FAST FOOD INDUSTRY Introduction Fast food is the term given to food that can be prepared and served

very quickly. While any meal with low preparation time can be considered to be fast food, typically the term refers to food sold in a restaurant or store with low quality preparation and served to the customer in a packaged form for take-out/take-away. Outlets may be stands or kiosks, which may provide no shelter or seating, or fast food restaurants (also known as quick service restaurants). Franchise operations which are part of restaurant chains have standardized foodstuffs shipped to each restaurant from central locations. The capital requirements involved in opening up a fast food restaurant are relatively low. Restaurants with much higher sit-in ratios, where customers tend to sit and have their orders brought to them in a seemingly more upscale atmosphere may be known in some areas as fast casual restaurants. History The concept of ready-cooked food for sale is closely connected with urban development. In Ancient Rome cities had street stands that sold bread and wine. A fixture of East Asian cities is the noodle shop. Flatbread and falafel are today ubiquitous in the Middle East. Popular Indian fast food dishes include vada pav, panipuri and dahi vada. In the French-speaking nations of West Africa, roadside stands in and around the larger cities continue to sellas they have done for generationsa range of ready-to-eat, char-grilled meat sticks known locally as brochettes. The Start of Fast Food Culture The concept of fast food pops up during 1920s.The 1950s first witnessed their rapid proliferation. Several factors that contributed to this explosive growth in 50s were: 1. Americas love affair with the automobiles. 2. The construction of a major new highway system. 3. The development of sub-urban communities. 4. The baby boom subsequent to world war second. Fast-food chains initially catered to automobile owners in suburbia.

On the go Fast food outlets are take-away or take-out providers, often with a "drive-through" service which allows customers to order and pick up food from their cars; but most also have a seating area in which customers can eat the food on the premises. People eat there more than five times a week and often, one or more of those five times is at a fast food restaurant. Nearly from its inception, fast food has been designed to be eaten "on the go", often does not require traditional cutlery, and is eaten as a finger food. Common menu items at fast food outlets include fish and chips, sandwiches, pitas, hamburgers, fried chicken, French fries, chicken nuggets, tacos, pizza, hot dogs, and ice cream, although many fast food restaurants offer "slower" foods like chili, mashed potatoes, and salads. Variants Although fast food often brings to mind traditional American fast food such as hamburgers and fries, there are many other forms of fast food that enjoy widespread popularity in the West. Chinese takeaways/takeout restaurants are particularly popular. They normally offer a wide variety of Asian food which has normally been fried. Most options are some form of noodles, rice, or meat. Sushi has seen rapidly rising popularity in recent times. A form of fast food created in Japan. sushi is normally cold sticky rice served with raw fish. Pizza is a common fast food category in the United States, with chains such as Domino's Pizza, Sbarro and Pizza Hut. Menus are more limited and standardized than in traditional pizzerias, and pizza delivery, often with a time commitment, is offered. Fish and chip shops are a form of fast food popular in the United Kingdom, Australia and New Zealand. Fish is battered and then deep fried.The Dutch have their own types of fast food. A Dutch fast food meal often consists of a portion of French fries .

Business In the United States alone, consumers spent about US$110 billion on fast food in 2000 (which increased from US$6 billion in 1970). The National Restaurant Association forecasted that fast food restaurants in the U.S. would reach US$142 billion in sales in 2006, a 5% increase over 2005. In comparison, the full-service restaurant segment of the food industry is expected to generate $173 billion in sales. Jobs and labor issues Today, more than 10 million workers are employed in the areas of food preparation and food servicing including fast food in the world. Employees are the backbone of the fast food industry. Proper training is crucial to the orderly and quick service customers expect. Yet, employee turnover can be as high as 200% per year. With such a turnover, owner-operators of franchise and non-franchise restaurants have the daunting task of constantly training an entirely new workforce. Policies and procedures need to be explained to each new employee. Globalization In 2006, the global fast food market grew by 4.8% and reached a value of 102.4 billion and a volume of 80.3 billion transactions. In India alone the fast food industry is growing by 40% a year. McDonald's is located in 120 countries and on 6 continents and operates over 31,000 restaurants worldwide. KFC is located in 25 countries. Subway has 29,186 restaurants located in 86 countries, Pizza Hut is located in 26 countries, Taco Bell has 278 restaurants located in 12 countries besides the United States.

Health issue Trans fats which are commonly found in fast food have been shown in many tests to have a negative health effect on the body.

The fast food consumption has been shown to increase calorie intake, promote weight gain, and elevate risk for diabetes. The Centers for Disease Control and Prevention ranked obesity as the number one health threat for Americans in 2004. It is the second leading cause of preventable death in the United States and results in 400,000 deaths each year. FAST FOOD INDUSTRY IN INDIA INDIA Emerging Market for Global Players The percentage share held by foodservice of total consumer expenditure on food has increased from a very low base to stand at 2.6% in 2001. Eating at home remains very much ingrained in Indian culture and changes in eating habits are very slow moving with barriers to eating out entrenched in certain sectors of Indian society. The growth in nuclear families, particularly in urban India, exposure to global media and Western cuisine and an increasing number of women joining the workforce have had an impact on eating out trends.

