Fast food is the term given to food that can be prepared and served very quickly.

While any meal with low preparation time can be considered to be fast food,

typically the term refers to food sold in a restaurant or store with low quality

preparation and served to the customer in a packaged form for take-out/take-away.

PESTLE analysis of fast food Industry

[Pestle of McDonald’s from fast food Industry]

Pulkit Mehra: AICISM2011-13: Roll No 26AMITY UNIVERSITY UTTAR PRADESH

FAST FOOD INDUSTRY

Introduction

Fast food is the term given to food that can be prepared and served very quickly. While

any meal with low preparation time can be considered to be fast food, typically the term

refers to food sold in a restaurant or store with low quality preparation and served to

the customer in a packaged form for take-out/take-away.

Outlets may be stands or kiosks, which may provide no shelter or seating, or fast food

restaurants (also known as quick service restaurants). Franchise operations which are

part of restaurant chains have standardized foodstuffs shipped to each restaurant from

central locations.

The capital requirements involved in opening up a fast food restaurant are relatively

low. Restaurants with much higher sit-in ratios, where customers tend to sit and have

their orders brought to them in a seemingly more upscale atmosphere may be known in

some areas as fast casual restaurants.

History

The concept of ready-cooked food for sale is closely connected with urban development.

In Ancient Rome cities had street stands that sold bread and wine. A fixture of East

Asian cities is the noodle shop. Flatbread and falafel are today ubiquitous in the Middle

East. Popular Indian fast food dishes include vada pav, panipuri and dahi vada. In the

French-speaking nations of West Africa, roadside stands in and around the larger cities

continue to sell—as they have done for generations—a range of ready-to-eat, char-

grilled meat sticks known locally as brochettes.

The Start of Fast Food Culture

The concept of fast food pops up during 1920s.The 1950s first witnessed their rapid

proliferation. Several factors that contributed to this explosive growth in 50’s were:

(1) America’s love affair with the automobiles.

(2) The construction of a major new highway system.

(3) The development of sub-urban communities.

(4) The baby boom subsequent to world war second.

“Fast-food chains initially catered to automobile owners in suburbia.

On the go

Fast food outlets are take-away or take-out providers, often with a "drive-through"

service which allows customers to order and pick up food from their cars; but most also

have a seating area in which customers can eat the food on the premises. People eat

there more than five times a week and often, one or more of those five times is at a fast

food restaurant.

Nearly from its inception, fast food has been designed to be eaten "on the go", often does

not require traditional cutlery, and is eaten as a finger food. Common menu items at fast

food outlets include fish and chips, sandwiches, pitas, hamburgers, fried chicken, French

fries, chicken nuggets, tacos, pizza, hot dogs, and ice cream, although many fast food

restaurants offer "slower" foods like chili, mashed potatoes, and salads.

Variants

Although fast food often brings to mind traditional American fast food such as

hamburgers and fries, there are many other forms of fast food that enjoy widespread

popularity in the West.

Chinese takeaways/takeout restaurants are particularly popular. They normally offer a

wide variety of Asian food which has normally been fried. Most options are some form

of noodles, rice, or meat.

Sushi has seen rapidly rising popularity in recent times. A form of fast food created in

Japan. sushi is normally cold sticky rice served with raw fish.Pizza is a common fast food

category in the United States, with chains such as Domino's Pizza, Sbarro and Pizza Hut.

Menus are more limited and standardized than in traditional pizzerias, and pizza

delivery, often with a time commitment, is offered.

Fish and chip shops are a form of fast food popular in the United Kingdom, Australia and

New Zealand. Fish is battered and then deep fried.The Dutch have their own types of

fast food. A Dutch fast food meal often consists of a portion of French fries .

Business

In the United States alone, consumers spent about US$110 billion on fast food in 2000

(which increased from US$6 billion in 1970). The National Restaurant Association

forecasted that fast food restaurants in the U.S. would reach US$142 billion in sales in

2006, a 5% increase over 2005. In comparison, the full-service restaurant segment of

the food industry is expected to generate $173 billion in sales.

Jobs and labor issues

Today, more than 10 million workers are employed in the areas of food preparation and

food servicing including fast food in the world.

