Global Marketing project Comparison of Fast Food Restaurants 1

Global Marketing project Project by: Sir Shujja Prepared by: Umar yasin Rehaan Athar Arooj Riaz Hina Nawa z Ammara Mubashar Submitted on: 5th July 2009 Pmas-University of Arid Agriculture Rawalpindi. 2

Global Marketing project McDonalds 3

Global Marketing project COMPANY DESCRIPTION . Established in California during the 1940s by two brothers, the McDonalds restaur ant became a popular teen hangout in the first flush of post-war affluence. To f eed these youthful bodies, the brothers reduced the menu to the perennial favori tes hamburgers, applied assembly line techniques to food production and expanded to four restaurants by 1953. Taking note of the brothers success, in 1955, Entre preneur Ray Kroc bought the right to franchise the McDonalds System. Renamed the McDonalds Corporation in 1960, Kroc focused his marketing effort on the family me al and children, spending heavily on television advertising which promoted the s miling clown face of its child-friendly brand mascot, Ronald McDonald. Today, th e McDonalds franchise exceeds 30,000 restaurants globally and serves over 50 mill ion people in more than 121 countries each day. GOALS AND OBJECTIVES . 1. McDonalds vision is to be the worlds best quick service restaurants experience. 2. McDonalds is committed to maintaining and developing the best food products in the quick service restaurant market. 3. In order to deliver this, the company has made a number of commitments to food safety and nutrition. 4. Lead the Quic k Service Restaurant market by a program of site development and profitable rest aurant openings, and by attracting new customers. Increasing sales through promo tions will enable them to continue their program of expansion. 4

Global Marketing project 5. McDonalds have an objective to continual enhance and improve their menu. This will better satisfy their customers and give customers more reason to visit. Ma ny ideas for new items on the menu come from the franchisees responding to custo mer demand. 6. Consumer tastes change over time and McDonalds has to respond to these changes. MISSION STATEMENT "McDonald s vision is to be the world s best quick service restaurant experience . Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile." . COMPETITIVE ADVANTAGE . McDonalds core competency is providing convenience when people need and want to e at fast food at prices that are competitive and provide best value for the custo mers money. One of McDonalds competitive advantages is its focus on consistency of quality, production of food and use of raw materials all around the world. The world recognition associated with the brand McDonalds itself is also one of McDon alds competitive advantages. 5

Global Marketing project Demand Trends . There are many variations observed in the demand trends for McDonalds in Pakistan . The trend followed by the high income group is relatively stable and they comp rise a very small percentage. The changes in the economy have very little effect on the demand trends of McDonalds that is being followed by this high income gro up. Other reasons for these variations are: McDonalds is a brand that is mostly p erceived by an average Pakistani customer to be a place which is visited on some occasion or once in a while. The main reason for this is the low disposable inc ome that people have because of the inflation and some other unemployment reason s. On the other hand McDonalds lovers such as college students, working individua ls, kids and families fond of spending a lot on fast food restaurants make it a place to be visited very frequently. One of the reasons is high disposable incom e by blue collar individuals. Another reason is the attraction for McDonalds by k ids as well as those who love it for every reason. There are also global issues which affect food demand for McDonalds e.g. bird flu and cow diseases in western countries brought down demand for McDonalds some years ago as it was a known fact that they get their meat from international suppliers in order to maintain qual ity. 6

Global Marketing project Key Success Factors : McDonald s Pakistan has an aggressive plan to expand in all other cities of Paki stan and is rapidly growing with the focus to provide friendly and a quick servi ce restaurant experience to its customers. There are many key success factors du e to which McDonalds is successful in the market. We have been successful in ide ntifying a few: All the franchises of McDonalds in Pakistan are owned by Lakson Group of Companies. Apart from the fact that LGC is one of Pakistans biggest corp orations, their management allows not only standardization of quality but a more uniform and effective marketing strategies in order to sustain in the market. T herefore McDonalds being its part had to continue to strive to maintain its stand ards in the local region. Many McDonald s restaurants have included a playground for children and advertising geared toward children, and some have been redesig ned in a more natural style, with a particular emphasis on comfort: introducin g lounge areas and fireplaces, and eliminating hard plastic chairs and tables. T his has given a new outlook to the McDonalds as a quick service restaurant that i s still not be seen on other fast food restaurants. McDonalds doesnt offer just b urgers. Their well diversified menu is also one of the key success factors as mo st of McDonalds competitors are quite specialized: KFC in chicken, Pizza Hut in p izzas etc. When it comes to eating out during Ramadan in any fast food restauran t, the name that clicks to the customers is McDonalds. The reason is the affordab le deals that they offer, that seem to beat all others when it comes to prices. Another advantage that McDonalds has on its competitors is the location of its fr anchises. 7

