Market Research Information
As McDonalds belongs to fast food market, therefore it is important to analyze its market and other important factors. These factors are discussed as follow:
The fast food market in Australia is very competitive with low barriers to entry. This has led many fast food chains to emerge and operate in Australian market, thereby increasing the competition in the industry. Another factor that has led the industry to grow is the increasing number of suppliers of the raw material (particularly chicken) and consumers on whom the fast food business is mainly dependent on (Johansen 2012).
There lies huge competition in the food and beverage business. However, in the past five years, the industry that was one ruled by fries and burgers faces some difficulty because of health conscious customers. This has given rise to sushi shops, juice chains and salad bars that have given rise to the competition in the competitive and saturated (Dunn 2013). There are approximately 16,000 fast food restaurants in the Australian market that has split in the middle between independent fast food restaurants and the fast food restaurant chains that include from Chinese restaurants to the local chicken shops.
The major brands in the fast food market in Australia include Hungry Jacks, Yum Brands, KFC, Pizza Hut and Domino's Pizza who are the main competitors of McDonald's Corporation. However, McDonald's has the greatest market share among all of its major competitors i.e., by 20%. The market shares of its competitors include 17% by Yum! Restaurants (that controls KFC and Pizza Hut), 8% by Hungry Jack's (which is a brand of Competitive Foods Australia), 5% by Domino's Pizza and 3% by quick service restaurants such as Oporto, Chicken Treat and Red Rooster chains (King 2013).
The expenditures of Australian customers on eating out and fast food has increased by approximately 50% in the last six years, where approximately one third of the Australians household food budget for a week is spent on fast foods and dining out. According to the statistics of Roy Morgan Research (2011), the age group between 35- 49 was the visitors or purchaser of the fast food restaurant business when taken as an average duration of four week. However, the 65+ Australian consumers had the lowest proportion i.e., 44%. Thus, more middle aged people are inclined to visit or make purchase from fast food restaurant. Another important factor is the shift of consumers towards healthy eating has increased rapidly which is because of the increased consumer awareness regarding the nutritional content of fries, burgers and other fast food menu. Thus, consumers prefer more balanced and nutritious diet while visiting fast food restaurants and stores. Apart from this, the Australian customer trend has more shifted towards fast food because of their busy lives. Thus, the customers now rely more on convenience foods and take away foods.
Future trends of the restaurant industry
It is forecasted that the revenues of the Australian fast food market is expected to increase at 2.5% CAGR (compound annual growth rate) in the next few years that will reach to a sum of 14.2 billion by the year 2017-18 (King 2013). Thus, the changing social trends and enabling customers to combine leisure time with meal time will help the fast food restaurant industry to grow.
One of the major strength of McDonalds Corporation is that it is one of the leaders in fast food industry globally. The Australian market has always remained successful and profitable that has led it to capture the largest market share (Smith 2011). Besides this, McDonald’s healthy food menu in Australian market has attracted large number of customers to become its loyal consumers. The company has a great financial stability that has enabled the company to engage in many strategic activities particularly expansion in its existing and new market (Dunn 2013). Thus, the company has potential to engage in CSR activities initiated by Team Victoria. The participation will also help the company to raise funds for Ronald McDonald House of charities.
One of the major weaknesses of the McDonalds is that the company still faces negative publicity regarding fast food chain that sells unhealthy and junk food (Smith 2011). The fact that McDonalds has changed its menu to more healthy food items and also sells its main menu of fast food items that is not widely communicated and most of the Australian consumers are unaware of this fact (Johansen 2012). Thus, by joining Team Victoria’s sports carnival day, McDonalds can overcome this negative publicity and make children and other consumers aware of the healthy food items.
The campaign proposed by Victoria Team to McDonalds will enable the company to take advantage of various opportunities that are emerging in its external market (Smith 2011). Among the others, the increasing demands for healthier food suggest that McDonalds could include children’s favorite food items that are healthy and delicious to engage the interest of them in the company (Johansen 2012). In addition, conducting campaigns twice a year, the company will also be enabled to draw the attention of children towards the company and the special discount packages that is offered on children’s meal of healthy food items. McDonalds could also increase its promotional activity that will trigger the participation of the candidates. Thus, the company’s reputation could be improved and higher revenues will be generated.
In case of McDonalds accepts the proposal by Team Victoria, the company might face some issues. One of the major issues will be that the competitors of McDonalds Corporation might increase their adaptation to healthier food menu that will bring tough competition in the market (Smith 2011). Similarly, if any of the competitors initiate conducting more compelling corporate social responsibility activities, the customers might get attracted towards them. In addition, the competitors start conducting such campaigns at larger level than that is proposed by Team Victoria. Thus, different issues might emerge that could be handled effectively only if appropriate and timely measures are taken by McDonalds after accepting the proposal.
Appendix 1: The Project Team
Dunn, C 2013, Nutrition Decisions: Eat Smart, Move More, Jones & Bartlett Publishers
Johansen, LT 2012, Fast Food Vindication, Lisa Tillinger Johansen
King, M, 2013. McDonalds continues its dominance of the Australian fast food market. [Online] Available at http://www.companiesandmarkets.com/News/Food-and-Drink/McDonalds-continues-its-dominance-of-the-Australian-fast-food-market/NI7135 [Accessed 18 April 2014]
Roy Morgan Research, 2011. 35-49 year olds lead on fast food. [Online] Available at http://www.roymorganonlinestore.com/News/35-49-year-olds-lead-on-fast-food.aspx [Accessed 18 April 2014]
Smith, AF 2011, Fast Food and Junk Food: An Encyclopedia of What We Love to Eat [2 volumes]: An Encyclopedia of What We Love to Eat, ABC-CLIO