Employees are the backbone of the fast food industry. Proper training is crucial to the

orderly and quick service customers expect. Yet, employee turnover can be as high as

200% per year. With such a turnover, owner-operators of franchise and non-franchise

restaurants have the daunting task of constantly training an entirely new workforce.

Policies and procedures need to be explained to each new employee.

Globalization

In 2006, the global fast food market grew by 4.8% and reached a value of 102.4 billion

and a volume of 80.3 billion transactions. In India alone the fast food industry is

growing by 40% a year. McDonald's is located in 120 countries and on 6 continents and

operates over 31,000 restaurants worldwide.

KFC is located in 25 countries. Subway has 29,186 restaurants located in 86 countries,

Pizza Hut is located in 26 countries, Taco Bell has 278 restaurants located in 12

countries besides the United States.

Health issue

Tran’s fats which are commonly found in fast food have been shown in many tests to

have a negative health effect on the body.

The fast food consumption has been shown to increase calorie intake, promote weight

gain, and elevate risk for diabetes. The Centers for Disease Control and Prevention

ranked obesity as the number one health threat for Americans in 2004. It is the second

leading cause of preventable death in the United States and results in 400,000 deaths

each year.

FAST FOOD INDUSTRY IN INDIA

INDIA – EMERGING MARKET FOR GLOBAL PLAYERS

The percentage share held by foodservice of total consumer expenditure on food has

increased from a very low base to stand at 2.6% in 2001. Eating at home remains very much

ingrained in Indian culture and changes in eating habits are very slow moving with barriers

to eating out entrenched in certain sectors of Indian society.. The growth in nuclear families,

particularly in urban India, exposure to global media and Western cuisine and an increasing

number of women joining the workforce have had an impact on eating out trends.

FACTS AND FIGURES

Fast food is one of the world’s largest growing food type. India’s fast food industry is

growing by 40% a year and is expected to generate a billion dollars in sales by 2005.The

multinational segment of Indian fast food industry is up to Rs. 6 billion, a figure expected to

zoom to Rs.70 billion by 2005. By 2005, the value of Indian dairy products is expected to be

Rs.1, 00,000 million. In last 6 years, foreign investment in this sector stood at Rs. 3600

million which is about one-fourth of total investment made in this sector. Because of the

availability of raw material for fast food, Global chains are flooding into the country.

MARKET SIZE & MAJOR PLAYERS

a) Dominated by McDonalds having as many as 75 outlets.

b) Domino’s pizza is present in around 100 locations.

c) Pizza hut is also catching up and it has planned to establish 125 outlets at the

end of 2005.

d) Subways have established around 40 outlets.

e) Nirulas is established at Delhi and Noida only. However, it claims to cater 50,000

guests every day.

Major players in fast food are:

MCDONALDS

KFC

PIZZA HUT

DOMINOS PIZZA.

COFFEE DAY

BARISTA.

The main reason behind the success of the multinational chains is their expertise in product

development, sourcing practices, quality standards, service levels and standardized

operating procedures in their restaurants, a strength that they have developed over years of

experience around the world. The home grown chains have in the past few years of

competition with the MNCs, learnt a few things but there is still a lot of scope for

improvement.

REASON FOR EMERGENCE

Gender Roles: gender roles are now changing. Females have started working outside. So,

they have no time for their home and cooking food. Fast food is an easy way out because

these can be prepared easily.

Customer Sophistication and Confidence: consumers are becoming more sophisticated

now. They do not want to prepare food and spend their time and energy in house hold

works. They are building their confidence more on ‘ready to eat and easy to serve’ kind of

foods

Paucity of Time: people have no time for cooking. Because of emergence of working

women and also number of other entertainment items. Most of the time either people work

or want to enjoy with their family.

Double Income Group: emergence of double income group leads to increase in disposable

income. Now people have more disposable income so they can spend easily in fast food and

other activities.

Working Women: working women have no time for cooking, and if they have then also

they don’t want to cook. Because they want to come out of the traditionally defined gender

roles. They do not want to confine themselves to household work and upbringing of

children’s.

Large population: India being a second largest country in terms of population possesses

large potential market for all the products/services. This results into entry of large number

of fast food players in the country.

