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Fast Food Industry

Fast Food Industry. Economics of Advertising Presentation Aaron Weiner Jonathan Kligman Charles Funderburk III Charles Hartsfield. Survey Question. What do you think is the most popular fast food restaurant ?! Burger King Subway Taco Bell McDonalds Chipotle Wendy’s.

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Fast Food Industry

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  1. Fast Food Industry Economics of Advertising Presentation Aaron Weiner Jonathan Kligman Charles Funderburk III Charles Hartsfield

  2. Survey Question • What do you think is the most popular fast food restaurant?! • Burger King • Subway • Taco Bell • McDonalds • Chipotle • Wendy’s

  3. Industry Overview • The first fast food restaurant was called Automat, located in New York City in 1912

  4. Industry Overview • The first fast food chains were A&W in 1916 and White Castle in 1921

  5. McDonalds • Paragon Modern Fast Food Restaurant • Began in 1940 by brothers Richard and Maurice Their first mascot was “Speedie”, which then became Ronald McDonald and the Gold Arches in 1961

  6. McDonalds • Financials

  7. McDonalds • Brand Equity

  8. McDonalds • Top 10 Brand Equity in 2011

  9. McDonalds • Price Parody Theory • Big Mac as Economic Indicator • Norway- $7.06 • US- $4.30 • Hong Kong- $2.13

  10. Burger King • Began in Florida in 1953 as Insta-Burger King • After financial difficulties, David Edgerton and James McLamore purchased the company and gave it the name we know today, Burger King. • Famous for customization from the 2002 slogan, “Have it your way.”

  11. Burger King • Financials

  12. Burger King • Brand Equity

  13. Industry Overview

  14. Industry Overview • Organization • HHI= 636.4 • C4= 42% • McDonalds- 21.2%, Yum!- 9.2%, Subway- 6.3%, Wendy’s- 5.3% • All of the big players are publicly traded, besides Subway which is privately owned • Yum! Brands owns: KFC, Pizza Hut, and Taco Bell

  15. Industry Overview

  16. Industry Overview • Key External Drivers • Consumer Spending • Healthy Eating Index • Consumer Sentiment Index • Agricultural Price Index

  17. Industry Overview • Consumer Spending & Healthy Eating Index

  18. Advertising Strategies • Informative • Price of product and discount offerings • Combative • Quality and brand differentiation • Small Segment Targeting • Health options and seasonal products

  19. Advertising Strategies • Informative • One of the most attractive aspects to the industry is the low price point • Quality is mentioned along with price to inform the consumers that it is NOT cheap because bad quality

  20. Advertising Strategies • Informative • Example • McDonald’s Dollar Menu

  21. Advertising Strategies • Informative • Example • Burger King’s Two For Price of One • Healthy options at a low price

  22. Advertising Strategies • Combative • This has become more popular with rising regulations due to health concerns • Prevalent because market is not growing in size; thus must attempt to take market share from competitors

  23. Advertising Strategies • Combative • Example • Big Mac vs. Whopper

  24. Advertising Strategies • Combative • McDonalds • Uses celebrities to attract sports fans and young athletes • http://www.youtube.com/watch?v=PmrTDZy3f2M

  25. Advertising Strategies • Combative • Burger King • Uses sex appeal • http://www.youtube.com/watch?v=sl0b12baPjU

  26. Advertising Strategies • Small Segment Targeting • This is often utilized as an attempt to gain new consumers because the market is decreasing by appealing to small segments (health conscious) • Promotes seasonal products that attract specific target audiences

  27. Advertising Strategies • Small Segment Targeting • McDonald’s • McDonald’s Shamrock Shake • McDonald’s Grilled Chicken Wrap

  28. Advertising Strategies • Small Segment Targeting • Burger King • Targeting children • Targeting animated movie fans

  29. Data Analysis • The top 10 cities in the industry by number of establishments are: • New York • Los Angeles • Chicago • Dallas • Atlanta • Houston • San Francisco • Miami • Seattle • Phoenix

  30. Data Analysis

  31. Data Analysis • We considered a myriad of variables to regress with the raw data • Obesity • Income • Ethnicity • Cost of Living • Total Sales $ • Population

  32. Data Analysis

  33. Data Analysis

  34. Data Analysis • Ethnicities Considered • Black • White • Hispanic • Asian

  35. Data Analysis

  36. Data Analysis

  37. Data Analysis

  38. Data Analysis

  39. Data Analysis Positive and significant relationship between Ad $’s and sales per capita suggests fast food advertising is successful

  40. Data Analysis Fast food revenue’s relationship with Ad $/capita is even more strongly correlated when looking at the establishment level data

  41. Data Analysis

  42. Data Analysis

  43. Data Analysis

  44. Survey • 7 questions • 100 respondents • Questions aimed toward establishing preferences and identifying advertising effectiveness

  45. Survey Survey Q1

  46. Survey Survey Q2

  47. Survey Survey Q3

  48. Survey Survey Q4

  49. Survey Survey Q5

  50. Survey Survey Q6

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