Facts and Figures Fast food is one of the worlds largest growing food type. Indias fast food industry is growing by 40% a year and is expected to generate a billion dollars in sales by 2005.The multinational segment of Indian fast food industry is up to Rs. 6 billion, a figure expected to zoom to Rs.70 billion by 2005. By 2005, the value of Indian dairy products is expected to be Rs.1, 00,000 million. In last 6 years, foreign investment in this sector stood at Rs. 3600 million which is about one-fourth of total investment made in this sector. Because of the availability of raw material for fast food, Global chains are flooding into the country. Market Size & Major Players a) Dominated by McDonalds having as many as 75 outlets. b) Dominos pizza is present in around 100 locations. c) Pizza hut is also catching up and it has planned to establish 125 outlets at the end of 2005.
d) Subways have established around 40 outlets. e) Nirulas is established at Delhi and Noida only. However, it claims to cater 50,000

guests every day.

Major players in fast food are:

McDonalds KFC Pizza hut Dominos pizza. Caf coffee day (popularly known as CCD) Barista

The main reason behind the success of the multinational chains is their expertise in product development, sourcing practices, quality standards, service levels and standardized operating procedures in their restaurants, a strength that they have developed over years of experience around the world. The home grown chains have in the past few years of competition with the MNCs, learnt a few things but there is still a lot of scope for improvement. Reason for Emergence

Gender Roles Customer Sophistication and Confidence Paucity of Time Double Income Group Working Women Large population Relaxation in rules and regulations Menu diversification

Challenges for the Industry

Social and cultural implications of Indians switching to western breakfast food Emphasis on the usage of bio-degradable products Retrenchment of employees Profit repatriation

Problems of Industry Environmental friendly products cost Balance between societal expectation and companies economic


i.

Health related issues: Obesity: Studies have shown that a typical fast food has very high density and food with high density causes people to eat more then they usually need. Low calories food: Emphasis is now more on low calorie food. In this line McDonald has a plan to introduce all white meat chicken Mcnuugget with less fat and fewer calories.

ii.

Trends in Indian Market

Marketing to children's Low level customer commitment Value added technology services Attracting different segments of the market

The success of fast foods arose from the changes in our living conditions: 1. Many women or both parents now work 2. There are increased numbers of single-parent households 3. Long distances to school and work are common 4. Usually, lunch times are short 5. There's often not enough time or opportunity to shop carefully for groceries, or to cook and eat with one's family. Especially on weekdays, fast food outside the home is the only solution.

What is a franchise? A franchise is a right granted to an individual or group to market a company's goods or services within a certain territory or location. Some examples of today's popular franchises are McDonald's, Subway, Domino's Pizza, and the UPS Store. There are many different types of franchises. Many people associate only fast food businesses with franchising. In fact, there are over 120 different types of franchise businesses available today, including automotive, cleaning & maintenance, health & fitness, financial services, fast food and pet-related franchises, just to name a few. Franchising is the practice of using another firm's successful business model. The word 'franchise' is of Anglo-French derivation - from franc - meaning free, and is used both as a noun and as a (transitive) verb. For the franchisor, the franchise is an alternative to building 'chain stores' to distribute goods that avoids the investments and liability of a chain. The franchisor's success depends on the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business. Essentially, and in terms of distribution, the franchisor is a supplier who allows an operator, or a franchisee, to use the supplier's trademark and distribute the supplier's goods. In return, the operator pays the supplier a fee. Thirty three countries, including the United States, China, and Australia, have laws that explicitly regulate franchising, with the majority of all other countries having laws which have a direct or indirect impact on franchising.

How Franchising Works If you are thinking about buying into a franchise system, it is important that you understand exactly how franchising works, what fees are involved, and what is expected of you from the franchise company. An individual who purchases and runs a franchise is called a "franchisee." The franchisee

purchases a franchise from the "franchisor." The franchisee must follow certain rules and guidelines already established by the franchisor, and in most cases the franchisee must pay an ongoing franchise royalty fee, as well as an up-front, one-time franchise fee to the franchisor. Franchising has become one of the most popular ways of doing business in today's marketplace. In most states you cannot drive three blocks without seeing a nationally recognized franchise company.

The History of Franchising Franchising began back in the 1850's when Isaac Singer invented the sewing machine. In order to distribute his machines outside of his geographical area, and also provide training to customers, Singer began selling licenses to entrepreneurs in different parts of the country. In 1955 Ray Kroc took over a small chain of food franchises and built it into today's most successful fast food franchise in the world, now known as McDonald's. McDonald's currently has the most franchise units worldwide of any franchise system. Today, franchising is helping thousands of individuals be their own boss and own and operate their own business. Franchising allows entrepreneurs to be in business for themselves, but not by themselves. There is usually a much higher likelihood of success when an individual opens a franchise as opposed to a mom and pop business, since a proven business formula is in place. The products, services, and business operations have already been established.