Relaxation in rules and regulations: with the economic liberalization of 1991, most of the

tariff and non tariff barriers from the Indian boundaries are either removed or minimized.

This helped significantly the MNC’s to enter in the country.

Menu diversification: increase in consumption of pizzas, burgers and other type of fast

foods.

CHALLENGES FOR THE INDUSTRY

Social and cultural implications of Indians switching to western breakfast food:

Generally, Hindus avoid all foods that are believed to inhibit physical and spiritual

development. Eating meat is not explicitly prohibited, but many Hindus are vegetarian

because they adhere to the concept of ahimsa. Those seeking spiritual unity may avoid

garlic and onions. The concept of purity influences Hindu food practices. Products from

cows (e.g., milk, yogurt, ghee-clarified butter) are considered pure. Pure foods can improve

the purity of impure foods when they are prepared together. Some foods, such as beef or

alcohol, are innately polluted and can never be made pure. But now, Indians are switching

to fast food that contain all those things that are considered impure or against there beliefs.

Some traditional and fundamentalist are against this transformation of food habit and

number of times they provoke their counterparts to revolt against such foods. And that is

what happened when McDonald’s decided to enter the complexity of Indian business

landscape, counting only on its “fast food global formula”, without any apparent previous

cultural training.

Emphasis on the usage of bio-degradable products: Glasses, silverware, plates and cloth

napkins are never provided with fast food. Instead, paper plates and napkins, polyurethane

containers, plastic cups and tableware, drinking cartons or PET (polyethylene

terephthalate) bottles are used, and these are all disposable. Many of these items are tossed

in the garbage instead of being recycled, or even worse, merely thrown on the ground. This

burdens nature unnecessarily and squanders raw materials. In order to reduce soil and

water pollution, government now emphasis more on the usage of bio-degradable products.

Retrenchment of employees: Most of new industries will be capital intensive and may

drive local competitors, which have more workers, out of business.

Profit repatriation: Repatriation of profits is another area of concern for Indian economy.

As when multinational enters the any countries, people and government hope that it will

increase the employment rate and result in economic growth. However, with the

multinational operation, host country experiences these benefits for a short time period. In

long run neither employment increases (because of capital intensive nature of MNC’s) nor it

increases the GDP or GNP because whatever MNC’s earn they repatriate that profit back to

their home country.

PROBLEMS OF INDUSTRY

Environmental friendly products cost high: government is legislating laws in order to

keep check on the fast food industry and it is emphasizing more on the usage of bio-

degradable and environment friendly products. But associated with this issue is the

problem that fast food player faces - the cost associated with the environment friendly

product. They cost much higher than the normal products that companies uses for

packaging or wrapping their products.

Balance between societal expectation and companies economic objectives: To balance

a society’s expectation regarding environment with the economic burden of protecting the

environment. Thus, one can see that one side pushes for higher standards and other side

tries to beat the standard back, thereby making it a arm wrestling and mind boggling

exercise.

Health related issues: obesity:

I. Studies have shown that a typical fast food has very high density and food with high

density causes people to eat more then they usually need. \

II. Low calories food: Emphasis is now more on low calorie food. In this line McDonald

has a plan to introduce all white meat chicken Mcnuugget with less fat and fewer

calories.

TRENDS IN INDIAN MARKET

Marketing to children's: fast food outlets in India target children’s as their major

customers. They introduce varieties of things that will attract the children’s attention

and by targeting children’s they automatically target their parents because Children’s

are always accompanied by their parents.

Low level customer commitment: Because of the large number of food retail outlets

and also because of the tendency of customer to switch from one product to other, this

industry faces low level customer commitment.

Value added technology services: There is continuous improvement in the technology

as far as fast food market in India is considered. The reason behind that is food is a

perishable item and in order to ensure that it remain fresh for a longer period of time.

Earlier, Indian people prefer eating at home but now with the change in trend there is

also need for improvement and up gradation of technology in food sector.

Attracting different segments of the market: Fast food outlets are introducing

varieties of products in order to cater the demands of each and every segment of the

market. They are introducing all categories of product so that people of all age, sex,

class, income group etc can come and become a customer of their food line.

