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Success Factors in the Fast-Food Industry
Convenient locations play a critical role in the success of fast-food kiosks. These points include the busy commercial strips, shopping malls, and high-traffic areas. These places have a constant movement of crowds, which will always crave some snacks. Such locations are still costly to rent for kiosk owners. However, the continued presence of people who want ready-made dishes promises high-profit margins (Heizer et al. 452). Food should always be served fast in these shops to keep customers. Most people walk into these restaurants on their way to various destinations, and they expect to find quick service.
Restaurants need to establish a specific brand of food that customers are sure of getting. Most people decide what dish they want before walking into a food shop. A good reputation for a given class of food is beneficial. For example, McDonalds and Burger King became popular by consistently offering simple and recognizable burgers (Bernsdorf et al. 102). This led to their growth beyond the United States to other international markets such as the United Kingdom. The kiosk should also maintain consistency in operation so that people are sure to find food anytime they visit. Other factors, such as food innovation and creative advertisement, are also critical to a restaurants success.
The availability of adequate facilities and equipment ensures work efficiency in these shops and maintains the foods in good quality. Worn-out and outdated equipment at the workplace reduces the morale of the workers. It gives the restaurant a bad reputation, which can negatively affect the customers turn-up. While the technology is growing, it is necessary to maintain the quality of the equipment and repair worn-out ones to ensure a smooth workflow. Appropriate food storage equipment such as microwaves and refrigerators will ensure that the food quality is preserved and spoilage is avoided.
Controlling the inventories while at the same time selling the food products at a reasonable price to make a profit is of much concern in the modern food supply chain. The restaurants need to ensure that there is not too much supply, which will lead to spoilage, and not too little, which will result in failing to provide the customers with meals. This is a critical concern as most food inventories are perishable and expensive to keep fresh for a long time.
Cost management is also a critical factor in the success of the shop. It is necessary to know the cost of the products and services. This will make it possible to identify the value of the profit received. The business needs to manage its costs and always ensure that the expenses incurred are less than the revenues (Bernsdorf et al. 110). The excess amount represents the gains from the income obtained during that particular period. To maximize the returns, the restaurants should major in the brands that give high-profit margins. That is the only way to keep revenues coming into the shop.
The quality of services offered in a restaurant is a vital factor in its success. People always want high-quality products and services. Whenever they notice a problem with the quality of foods served, they are not likely to show up again. This may send away customers that are necessary for the kiosks operation. Low customer turn-up translates into a smaller cash flow, and financial instability is the reason for the closure of most fast-food kiosks. Most of the food industry inputs come from farm produce. The ability to maintain the products fresh and in good quality is one of the ways for a supply chain to promote its success. Proper storage and faster transportation minimize the spoilage of the farm produce before being utilized. If that happens, it translates into reduced losses to the restaurants (Heizer et al. 454). It comes as a strength as consumers need quality foods that are close to their natural state.
Current Basis of Competition
The competition in this industry is mainly price wars; restaurants lower their prices to the levels that will attract customers without incurring losses. Some have adopted offering free delivery of food to clients homes as a means to increase sales. Most fast-food chains have embraced information technology in their operations and incorporated online ordering of foods delivered to customers by a third party or an employee of the food store.
Restaurants have also upscaled food varieties in their menu to keep the consumer base as competition becomes more pronounced due to the opening of new food kiosks. Some restaurants carry out promotional activities such as discounted offers of dishes, free delivery of foods, and even gifting loyal customers with meal vouchers (Heizer et al. 453). This helps to keep customers and attract more people. Most of the franchised fast-food outlets carry creative advertising programs that make their food brands popular. Food adverts are typical on Television, and posters are displayed at strategic places.
Effects of Economy Shutdown on the Industry
The global pandemic has hit every part of the economy, and restaurants are also deeply affected. They have shown a severe collapse in revenue base and customer traffic. The governments effort to curb the spread of the Covid-19 has also proved detrimental for the food industry. Unlike other risks, the Covid-19 eruption is by any standard exceptional. It comes with high levels of uncertainty, extreme scope and presents a situation that is far beyond the experience of many business owners. This disease has infected and killed millions around the globe. In addition, the global economy has been hit hard by this pandemic to the extent of bringing all production activities to a standstill.