Advantages of Buying a Franchise There are many advantages to buying a franchise. Some of these advantages are:

Corporate image - The corporate image and brand awareness of the company is already established. Consumers are always more comfortable purchasing items from a familiar name or company they trust.

Training - The franchisor usually provides extensive training and support to the franchise owner.

Savings in time - Since the franchise company already has the business model in place you can focus on running a successful business.

There is a reason why franchising has been around for decades. It is a great way for individuals to own and operate their own business. If you are thinking about buying a franchise, do your homework, research the company, and you should consult with a franchise consultant or franchise attorney before making a final commitment.

Obligations of the parties Each party to a franchise has several interests to protect. The franchisor is involved in securing protection for the trademark, controlling the business concept and securing knowhow. The franchisee is obligated to carry out the services for which the trademark has been made prominent or famous. There is a great deal of standardization required. The place of service has to bear the franchisor's signs, logos and trademark in a prominent place. The uniforms worn by the staff of the franchisee have to be of a particular design and colour. The service has to be in accordance with the pattern followed by the franchisor in the successful franchise operations. Thus, franchisees are not in full control of the business, as they would be in retailing. A service can be successful if equipment and supplies are purchased at a fair price from the franchisor or sources recommended by the franchisor. A coffee brew, for example, can be readily identified by the trademark if its raw materials come from a particular supplier. If the franchisor requires purchase from his stores, it may come under anti-trust legislation or equivalent laws of other countries. So too the purchase of uniforms of personnel, signs, etc., as well as the franchise sites, if they are owned or controlled by the franchisor. The franchisee must carefully negotiate the license. He and the franchisor must develop a marketing or business plan. The fees must be fully disclosed and there should not be any hidden fees. The start-up costs and working capital must be known before the license is granted. There must be assurance that additional licensees will not crowd the "territory" if the franchise is worked according to plan. The franchisee must be seen as an independent merchant. He must be protected by the franchisor from any trademark infringement by third parties. A franchise attorney is required to assist the franchisee during negotiations. Often the training period - the costs of which are in great part covered by the initial fee - is too short in cases where it is necessary to operate complicated equipment, and the franchisee

has to learn on his own from instruction manuals. The training period must be adequate, but in low-cost franchises it may be considered expensive. Many franchisors have set up corporate universities to train staff online. This is in addition to providing literature, sales documents and email access. Also, franchise agreements carry no guarantees or warranties and the franchisee has little or no recourse to legal intervention in the event of a dispute. Franchise contracts tend to be unilateral contracts in favor of the franchisor, who is generally protected from lawsuits from their franchisees because of the non-negotiable contracts that require franchisees to acknowledge, in effect, that they are buying the franchise knowing that there is risk, and that they have not been promised success or profits by the franchisor. Contracts are renewable at the sole option of the franchisor. Most franchisors require franchisees to sign agreements that mandate where and under what law any dispute would be litigated.

Regulations in India The franchising of goods and services foreign to India is in its infancy. The first International Exhibition was only held in 2009. India is, however, one of the biggest franchising markets because of its large middle-class of 300 million who are not reticent about spending and because the population is entrepreneurial in character. In a highly diversified society, McDonald's is a success story despite its fare's differing from that of the rest of the world. So far, franchise agreements are covered under two standard commercial laws: the Contract Act 1872 and the Specific Relief Act 1963, which provide for both specific enforcement of covenants in a contract and remedies in the form of damages for breach of contract.

Types of franchising There are many different types of franchise ownership opportunities. You may choose to become a multi-unit franchise owner, an area developer or you may decide to buy an existing franchise. Each ownership opportunity has its own unique responsibilities. The following is a list of the many different ownership opportunities franchising offers.

Single Unit Franchise Single unit franchising is the most likely place a brand new entrepreneur would begin. In this type of franchise, the franchisee would only be responsible for running one unit. However he or she would be extremely involved with all of the daily operations of the business.

Buying an Existing Franchise Many franchise owners decide to sell their franchises after they have opened. There are several reasons why existing franchises are listed for sale. There are pros and cons to buying an existing franchise.

Multi-Unit Franchise Multi-unit franchising creates the opportunity for the franchisee to open more than one unit. In this case, multiple units are usually sold at a reduced rate per unit. In this type of operation, the franchisee partakes less in the day-to-day operations of the unit.

Area Developer Area development is similar to multi-unit franchising. The only difference is that this type of franchising typically involves a greater number of units encompassing a larger territorial area. The area developer is granted the right to open a pre-determined number of outlets in a certain geographic territory.

Master Franchise Master Franchising allows people or corporations to purchase the rights to subfranchise within a certain territory. A master franchisee helps the overall franchise company by recruiting franchisees to open units within a specific territory.