The success of fast foods arose from the changes in our living conditions:

1. Many women or both parents now work

2. There are increased numbers of single-parent households

3. Long distances to school and work are common

4. Usually, lunch times are short

5. There's often not enough time or opportunity to shop carefully for groceries, or

to cook and eat with one's family. Especially on weekdays, fast food outside the

home is the only solution.

Kentucky Fried ChickenAbout the Company

KFC Corporation, or KFC, founded and also known as Kentucky Fried Chicken, is a

chain of fast food restaurants based in Louisville, Kentucky. KFC is a brand and

operating segment, called a "concept" of Yum! Brands since 1997 when that company

was spun off from PepsiCo as Tricon Global Restaurants Inc. The restaurants are

known as Poulet Frit Kentucky or PFK in the province of Quebec in Canada. In France,

however, the chain is known as KFC.

KFC primarily sells chicken in form of pieces, wraps, salads and sandwiches. While its

primary focus is fried chicken, KFC also offers a line of roasted chicken products, side

dishes and desserts. Outside North America, KFC offers beef based products such as

hamburgers or kebabs, pork based products such as ribs and other regional fare.

The company was founded as Kentucky Fried Chicken by Colonel Harland Sanders in

1952, though the idea of KFC's fried chicken actually goes back to 1930. The company

adopted the abbreviated form of its name in 1991. Starting in April 2007, the company

began using its original name, Kentucky Fried Chicken, for its signage, packaging and

advertisements in the United States as part of a new corporate re-branding program

newer and remodeled restaurants will have the new logo and name while older stores

will continue to use the 1980s signage. Additionally, Yum! Continues to use the

abbreviated name freely in its advertising.

Products

The famous paper bucket that KFC uses for its larger sized orders of chicken and has come to

signify the company was originally created by Wendy's restaurants founder Dave Thomas.

Thomas was originally a franchisee of the original Kentucky Fried Chicken and operated several

outlets in the Columbus, Ohio area. His reasoning behind using the paper packaging was that it

helped keep the chicken crispy by wicking away excess moisture. Thomas was also responsible

for the creation of the famous rotating bucket sign that came to be used at most KFC locations in

the US.

Menu items

KFC's specialty is fried chicken served in various forms. KFC's primary product is pressure-fried

pieces of chicken made with original recipe. The other chicken offering, extra crispy, is made

using a garlic marinade and double dipping the chicken in flour before deep frying in a standard

industrial kitchen type machine.

Kentucky Grilled Chicken - This marinated grilled chicken is targeted towards health-conscious

customers. It features marinated breasts, thighs, drumsticks, and wings that are coated with the

Original Recipe seasonings before being grilled. It has less fat, calories, and sodium than the

Original Recipe fried chicken. Introduced in April 2009.

Discontinued products

The Colonel's Rotisserie Gold – This product was introduced in the 1990s as a response to the

Boston Market chain's roasted chicken products, and a healthier mindset of the general public

avoiding fried food. Purportedly made from a "lost" Col. Sanders recipe, it was sold as a whole

roaster or a half bird.[28]

Tender Roast Chicken – This product was an off-shoot of 'The Colonel's Rotisserie Gold'. Instead

of whole and half birds, customers were given quarter roasted chicken pieces. For a time,

customers could request chicken "original", "Extra Tasty Crispy", or "Tender Roast".

Smokey Chipotle – Introduced in April 2008. The chicken was dipped in chipotle sauce then

doubled breaded and fried. It has been discontinued since August 2008.

Nutritional value

KFC formerly used partially hydrogenated oil in its fried foods. This oil contains

relatively high levels of trans fat, which increases the risk of heart disease. The Center

for Science in the Public Interest (CSPI) filed a court case against KFC, with the aim of

making it use other types of oils or make sure customers know about Trans fat content

immediately before they buy food.

In October 2006, KFC announced that it would begin frying its chicken in trans fat-free oil. This

would also apply to their potato wedges and other fried foods, however, the biscuits.

Advertising

One of KFC's latest advertisements is a commercial advertising its "wicked crunch box

meal". The commercial features a fictional black metal band called "Hellvetica"

performing live, the lead singer then swallows fire. The commercial then shows the lead

singer at a KFC eating the "wicked crunch box meal" and saying "Oh man that is hot".

