Success factors for American Fast Food Companies in Asia
Introduction
Fast Food Companies operate their business in fast food restaurants that are also called quick service restaurants. The industry environment is characterized by certain types of restaurants whose common features include fast food cuisines that are served with the least possible table services. The types of foods that are available at the quick service restaurants are intended to cater for "meat-sweet-diet" with limited menu (Nabhan & Ashley, 2004). The preparation of the foods at quick service restaurants is made in advance and massiveness and then maintained hot as packages and in finished form that can be ordered on demand, therefore, ready availability for immediate consumption and take away is guaranteed. Some customers prefer to be served while seating in the quick service restaurants establishments. Most Fast Food Companies operate the business as franchise operation or a chain of restaurants. This system facilitates for the supply of products of standardized ingredients with foods that are partially prepared which are circulated to every branch of the chain of restaurants through supply channels that are effectively controlled. The origin of the first Fast Food Companies has been documented as the United States in which case the A & W was established in 1919 while the White Castle was established in 1921 (Nabhan & Ashley, 2004). The business has proliferated with mush success being recorded in such Fast Food Companies as KFC Pizza Hut and McDonald which have immensely grown to become multinational having established numerous outlets in most parts of the world.
Most Fast Food Companies have adopted divergent concepts for operation of their business. The most common of these concepts are the casual restaurants and the catering trucks. In casual restaurants, the establishments provide for higher sit-in ratios thus allowing clients to access their services while seated in the establishments. On the other hand, the catering trucks involve mobile units that are commonly parked at convenient places preferably near factories and other work sites where fast foods are served. KFC Pizza Hut and McDonald Fast Food Companies are some of the most successful international quick service restaurants chains. The success of these quick service restaurants is attributed to their effective styles of management coupled with efficient strategies of global expansion. They have therefore been able to acquire a share in the foreign markets in quick service restaurants industry.
McDonald's quick service restaurants chains are spread out in about 126 countries that are distributed in six continents with over 31,000 restaurant establishments globally. In India alone McDonald's quick service restaurants chains accounts for over 160 restaurants that have been operating successfully since the company gained entry in to the Asian Market. One of the marketing plans that was initiated at McDonald's quick service restaurants chains in India was exclusion of beef in their menu. The premise behind such an initiative was acknowledgement and adaptation to the Indian culture, thus the marketing policy that was developed was intended to entice the Indian clients. The great success that has been achieved by McDonald's quick service restaurants chains makes it to be the global fast food service vendor with over 32,000 restaurants that offer service to over 50 million customers on daily basis in over 119 global countries. On the other hand, KFC Pizza Hut was introduced in 1995 and is currently one of the largest varieties of Yum
Restaurants that has been successfully established in the Asian market. KFC Pizza Hut is a successful organization that owns other bigger brands that include the Pizza Hut, the Taco Bell, the A&W as well as Long John Silver. The customers at KFC Pizza Hut have been offered an environment that makes them to feel more relaxed and not in rush to vacate the seat because the design of their establishments offer more space. KFC Pizza Hut has the freshness and its staff members are more positive and lively. The secret behind success at KFC Pizza Hut is also attributed to the communication surrounding the introduction of vegetarian food on the menu as a marketing strategy targeting the Asian culture and the freshness of their products.
This research paper posits to critically how American Fast Food Companies such as McDonald‘s and KFC Pizza Hut have achieved the greatest echelons of success in the Asian markets. The research will also address the best practices that have been adopted by the American Fast Food Companies in the global food industry, the global growth trends as well as challenges, and effect on its operating income and number of increasing restaurants in the Asian market from their expansion in these foreign countries. Overall, the research paper provides a discussion of how American Fast Food Companies such as McDonald‘s and KFC Pizza Hut enters into the Asian foreign market and the applicable strategies that have been implemented in these fast food restaurants in order to be a dominant leader in the fast food industry in the Asian market at low cost. This research also focuses on American Fast Food Companies such as McDonald‘s and KFC Pizza Hut international success, and strategies and benefits that it got from the franchise business that were established in the Asian market (Schlosser, 2001).
Objectives of research
The primary objective of the research involves gaining a comprehensive understanding of the various global business strategies that were adopted by American Fast Food Companies such as McDonald‘s and KFC Pizza Hut in Asian markets. The other objectives are:
To analyze how these strategies are influenced by the external environment.
