5. Porter’s Five Competitive Forces
Entrants - Low/Moderate- Brand awareness
and lower cost competitive advantage.
Require time and large capital Investment
Rivalry – High- Burger King, Wendy’s, J.B.,
are heavy competitors
Power of Suppliers – Low- Most have the
purchasing power to negotiate lower prices
6. Porter’s Five Competitive Forces
Competitive Force - Threat/Power- Prices and
product offering are the main sources of competition
Substitutes- Low/Moderate- Trends show
consumers prefer healthier and more exotic
alternatives
Buying power -Most players have a lower cost
competitive advantage. Top players also achieve
economies of scale via this
7. Rivalry among Existing Competitors
Intense rivalry and competition market share
among existing fast-food competitors
Slowing growth rate of sales
To attract customers….
- increase advertising
- price discount
- offer new product
8. Threat of New Entrants
Economies of scale force new entrants
to enter at a cost disadvantage
Require higher fixed costs to enter
existing market
Have strong customer loyalty
Willing to defend new entrants with price
discounting and advertising
9. Threat of Substitute Products
There are….
- numerous restaurants and other eating
alternatives
- a variety of high-quality, reasonably
priced eating alternatives
Customer switching costs are low
12. McDonald’s History
In 1955 Milkshake-Machine Salesman Ray
Kroc took out a franchise on a hamburger
store owned by two McDonald brothers.
Today McDonald’s is the largest fast food
operator in the world.
50 Million customers every day, 12000
Restaurants in the USA, and 30,000
Worldwide in 119 countries
The chain has grown by one new outlet every
17 hours in the last decade.
13. Marketing Strategy
Global Brand Awareness ‘Golden
Arches”
Marketing Alliances
Global Sponsorship
Alignment with country-level marketing
activities
Focused on its customers
15. Subsidiaries
Boston Market
Chipotle Mexican Grill
Donatos Pizzeria Business
Note: in December 2003 McDonalds sold
Donatos Pizzeria Business
17. SWOT Analysis
Strengths
Financial Power- McDonald’s spends more on
advertising on a single brand than any other
organization. In 1986 a colossal $789m, or 6.3% of
system wide sales, went to advertising. It is one of
the five largest television advertisers in the US, with
children as its prime target. After Santa Claus,
Ronald McDonald is the figure best known to US
Children.
Recipe for Success- McDonalds revolutionized the
fast food Industry. They introduced a new production
process that lowered labor costs.
18. SWOT Analysis
Weaknesses/Opportunities/Threats
Weakness-It is possible that a company can become
so large it saturates the market.
Opportunities- Because of its financial power
McDonalds could move into to other
industries/products at any time.
Threats- Competitors, Suppliers, Workers Unions,
Attacks of health campaigns, and Environment.
20. BK Background
Founded in 1954
Second Largest Fast Food Chain Worldwide
Global operations of the $11.3 billion company
BURGER KING® restaurants serve approximately 1,072
customers per restaurant, per day, or approximately 11.8
million customers daily worldwide
The BURGER KING® system employs more than 300,000
people system wide
21.