Global Marketing project Its main advantage is that it is located in vicinity that is easily approachable . Secondly it has got in its surroundings other very attractive places to be vis ited by people who want to enjoy their life to the full. These places are a sour ce of attraction not for the services they provide but for McDonalds as well. For example one of its outlets has been opened in Park Towers in Karachi so as to a ttract the shoppers who visit it very frequently. Another strategic location tha t McDonalds has acquired is at the Clifton beach. This has forced many others nea rby restaurants and one of the very famous cuisine restaurants with the name of Kublai Khan to get closed. Same is the case in Rawalpindi/Islamabad where McDona lds holds an important strategic location. The customers that are driven to the C inepax are automatically attracted towards McDonalds. Product life Cycle Analysis : In the Pakistani market McDonalds has been placed in the growth phase as it is st ill growing and has the potential to grow further. There are many strategies tha t have been employed in the other countries but are still to be made a part of t he McDonalds franchises in 8

Global Marketing project Pakistan. Following are some of the strategies that can be made a part of the Pa kistani market so as to increase its market growth: a) McDonalds in Pakistan can introduce breakfast in its menu to cater to the needs of those who are in a hurr y to get to office in time. This will give them an edge on its competitors and i ts growth will increase. b) To gain advantage in the local market, McDonalds shou ld introduce coffee at all the franchises. c) To maintain its brand image as a t wenty four seven customer restaurant, McDonalds must make its timings more flexib le to the needs of those who are usually very busy with their work schedules. BCG Matrix : According to BCG Matrix McDonalds is a star. The reason for this is its high mark et growth and high market share in the Pakistani market. On the other hand KFC a nd Pizza Hut are the cash cows because of 9

Global Marketing project their low growth rate and high market share. During past some years KFC and Pizz a Hut have lost their market growth because of the fact that they lost their sta ndard war to their competitor i-e McDonalds. Another direct competitor of McDonal ds is AFC. According to BCG Matrix it is question mark. Some of the reasons that are responsible for its low market share and low market growth are the less expa nsion strategies being followed by the company. Secondly they are not focusing a t all on all the major cities, rather they are only focused on the target segmen ts of large cities. 10

Global Marketing project SWOT ANALYSIS Strengths: . McDonalds has been able to maintain its market share in the QSR market of Pakist an since 1998 and this is actually the major strength of McDonalds that has made it so popular. Other major strengths are listed below: Products: A major strength is the various deals that McDonalds offers so that it could be made affordable. Recently McDonalds offered a deal for Rs.85 only, containing a beef burger along with a drink. McDonalds offers many flavors of Mcflurry ice cre am from a mix of M&Ms to Oreo cookies. The M&Ms flavor was introduced about a ye ar back and is still popular among the M&Ms lovers. McDonalds has also customized its meal according to the tastes of Pakistan. People in Pakistan do not eat bac on so McDonalds does not offer such sort of meals in the country. Brand Recognition: McDonalds has gained recognition worldwide. The chain is present all over the wo rld in more than 122 countries. In Pakistan a large number of franchises are pre sent, majority of them in Karachi and Lahore and McDonalds is regarded as a symbo l of value and quality for your money. Party celebrations: McDonalds offers its clients, especially children to celebrate their birthdays th ere. One can invite friends, they decorate the party area, various party games a re organized along with face painting activity etc. Children are provided with a n opportunity to celebrate their day in the way that they want. 11

Global Marketing project Partnership with Coca Cola: McDonalds and Coca Cola are official global partners. Coca cola is a big brand n ame serving people all over the world with beverages. Partnership with telecom companies: McDonalds offered special deals to its clients with up size meals who are the us ers of a particular company such as Warid and Ufone. Weaknesses Product Variety: McDonalds needs to develop more and more products to stay in the competition. Af ter the opening of international QSRs in Pakistan, many local QSRs have also bee n opened in various cities. The tastes are a bit different but they too are offe ring chicken and cheese burgers, drinks and fries at competitive prices. This si tuation requires McDonalds to be more innovative and price competitive. More advertising: In Pakistan, McDonalds rarely advertises at TV, however billboards often show off juicy McDonalds burgers but this could affect its popularity in future. It defin itely needs to advertise more to reach the target and the potential customers. Drive-Thru: The service at McDonalds drive-thru has been subject to criticism all over the wo rld and a lot of people complaint that the orders are either missing some of the items or are entirely wrong. The service time at the drive- thru is also subjec t to great variations and needs to be improved. 12