Similar to another sector of the economy, the fast-food industry is facing numerous disruptions. They arise from various sources in the supply chain, including the suppliers on different levels, customers, storage and distribution, production process, and external forces such as political issues and conflicts. Besides, the food supply chain is associated with delays and uncertainty caused by the dynamic nature of the industry and transmits a risk tendency. Fast-food restaurant owners have implemented different measures to tame the spread of the virus including disinfection, cleaning, screening, and monitoring the workforce for Covid-19.
The shutdown of the economy due to the global Covid-19 pandemic significantly affected restaurants and the food industry, it has reduced the traffic of people in restaurants and along the busy streets. The food kiosk workers were laid off, and the shops revenues decreased drastically (Cant and Woodcock 3). The distribution of food products from groceries was further affected when lockdowns were initiated to curb the virus from spreading. It also made it hard to deliver foods to clients homes as peoples movement was restricted only to workers essential groups. Many small kiosks were affected beyond recovery because of the challenging economic conditions.
Following the pandemic, many fast-food restaurants such as McDonalds, Chick-fil-A, Wendys, Shake Shack, Arbys, Panera Bread, Subway, and Starbucks indefinitely closed their dining spaces and resorted to food deliveries and carryout. Suppliers of meat and seafood also ran out of business as the food industry is deeply hit and lost its customers (Cant and Woodcock 3). Most of the farmers also suffer from the spoilage of their products. They produce a surplus during the onset of the pandemic anticipating large sales during the peaks; however, this never happened. Most of these products stay past their expiry dates. This accounted for great losses to the suppliers and food store owners.
Risk Mitigation
To keep the inventory at an optimal level, fast food restaurants can be tied with the sales point at which the excess supplies are sold. This will ensure that the restaurant department holds what it needs and the extra inventories are sold. There are also modern inventory management tools that can automatically trace stocks and predict shortages or surpluses (Heizer et al. 454). Inadequate communication should no longer be a weakness along the food supply chain since numerous technological inventions have eased this process. Web-based services are nowadays available where people can hold meetings virtually along the supply chain. This is even more effective during the economic shutdown period during which movements are restricted between some countries and regions.
To maintain the freshness and quality of the food supplies, it is necessary to select appropriate packaging for the products, more so for foods ready for delivery. This will ensure these foods reach clients in a good and safe condition. There is an emerging technology called blockchain in which users keep all information regarding a transaction. Data fed into this digital platform can never be manipulated or deleted. Restaurant managers can find unmanipulated data from this platform, which is crucial when tracing a product.
Measuring the cost associated with the supply chain is the first step towards solving its consequences. The business should keep track of the costs by storing such data in a spreadsheet. The expenses can be analyzed to come up with less costly strategies (Heizer et al. 454). However, the spreadsheet cannot manage the costs associated with complex food supply chains, hence the need for network solutions.
Gaining the visibility of the suppliers financial stability will enable the management to avoid the risk of dealing with third-party vendors. A supplier who is not financially stable is likely to hire another vendor to supply the products creating some external risks. Restaurants also need to hire reliable freight carriers to transport products to other franchises. It is necessary to keep these cargo carriers on track to ensure the safety of the products. Moreover, restaurants that have ways for online ordering should ensure that agents responsible for the delivery of the foods are credible.
The restaurants also need to put measures in place to curb the possible spread of the Covid-19. One of the mitigations measures that business owners can implement includes installing sneeze guards which have a pass-through opening below the barrier at the various customer service points and checkouts. Other measures include placing the electronic payment terminal at a distance from the cashier, ensuring check-out lanes are properly utilized, implementing visual cues that indicate points where a customer should stand, limiting maximum customer capacity at the entry, and providing remote shopping alternatives.
Works Cited
Bernsdorf, Kamille, et al. Accessibility of Fast-Food Outlets Is Associated With Fast Food Intake. A Study in the Capital Region of Denmark. Health & Place, no.48, 2017, pp. 102-110. Web.
Cant, Callum, and Jamie Woodcock. Fast Food Shutdown: From Disorganisation to Action in the Service Sector . Capital & Class, 2020.
Heizer, Jay, et al. Operations Management. Prentice-Hall, 2008.
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