Quick Service Restaurant Industry Analysis

Date: September 25, 2016
Senior Partners
Copeland Associates
Athens, OH 45701
To: Senior Partners
Vic Matta
Theo Muir
Andrew Pueschel
Lee Wakeman
From: Team 4
Shaun Bentkowski
Kelsey Kinner
Robert Lambert
Jack Martin
Erin Pursinger
Dear Senior Partners,
Subject: Analysis for the Industry, Key Competitors and Key Success Factors for the Quick-
Service Restaurant Industry
As requested by the Senior Partners of the Copeland Associates Business Cluster, our team has
analyzed the Quick-Service Restaurant Industry and identified the key success factors and key
competitors. We have prepared a report that contains an analysis of the industry, identifies the key
success factors in this industry, and the top three competitors and we have completed a Porter’s
and PESTLE analysis. We analyze the industry by breaking it down into the macro/micro
environments and we identify the company that we believe is best positioned for future success
based on our key success factor scoring matrix.
Our report will contain the following criteria:
• External Analysis of the Quick-Service Restaurant Industry
• Key Competitors
• Key Success Factors
• Key Success Factor Scoring Matrix
• Porter’s and PESTLE Analysis
Sincerely,
Team 4

Quick-Service Restaurant industry:
Analysis of Key Competitors and Key
Success Factors
Prepared For:
Vic Matta, Theo Muir,
Andrew Pueschel, Lee Wakeman
Jack MartinErin Pursinger
Kelsey Kinner Shaun Bentkowski
Rob Lambert
PM007 Team 4

Executive Summary
The quick-service restaurant industry has been trying to overcome a recession in the United States, but
has been thriving in other parts of the world.
Key Success Factors
Companies in the quick-service industry need to have a main focus when operating their businesses to
maintain positive growth. Even though the industry is always changing, there are key success factors that
each company must adhere to if they want to be successful in the quick-service industry. The three key
success factors that are discussed in this report are:
1. Marketing/Brand Recognition – Marketing and brand recognition go together because in order to
build a brand you need to be successfully marketing your company to do so. Companies in the quick-
service industry need to build strong brands that are incorporating the popular trends that consumers
are looking for in this industry to be successful.
1. Location – One of the main reasons why the quick-service industry exists is to provide convenient and
affordable food to as many people as possible. This can only be achieved if the restaurants are
located in the most convenient locations, where there is a lot of traffic, to ensure that the restaurants
are able to serve as many customers as possible every day.
1. Adaptation – If restaurants in this industry are not able to adapt to the consumers changing needs,
then they will not be able to survive in this industry. By adapting to the consumer’s needs it allows
the restaurants to continue to maintain positive growth. This is because what people enjoy most
about this industry is the speed and convenience and consumers looking for the new trends will not
be lost if companies are able to adapt to give the consumers what they are looking for.
Through our research, we have determined that a company in the quick-service industry cannot be
successful unless it has all three of the key success factors.
Industry Analysis
This report also gives an in-depth look at the industry as a whole. By incorporating the Porter’s Five
Forces and a PESTLE analysis, we are able to give detailed information about the quick-service industry.

Table of Contents
Introduction…………………………………………………………………………………..……..…………………….…………………………………..6
Industry Analysis…………………………………………………………………………….………..………………………………………………….7-8
Key Competitor Analysis: McDonald’s…………………………………….…….………..………..…………………………………………….9
Key Competitor Analysis: Wendy’s………….…………………………………………………………………………………………………….10
Key Competitor Analysis: Yum! Brands….………………………………………………………………………………………………………11
Key Success Factor #1: Marketing/Brand Recognition……………………………..………………………………………………12-15
Key Success Factor #2: Location……………………………………………………………………………………………………………..…16-18
Key Success Factor #3: Adaptation……………………………………………………………………………………………………….…..19-20
Key Metrics…………………………………………………………………………………..……..…………………………………………………………21
Key Success Factors Scoring Matrix……………………………………………………………………………………………………………….22
Conclusion…………………………………………………………………………………..……..………………………………………………..………..23
Reference List…………………………………………………………………………………..……..………………………………………..………24-26
Appendix A: Porter’s Analysis……………………………………………………………………………………………………………..……27-30
Threat of New Entry…………………………………………………………………………….………..………………………………………….……28
Threat of Substitution…………………………………………………………………………………………………………………………………….29
Competitive Rivalry………………………………………………………………………………………………………………………………………..29
Supplier Power…………………………………………………………………………………..……..…………………………………………………..30
Buyer Power…………………………………………………………………………………..……..………………………………………………………30
Appendix B: PESTLE Analysis……………………………………………………………………………………………………………………31-34
Political…………………………………………………………………………………..……..……………………………………………………….…..…31
Economic…………………………………………………………………………………..……..………………………………………………….………..31
Technology…………………………………………………………………………………..……..………………………………………………………...32
Environmental…………………………………………………………………………………..……..………………………………………………..…..32
Social…………………………………………………………………………………..……..……………………………………………………….…………33
Legal…………………………………………………………………………………..……..………………………………………………………….……….34
Appendix C: Business Model Canvas……………………………………………………………..…………………......…………………35-37
McDonalds………………………………………………………………………………………………………………………………………..……………35
Wendy’s………………………………………………………………………………………………………………………………………………….……...36
Yum! Brands……………………………………………………………………………………………………………………………………………………37
IV

List of Figures
Figure 1…………………………………………………………………………………………………………………………………………………….7
Figure 2…………………………………………………………………………………………………………………………………………………….8
Figure 3…………………………………………………………………………………………………………………………………………………….8
Figure 4…………………………………………………………………………………………………………………………………………………….9
Figure 5………………………………………………………………………………………………………………………………………….……….10
Figure 6…………………………………………………………………………………………………………………………………………………..11
Figure 7………………………………………………………………………………………………………………………………………………..…12
Figure 8………………………………………………………………………………………………………………………………………………..…14
Figure 9…………………………………………………………………………………………………………………………………………………..14
Figure 10…………………………………………………………………………………………………………………………………………………15
Figure 11…………………………………………………………………………………………………………………………………………………16
Figure 12…………………………………………………………………………………………………………………………………………………16
Figure 13…………………………………………………………………………………………………………………………………………………17
Figure 14.......................................................................................................................................................18
Figure 15.......................................................................................................................................................19
Figure 16…………………………………………………………………………………………………………………………………………..…….20
Figure 17…………………………………………………………………………………………………………………………………………………21
Figure 18…………………………………………………………………………………………………………………………………………………28
Figure 19 ………………………………………………………………………………………………………………………………………………..31
Figure 20 ………………………………………………………………………………………………………………………………………………..32
Figure 21 ………………………………………………………………………………………………………………………………………………..33
Figure 22 ………………………………………………………………………………………………………………………………………………..34