To analyze the growth trend of American Fast Food Companies such as McDonald‘s and KFC Pizza Hut in Asian markets
To analyze the advantages that are associated with the franchise business and its impact on American Fast Food Companies such as
McDonald‘s and KFC Pizza Hut in Asian markets
Research questions
In this research paper, the study shall involve the use of questionnaires accompanied by effective interviews that shall be administered to the players' involved in American Fast Food Companies businesses in Asia with particular interests in KFC Pizza Hut and McDonald's chains of fast food restaurants. The data obtained from this research shall be analyzed properly to come up with the effective ways and best recommendations regarding the same. These objectives will be achieved by addressing the following research questions:
What is the market size of the American Fast Food Companies that operate in the Asian market?
What are the major brands that are offered by American Fast Food Companies that operate in the Asian market?
Which type of fast food (burger fast food, chicken fast food, Asian fast food etc.) is expecting the greatest level of growth over the next five years among the American Fast Food Companies that operate in the Asian market?
Do fast casual restaurants have a presence in American Fast Food Companies that operate in the Asian market?
What are fast food chains doing to attract consumers during non-traditional day-parts for the American Fast Food Companies that operate in the Asian market?
Research Methodology
The research paper shall be based on exploratory research that has been extracted from secondary sources which include reviewing available literature and/or data on the subject of American Fast Food Companies that operate in the Asian market. Primary research will also form a crucial basis for source of information that will ultimately lead to the findings and recommendation in this research. The secondary sources of data in this regard shall entail the following:
Research Papers and Case Studies
Books and Articles from Business Magazines:
Publications that have been published by Global Consulting Firms
International Business References
Literature review
According to Thorpe, et al., (2008), success factors in American Fast Food Companies that operate in the Asian market. Achievement of success in American Fast Food Companies that operate in the Asian market depends on proficiency of understanding varied parameters in contrast to fine dining (Thorpe et al., 2008). The clients who set their foot to quick service restaurants are interested in being served with speed, convenience as well as predictability in contrast to some memorable experiences in dining. It is therefore imperative for American Fast Food Companies that operate in the Asian market to understand this logic so that they can be competitive in this industry in foreign countries.
Wilk, (2006) suggests that, the American Fast Food Companies that operate in the Asian market as quick service restaurants have embraced branding as a critical element in their success in this business. They make use of logos, slogans as well as signs that can be recognized by the clients at any outlet in any region of their operation (Wilk, 2006). The importance of branding is attributed to buying behavior of the customers with regard for assurance of predictability of their intended purchase. Before a customer goes to a fast food establishment, the anticipated product must clearly reflect in the mind and this is greatly enhanced by the use of branding. Branding is a source of consistent and easily recognizable product that enables the business to reassure the clients that there are no changes made to the product. Wilk, (2006) suggests the use of simple slogans that have the impact of lodging the message to the brains of the customers and further effectiveness of this approach is enhanced by repeated adverts in radios as well as television commercial adverts. This creates a situation that, whenever a customer comes across such food item in a fast food outlet, they respond positively because the brand has already been ingrained in their brains.
Bottero, (2004) suggests the use of location in areas that are convenient so that the fast food business can be successful. Fast food outlets that are located in prime traffic areas are most likely to be successful. In the cause of establishing a new outlet in a foreign country, the American Fast Food Companies do not look at the destination but location. The customers in this business can hardly travel for long distances only to purchase the products offered contrary to the customers who travel for long distances to access special experience in ordinary restaurants. Therefore, fast food restaurants allied to American Fast Food Companies in Asia are located in close proximity to the shopping malls and the busiest commercial strips where they can attract the greatest number of customers. This gives them the advantage of impulse purchases from the clients with no initial preplanned patronage to conduct any business in a restaurant.
American Fast Food Companies that operate in the Asian market must also be keen on the speed of offering their services to the customers. Janet & Richard, (2006) suggests that, fast food must live up to its name so that customers can be attracted to such a business. Majority of the customers make their purchases on transit to their places of work or other important destinations. Most clients also make their purchases while inside their cars and therefore they value the speed at which the services are rendered to them. Happier and returning customers are usually motivated by the speed of food delivery after an order has been placed. American Fast Food Companies that operate in the Asian market therefore give due consideration to efficient as well as standardized kitchens with specific focus on the types of foods that cook extremely quickly. This is a critical success factor that has been embraced by McDonald‘s and KFC Pizza Hut in Asian markets and give them a competitive edge.
