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Porter’s Five Forces Analysis of the Fast Food Industry

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Porter’s Five Forces Analysis of the Fast Food Industry

Complete a Porter's Five Forces Analysis of the fast food industry and for each of the 4 generic strategies, identify one restaurant that you believe is employing that generic strategy.

According to Hoover's Fast Food and Quickservice Restaurant Report, Fast food restaurants make up one of the largest food industry segments with more than 200,000 restaurants in the US. Fast food franchises are known for their low cost and high-speed products served to go as well as for a quick on-site consumption. Consumers are attracted to the idea of standardized menus and familiar meals in each location. Michael Porter’s model discussed below will help us identify five key competitive forces to analyze the fast food industry environment.

The threat of entrants - High
Entry barriers into the fast food industry seem to be low because of the relatively low capital requirements to start a new restaurant. New entrants are not in need to possess proprietary technology to be able to compete with already established restaurants or franchises. However, the fast food industry is dominated by globally recognized chains with high brand awareness and brand loyalty like McDonald’s, Burger King, KFC, Pizza Hut and etc. Established fast food restaurants have numerous advantages in product technologies, easy access to ingredients and supplies, favorable locations, successful marketing, and experience. While these disadvantages can seem as a significant barrier to entry, the threat of entrants has proven to be high because new players open up hundreds of new restaurants on a daily basis.

Power of Suppliers – low
The bargaining power of suppliers in the fast food industry captures significantly low pressures on the industry’s profitability. Suppliers are not in a powerful position because there are large amounts of

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