22. Fascinating BK Facts
Today, Burger King operates the #2 hamburger chain
(behind McDonald's) with more than 11,200
restaurants across the US and in about 55 other
countries
Since its founding in 1955, BURGER KING® has
sold well over 2.1 billion hamburgers annually
23. BK Brand Strategy
Brand image
• Masculine oriented (Burger ‘King’ – not Burger Queen)
• ‘‘King’: The larger size than the average burger
Food
• Great-taste
• High quality
• Fun
• Value
• Portability
Slogan: ‘Have it your way’
• Customized
• Customer-oriented
• Differentiation from other fast-food competitors
24. BK Marketing Mix Strategy
Product (Whopper)
Price (Compare with McDonald,
Wendy’s, Yum! and Subway)
Promotion (Stick with the jumbo size
burger – the opposite force against the
recent trend of Low Carb)
Place(Distribution)
25. BK Marketing Mix-Product
Whopper Sandwich
Fire Grilled Burgers
Chicken, Fish & Veggies
Salads
Breakfast
Treats
Sides & Beverages
Kids Menu
26. BK Marketing Mix-Price
Price Range
- $4 - $8 for a value meal
The value meal for breakfast
- For example, suggested Enormous Omelet
Sandwich retail price: $2.99, or $3.49
27. BK Marketing Mix-Promotion
Advertising Slogan (2004-present) “Have it your way”
Star Wars deal
- The fast-food chain's first global promotion
Burger King Offering Low Carb
- Allow substitutions of french fries with salads and bottled
water for soft drinks
A Big Breakfast at Burger King
- Debuts Enormous Omelet Sandwich
28. Burger King Target Audience
Customer with the sophisticated taste but still
need fast food service
Middle class household with the discretionary
income
Family with kids
29. Financial Picture
Private company – hard to obtain
numbers
11,200 restaurants
2004 sales 13 billion
2004 sales growth 18.2
30. Burger King Largest Franchises
AAFES
AmeriKing
Aramark
C&L
Carrolls Corp #1
franchise
Cimm's
Compass
Deignan-Kauffman
HMS Host
Nath
Quality Dining
Sodexho-Marriott
Sydran
TA Operating Group
Veterans Canteen
Westwind
31.
32. Exclusive Supplier
Restaurant Services, Inc. (RSI)
Cooperative serving BURGER KING®
restaurant owners in the United States.
Founded in 1991
Purchasing agent for U. S. Burger King
system.
33. SWOT Analysis
Strengths
Global Brand Equity
The second largest fast food chain (18.8% of US
fast-food hamburger business)
Successful items: WHOPPER® Sandwich
More than 55 Global market operations
Customized Fast Food service
Real Estate investment (pursuit of the best
location in town)
Financial support from the parent company
(Texas Pacific Group)
34. Strengths
2nd Largest burger chain
Brand recognition and recall
Over 11,000 locations worldwide
WHOPPER has highest brand recognition
Economy of scale provides buying power
Unique product to differentiate product (flame
broiled).
Customization allows customer to “have it your
way”
35. Weaknesses
Declining market share
Self-restricted the diversification of
product development because of
stickiness to strong ‘Burger King’ brand
image
Weak product development
Slowed revenue and income growth
36. Weakness
We are in a “Burger Slump”
BK has no other business segment
Ameriking , 2nd
largest franchise filed for Chapter 11
“Revolving” door in corporate board room, 10 CEOs in 14 years
High franchise rate makes BK vulnerable to multiple disparate
policies
Failure to introduce new brand lines
3 of 10 largest franchises are in chapter 11
Lackluster marketing
37. International expansion
Only serving 1% of the world’s
population (Potential growth in
China & India with new product
development)
Growing dining-out market
Opportunities
38. Opportunities
Consumers have positive perception of
brand.
Take advantage of healthy eating trend.
Consider new brands and franchises.
Reduce cost of entry for BK franchise
Expand in Asia market
Reduce underperforming outlets
39. Mature industry
Fiercely competitive environment
• With other franchises (McDonald)
• With the local competitor
Growing health-conscious consumers (Low Carb Trend)
• The social issue of McDonald’s ‘Supersize me’
Changing demographics (Rapid transition into the aging
society)
Vulnerability to the fluctuation of foreign exchange rates from
expanding global operations
Unreliability of supplier for the recent cow-related disease
(i.e. Mad Cow Disease)
THREATS
40. BK Marketing Mix-Place
AmeriServe Food Distribution
- It plans an orderly transition of distribution services
- Approximately 5,800 Burger King restaurants currently
served
H & H Foods
- Supply South Texas-area Burger King ® restaurants with
beef patties
Restaurant Services, Inc. (RSI)
- The exclusive purchasing agent for the vast majority of
products and services used by BURGER KING®
restaurant owners in the United States and is manager of
the system's supply chain.
41.
42. Bibliography
Corporate Information
http://proquest.umi.com/pqdweb?
index=0&did=168203801&SrchMode=1&sid=1&Fmt=3&VInst=PROD&VType=PQD&RQT=30
9&VName=PQD&TS=1126476479&clientId=30358
Franchise list http://www.prnewswire.com/cgi-bin/stories.pl?