In 2007, the original, non-acronymic Kentucky Fried Chicken name was resurrected and

began to reappear on company marketing literature and food packaging, as well as

some restaurant signage.

KFC Business Strategy

KFC fast-food chains are currently under the restaurant division of PepsiCo

Incorporated. Some major threats include the changing attitudes of society toward

healthier eating habits, KFC has more than 9,800 outlets located in 77 countries. In

marketing, KFC restaurants are not restricted from locating within close proximity of

other KFC restaurants. There are two alternative strategies for KFC. The first strategy

involves keeping PepsiCo beverage division and snack foods division together, and a

divestiture of PepsiCo restaurant division; selling Taco Bell, Pizza Hut, and KFC.

Present Situation

The organization is currently structured with two divisions under PepsiCo. David Novak

is president of KFC. John Hill is Chief Financial Officer and Colin Moore is the head of

Marketing. Peter Waller is head of franchising while Olden Lee is head of Human

Resources. KFC is part of the two PepsiCo divisions, which are PepsiCo Worldwide

Restaurants and PepsiCo Restaurants International. Both of these divisions of PepsiCo

are based in Dallas.

Strengths

Strengths can be found internally in a company and can be used to the company’s

advantage. The strengths identified are as follows:

1. KFC's secret recipe.

The secret recipe has long been a source of advertising, and allowed KFC to set itself

apart. Also, KFC was the first chain to enter the fast-food industry, just before

McDonald's, which opened its first store a year later, and the "secret recipe" was the

initial home replacement strategy.

2. Name recognition and reputation.

KFC's early entrance into the fast-food industry in 1954 allowed KFC to develop strong

brand name recognition and a strong foothold in the industry. The Colonel is KFC's

original owner and a very recognizable figure, both in the U.S. and internationally, in

their new logo. In fact, in the fourth annual LogoValue Survey, done by The Schecter

Group, the KFC logo was the only one which significantly enhance the brand's image .

3. PepsiCo's success with the management of fast food chains. PepsiCo acquired

Pizza Hut in 1977, and Taco Bell in 1978. PepsiCo used many of the same promotional

strategies that it has used to market soft drinks and snack food. By the time PepsiCo

bought KFC in 1986, the company already dominated two of the four largest and fastest-

growing segments of the fast food industry.

4. Traditional employee loyalty.

"KFC's culture was built largely on Colonel Sanders' laid back approach to management"

(Wright, p.433). Before the acquisition of KFC by PepsiCo, employees at KFC enjoyed

good benefits, a pension, and could receive help with other non-income needs. This kind

of "personal" human resources management makes for a loyal workforce.

5. Improving operating efficiencies by reducing overhead and other operating

costs can directly affect operating profit.

Due to the strong competition in the US, the fast-food chains are reluctant to raise prices

to increase profit. Many of the chains are turning to operating efficiencies to increase

profit. For many companies, operating efficiencies are achieved through improvements

in customer service, cleaner restaurants, faster and friendlier service, and continued

high-quality products.

Weaknesses

Weaknesses are also found internally like strengths. Weaknesses, however, can limit a

company’s potential. The weaknesses for KFC are identified as follows:

1. The many sales of KFC lead to a confusing corporate direction.

Between 1971 and 1986, KFC was sold three times. The first two sales, to Heublein, Inc

and to R.J. Reynolds, left the company largely autonomous. It wasn't until the sale to

PepsiCo in 1986 that changes in top management started to take place. These changes

happened almost immediately after the sale.

2. KFC has a long time to market with new products.

Because of the nature of the chicken segment of the fast food industry, innovation was

never a primary strategy for KFC. However, during the late 1980's, other fast food

chains, such as McDonald's, began to offer chicken as a

Menu option. During this time, McDonald's had already introduced the McChicken while

KFC was still testing its own chicken sandwich. This delay significantly increased the

cost of developing consumer awareness for the KFC sandwich.