Global Marketing project Opportunities Reasonable Prices: McDonalds can broaden its market by offering meals at more competitive prices in comparison to other local QSRs such as AFC, Pappasallis etc. This way it could get hold of the potential customers too. Opportunity to be innovative: McDonalds could make itself more innovative by offering deals that appeal more t o Pakistani consumers e-g it can introduce desi flavors in the present products s uch as Barbeque, Tandoori, Masala and other spicy tastes which are staple of the country. Breakfast and special noon meals: Now in Pakistan most the trend of women going to work and opting for profession is increasing as a result of which they are running short of time to carry out a ll the home chores along with their work. McDonalds can offer deals to such mark et by catering them in the morning for breakfast. During the office hours people mostly go out for their lunch to restaurants. McDonalds can avail this potentia l market too. Growing dinning out Market: In Pakistan the dining out trend is increasing especially in youngsters and uppe r middle class. McDonalds has the opportunity to grasp this market quite well. I t is already doing well by serving them but it could arrange various activities for the people of this age. Dine in Cafes: McDonalds can open up with small-sized cafes for the teenagers in their universi ties and colleges. McCafes: McDonalds has opened coffee shops by the name of McCafes in UK. Pakistan can serv e as a new potential market for these cafes. 13

Global Marketing project Threats: More health conscious customers: With increasing awareness about food and the importance of a balanced diet, peop le are opting for low calorie food e-g salads and food with high fiber content. To remain in the scope, McDonalds needs to serve this market as well as the pres ent customers, this could be posed as a threat to McDonalds. Subway is offering its low fat veggie and chicken sandwiches at prices almost the same as McDonalds . For McDonalds diet meals could be a way out of this situation. Until now, McDo nalds in Pakistan has nothing to offer to health conscious customers. Foreign as well as local competitors: In the growing market QSR market of Pakistan McDonalds competitors are entering not only from other countries but from within the country too. Their competitive prices could be a reason due to which McDonalds can lose its share in the Pakis tani market. Changing customer styles: Pakistani culture has been changing for years now with new technologies and tren ds. People who are not brand loyal move with the changing times. Some competitor can easily enter into the market and make better offers to its consumers by foc using on their needs and the satisfaction that they want. To remain competitive, McDonalds needs to be innovative and should change along with the Pakistani con sumer styles. 14

Global Marketing project Al.Najam Fried Chicken 15

Global Marketing project INTRODUCTION . The time was mid 90 s. Fast food companies were booming in Pakistan. Quality fas t food in Pakistan was outrageously expensive and on a handful of families could afford to go there. No middle class family could think of taking their children to such big food chains. This was the time when AFCTm (Al-Najam Fried Chicken) opened its first restaurant at Saman Abad, Main Market in Lahore. Our goal and a im was very simple. To make the quality fast food available to all those people who liked the fast food but couldn t dare to afford. We did so without compromis ing the highest standards of food industry. We AFCTm , not only use the best raw materials available but we also provide the best of food at a very reasonable a nd competitive price. All our foods are processed and prepared using of the art machines and equipments. Alhamdulillah, with the grace of Allah Almighty, public response was overwhelming. AFCTm became the fastest growing fast food chain in Pakistan. At present time, AFCTm has more then twenty branches Nationwide includ ing Mall Road, Railway Station, Allama Iqbal Town, Twonship,Mughal Pura, Defence , Thokar Niaz Baig, G.T Road, Wapda Town. It has also opened in Faisalabad , SGD , Abbotabad, Karachi, Gujranwala, Rawalpindi, Gujrat. Sahiwal Branch is ready to start business. At least three more branches including Murree and Multan are in the wings. 16

Global Marketing project At AFCTm , we work hard and work right. Our work force consist of very talented and experienced personnel. These workers and team members are skillfully trained to follow all hygienic procedures. Our disciplined staff is taught to respect i ts customers and to provide the fastest services. We are proud that we use froze n chicken, which is hygienic, healthy and safe. We ensure our patrons the freshn ess of food all the time every time when visit an AFCTm. MISSION AND VISION AFC better for people by ensuring healthy foods . CORE VALUES TEAM WORK: . We share responsibility and ownership of our decisions and action and trust one another in making shared decisions as a fear thought honest and open communicati on. EXCELLENCE: We provide the highest standards of quality in everything we offer. 17

Global Marketing project INTEGRITY: We insist on an organizational environment consistently based upon the highest e thical standards. RESPECT: we will show application and high regard for our associates partners and custome rs. AFC BRANCHES . Lahore(Head Office) Faisalabad Gujrat Rawalpindi Murree Abbotabad Sargodha Sahiw al Gujranwala Karachi Multan 18