ACCT=105&STORY=/www/story/11-12-2002/0001839842
Marketing Strategy http://proquest.umi.com/pqdweb?
index=3&did=818659331&SrchMode=1&sid=1&Fmt=4&VInst=PROD&VType=PQD&RQT=30
9&VName
=PQD&TS=1126477227&clientId=30358
SWOT http://search.epnet.com/login.aspx?direct=true&db=buh&an=16823714
Corporate Info
- http://www.bk.com/CompanyInfo/index.aspx
Sonics Annual Report (2004)
- http://www.sonicdrivein.com/pdfs/annualReports/04_12annualReport.pdf
Financial Info
- http://www.hoovers.com/burger-king/--ID__54531,ticker__--/free-co-fin-factsheet.xhtml
43. SONIC DRIVE-IN
Sonic, America’s drive-in, originally Top Hat drive-
in,started as a hamburger and root beer stand in
1953.
Sonic is the largest chain of drive-in restaurants in
the United States and Mexico, with more than 1
million customers a day
Sonic has 3000 drive-ins coast to coast
44. Sonic
Marketing strategy
Multi-layered growth strategy, targeting
earnings per share of approximately 20%
for the year ending September 2005.
• Addition of drive-ins
• Increasing media expenditure to boost brand
awareness
• Accelerating franchise development and
ascending royalty rate
45. Sonic
Marketing strategy
Highly differentiated concept, through
personalized carhop service, and a
variety of menu choices.
Accelerated Expansion program
• Opening 167 new franchises in 2004
• Opening 188 new drive-ins in 2004
• Planning to open 185 drive-ins in 2005
46. Sonic
Marketing strategy
Solid Sales Trends
• Sales increase of 13% in 2004, and 6.5%
same store sales
• Sales increase of 18% in 2005, and 6.8%
same store sales
47. Sonic
Marketing strategy
Solid Financial performance
• Revenues rose 20% to $536 million 2004 and
18% in the first nine months of 2005
• Net income per diluted share rose 19% in
2004 and is up to 21% the first nine months of
2005
• ROE has exceeded 20% for five consecutive
years.
49. Sonic
Strengths
Carhop Service: many customers enjoy
the personal carhop who delivers the
order to the car with a free mint
Overall Good Company: Listed for the
10th
consecutive year by Forbes
magazine to be one of the “ 200 best
small companies in America”
50. Sonic Strengths
Multi-layered growth strategy:
• Listed at number 50 for percentage increase in
sales on the top 50 Growth chains list( Restaurant
Business, July 2003)
• Ranked number 80 on the Hot Growth Companies
list ( Business Week, June 2003)
Good Franchise: Listed in the top 10 on Entrepreneur
magazine’s “Franchise 500 list” (January 2003)
Great Sales Records: Increase of 13% in 2004 , and
18% in the first 9 months of 2005.
Continuously increased revenue ( chart 1)
51.
52. Sonic
Strengths
Menu
• Unique menu items that include Toaster Sandwiches,
extra- long cheese coneys, hand battered onion rings,
and a variety of drinks and deserts
• Quality Burgers: named one of the top three in the
Best Overall burger QSR category for seven
consecutive years( Restaurants & Institutions Annual
Choice in Chains Awards, March 2003)
• Cream pie shake distinguished as most appealing and
unique beverage in its category and receives “Best in
Class” award ( Restaurant Business, May 2001)
53. Sonic
Weaknesses
International Presence: Except for 7 drive-ins in Mexico,
Sonic Does not have a well established international
market
Brand awareness: although Sonic has a differentiated
service that is the carhop, and a quality burger, it is still
not viewed as the leader in the fast food industry.
Cost of the international franchise: To get a Sonic
international franchise, the investor must have $3.5 million
in assets and $2.5 million in cash which could hinder the
development of new franchises abroad
55. Sonic Threats
Obesity awareness: this will push sonic to include light
meals
Gas prices: the rise of gas prices will increase the
prices of sonic
Hurricane Katrina will have negative impact on the
Sonic Franchises since Louisiana and Mississippi are
two core markets for Sonic. 60 restaurants in Louisiana,
Mississippi and Alabama were damaged by Katrina.