The success of American Fast Food Companies such as McDonald‘s and KFC Pizza Hut in Asia is also anchored on efficiency. Wilk, (2006) suggests that, maximization of profits in this business depends on achieving massive sales. American Fast Food Companies that operate in the Asian market operates in commercial environments that require efficiency functioning as a crucial success factor. Wilk, (2006) further suggests that, efficiency in fast food industry also minimization of wastages in food, hiring works at the minimum possible wages and embracing the benefits associated with economies of scale in the process of purchasing. Any amount of money that is spent in unnecessary way translates to a deduction in the profits. Employees' turnover rate in American Fast Food Companies is significantly high thus forcing the management to design training regimens that are highly standardized, effective as well as rapid.
American Fast Food Companies doing business in Asia such as McDonald‘s and KFC Pizza Hut also attribute their success to the use of technology which is a facilitate of quick delivery of efficient services to the clients. Belasco, (2006) suggests that, the use of technology in fast food restaurants has enhanced security and accuracy and introduction of hospitality point of sale system has contributed to great echelons of success. This initiative allow the crew workers in the kitchen to view the orders that have been placed by the customers in the front counter thus facilitating driving through effectively in real time. The use of wireless system in this regard facilitates the orders that have been placed through the drive to be accessed by cooks as well as the cashiers.
Methodology and sources of data
This section shall form the basis of discussions on the appropriate methods and procedures that are applicable in collecting the relevant information and statistics that will facilitate achievement the intended objectives of research as priory indicated in the introductory sections of this paper. The methods of research will also incorporate information on study location, strategies and analysis steps that will be pertinent to this research. As indicated in a previous section of this paper, the objective of the research is to identify how American Fast Food Companies such as KFC Pizza Hut and McDonald's succeed in Asia It is important to note here that this research is mainly based on the questionnaire even though other research methodologies were briefly discussed. The research shall also include a quantitative analysis that is achievable through the use of collected data to show the point of view of the researcher. Econometric and statistical analysis are also considered in this paper in which case, econometrics enable the researcher to make use of available data in the estimation of relationships that exist between diverse variables.
Primary research and secondary research
Primary research involves collection of information that does not exist in written form. Primary approach to research is usually achieved through a number of forms: including questionnaires, telephone conversations, surveys, etc. As pertained to this project, the primary sources would likely be the McDonald's restaurant and the KFC Pizza Hut restaurant chain. The major advantage that is associated with the use of primary research involves the high level of accuracy that is associated with this approach. However, primary research is also associated with some challenges one of the most significant being that, it may be time consuming. This is because, this approach entails dealing with people from diverse regions, and the human participants in most cases are only resourceful out of their own willingness in participation. As a result, administering this approach is likely to take substantial time as the participants decides whether to participate or not and accuracy in giving the information that they have concerning the administered interviews and questionnaires. On the contrary, the use of secondary approach to research entails relying on the information that exists in written materials to shed light on the topic. The most reliable sources of secondary data in this regard are research papers and case studies, books and articles on global food system, Operations Management, foods and cultures and quick service restaurants chains, business magazines, journal publications that have been published by global consulting firms and international business references. The major benefits that are associated with the use of secondary research in this study is that the approach is not time consuming. However, the researcher must take due diligence when using secondary sources because the information retrieved from these sources may not be relevant and updated. The information derived from these secondary sources was used to write the literature review section of this research paper.
Quantitative and qualitative data
There are two main ways in implementing the activity of the research, ‘Quantitative research' and ‘Qualitative research'. The Qualitative data involves the information that is based on meanings verbal words or personal expressions from the respondents. Qualitative analysis of data is one of the major methods for data compilation that is achieved through interpersonal interviews.
Research strategy
Another aspect of great significance in this research involves the research strategy because it forms the basis of identifying the appropriate procedures applied by the researcher in answering the research objectives or questions. The research strategies of choice in this regard engross experiments, case studies, survey, theoretical perspectives, cross-sectional and longitudinal studies. It is imperative to examine some of these strategies while paying particular attention to the case study of McDonald‘s and KFC Pizza Hut which is applicable in this particular research.
Experimental research strategies in this research entail observation of buying behavior at McDonald‘s and KFC Pizza Hut under controlled conditions. The researcher chooses to observe the frequency of attendance at McDonald‘s and KFC Pizza Hut in different restaurant outlets in India. Experimental research strategy has been recommended in this research with a scientific orientation because the phenomenon being studied will not be affected by the experimental conditions.