Global Marketing project HIERARCHY . Chairman Trade Mark Owner Trade Mark Owner Finance Manager Marketing Manager H.R Manager Branch Manager Assistant Branch Manager Low Level Employees 19

Global Marketing project SERVICES Dine in. Take away. Free home delivery. Free Regular Drinks. . Dine In: Dine in is the service provided by AFC. The customer who wants to enjoy their of fered products in AFC they use to sit and enjoy the meal and exchange their idea s in AFC. This service gives opportunity to the customer to observe the environm ent and diversify their selves according to the environment. Like other fast foo ds AFC provide self service. Sitting arrangement is about 65 people. About 15 ta bles are available. Take away: This service is also offered by AFC to those customers who have less time. These customers utilize the service by taking the meal with them like parties and tri ps etc. very busy persons who dont have time to spent on AFC they take meal with them so they use their time properly on their work. 20

Global Marketing project Free Home Delivery: Free home delivery service is also provided by AFC. They received orders of cust omers on telephone and deliver the meal to the customer free of delivery cost. T his service is to facilitate those customers who are not able to visit AFC perso nally due to many reasons. This facility is particularly to facilitate children and females. So this service gives opportunity to fulfill their hearted desires for AFC meal which always remain alive in their memories. Free Regular Drinks: If cashier fails to give you receipt you are entitled to a free regular drink. CHARITY PROGRAMS . We have started a "Madrissa, Mosque and a Hospital" at "Multan Road Phool Nagar" where there is no proper arrangement of medicine, hospital and clinics people h ave to go to other cities for treatments and many of them expires in the way so we started the Free Hospital to help those people. 21

Global Marketing project Hospital: Round the clock active care Patients are frequently and timely visited throughou t the day by the medical staff, and through the night too if needed. Hospital ma nagement The staff works by a system which has been by professionals to prevent error and provide the best of care and satisfaction possible. We try harder ever y day, and every small incident of mismanagement is taken seriously. The smalles t of complaints are also taken care of with top priority. Our aim is that each p atient should be catered to like a family member and not taken as a routine clie nt. Night Duty The night staff is not allowed to sleep and is compensated for th e full 12 hours of the duty. The medical staff is highly paid to provide them an incentive to stay at Hospital. They are also given bonuses based on their indiv idual performances every month. 22

Global Marketing project SWOT ANALYSIS . AFC has the privilege of being the only fast food hotel boasting of national qua lity standards until recently, till the arrival of new fast foods in Pakistan. I t has been exploiting its strengths and opportunities quite efficiently and has always tried to turn the weaknesses and opportunities in its favor. An analysis of its strengths, weaknesses, opportunities and threats as perceived by us is as follows: Strengths: o o o o Convenient location. Hospitable treatment to customers High quality food . Low price food as compared to other fast foods. Weaknesses: o Lower motivation o Lack of training. o Lack of performance oriented promotions . o National level /Limited customers 23

Global Marketing project Opportunities: o More incentives for outstanding staff to retain them as it is difficult to fin d well trained staff. o Specialty restaurant should be introduced to give a wide r variety of services. Threats: o New restaurants in Islamabad providing comfort to the people with a traditiona l outlook. o Fast foods like McDonalds and KFC there is lot of competition prevai ling in market regarding this business. 24

Global Marketing project Statistical Analysis . We have distributed 150 questionnaires to the public among them 50 were being di stributed in our institute while remaining 100 were distributed in residential a reas of Rawalpindi and Islamabad. The result is a below along with graphs. 1. McDonald has more taste than AFC. Strongly agree Neutral Disagree agree 97% 2 % 1% 0 Strongly Disagree 0 97% ` 0% Strongly agree agree neutral Disagree Strongly Disagree 0% 1% 2% 25

Global Marketing project 2. McDonald has good quality food than AFC Strongly agree Neutral Disagree agree 98% 2% 0 0 Strongly Disagree 0 98% ` 0% Strongly agree agree neutral Disagree Strongly Disagree 0% 2% 0% 26

Global Marketing project 3. McDonald has more meals than AFC according to customer needs. Strongly agree 99% agree 0 neutral 1% Disagree 0 Strongly Disagree 0 99% 0% 0% 0% 1% ` Strongly agree agree neutral Disagree Strongly Disagree 27

Global Marketing project 4. McDonald company has attractive brand name than AFC Strongly agree 96% agree 0 neutral 4% Disagree 0 Strongly Disagree 0 96% 0% ` 0% 0% Strongly agree agree neutral Disagree Strongly Disagree 4% 28