Introduction
The purpose of this business report is to analyze the Quick-Service Restaurant Industry and determine the
key success factors and the top 3 competitors in the industry that meet those factors. Through our
research, we have determined all the factors that are required to have a successful Quick-Service
Restaurant. We have broken down the Quick-Service Industry into two categories, Fast-Food and Fast-
Casual. The majority of the industry is dominated by fast-food restaurants which make up 90% of the
industry, while the fast-casual restaurants only make up 10%, so this report will be slightly more focused
on the fast-food restaurants. It is important to include the fast-casual restaurants in this report, because
you will see that most fast-food restaurants are adopting a lot of the fast-casual experience without losing
any of the speed and convenience that the fast-food industry is known for. From analyzing the industry and
our research we have concluded that these three factors are essential for success in the Quick-Service
Industry; marketing/brand recognition, location, and adaptation.
Key Success
Factors
Marketing/Brand
Recognition
Location Adaptation
Marketing/Brand Recognition is a key success factor because they are used together to create a global
brand that is universally liked and respected.
Location is an important factor because without having an optimal and convenient location that has a
high volume of consumers, it is difficult for a Quick-Service restaurant to be profitable with how cheap
their food is sold for.
Adapting to the market is required for companies in this industry because if they are not able to adapt to
trends, then they will not be able to maintain positive growth.
The research we have gathered in this report will further explain why these 3 factors are essential to
having a successful restaurant in the Quick-Service Industry. Also, we will give an in-depth industry
analysis, so you can understand the Quick-Service industry from a macro and micro perspective.
From this analysis we found that the top three competitors in this industry are McDonald’s, Yum!
Brands, and Wendy’s. We will discuss how they are meeting these success factors and ultimately
decide which is best set for the future.
Intro Analysis KC #1 KC #2 KC #3 KSF #1 KSF #2 KSF#3
Metrics Matrix Conclusion
6

Industry Analysis
The fast food industry is starting to see a much
higher demand to become healthier and more
environmentally friendly. This has challenged big
players in the industry to find new ways to be
healthy while still getting the profit they require.
• Consumers realized they should be much more
health conscious after a strong connection
between fast food and childhood obesity was
found. Increasing health consciousness is a threat
to the fast food industry because they rely on
making greasy, cheap fast foods that will give
them the best bang for their buck.
• Companies, along with being health conscious,
have to work with the environment
more. Consumers want to be environmentally
friendly, so to combat this, firms like McDonald's
are moving 100% of their fiber based packaging
to recycled material by 2020 in an effort to
appeal to this new demographic (McDonalds,
2015).
Businesses in the Quick Service Restaurant industry
are always looking for new innovative technology
that can give them an edge over the
competitor. Online ordering has been growing
steadily for years, but with the use of new mobile
applications and other payment platforms, this
trend is accelerating.
• Kiosks that can bypass the need for a cashier has
become an increasingly popular trend
throughout the industry saving restaurants time
and money while also allowing the customer to
personalize their meal.
• There is also a growing trend in consumers using
online or mobile payments to make their fast
food purchases. During 2013-2015, China had a
large growth of 284%, with an absolute value
increase of 18.8 billion, while PC purchases
declined by 21%. The United States experienced
a much less dramatic growth in mobile purchases
of 98% and PC purchases increased by 42%
(Euromonitor International, 2015).
Source: Euromonitor International, 2015
7
Figure 1

Industry Analysis (cont.)
In the QSR industry, the Americas and Asia house about
83% of the global market.
We decided that fast casual restaurants such as Panera
Bread and Chipotle Mexican Grill are apart of the QSR
industry even though it makes up only 10% of the
market. Chipotle holds the leading market share of fast
casual restaurants while McDonald’s holds about 17%
of the market in the U.S.
Almost 60% of the United States market share in the
QSR industry is held by other low level fast food
restaurants that do not classify as a big player in the
industry (Statista, 2015).
Firms who hold only a market share in the U.S are
attempting to globalize their business to expand to
growing economies that will slow their movement
towards the maturity stage in the industry lifecycle.
Source: Marketline, 2011
A micro analysis of the quick service restaurant
industry reveals:
• Highly Competitive
• Moderate Threat of New Entry
• Buyers have the power
• Many Substitutes
• Suppliers lack power
Source: Statista, 2015
With over 200,000 fast food restaurants in the quick
service restaurant industry, making the competition
fierce among competitors. When firms experience
an ongoing trend of slowed growth, they are
gradually moving closer to reaching the maturity
stage of the industry lifecycle.
The moderate threat of new entry in the QSR
industry can be attributed to many factors, but the
most important of which is big players advantage of
economies of scale.
Suppliers show a trend of having weak power
because firms have so many options to pick from.
However, some companies, like Chipotle, use less for
more quality. Firms try to combat their many
substitutes by making their service the most
convenient food option for a great price.
44%
39%
15%
2%
A ME RIC A S A S IA - P A C IF IC E UROP E MIDDLE
E A S T /A F RIC A
GEOGRAPHIC SEGMENTATION
8
Figure 2
Figure 3

Key Competitor Analysis:
McDonald’s
Key Partners:
• Kraft (McCafe supplier)
• Angry Birds (Toys & Advertisements)
• Nintendo/Pokemon GO (3,000 Japan
locations are gyms)
• Coca-Cola
• Social Media Partners
Management Team
In 2015, the Company and its Board of Directors
took steps to reset its business and restore
growth, which included the election of a new CEO
in the first quarter. In May, management
announced the initial steps of the Company’s
turnaround plan, beginning with a worldwide
restructuring in July. This resulted in a
reorganization from a geographically-focused
structure to segments that combine markets with
similar characteristics and opportunities for
growth. Management expects the new structure
to enable faster decision-making and an increased
ability to move proven initiates quickly across
markets (McDonald’s 10-k, 2015).
International Strategy
McDonald’s has over 36,000 restaurants
worldwide and operates in over 100 countries.
Those two numbers alone prove that McDonald’s
has a sound international strategy. McDonalds
dominates the franchise business model with over
80% of restaurants owned by franchisees.
McDonald’s model has become the norm for
other franchise organizations. McDonald’s
restaurants can be grouped according to how the
market reacts and preforms. International Lead
Markets are established markets including
Australia, Canada, France, Germany, the U.K. and
related markets. High Growth Markets are
markets believed to have relatively higher
restaurant expansion and franchising potential
including China, Italy, Korea, Poland, Russia, Spain,
Switzerland, the Netherlands and related markets.
Foundational Markets & Corporate are the
remaining markets in the McDonald's system,
each of which is believed to have the potential to
operate under a largely franchised model
(Statista, 2016).
9
Figure 4

Key Competitor Analysis: Wendy’s
Key Partners:
• Clarabridge(Text Analytics Software)
• Coca-Cola
• Stubhub(Digital Coupon Campaign)
Management Team
Beginning in 2015, Wendy’s elevated multiple
people into bigger leadership roles. Todd Penegor
was promoted to Executive Vice President and
Chief Financial Officer and Bob Wright was also
been promoted to Chief Operations Officer.
Wendy’s has the highest confidence that Todd and
Bob’s new elevated leadership roles will spur even
greater growth and performance. Management is
focusing on its commitment to restaurant
development and consumer-facing technology as
growth engines for the brand. In May 2016,
Penegor was promoted to Chief Executive Officer
and Gunther Plosch took over as Chief financial
Officer. Wendy’s executive team is a relatively
young group of people that the board of directors
hope will speed up decision making and further
their growth in the industry (Wendys, 2016).
Wendy’s has over 6,500 restaurants in 30
countries worldwide. The Wendy’s team believes
that earnings generated from the international
market will be a significant component of ability
to generate long term value for stockholders. In
2015, there were 5,722 Wendy’s restaurants in
the United States and an additional
757 restaurants around the world; the majority of
which are located in Puerto Rico, the Philippines
and Indonesia. Puerto Rico houses 78 Wendy’s
while Indonesia has 45 and the Philippines have
42 respectively. (Statista, 2015) Although
Wendy’s was expecting to grow into the Chinese
market by 2015 there still has been no sign of
their expansion but are still exploring their
options. Just over 90% of Wendy’s restaurants are
franchised and they hope to keep increasing that
number in the future. Wendy’s recently entered
into a definitive agreement to acquire 100% of the
equity of First Kitchen Ltd. Which involves 136
restaurants. Wendy’s First Kitchen is a hybrid
concept; offering both great-tasting, high quality
hamburgers and chicken sandwiches, plus pasta
and other First Kitchen favorites.
5,133 5,374 5,558 5,847
1,427 1,183 957 632
2012 2013 2014 2015
NUMBER OF WENDY'S RESTAURANTS WORLDWIDE 2012 -2015, BY MODE OF
OPERATION
Franchised Company-owned
10Figure 5