McDonald‘s and KFC Pizza Hut were also subjected to survey as a crucial research strategy in this research. Surveys in this regard facilitate collection of a large amount of data from a large population. This implies that the researcher can conduct surveys and question specific groups of people in McDonald‘s and KFC Pizza Hut to obtain large amount of information relevant to the success factors for American Fast Food Companies in Asia. The data was collected from the people accessed at McDonald‘s and KFC Pizza Hut either via questionnaire or orally. The purpose of the survey was to establish and analyze views of respondents in order to find what they think about success factors for American Fast Food Companies in Asia. However, despite the fact that the views from a large number of respondents were gathered through the survey strategy, the data obtained might not all reflect to the objective of the research at depth.
Questionnaires and interviews
The major approach to research in success factors for American Fast Food Companies in Asia was mainly carried out by the use of a questionnaire. The questionnaire enabled the information to be gathered from many respondents who were directly involved in the restaurant industry with specific cases of McDonald's restaurant and KFC Pizza Hut restaurant. Use of a questionnaire as a quantitative method for collecting data from the sources is the most appropriate method of collecting mass responses and as such, providing a good method of comparative analysis. In order to achieve the purpose of the investigation, the key focus lies on finding out which techniques should be applied. Interviews were identified as the best compliment to questionnaires in collecting sufficient data for this research (Saunders, et al, 2003). Different types of interviews that the researchers may opt to apply to their studies. The three are inclusive of structured interviews, semi-structured interviews, and unstructured interviews.
After considering the different types of interviews, questionnaires are considered more useful for this study. This is necessary, as it allows gaining a deeper understanding of the participants' views. The use of interview KFC Pizza Hut and McDonald's restaurant involved the management team to get their view on how they operate. The customers in the restaurant industry were also involved in the interview.
Quality Assurance
The research was performed with principles and ethical issues in consideration in order to be accepted. The research focused on elements of reliability, validity and feasibility in order to reduce the chance of obtaining wrong data (Saunders, et al, 2003).
Validity and Reliability of Results
A debate about the findings of the preceding literatures on success factors for American Fast Food Companies in Asia inevitably includes
a discussion of ‘research', normally referring to the way in which the data was collected" (Saunders, et al, 2003). This research being a phenomenological, all questions are related to theoretical characteristics discussed in literature preview. The process would therefore be accurate in collecting, analyzing and sampling data; hence the validity of result would be quite high. Considering that there are many different aspects of validity, which influence the validity of the research in general.
Ethical consideration
The participants were supplied with different questionnaires based on the success factors for American Fast Food Companies in Asia. All the participants were given their respectively informed consent prior to their participation in the research. They were informed prior to the research, the purposes, the potential benefits and potential risks that were associated with their participation. Ethical standards were also considered in the process of the procedures of the research.
It is an ethical requirement that all the people taking part in this study shall be informed about the rationale of the research and the intentions of the researcher by means of an introductory letter that shall be sent to them. All the findings taken care of higher levels of confidentiality and as a matter of ethics, none of the sources, be it personal or at organization level, shall correlated with any particular observation, nor shall any comment be associated without explicit permission from the source. All the information gathered during the interviews shall be treated as confidential and every individual participant shall be given full rights of anonymity. All interviewees shall be treated with high degree of respect and esteem.
Results and findings
The success factors for American Fast Food Companies in Asia entirely dependent on the techniques and methods put in place for the management of employees at KFC Pizza Hut and McDonald's. the KFC Pizza Hut and McDonald's restaurant are required to put proper ideologies in place to ensure that they gain competitive advantage. The points discussed above shows how KFC Pizza Hut and McDonald's have made it possible to enjoy the majority control of the Indian market by the various ways which some result to employee motivation, good product made, distribution , pricing and promotion on the same not forgetting a good environment of performing the same business. KFC Pizza Hut and McDonald's have embraced the advantages of the technology and staff motivation just to mention a few in order to gain competitive advantages in the Asian market.
Recommendation
Taking the example of KFC Pizza Hut and McDonald's restaurant, all other American Fast Food Companies in Asia can follow suit in order for them to gain clients and market control enjoyed by KFC Pizza Hut and McDonald's restaurant, some of the recommendations American Fast Food Companies in Asia can be encouraged to put in place from this research are:
• They can effectively understand their objectives in the business and especially here in the line of restaurant industry.
• The managers of American Fast Food Companies in Asia can have a sense of commitment in their work and can empower the staff and thus improving on the productivity.
• American Fast Food Companies in Asia should be quick to adapt to Indian customers demands and especially make their prices affordable to ordinary Indians
• The American Fast Food Companies in Asia can make use of effective communication channels in order to make sure that their products reach the customers in the best time possible and that the customers get enough information concerning the same.