Venture Budgeting and Forecasting Paper Essay
Venture Budgeting and Forecasting Paper
Many Detroiters love fast food, but consumers from around the globe love it just as much as any Detroiter. Restaurants like McDonald’s have broadened across the world, and surfacing markets are one of the fastest growing areas in the fast food industry. However, the fast food industry still has its’ challenges, particularly in the United States. From economic recession and changing views about health and rising food costs, many fast food chains have been experiencing some serious issues internally and externally. But rather than run from these challenges, the fast food industry has been offering new product and embracing some new products. Modern culture is on the move and there is still a large demand for a quick meal at any time of the day. Fast food franchising is still relevant in pizza and burger restaurants, but the fast food industry is also developing in unique and healthy ways too. For a fast food business to be successful in the current modern society in Detroit, a person or group of people should evaluate the trends of the fast food industry, find opportunities within the industry, evaluate the risks and rewards of the opportunity, and make sure the business opportunity is a feasible one. In the years 2007 thru 2012, the recession and the gradual economic recuperation made the fast food businesses revenues slow down. In the city of Detroit consumers had less income to spend during the recession.
Many members of the community stayed cautious of their spending because of the slow recovery, and consumers ate at fast food restaurants a lot less than usual (“Fast Food Business 2012”, 2014). It is now 2013, but quite a few citizens of Detroit, Michigan are still recovering from the past recession. Some fast food restaurants created dollar menus that were appealing to the consumers who could not afford their usual combination meals. Many consumers chose to buy more groceries, and cook their own meals at home, rather than spend large amounts of money on fast food daily. Food assistance made buying groceries easier for the less fortunate members of the Detroit community. Over the last 10 years, there has been a rise in the concentration on the quality of food provided in fast food restaurants. Many fast foods are processed, and a large amount of the food causes weight gain and is high in fat. Because of this, fast food companies had to take action by implementing menu options that are healthier. Michigan is one of the most obese states in the U.S., and the men and women are working hard to change the rate of obesity. Therefore, fewer consumers are eating fast foods. These consumers search for more healthy alternatives to better their daily diets (“Fast Food Industry Analysis 2014 – Cost & Trends”, 2014).
There are many aspects that can effect the demand and supply of the fast food industry. Healthy food state campaigns and animal rights campaigns have a negative impact on the demand. These negative effects occur when fast food businesses are required to undertake all laws and regulations. Those companies will also have to adapt its supply chain, which could change the structure of their price. There are some other parts that will positively influence the supply, like campaigning genetically modified foods and labeling. These factor scan help producers to lower their prices (Freire, 2013). The economic crisis positively influences the demand for fast food, because people search for more inexpensive food. There are other aspects that can influence the industry positively or negatively, such as a growing market, the economic downturn and sustaining but declining development visions for surfacing markets, low set up price for franchising, growing middle class, and improvement in life standards in emerging economies. Some technical sides affect both demand and supply also, such as accurate quality control systems that steer clear of harmful advertising that could break customer assurance in a brand, ordering computers, global supply chain control, redesigned kitchens, and drive thru windows with LED displays.
Technology is used to reduce food waste, labor costs, and to make service faster and more convenient (Freire, 2013). The game of fast food is gradually changing. In The City of Detroit, consumer’s tastes are changing as they become more conscious of the health risks of eating quick-carry-out lunches and fast foods that were so popular in the past. More restaurants than ever choose healthy options over greasy processed meals. Fast-casual diners have the opportunity to introduce good, healthy fast food to the new consumers. Fast-casual diner company models offer opportunities to spend more money into their local community economies than large fast-food franchises. Small fast-casual franchises usually by their meat and goods locally, giving an increase to farming economies where the restaurants are located. The little improvement to the local economy can boost the demand in the local restaurant industry. Fast-casual diners usually pay more than traditional fast-food franchises. This offers an opportunity to appeal to job applicants who are more experienced and qualified, consequently improving service and product quality (Ingram, 2014). Conventional fast-food franchises have globally recognized brands and established distribution systems.
These franchises are not sitting by carelessly while the new fast-casual diners try to increase market share in the industry. In the past, several fast-food franchises served unhealthy foods only, but they now offer healthy wraps, snacks, and salads at a lower price than fast-casual franchises. This can damage the fast-casual restaurant’s advantage by taking their customers incentives to stop going to the traditional fast-food chains. The average price for a meal at a fast-casual restaurant can range from $10 to $15, which can be very expensive for consumers having a hard time balancing their budget. Fast-casual restaurants present several risks in addition to opportunities. The compensation and sourcing rules that give internal chances, act to raise fast casual franchise costs compared with fast-food chains, like compelling them to keep high prices or cut into profits. Using a large variety of organic, fresh ingredients can also expose fast-casual franchises to a high risk of ingredient waste and spoilage; making costs much higher (Ingram, 2014). The fast food industry has come a long way from burger stands and French fries. In the current modern society fast food is changing each year. The past recessions, higher food cost, and health concerns have caused many fast food chains to make changes in their menu and other areas also. There are more healthy choices of food added to the menus to cater to a broader spectrum of consumers. There are more modern trends and opportunities for businesses to keep up with. If fast food businesses do not take advantage of the opportunities available, the new and upcoming fast-casual diners will leave them behind.
Fast Food Business 2012. (2014). Retrieved from http://www.sbdcnet.org/small-business-research-reports/fast-food-business-2012 Freire, A. (2013). Analysis of Food Industry. Retrieved from http://www.docstoc.com/docs/160598217/ANALYSIS-OF-FOOD-INDUSTRY Fast Food Industry Analysis 2014 – Cost & Trends. (2014). Retrieved from https://www.franchisehelp.com/industry-reports/fast-food-industry-report/ Ingram, D. (2014). What Are Opportunities & Threats Found in the Fast Casual Segment of the Restaurant Industry?. Retrieved from http://smallbusiness.chron.com/opportunities-threats-found-fast-casual-segment-restaurant-industry-15531.html