Key Competitor Analysis:
Yum! Brands
Key Partners:
• Pepsico
• Frito Lays
• Cinnabon
Management Team
As of May, 2016, Yum! Brands announced their
Chief Executive Officer of Pizza Hut, David Gibbs,
would be promoted to Chief Financial Officer of
Yum! With Gibbs assuming responsibility for
Yum’s global finances, Yum! ensures a smooth
transition of executive leadership in advance of
the Company’s separation into two publicly traded
companies- Yum! Brands and Yum! China-by the
end of this year. Yum! has an interesting dynamic
in their management team that Wendy’s and
McDonald’s do not have, since Yum! is a parent
company of multiple restaurants, as well as a
separate China company, they have more levels of
management before you make it to the Board of
Directors. Yum! Brands management sees a
significant potential in expanding Taco Bell into
China. They hope to see Taco Bell take off in
China from the decades of accumulated customer
loyalty and world-class operations like KFC and
Pizza Hut (Yum, 2016).
Yum! Brands is one of worlds largest companies
with nearly 43,000 restaurants in almost 140
countries and territories. After their spinoff with
Pepsico in 1997 Yum! Has become a truly global
company with approximately 20% of profits
coming from outside the U.S. to almost 65% in
2015. Yum! announced in October of 2015 that
it’s spinning off its China unit into a separate
publicly traded company. This was set in place
because of problems that Yum! Brands has
encountered such as food-safety scares and
strong competition. Yum! has done well
expanding internationally through KFC and Pizza
Hut but are attempting to further expand Taco
Bell. They found that Taco Bell is not as easy to
expand globally because outside the U.S, Mexican
fare is not as familiar as pizza and chicken.
However, Yum! states that they hope to open
1,000 international Taco bell locations by 2020
and 1,550 international restaurants by the end of
2023 (Bloomberg, 2015). Yum! Is dedicated to
reaching a goal of 96% of their restaurants owned
and operated by franchisees by the end of 2017.
Worldwide, Yum! Brands system opens over six
new restaurants per day on average, making it a
leader in global retail development (Business
Wire, 2016).
14,577 13,728
6,400
5,003
1,903
372
432
7
0
5000
10000
15000
20000
25000
Kentucky Fried Chicken Pizza Hut** Taco Bell
Numberofrestaurants
Number of Yum! Brands Restaurants Worldwide in 2015
United States and other China India
11
Figure 6

KSF 1: Marketing/Brand Recognition
Marketing and Brand Recognition are important for
the following reasons:
• The Quick-Service Restaurant Industry is
dominated by big brands like McDonald’s, KFC,
and Wendy’s and to maintain positive growth
these companies need to market effectively to
consumers, especially millennials.
• Companies in the fast-food industry are trying to
combat the reputation of serving unhealthy food
by changing their company image through
advertising campaigns focused on healthy eating.
• The Fast-Casual atmosphere is what the
millennials prefer over the typical fast-food
experience, so companies are changing décor,
menu items, and resurrecting old mascots to build
brands that millennials enjoy eating at.
Healthy Eating
Nearly all companies in the Quick-Service Industry are
creating brands that revolve around healthy menu
options and overall better quality of food. A great
example of this is McDonald’s campaign to show its
“brand evolution.” This was implemented in an attempt
to change their brand perception by convincing parents
that the Happy Meal is healthier than ever, having
reduced average salt content by 47.4% since 2003
(Roderick, 2016). Changing the unhealthy reputation of
fast-food is very important, especially among millennials
who are looking for cheap and healthy food.
Changing Décor/Experience
Again, in an attempt to cater to millennials and to mimic
the fast-casual atmosphere, fast-food restaurants are
changing their décor from the traditional fast-food look.
Taco Bell has implemented a concept called Taco Bell
Cantina, which has a completely different décor than
traditional taco bells, unique menu items, and even sells
alcohol (Bryant, 2016). Taco Bell is following what we
have seen from fast-food restaurants by updating their
interiors décor to be more modern and is taking it a step
further by implementing the sales of alcohol, which is
not typical in the Quick-Service Industry.
Fast-food restaurants are implementing these changes
to try to bring millennials back into their restaurants.
With fast-casual restaurants being visited 42% more and
fast-food being visited 20% less, it is very important to
cater to the millennials by changing the décor and
overall experience.
Source: Statista 2014
Appealing to Millennials
In order to understand why quick-service restaurants
are focusing on appealing to millennials, you need to
refer to Figure 7. As you can see, there has been a
decrease among millennials visiting fast-food
restaurants by 20% and an increase in their visitations
to fast-casual restaurants by 42%.
On this graph, you can clearly see the number of
millennials that are leaving the fast-food industry for
fast-casual is significantly larger than Generation X and
the Baby Boomers (Statista, 2014).
This means that companies in the Quick-service
restaurant industry need to cater to the needs of the
millennials because they are currently losing a large
amount of market share.
12
Figure 7
-18%
-11%
-20%
20%
11%
42%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
Baby Boomers Generation X Millennials
VisitationLevel
Fast-Food vs Fast-Casual Restaurant Visitation in the United
States 2014
Fast-Food Fast-Casual