Global Marketing project 5. McDonald company charges reasonable prices than AFC. Strongly agree neutral D isagree Strongly agree Disagree 0 10% 0 80% 10% 10% 0% 10% 0% ` Strongly agree agree neutral Disagree Strongly Disagree 80% 29

Global Marketing project 6.McDonald company does not change the quality of product with change in price a s compared to AFC. Strongly agree neutral Disagree Strongly agree Disagree 92% 0 0 8% 0 92% ` 0% 0% 0% 8% Strongly agree agree neutral Disagree Strongly Disagree 30

Global Marketing project 7. McDonald company provides more incentives and sponsorship for customer than A FC Strongly agree neutral Disagree Strongly agree Disagree 0 30% 5% 65% 0 65% 0% 0% ` 30% Strongly agree agree neutral Disagree Strongly Disagree 5% 31

Global Marketing project 8. McDonald company has more sale discounts/sales offers as compared to AFC. Str ongly agree neutral Disagree Strongly agree Disagree 0 1% 8% 91% 0% 91% ` 1% 8% 0% 0% Strongly agree agree neutral Disagree Strongly Disagree 32

Global Marketing project 9.McDonald company has more creative advertisement than AFC. Strongly agree neut ral Disagree Strongly agree Disagree 94% 6% 0 0 0 94% 0% ` 0% 0% 6% Strongly agree agree neutral Disagree Strongly Disagree 33

Global Marketing project 10.McDonald company advertises more on media than AFC. Strongly agree neutral Di sagree Strongly agree Disagree 0 0 80% 20% 0 80% 0% 0% 0% ` 20% Strongly agree agree neutral Disagree Strongly Disagree 34

Global Marketing project 11. McDonald have more attractive packaging than AFC. Strongly agree neutral Dis agree Strongly agree Disagree 90% 10% 0 0 0 90% ` 0% 0% 10% Strongly agree agree neutral Disagree Strongly Disagree 0% 35

Global Marketing project 12. McDonald company have more market share as compared to AFC. Strongly agree n eutral Disagree Strongly agree Disagree 70% 0 30% 0 0 70% ` 0% 0% 0% 30% Strongly agree agree neutral Disagree Strongly Disagree 36

Global Marketing project 13. McDonald are easily available in market as compared to AFC. Strongly agree n eutral Disagree Strongly agree Disagree 33% 67% 0 0 0 67% ` 0% 33% 0% 0% Strongly agree agree neutral Disagree Strongly Disagree 37

Global Marketing project 14. McDonald distributors work well as compared to AFC. Strongly agree neutral Di sagree Strongly agree Disagree 95% 5% 0 0 0 95% 0% ` 0% 0% Strongly agree agree neutral Disagree Strongly Disagree 5% 38

Global Marketing project 15. Do you think AFC will be completely out of market in future? Strongly agree neutral Disagree Strongly agree Disagree 0 52% 8% 40% 0 8% 52% ` 40% 0% 0% Strongly agree agree neutral Disagree Strongly Disagree 39

Global Marketing project Analysis and Recommendations From the above survey conducted on two fast food restaurants one of them was loc al and the other was international, we have reached towards a conclusion that: . People mostly prefer international restaurants as it has good quality food, frie ndly environment and reasonable charges. From the above survey we do identify th at local fast food restaurant is far behind than international, reason behind th at it has low quality food and short menu. Although it offers relatively low pri ces and some discount offers but still it hasnt captured that market share as com pare to McDonald in Pakistan. McDonalds has variety of meals as compared to Afc. It provides large range of bu rgers, fries, international meals salads and ice cream. On the other hand Afc ha s limited variety of burgers and fries .According to our survey, public want lar ge variety of meals in every restaurant therefore they prefer McDonald over Afc. Customers usually prefer brand names when choosing any restaurant therefore McDo nalds is also enjoying its high market share due to brand name in Pakistan. 40

Global Marketing project It is a very common practice that quality of product diminish with a decrease in the price but according to our survey 92% of the public confided that McDonald has never compromised on their quality even though when it has decreased its pri ces. Our result shows that people are more satisfied with the discounts and promotion s offered by afc. Another tool for capturing the market is attractive advertiseme nts and McDonalds is also given preference by customers due to its advertisements as compare to Afc. McDonalds is easily available all over Pakistan. It has opened numerous branches as compare to Afc. Afc has limited no. of branches in Pakistan therefore easy a nd quick access is also a major factor of preference of McDonalds over Afc. Afc is successfully fulfilling customer demand but it cannot compete McDonalds t herefore heavy investment is still needed by Afc to stay in market otherwise it might be out of market in near future. 41

Global Marketing project References www.google.com www.afc.com.pk www.mcdonalds.com 42