haber.php?nid=3911 * http://www.etuder.org.tr/organizasyonlar5.html * http://portal.euromonitor.com/portal/statistics/tab