Marketing/Brand Recognition(cont.)
Resurrecting Old Mascots
Another way that companies in the quick-service
restaurant industry are attempting to appeal to
millennials through branding is by resurrecting
their old mascots. Wendy’s introduced Red, a
redhead millennial used in commercials to appeal
to younger consumers, in 2014. In May of 2015,
McDonald’s brought back the Hamburglar and KFC
brought back The Colonel in an attempt to
resonate with consumers.. According to YouGov,
in the month following the implementation of the
old mascots, McDonald’s ad awareness increased
from 50 to 54 percent and KFC’s ad awareness
increased from 34 to 41 percent (Kneiszel, 2015).
Now this may not sound like that significant of an
increase, but in companies that are appealing to
millions of people any increase is extremely
beneficial to the brand because millions of more
people are reached.
McDonald’s Resurrection of Hamburglar
McDonald’s randomly reintroduced Hamburglar
after a 13 year hiatus in an attempt to keep
McDonald’s relevant and modern. This caused
social media to blow up with tweets, comments,
articles, and posts about the Hamburglar.
McDonald’s realizes that reintroducing the
Hamburglar out of complete random will probably
not cause people to run to the nearest
McDonald’s, but it does cause people to start
talking about the brand especially on social
media, which almost all millennials are extremely
active on. Getting people, especially millennials,
to talk about their brand is very important
because it causes a person start thinking about
McDonald’s again which could translate to more
visits to McDonald’s stores in the near future.
Colonel Sanders Brought Back to Life by KFC
KFC brought back Colonel Sanders after
abandoning him for 21 years, which was an
obvious response to McDonald’s resurrecting the
Hamburglar. Originally Darrell Hammond, from
Saturday Night Live, was chosen to be the colonel,
then Norm Macdonald, who is also from Saturday
Night Live, and the company finally settled on Jim
Gaffigan. Although the company keeps switching
the actor, KFC is attempting to rebrand its
companies to millennials by resurrecting The
Colonel, who is played by popular comedians. The
company hit a plateau in the United States, so it
needed to attempt something to get people
excited about KFC again and what better way to
get people talking about your brand than
resurrecting a loved mascot. They chose 3
separate comedians to play The Colonel in an
attempt to appeal to a younger audience, because
KFC understands that millennials are shaping the
entire quick-service industry’s decisions.
Wendy’s Introduces Red for Commercials
Unlike McDonald’s and KFC, Wendy’s did not have
to resurrect their mascot, Wendy, because she
technically never left. In a conference call in 2014
with the chief executive, Emily Brolick, she
introduced the Red character, who is a millennial
herself, for Wendy’s commercials to appeal to the
younger consumers (Lutz, 2014). Again, this was
done because Wendy’s understands how
important it is to appeal to the millennials and
having a twenty-eight year old play Red is a great
way for millennials to relate to her. Wendy’s also
gave their sign a make-over and removed the
phrase “Old-Fashioned Hamburgers,” because the
company now offers salads and other healthy
alternatives. Even though Wendy’s never had to
resurrect their mascot, they changed the
traditional Wendy’s sign and introduced Red in
commercials to make Wendy’s more appealing to
millennials which is exactly what McDonald’s, KFC,
and other companies in the QSR industry are
attempting.
13

Leaders in Quick-Service Restaurant Industry
Advertising and branding plays a giant role in the
quick-service industry. As you can see in the two
graphs below, the amount of advertising dollars
spent by a company in this industry directly
correlates to the amount of market share a
company is able to attain. The pie chart at the
bottom right of the page is limited to the United
States as a sample because Wendy’s has such
significant less international locations than
McDonald’s and Yum Brands. Obviously other
companies in this industry are spending millions
on advertising, but McDonald’s, Yum Brands, and
Wendy’s all are able to gain a competitive
advantage through how they advertise.
Value Proposition
After analyzing McDonald’s, Yum Brands, and
Wendy’s 10k financial reports, all three companies
are modeling their businesses to create as much
value as possible to the consumer. QSR
restaurants are able to gain competitive
advantage through having the healthiest and
freshest food ingredients, combo meals, and
obviously whichever is the cheapest price. The
way that companies are able to promote their
value proposition to the world is through their
advertising and branding.
McDonald’s
Not only is McDonald’s making the switch to
healthier ingredients to increase the value of their
products, it is also using combo meals to give the
consumer more bang for their buck. McDonald’s
introduced the McPick 2, which allowed the
consumer to pick two items from a list that cost
two dollars for the combo.
Yum Brands
Yum Brands recognize that consumers are looking
for the best value for their money, so they have
also been implementing their own combo deals.
Pizza Hut is offering a list of items that when you
purchase two or more cost five dollars each, Taco
Bell currently has a five dollar cravings deal which
allows consumers to pick four items and a drink,
and KFC currently is offering five dollar fill up
boxes that have a few combinations to pick from
as well.
Wendy’s
Just like the two leaders in the industry, Wendy’s
introduced its own combo meal, the 4 for $4. It
gives the consumer extra value because they are
able to receive more food than usual for a much
cheaper price.
Marketing/Brand Recognition(cont.)
Source: Statista 2015
McDonald's,
17%
Yum Brands,
10.80%
Wendy's ,
4.40%
Other,
67.80%
Market Share of Leading Fast-
Food Brands in the U.S. 2015
McDonald's Yum Brands Wendy's Other
2,670
1,650
351.5
2,640
1,180
345.6
2,490
1,770
351.1
0
500
1,000
1,500
2,000
2,500
3,000
McDonald's Yum Brands Wendy's
SpendinginU.S.MillionsofDollars
Advertising Expenses - Top 3
Competitors in QSR Industry (in
million U.S. Dollars)
2012 2013 2014
14
Figure 8 Figure 9

Marketing/Brand Recognition (cont.)
Strong Digital Presence
Another key way to connect with the consumer is
to display a strong digital presence. Studies
conducted by RBC Capital Markets have shown that
among millennials, fast food restaurant traffic has
slowed down by over 21% over the last seven
years.
Despite the decrease in fast food traffic, fast-casual
restaurant traffic has increased over this period.
The NPD Group’s research finds that within this
industry, Chipotle and Panera are two brands that
have been very successful over the past seven
years. One factor contributing to this success is
that they both focus on branding within the digital
space. Attracting millennial traffic is essential for
the future of the QSR industry, and expanding
digital presence has proven to be a good way to do
so.
With smart phone accessibility rates at an all time
high, digital advertising has been established as an
essential medium for marketing. In 2015, digital
marketing spending worldwide was $200.8 billion.
By 2020, that number is expected to grow more
than 50%, estimated at $306 billion. The chart
below illustrates projected growth in the digital ad
space. Social media spending for example is
expected to rise by upwards of 80%.
Marketing in the QSR industry is so important
because it allows companies to show the
consumers what distinguishes them from their
competitors. Quick service restaurants need to
give customers a reason to choose their restaurant
over another because of the wide range of options
available to the consumer at most times.
Ability to connect with the consumer through:
• Localized Marketing Strategy
• Strong Digital Presence
Localized Marketing Strategy
Many companies, depending on which industry
they are in, implement a standardized marketing
strategy which delivers a global brand image
across various markets.
Another marketing strategy is localization, which
takes into account the culture of different
territories. Consumer studies have shown that in
fast food chains’ marketing campaigns, consumers
have a much better reaction to messages that
represent their own culture. Localized marketing
campaigns have shown to be essential when
entering a new market.
A competitive advantage is lost when using
standardization. When localizing fast food menus,
customers’ satisfaction perception heightens.
(Journal of Business and Retail Management
Research, 2013). $90.70
$43.50
$27.10
$20.70
$142.50
$69.80
$48.90 $45.50
Search Banner Social Media Video
Worldwide Digital Ad Revenue Forecast
2016 2021
*Dollar values expressed in billions
15
Figure 10