Mad Cow disease: This may eventually lead to
customers shifting to other fast foods alternatives
56. Sonic
Revenue
Revenue for the fiscal year ended August 31,2004
Revenue for the nine months ended May 31,2005
Projected revenue for the year ended August 31, 2005
$280,056 $280,056
$330,638
$446,640
$536,446
$442,493
$589,990
$32,627 $32,627 $38,956 $52,261 $63,015 $51,341 $68,454
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
2000 2000 2001 2003 2004 2005 projected
2005
Total Revenues
NetIncome
57. Sonic
Drive-in Sales
Sales for the fiscal year ended August 31,2004
Sales for the nine months ended May 31,2005
Projected sales for the year ended August 31, 2005
$224,880 $267,463 $330,707 $371,518 $499,551
$1,533,948$1,704,014
$1,874,562$1,988,842
$2,219,340
$1,777,235
$2,369,647
$449,585 $374,663
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
2000 2001 2002 2003 2004 2005 projected
2005
partner drive ins
franchise drive ins
58. Sonic
Porter’s Analysis
High rivalry among competitors
• Little product differentiation
• Low customer loyalty which leads customers
to shift easily to another fast food chain.
• High number of fast food restaurants.
59. Sonic
Porter’s Analysis
Low threat of new entrants
• Economies of scale. Sonic alone has 3000
drive ins which makes the cost of
manufacturing low, and thus giving it a
competitive advantage
• High Capital requirement ( equipment and
training)
• Service differentiation through carhops
60. Sonic
Porter’s Analysis
Low bargaining power of supplier
• Cost of shifting suppliers is low
• Substitute products are not an option because
beef is part of the burger
61.
62. Sonic
Porter’s Analysis
Threat of substitutes
• People can shift to a different fast food
Low bargaining power of buyer
• No buyer concentration
65. IMPORTANT DATES
Born in San Diego California 1.951 as a Pioneers in
the “Drive-Thru” serving system
Major expansion to 1000 restaurants in the Western
and Southwestern markets
They become a private owned company in 1988
1.992 went public with 17.2 million shares
1995 Great advertising campaign with expansion to
Southeastern markets until 2001
With a long-term goal of becoming a national
restaurant company, Jack in the Box entered the
fast-casual restaurant category in 2003
66. STRATEGY
Jack in the Box Inc., founded in 1951, is a
restaurant company that operates and
franchises Jack in the Box® restaurants and,
through a wholly owned subsidiary, Qdoba
Mexican Grill®.
The company also operates approximately 40
proprietary convenience stores called Quick
Stuff, which is a major-branded fuel station and
is usually developed adjacent to a full-size
Jack in the Box restaurant.
67. COMPANY STRATEGY…
Jack in the Box is among the nation's leading fast-food
hamburger chains, with more than 2,000 quick-serve
restaurants in 17 states. As the first major hamburger
chain to develop and expand the concept of drive-thru
dining.
Jack in the Box has always emphasized on-the-go
convenience, with approximately 85 percent of the half-
billion guests served annually buying food at the drive-
thru or for take-out. In addition to drive-thru windows,
most restaurants have indoor dining areas and are open
18-24 hours a day.
68. COMPANY STRATEGY…
Jack in the Box offers a broad selection of distinctive,
innovative products targeted at the adult fast-food
consumer, including hamburgers, specialty sandwiches,
salads and ice cream shakes. Hamburgers represent the
core of the menu, including the signature Jumbo Jack,
Sourdough Jack and Ultimate Cheeseburger. And,
because value is important to fast-food customers, the
company also offers value-priced products on "Jack's
Value Menu," including tacos, a chicken sandwich and
Breakfast Jack.
69. SUBSIDIARIES
Qdoba Mexican Grill, which was acquired by Jack in
the Box Inc. in January 2003, is an emerging leader
in fast-casual dining
Operates more than 230 restaurants in 35 states.
Qdoba is renowned for offering nouveau Mexican
cuisine
70. SWOT ANALYSIS
Strengths
The revenues of the company for the last four
years are continually growing
The company is also showing good profits
The company is remodeling 200 stores per
year
Offers higher quality customer service
71.
