Fast Food Market Forecast – The Subway Example of Strategic Product Positioning

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The fast food market in the United States has seen healthy growth over the past three years, and the forecast can be maintained. The fast food market is expected to maintain its current growth expectations, with an expected compound annual growth rate (CAGR) of 2.3% for the five-year period 2005-2010. This is expected to bring the market to a value of $57.6 billion by the end of 2010. Drivers of growth include an increasing number of Americans in the workplace, reducing the time spent preparing meals at home. In 2010, the US fast food market is expected to be worth $57.6 billion, an increase of 12.1% since 2005.

Expected volume

In 2010, the fast food market in the United States should register a volume of 37 billion transactions (figure 1). This represents an increase of 5.3% since 2005. The CAGR of market volume over the period 2005-2010 is expected to be 1%.

Success factors

Success factors for fast food franchisees will include targeted product and marketing around healthier menu selections, brand consistency, low start-up costs, franchisee support and consumer convenience. Subway ® represents a poignant example of a fast food franchisee ready to succeed in the future fast food market. Their strategies transcend the fast food market and apply to many other markets and products.

SWOT analysis

Subway Sandwich Shops are well positioned to leverage their strengths and address reasonable threats, weaknesses and opportunities. The table below highlights these strengths, weaknesses, opportunities and threats.

Strengths

  • Size and number of stores and channels
  • The menu reflects the demand for fresh, healthy and quick products.
  • Use of non-traditional channels.
  • Partnership with the American Heart Association.
  • Global brand recognition.
  • Customizable menu offerings.
  • Low franchise start-up costs.
  • Franchisee training is structured, brief and designed to ensure a quick start and success.

Weaknesses

  • The decor is outdated.
  • Some franchisees are unhappy.
  • Service delivery is inconsistent from store to store.
  • Staff turnover is high.
  • No control over franchise saturation in given market areas.

Opportunities

  • Continue to grow the global business.
  • Update the decor to encourage more catering businesses.
  • Improve the customer service model.
  • Continue to expand channel opportunities to include event wagons.
  • Improve relationships with franchisees.
  • Experiment with drive-thru.
  • Develop packaged dessert offerings.
  • Keep revising and refreshing menu offerings.
  • Develop more partnerships with film producers and toy manufacturers to promote new film releases through kids’ menu packaging and co-branding opportunities.

Threats

  • Troubles or disputes with the franchisee.
  • Food contamination (spinach).
  • Competition.
  • Interest costs.
  • Economic downturn.
  • Sabotage.
  • Legal proceedings.

Competitive analysis

The metro is not without competitive pressures. Major competitors include Yum! Brands, McDonalds, Wendy’s and Jack in the Box. Yum! The brands are the largest in the world, with 33,000 restaurants in more than 100 countries. Four of the company’s highly recognizable brands, KFC, Pizza Hut, Long John Silver’s and Taco Bell, are global leaders in the quick-service Mexican, chicken, pizza and seafood categories. Yum! has a workforce of 272,000 employees and is headquartered in Louisville, Kentucky.

McDonald’s Corporation (McDonald’s) is the world’s largest foodservice retailer with 31,000 fast food restaurants in 119 countries. The company also operates restaurants under the brands “The Boston Market” and “Chipotle Mexican Grill”. McDonalds primarily operates in the United States and the United Kingdom and is headquartered in Oak Brook, Illinois, and employs 447,000 people.

Wendy’s International (Wendy’s) operates three fast food chains: Wendy’s (the third largest hamburger chain in the world), Tim Horton’s and Baja Fresh. Wendy’s operates more than 9,700 restaurants in 20 countries, is on Fortune magazine’s list of America’s 500 Companies, is headquartered in Dublin, Ohio, and employs approximately 57,000 people.

Jack in the Box owns, operates and franchises Jack in the Box quick service hamburger restaurants and Qdoba Mexican Grill fast casual restaurants and is headquartered in San Diego, California.

Target markets

The increase in sandwich sales is the result of a decrease in consumer interest in burgers and fries and an increase in demand for healthier options. Sandwich sales are growing 15% annually, outpacing the 3% sales growth rate for burgers and steaks.

Current marketing program

A new breed of restaurants are making big gains against market-saturated burger establishments. Described as “fast-casual”, these restaurants are dominated by Mexican chains and sandwich shops offering fresh breads and specialty sandwiches.

Respond to changing consumer expectations for healthy, fresh and made-to-measure sandwiches; Subway’s marketing program meets these expectations through a number of approaches. Most notable were TV commercials featuring Jared. These commercials emphasize the healthy aspects of a Subway sandwich by highlighting the 245 pounds Jared lost by eating a Subway sandwich diet. Subway also markets through national sponsorship events such as the American Heart Association Heart Walks and local events such as triathlons and children’s sports teams.

The Subway example represents marketing and product strategies that are classic examples of focusing on market demand, consumer trends, product optimization, and innovation. Marketing strategies of creating clear brand recognition, brand and product association, and market demands have strategically positioned Subway to grow its market share in the near future. These marketing strategies are also replicable foundational marketing strategies that transcend the fast food market. Does your marketing strategy tie brand recognition to products that support the future direction of your market?



Source by Michael Mccarty

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