KSF 2:Utilizing Location
The next key success factor in the QSR industry is
utilizing location.
The key to having a smart location is making sure
that the location of the restaurant is in a high
traffic area and is convenient (Business Source
Complete, 2012). Consumers looking to eat at
quick-service restaurants are looking for
convenience and for it to be a fast process. They
aren’t going out of their way to dine at these
restaurants.
Use of Data
In order for the restaurants in this industry to
determine where the best location for their
business is, a lot of them have been using specific
applications that calculate geographic and
demographic data. These specific applications are
geographic information systems (GIS) and they are
used to determine where to open up new
locations (Ungerleider, 2014).
The two main competitors used are Esri and
MapInfo (Ungerleider, 2014). They determine the
location based off of the data overlays from auto
traffic, safety information, consumer
demographics, and commercial mix (Ungerleider,
2014).
Widespread Location
In addition to being smart about the specific
location, in order to be successful in this business
the restaurants need to have widespread
locations. Figure 11 shows the revenue of the top
competitors in this industry. Figure 12 shows the
amount of units that these restaurants have
worldwide. Having a good spread of locations is
beneficial to the companies and plays a role in
their success.
Emerging Economies
Making sure that they are being placed in
developing economies with a rising middle class is
another essential aspect for determining location.
India, Brazil, Mexico, Indonesia and Vietnam are
countries where placement of new QSR
restaurants would be smart locations because of
their emerging economies (First Research, 2016).
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Mcdonalds Subway YUM! Brands Chick-fil-A Chipotle
Mexican Grill
QSR Chains worldwide locations
0
5
10
15
20
25
30
McDonalds Subway YUM!
Brands
Chick-fil-A Chipotle
Mexican
Grill
QSR Chains Worldwide Ranked by Revenue
(In Billion U.S. Dollars)
Figure 11
Figure 12
16

Utilizing Location (cont.)
India
In India, the QSR market is growing at a rate of
25% per year (The Economic Times, 2015) , and
this growth is largely driven by the emergence of
economies in smaller cities where real estate is
cheaper and competition is limited. They are
growing at such a rate because of the entry of
various national and international players in the
QSR industry. About 50% of India’s population eats
out at least once every three months and 8 times
in every month in bustling metros as compared to
the US (14 times), Brazil (11 times), Thailand (10
times) and China (9 times)-according to Assocham
Secretary General D S Rawat (The Economic Times,
2015).
A large share of the QSR market rests in metros
and mini metros due to higher consumption,
heightened consumer awareness, and exposure in
key cities such as Delhi, Mumbai, Bangalore and
Hyderabad (The Economic Times, 2015). There is a
mix of company owned and franchised models.
There are more than 120 brands with more than
4,000 outlets spread across various cities in India.
By 2020 it is expected that 35% of India’s
population will be in urban areas, totaling 52 crore
compared to the current 34 crore (The Economic
Times, 2015). India Has 356 million people
between the ages of 10 and 24, giving it the
world’s largest youth population (Gauba, 2015).
Having a large millennial population is another
reason why India is prospering in the QSR industry.
17
Industry Response- McDonald’s
McDonald’s has over 36,500 locations worldwide.
China, Hong Kong and Korea collectively represent
more than 2,800 locations, the majority of which
are currently company owned (McDonald’s, 2016).
In the next 5 years, McDonald’s plans to add more
than 1,500 locations in China, Hong Kong and
Korea.
Franchising
McDonald’s plans on franchising these locations
out. This will allow these locations to be more
localized, which will help market more towards the
culture of the location. 80% of McDonald’s
locations are already franchised out (McDonald’s,
2016). 44% of which are in emerging economies in
China and Korea
Partnerships
By increasing the franchising in the Asian market,
this will create partnerships with local vendors.
This will reinvigorate growth, because McDonald’s
believes that the locals have a better business
model for their area, which will allow for
maximized profit. In addition to creating
partnerships in China, McDonald’s plans to create
partnerships in Taiwan and Japan.
Source: CNBC, 2015Figure 13

Utilizing Location (cont.)
18
Industry Response- Yum! Brands
Yum! Brands has had the upper hand in the Asian
market since 1987 (they opened the first KFC in
China). KFC is the #1 Western QSR brand in China
with more than 5,000 locations in over 1,100
cities (Yum! Brands, 2016). They have been able to
localize their restaurants well because Yum! has
local management teams in China.
Franchising
In addition to having local management teams in
China, in 2015 Yum decided to franchise to Yum
China (Bloomberg News, 2015). They were
struggling and decided that this move to
franchising would benefit them financially. This
would also allow them to localize more efficiently
with Yum China, as it is purely associated with the
Chinese region.
Industry Response-Wendy’s
Similar to McDonald’s and Yum! Brands, Wendy’s
has been largely focused on franchising their
locations. While Wendy’s isn’t as invested in the
Asian market, they are spread out across the
globe. They intend to expand their franchises in
the Middle East, North Africa, Singapore, Turkey,
Russia, Eastern Caribbean region, Georgia, the
Republic of Azerbaijan, Ecuador and Chile (Zack’s
Equity Research, 2014). They also plan on
exploring growth in China and Brazil. In addition
to franchising out most of their locations, Wendy’s
plans on creating partnerships in Argentina, the
Philippines and Japan (Zack’s Equity Research,
2014).
Figure 14 above shows the revenue of Wendy’s
franchised and company owned locations for
each quarter between 2012 and half of 2014.
This shows that the franchises are making more
revenue than the company owned locations.
This is because Wendy’s is able to increase
revenues by charging royalties, fees and rent to
the leased locations (Jones, 2014). They weren’t
pushing for franchises until the third quarter in
2013 and that is where they started to see the
escalation in revenue.
Figure 14

KSF3: Adapting to New Market Needs
Many different trends are expected to be changing in
the quick service restaurant industry in 2016, so
quick adaptation to these is crucial to succeeding in
the industry. In the U.S. and globally, one of the
biggest changes is the rising trend of healthy eating,
which if not addressed and improved, could be a
huge downfall for the industry. The trend leans
strongly toward food and beverages that are
considered “wholesome and real”. This has a direct
link to “fresh” food as that is the mantra for healthier
food choices that is growing in popularity.
Authenticity
Along with the real food concept, adding authentic
foods, such as ethnic options and ingredients from
regional and local farmers, is key to adapting to this
new trend. The authenticity aspect doesn’t stop at
the food. Millennials want new experiences and
places that are interesting to eat at.
Mindful Dining
In addition, mindful dining is a somewhat new
concept that is expected to flourish in the next year.
Mindful dining makes up the second level of
characteristics that allow consumers to feel good
about themselves while eating out.
The millennial generation is leading these trends
more than their elders, and as millennials are
reaching their stages of success in life and acquiring
more personal income, the quick service restaurant
industry must be able to adapt to satisfy their new
wants and needs in order to profit.
Not only is the market changing rapidly, it’s changing
differently all over the world. While broad trends are
generally similar, if a corporation is global, their
ability to adapt is even more crucial to ensure the
different markets around the world are all satisfied.
Millennials are at the beginning of controlling the
entire industry and they’re looking for stronger flavor
profiles, nontraditional destinations, and savory
foods that are still considered clean. Without a strong
ability to adapt, quick service restaurants will not
succeed.
The graph below shows the projected population of
Millennials as a whole, and how far they will outgrow
all surrounding generations.
19
In order to remain successful, quick service restaurants
must adapt to the demands of the new generation
controlling their market: Millennials
Millennials want:
• Healthier options
• Authentic foods and experiences
• “Real” Food (local or regional sources)
• Mindful Dining (ethical)
Source: Pew Research Center, 2014
Figure 15