72. Weakness
The company has to spend an a higher
percentage of money in advertising,
assets, and strategic planning.
They do not have much presence in the
Southeast region which is a profitable
market.
73. OPPORTUNITIES
Since Jack in the Box is a very well
known company in the Southwest they
can always use this good-will in order to
attack other markets now that the
company is growing .
74. THREATS
The late increase in the meat and oil
prices
Changing consumer tastes & preferences
Large investments required to stay
competitive are eating away at profit
margin
78. Yum! Brands, inc.
Yum! Brands inc. is the largest restaurant
company with more than 34,000 company,
franchise, license, and joint ventures, in
more than 100 counties.
.
79. Yum! Brands, inc.
Oct 1997 Pepsi co. owner of KFC, pizza
hut, and Taco bell formed a publicly
owned and independent company:
Tricon Global restaurants inc.( Yum!
Brands former name)
May 2002 the company acquired
Yorkshire Global restaurants, Inc. and
changed the name to Yum! Brands, inc.
80. Yum! Brands, inc.
Growth Strategies
Build dominant China brands
• China is the number one market for new
company development
• China division operating profits were more
than $200 million in 2004
Run great restaurants
• 100% CHAMPS culture restaurants
(Cleanliness, hospitality, Accuracy,
Maintenance, Product Quality and Speed)
81.
82. Yum! Brands, inc.
Growth Dtrategies
Multi-brand great brands
• Yum! Is the world leader in multi-branding,
offering consumers more choice by combining
two brands under one roof
• Yum! Owns 2900 multi-brand restaurants
Worldwide.
83. Yum! Brands, inc.
Growth strategies
Drive profitable international growth
• Yum! Restaurants International (YRI) owns
more than 11,000 restaurants outside the US
• YRI opened 700 restaurants every year for
the past 5 years. And in 2004 YRI opened 3
new restaurants each day of the year.
• In 2004 YRI revenues totaled $2.1 billion, and
operating profit reached $337 million
84. Yum! Brands, inc.
A & W Restaurants, inc.
Is based in Louisville, KY
Founded in 1919, serving all American
pure beef hamburger and hot dogs.
Owns 600 food outlets in 13 countries
and territories around the world and 600
points of distribution at Yum!
Multibramds restaurants.
85. Yum! Brands, inc.
KFC Corporation
Is the most popular chicken restaurants chain
Is based in Louisville, KY
Was founded in 1953 and specializing in
Original recipe, Extra Crispy, and Colonel’s
Crispy Strips with home style sides, BBQ
Wings, and Chicken sandwiches.
Owns 13000 outlets in more than 80 countries
86. Yum! Brands, inc.
Long John Silver’s, inc.
Is the world’s largest quick-service seafood
chain.
Is based in Louisville, KY
Was founded in 1969and specializing in
batter-dipped fish, chicken, shrimp, and
hush-puppies.
Owns 1200 restaurants worldwide, and 200
additional points of distribution in multi-brand
restaurants
87. Yum! Brands, inc
Pizza Hut Inc.
Is the World’s largest pizza restaurant
company
Is based in Dallas, TX
Specializes in pan pizza, thin n crispy pizza,
hand tossed style pizza, and stuffed crust
pizza
Owns 7500 restaurants in the USA, and more
than 4500 restaurants in over 80 countries
88. Yum! Brands, inc
Taco Bell Corp.
Is the nation’s leading Mexican-style
quick service restaurant
Specializes in Tacos, burritos,
quesadillas, border bowls, and nachos
Owns 6000 restaurants in the USA and
serves 35 million people.
89. Yum! Brands, inc.
Corporate Responsibility
Community involvement
• Yum! Brands foundation corporate sponsor of
dare to care program to end hunger
• YUMeals program to end hunger in the USA
• Pizza Hut book it program to help develop
reading interest for children
• KFC colonel kids charity to provide nationwide
access to childcare
• Taco bell teen programs
90. Yum! Brands, inc.
Corporate Responsibility
Diversity
• For the past two years, Yum! Has been
recognized in Fortune magazine’s top 50 “
Best Companies for Minorities”
• Yum! Has been recognized in Black
Enterprise magazine as one of the 30 best
companies in diversity