Economic downturn, leading to lower consumer spending
2 opinions in relation to the future growth
Fast food restaurants become alternatives to full service restaurants because they are cheaper
Senior trends manager for TRU says
"I wouldn't expect people are going to stop going to fast-food restaurants," he says. "They will curtail it to a degree, but teens and twenty-somethings are already going to fast-food restaurants quite a lot. You're going to see minimizing across the board."
Two of the four top categories young people plan to spend less on are eating out, while 51 percent plan to spend less on snacks.
Changes in lifestyle such as divorce, late marriages, an increase in single-parent households, homes with two working parents, an aging population, increased hours spent working, and an increase in commuting time are driving more consumers into the restaurants.
Though the company operates in 65 countries, its operations are heavily concentrated in the US and Canada. About 65% of its restaurants are located in the US and Canada
Concentration of operations in one geographic area increases company's exposure to local factors such as adverse economic situation, labor strikes and changes in regulations that can affect its operations.
Scattered Marketing Campaign
Fail to efficiently promote products, because they are too busy trying to promote “The King” character
The company's competition in the broadest perspective includes restaurants, quick service eating establishments, pizza parlors, coffee shops, street vendors, convenience food stores, delicatessens and supermarkets.
Expiry of Franchise Agreements
Of the 409 agreements that expired in fiscal 2006, only 47% were renewed and 28% were extended for similar periods.
Acrylamide in French fries
Acrylamide has been shown to cause cancer in some studies in experimental animals although further studies are underway to better understand the significance of these results in relation to human health.
Limited control of daily operations (cleanliness, culture, etc.)
Generally less profitable
32% of profit came from company owned restaurants
¼ as profitable
Break Even Analysis of Conversion Process Cost of Repurchase 650,000 Revenue of Franchise (yr) 52,621.26 Revenue of Company owned 220,480.2 Difference in cash flows 167,858.9 Break Even (years) 3.8723
“We believe that our restaurant ownership mix provides us with a strategic advantage because the capital required to grow and maintain the Burger King» system is funded primarily by franchisees, while still giving us a sizeable base of Company restaurants to demonstrate credibility with franchisees in launching new initiatives.”