KSF3: Adapting to New Market Needs
McDonald’s
McDonald’s is by far the most established quick
service restaurant in the world, but are they able to
combat the millennial demands for healthier options
that offer customizable menus? It’s possible but stats
so far show a downfall in every aspect. The
percentage of people aged 19-21 in the U.S. who
visited McDonald’s monthly has fallen by 12.9%
(Jargon, 2014).
During this same period, the percentage of 19-21
year olds increased their monthly visits to fast-casual
restaurants by 2.3% (Jargon, 2014).
McDonald’s is pushing hard with new items like their
McWrap sandwiches (chicken and vegetables rolled
in tortillas) to hopefully capture the attention of
millennials.
YUM! Brands
Millennials have a wider range of choices than any
generation before them and they’re promiscuous in
their brand loyalty, making it harder for QSRs to earn
the loyalty of the generation.
KFC has started an effort to offer novelty and
communicate with a warm, personal tone to capture
the attention of millennials.
Starting in Texas, Pizza Huts everywhere are getting
massive makeovers with modernized ovens and
spruced up interiors (Harrison, 2016). The rebrand
will include industrial-style lighting, exposed rock
walls, and ovens that can cook pizzas at 575 degrees
in just 3 minutes. It is expected that all Pizza Huts will
be remodeled by 2022.
Wendy’s
• Creating the “Red” character for commercials
The Redhead featured in all of Wendy’s commercials
is a 28 year millennial who expresses the same
desires as millennials in the real world. Her desires
are supposedly met in the commercials.
• Digital Marketing
The company launched their pretzel bacon
cheeseburger with a digital promotion that featured
carious performers singing consumers’ Facebook
comments and tweets about the company. This is
important for the company because they reached the
millennial consumers at a fraction of the cost
• New menu items
Wendy’s is also focusing on adding healthier items to
their menu. They have added a multitude of new
items including the Asiago Ranch Chicken club, BBQ
Ranch Chicken Salad, and the Asian Cashew Chicken
Salad.
20
Source: Wall Street Journal, 2014
Figure 16

Key Metrics
Financial Performance
Current Ratio
1) McDonald’s Corporation – 3.27
2) The Wendy’s Company – 2.29
3) YUM! Brands, Inc. – 0.55
The current ratio is a measure of a company’s
solvency. This ratio indicates the ability to
pay obligations when they come due as well
as well as the ability to meet long term fixed
expenses.
Equity multiplier
An equity multiplier is a measure of a
company’s financial leverage. A lower equity
multiplier shows that a company uses less
debt to finance its assets.
Total Asset Turnover
Total asset turnover measures the efficiency
of how a company uses its assets to generate
revenue. A higher ratio implies that the
company is performing well.
Profit Margin
1) McDonald’s Corporation – 18.84%
2) YUM! Brands, Inc. – 10.97%
Future Indications
P/E Ratio
A P/E ratio is a valuation metric that essentially shows how
much investors are willing to pay per dollar of company
earnings. A higher P/E ratio is often an implication of
higher earnings growth in the future.
Currently, we see Wendy’s as the Company that is likely to
experience the most growth in the future. Wendy’s had
the highest one year return rate out of our three
competitors at 22.06%, more than doubling that of YUM
Brands.
Below is a graph that represents the growth percentage in
stock price among our three competitors over the last 5
years.
Wendy’s also has the highest year over year earnings of
20%, comparing that to McDonald’s 11.83% and YUM’s
15.75%.
NASDAQ’s Estimated 5-year avg. annualized growth rate:
1) The Wendy’s Company – 14.85%
2) YUM! Brands, Inc. – 10.98%
3) McDonald’s Company – 9.66%
Wendy’s has also been able to increase net profits by over
250% in the last three years, despite a significant 22%
decrease in revenues over this time.,
WEN
YUM
MCD
Bloomberg, 2016
21
Figure 17

Key Success Factor Scoring Matrix
Although we identified Wendy’s as most likely to see the highest growth rate in the near future, YUM
Brands, Inc. is the company that we recognized as best positioned for the future according to our
weighted scoring matrix. For our key success factors, “marketing/brand recognition” and “utilizing
location” hold equal weights of 35%, and “adapting to new market needs” has a lower weight of 30%.
The reason for these weights is that “marketing/brand recognition” and “utilizing location” are
necessary to get customers in the restaurant. If these two key success factors are not utilized, then
having the ability to adapt to new market needs lacks significance. Adapting to new market needs is
important in maintaining customers’ satisfaction, but it does not have the ability to draw in business
like the other two key success factors, therefore giving it less weight.
This scoring matrix is a good representation of how utilizing each of these key success factor is
important in the QSR industry. For example, YUM only has the highest weighted score in one of the
three categories, however, their ability to use all three at a high level has them scored highest among
the three competitors. Despite such tremendous growth in the past few years, one of the main
reasons that Wendy’s scored the lowest out of the three competitors is their low score for “utilizing
location”. We see Wendy’s lack of global presence as a major restriction to their future success.
McDonald’s and YUM’s ability to tap into new and emerging markets gives them a major advantage
over Wendy’s.
22

Conclusion
The Quick-Service Restaurant industry is divided between fast food and fast casual. While fast food is
the larger component of the industry, fast casual is the way that the consumers want to be eating. This
has become a popular trend and is one that the fast food restaurants have been taking into account. It
is a very competitive industry and by incorporating the following business practices into their plan, a
restaurant will be able to thrive in this industry.
• Marketing efficiently and towards the right demographics. The millennials are the key buyers in this
industry and the competitors in this industry need to be able to focus their attention on them. They
can do so by focusing on healthy eating, localizing their marketing strategy, having a strong digital
presence, bringing back old mascots and changing their décor and menu items.
• Utilizing locations. Having many different locations is one thing, but making sure that the locations
are in a high traffic area and an up and coming area is where the businesses in this industry need to
be.
• Being able to adapt to new market needs. As stated above, the millennials are the target
consumers, and being able to adapt to their preferences is key to bringing them in to your business.
The businesses in this industry will be able to achieve these because the industry is keeping up with the
trends that the millennials are looking for. The industry has been more focused on healthier food
options, being environmentally friendly, incorporating different forms of online ordering and
globalizing. Not only keeping up with these industry trends, but setting these industry trends is the way
to prosper in this industry.
From our research and analysis of the quick-service restaurant industry, we have determined YUM!
Brands, Inc. is best positioned for future success in the global quick-service restaurant industry.
23

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24

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25

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26

Supplier Power Buyer Power
Threat of
New Entry
Threat of
Substitution
Competitive
Rivalry
Appendix A: Porter’s Analysis
Threat of New Entry
 Moderate threat
 Barriers to entry
(regulations)
 Not an immediate threat
to big players
 Low profit margins are
unattractive to those
unable to operate on large
scale
Competitive Rivalry
 Moderate/strong threat
 Large amount of
competitors
 Several big players
dominate market share
Buyer Power
 Very strong force
 Wide variety of options to
choose from
Supplier Power
 Moderate force
 Suppliers with
established brand have
more bargaining power
 Multiple suppliers
available for similar
cost
Threat of Substitution
 Very strong force
 Many QSR’s in most
areas that offer similar
products
27

Appendix A: Porter’s Analysis (cont.)
In the quick service restaurant industry, there
is a moderate threat to new entry because of
the barriers set in place. Some of these
barriers include:
• High overhead costs
• State and federal regulations
• Trademarks and Patents
• Capital Investment
• Accessing Distribution Channels
• Economies of Scale
The big players in the industry hold an
advantage in mass production. In mass
production, as the businesses efficiency
increases their costs decrease. This makes it
difficult for new entrants to gain enough
ground and rise up in the industry. Along with
that, the high start up costs and ongoing
capital requirements involved in franchising
your business. make it a headache to try and
enter this industry.
Companies in the global market have to
market their brand to suit the cultures and
social norms of their customers. New players
have a difficult time getting their name out
there because advertising campaigns are so
expensive and firms that are already
established have the ability to retaliate
aggressively against new players trying to
enter the market. Social media, however, is
giving new entrants an even playing field in
terms of marketing communications. This
allows the firms to eliminate a need for
expensive advertisements and just focus on
effectively communicating their message. In
addition, the big players make it difficult for
new entrants to access their distribution
channels. The threat of new entry isn’t an
immediate concern to big players due to the
number of worldwide establishments by the
industries top competitors
An entrepreneur looking to join the QSR
industry has a complex set of permissions
before opening a restaurant. Permissions
include maneuvering around different
countries state and federal regulations. Some
examples of this is the federal trade
commission and the Americans disabilities act.
As well, a new entrant would also be tasked
with creating a product that is unique enough
to set it apart from the competitors. This puts
up a lot of barriers for new entrants in the
industry making it a moderate threat to big
players. Although it is very difficult to be a top
company in the industry, the smaller players
make up 60% of the industry in the U.S.
Threat to New Entry
0
5,000
10,000
15,000
20,000
25,000
30,000
Leading quick service restaurant chains
in the U.S. in 2015, by number of units
28
Figure 18

There are three main threats of substitution of quick serve
restaurant products.
These are meals from:
• fast casual restaurants
• convenience stores/grocery stores
• eating at home.
The competing options are all as easy and convenient as
going to a quick service restaurant so the threat of these
substitute products is very high (Greenspan). There is a lack
of differentiation in the QSR industry and these substitute
products allow endless differentiation and can have higher
quality, so these threats are something to be
addressed(MBA Crystal Ball).
These ready to eat meals are popping up in local
convenience stores and grocery stores and are taking away
from the QSR industry because the consumers already have
other reasons for being in these other businesses, so it is
becoming more convenient for them to just buy their food
there (Mintel).
There are over 200,000 fast food restaurants in the quick
service restaurant industry, making the competitive rivalry
a very strong force. With the industry slowing down its
growth, firms are starting to reach the maturity stage of the
industry lifecycle. Quick service restaurants have high fixed
costs, meaning they need to sell high volumes to
recuperate.
Because selling high volumes is essential to staying a top
competitor in the industry, quick service restaurants are
going above and beyond to fight for the cheapest, yet most
popular, meal on the market.
Looking at any fast food restaurant in your surroundings,
you can see how obvious this is. Wendy’s 4 for $4,
McDonalds McPick 2, Pizza Hut has now launched a seven-
item menu for only $5, Burger King just released a 5 item
meal for only $4, and there are many more.
All of these promotions are strategies with huge risk by
corporations to bring in new customers.
Threat of Substitution Competitive Rivalry
29

Supplier Power
Quick Service restaurants depend on their
suppliers for almost every component of their
functioning operation. From the food products
to something as simple as napkins, a supplier is
used.
The sizeable amount of suppliers seriously
limits the bargaining power of suppliers.
Usually, suppliers have very weak control over
the Quick-Service industry, because there are
so many substitutes that can easily be attained
for the same price.
To combat the fact of buyers having a multitude
of choices for suppliers, an individual supplier is
forced to offer incentives to buy from them to
stand out from the rest of the crowd.
Incentives can range from:
• Lower Prices
• Faster delivery times
• Flexible credit terms
• Higher quality products
• Volume discounts
The bargaining power of a supplier can largely
depend on their consumer base. Suppliers with
few customers will have to negotiate more
towards their customer’s demands, whereas a
supplier with a large customer base can stand
to lose a buyer’s account without hurting
financially.
Suppliers with an established brand have more
bargaining power than those who sell generic
products. This power increases greatly if the
supplier has an established brand with a great
reputation, in which case, the buyer can use the
supplier’s brand in their marketing plans to
attract more customers.
Buyer Power
In the Quick Service Restaurant Industry, buyers
have a surplus of suppliers to choose to buy their
products from. Because a buyer tends to make up
a large portion of the supplier’s revenue and they
can replace suppliers without difficulty, the buyer
generally has a larger advantage.
Buyer power can also escalate from increased
supplier competition. Competition between
suppliers increases the buyer’s bargaining power
because the quick service restaurants are able to
pick and choose, forcing the supplier to offer
special deals and incentives to stand out from
other suppliers.
Fortunately for buyers, a spike in supplier power
usually does not last long. If the demand for
supplies is high enough, other suppliers will enter
the market to serve the target market.
Corporations will also search more intensely to
purchase, or even develop, alternatives.
30

Appendix B: PESTLE Analysis
Political
On a global scale, opportunities arise in the
industry to expand business based on improved
international trade. The industry has the ability to
reform practices and strategies to lessen the
impact of the government taxation without
breaking the law.
On the other hand, public health policy increasingly
tends to avert people from consuming fast foods.
Nonetheless, the industry and individual
corporations have the opportunity to acknowledge
this external factor by refining the healthfulness of
its products.
In the U.S., new minimum wage laws are a
possibility, making labor costs increase significantly
in the quick service restaurant industry if imposed.
The European Union is beginning to monitor GMO
use, typically found in fast food. To continue
expansion in the EU, quick service restaurants will
need to improve products to stay up to par with
the EU’s standards.
Most quick service restaurants have the
opportunity to internationally expand based on
increasing integration and alliances among
countries around the world. Most major markets
are politically stable which presents minimal
barriers and challenges for corporations to expand.
In the political aspect of the PESTLE Analysis of the
quick service restaurant industry, the political
external factors present opportunities that
outweigh the threats.
Economic
While the U.S. Economy is mostly stable and
improving after the 2008 recession, providing
opportunity for growth in profit in the U.S., the
Chinese economy is slowing down and the
European market is very risky.
The U.S. Economy is stable, but inflation is hurting
the QSR Industry that survives off their suppliers’
consistently low prices.
McDonald’s CFO stated this summer, “While we
are benefiting from favorable commodity costs
around the world, we are facing rising labor costs
in many of our markets, as a result, we are
carefully balancing price increases with a focus on
maintaining our strong value proposition.” (as
cited in Graham, 2016). He noted that because of
this, their menu prices were up about 3% from the
previous year.
Food-at-home is becoming much less expensive
than in years past, while fast food prices are
continually rising. Prices of limited service meals
and snacks are up 6%, while food at home costs
0.7% less than it did two years ago (Graham). This
is the biggest gap between the two since the
Bureau of Labor Statistics began breaking out fast-
food prices in the late 1990s.
http://www.investors.com/news/fast-food-prices-have-never-risen-so-fast-vs-eating-in-costs/
31 Figure 19

It is essential for brands within the QSR industry to
evolve their businesses constantly in order to keep up
with technological trends. Accessibility to consumers
is key in acquiring customers. One way to do so is
having online and mobile platforms for ordering and
payments. For example, mobile orders in China make
up almost 30% of all fast food sales, compared to the
10% global average.
Competitors Filling The Online and Mobile Space
Many new competitors emerging in the food industry
are not even restaurants. In recent years, meal
delivery subscription services and recipe box
deliveries such as Blue Apron, Plated, and Hello Fresh
have grown in popularity. Tech savvy consumers are
changing their expectations for service, which does
not necessarily involve human interaction.
Key advancements with technology
• Industry Research and Development
• Increase Business Automation
• Increase Sales Through Mobile Platform
The graph below identifies the top four out of 14
reasons that consumers use a restaurant’s smart
phone app.
Climate Change plays a significant role in the Quick-
Service Restaurant industry. Rising temperatures
play a large role in the availability and price of
produce and livestock. Warmer temperatures cause
some crops to grow much faster, but with a
reduction in the amount yielded. More extreme
temperature and precipitation can prevent crops
from growing at all.
Another factor that the rising temperature impacts
is livestock. Over time, heat stress can increase the
risk of disease, reduce fertility in the animals, and
even reduce milk production.
Other environmental factors can cause problems to
food production for the Quick-Service Industry.
Extreme floods and droughts can also impact the
production of crops. In 2008, an estimated $8
billion was lost for farmers due to the Mississippi
River flooding right before the harvest period for
many crops (EPA.Gov/ClimateChange). Losing that
much product has a direct effect on the Quick-
Service Industry, because in that industry prices
from suppliers need to be as cheap as possible to
maintain high margins for sales on cheap food.
Drought also reduces the amount of quality feed
available to grazing livestock. A reduction in quality
livestock with an increased risk in disease is
detrimental to the Quick-Service Industry. With one
of the main pros of the industry being cheap food
with high quality, the climate change will surely
impact the price of quality produce and livestock.
Technology
55%
46% 45%
38%
ME NU & P RIC E S H OURS OF
OP E RA T ION
NE A RBY
LOC A T IONS
C URRE NT DE A LS
REASONS FOR USING
RESTAURANT APP
Share of respondentsStatista, 2016
Environmental
Appendix B: PESTLE Analysis (cont.)
32
Climate Change can affect crop growth and the
wellbeing of livestock
Extreme Floods wipe out significant amounts of
harvest crops
Droughts reduces the amount of quality feed
available for livestock
Figure 20
Menu/Prices Hrs. of Operation Locations Current Deals

The biggest trend affecting the social spectrum
of the QSR industry is a move away from greasy,
unhealthy foods. This trend can be seen as a
threat to big players like McDonalds or Yum!
Brands, who are often criticized for the negative
health effects from their food. Consumers want
more healthy options on the menu for the same
great price. Subway was one of the first
restaurants to capitalize on the weight and
health concerns of consumers and successfully
market the health benefits of their sandwiches.
McDonalds introduced a new healthy choices
menu that has had varying levels of success.
Since healthy options cost more to the firm,
companies have been investing in their
international operations as a part of a long-term
strategy to focus on emerging economies due to
slow domestic growth.
Globally, QSR are growing at a steady rate and
with that, comes a much more culturally diverse
target market that they must adapt to. Many
global chains are viewing China as a market that
has a strong potential for growth accompanied
with long term
profitability. The industry is still expecting to
see growth in healthy eating in 2016, as
consumers become increasingly aware of issues
relating obesity and weight. Another trend
seen as an opportunity is the widening wealth
gap. The QSR industry’s target consumer market
is mostly from medium to low-income
households. With the gap widening,
Companies are starting to see steady growth
from the lower end of the spectrum.
An opportunity that the QSR industry can take
advantage of is how increasingly busy our
lifestyles are becoming. The busier that we are
throughout the day the easier it is for the
consumer to just give in to the cheap fast food
option. Firms such as Wendy’s are attempting
to improve their food quality in order to retain
and gain new customers. Consumers hope with
these trends in 2016 that the fast food market
can add healthy options to their menu while still
improving their quality.
19
10 10
8
7
5
3 3
2 2
1 1 1 1 1 1 1 1 1 1 1
7
11
0
2
4
6
8
10
12
14
16
18
20
Ranked in %
Global fast food chains with the healthiest food in the U.S. as of August 2014
Social
33
Figure 21

There are a few legal threats on the quick
service restaurant industry.
The main contenders are:
• the rise of minimum wage levels in the U.S.
• Health and food safety regulations
• support for unions in developing countries
Citizens in the U.S. are becoming more aware
of the low wage of the fast food industry and
this increased awareness is hurting the image
of the industry. In order to regain their image,
a few restaurants have mandated some legal
action.
McDonalds has started implementing a
minimum wage change of $1 in company
owned outlets, they plan to raise this to a $10
minimum wage in 2017 (Balsamo). If the
minimum wage reform goes through to $15
fast food operators will need to adjust to it
and that could lead to serious job cuts in the
industry in order to maintain profit when
labor costs rise (Balsamo).
Figure 3 shows a public opinion in 2013 when
they believed the minimum wage should be
increased to $10.10. The reform is likely to go
through if the trend is similar for the increase
to $15.
Health and safety regulations are a constant
factor that needs to be accounted for when
working in this industry. Making sure that all
employees are following regulations is
imperative so no lawsuits breakout against
companies.
The push for unionization is another threat for
the industry (Young). While many employees
in the industry have attempted protests at the
lack of unionization, they haven’t
succeeded(Smith). The protestors have been
evolving their practices though, which could
lead to a bigger threat in the future.
All of these are potential threats to the
industry, but at this point in time there isn’t
any serious legal action taking place in the
QSR industry.
Legal
34
Figure 22

McDonald’s Corporation
Business Model Canvas
• Kraft
• Angry Birds
• Nintendo
• PokemonGo
• Coca-Cola
• 67% Revenue stream from
company-operated sales
• 33% Revenue from franchised
operations
• Typically less
expensive than
competitors
• Fun meals for
kids
• Different food
combination
choices
• Cooking
• Boxing
• Branding
• TV ads
• Social Media
• Heavy bilboard
advertising
• US Market
• International Lead
Markets
• High Growth
Markets
• Foundational
Markets and
Corporate
• Raw Materials
• Labor
• New Toys
• Website
• Nutrition
options and
information
• Advertising/Marketing
• Labor
• Materials
• Research
35

Wendy’s Business Model Canvas
• Clarabridge (Text
analytics
Software)
• Coca-Cola
• Stubhub (Digital
Coupon
Campaign)
• Social Media
Partners
• Over 90% of revenue comes
from franchised restaurants and
the goal is to keep growing that
number
• American
Market
• Asian Market
• European
Market
• Millennial
Generation
• Generation X
• Baby Boomers
• Social Media
Presence
• Huge TV
Advertisements
• Labor wages
• Food costs
• Advertising costs
• Very cheap value
menu
• 4 for $4
• Healthy and
Fresh locally
sourced beef
• Brand
Recognition
• Customer
Service
• Fast and efficient
service
• Quality customer
service
• Qualified
employees
• Food suppliers
• Disposable
kitchenware
suppliers
36

Yum! Brands Business Model
Canvas
• Doritos
• Mountain Dew
• Food Suppliers
• Pepsi
• Cinnabon
• Marketing
• Branding
• Adapting
• Combo Meals
• Convenience
• Cheap
• Healthy Options
• Speed
• Variety of Items
• Branding
• Customer Service
• American Market
• Asian Market
• European Market
• Millennials
• Generation X
• Baby Boomers
• Cheap Labor
• Drive-thru
• Television
• Radio
• Social Media
• Internet
• Food
• Employees Wages
• Advertising
• Franchising
• Customer Purchases
37

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