3. Conflicting cultures of KFC and Pepsi Co.

While KFC's culture was largely based on the Colonel's laid back approach to

management, while PepsiCo's culture is more of a "fast track" attitude. Employees do

not have the same level of job security that they enjoyed before the PepsiCo acquisition

Problems

Through an analysis of the strengths, weaknesses, opportunities, and threats of KFC, the

following potential problem areas were identified:

1. No defined target market.

The advertising campaign of KFC does not specifically appeal to any segment. It does

not appear to have a consistent long-term approach. The U.S. has enormous changes in

its demographics. Single-person households have increased from 12% in 1970 to 25%

in 1995. With this kind of dramatic change, KFC does not have a proper approach to its

target market.

2. Health Conscious Consumers.

There has been a trend toward an increasingly healthy diet in America. This put KFC at

an extreme disadvantage due to its fried product offering.

3. Increased Start Up Costs.

Prime locations have increased in cost due to limited room for expansion. New

technology has increased efficiencies, but resulted in greater increased start up costs.

Restaurant and equipment packages range from $500,000 to $1,000,000.

Achievements:

KFC is one of the most renowned world gastronomic brand names. Kentucky Fried

Chicken products are currently offered in 80 countries worldwide and in more than

11,000 restaurants which are visited on a daily basis by almost 8 million customers.

Globally, KFC employs approximately 290,000 people, Worldwide, a new KFC

restaurant is opened almost every day.

In 2004 the “KFC Excellent” range - three types of salad (Caesar, Garden and Mandarin)

obtained the prize for “Worldwide Best Practice Award 2004” in the category of best

product and best marketing campaign and its implementation in the restaurants. This

prize is distributed each year by YUM Restaurants International.According to the

ratings for “Most expensive world brands 2004” conducted by the American weekly

‘Business Week’, KFC was positioned 54th place; currently valued at 5.1 billion USD.

DOMINO’S

SIZE OF THE MARKET

Domino's Pizza is one of the biggest and fastest growing international food joints in South

Asia. The very first Domino's Pizza outlet in India opened in Jan, 1996 at New Delhi. Today,

Domino's Pizza India has become a wide network of Pizza delivery and food chain. There are

close to 220 outlets in 42 cities of India and the brand is the top most among the food

delivery business. Domino’s Pizza outlets can be seen at major locations of Delhi and NCR.

Their home delivery is free with a guarantee of “Thirty Minutes Nahi to Free”. Although

they are expert in delivering Pizzas on time, their eating joints and outlets are also good. We

plan to have a total of 500 stores in 75-80 cities by 2010 to 2011. It would entail an

investment of Rs 200 million during the period

MARKET GROWTH

During last four months, dominoes have opened outlets in Jammu, Panipat, Surat, Baroda,

Nashik, Trivandum, Meerut and Patiala. While earlier, 70 percent of our business used to be

in metros and mini-metros, now the ratio is 50:50 between big cities and smaller Tier II and

III cities. Domino’s Pizza is expanding its base in India by opening 500 outlets to add to its

current tally of 156 outlets, across 50 cities in India by 2011 with an investment of Rs.1, 000

crore.

MARKET STRATEGIES

Promotional and Advertisement Campaigns(Coupons and discounts)

The '30 Minutes' Promise

Use of Technology(Digital interactive Television, Internet on the PC, Mobile

telephony)

Premium Pricing Strategy

Indian fast food industry and entry of multinational players

Distribution strategies of fast food chains in India

MARKET SHARE

The organized pizza market in India is worth Rs.500 crore and Domino’s has a substantial

45% market share, and registered a healthy growth of 60% over last year. The main target

for new outlets shall be metro cities though Tier II cities would also receive a fair amount of

attention. Currently Domino’s sells around 35,000 pizza every day, of which around 1% are

given free on account of its “30 minutes or free” model. 65 percent of its revenue comes

from home delivery service; around 35 percent is from sales in premise.

COMPETITORS

Fast food is one of the world's fastest growing food types. It now accounts for roughly half

of all restaurant revenues in the developed countries and continues to expand there and in

many other industrial countries in the coming years. But some of the most rapid growth is

occurring in the developing world; where it's radically changing the way people eat. People

buy fast food because it's cheap, easy to prepare, and heavily promoted. This paper aims at

providing information about fast food industry, its trend, reason for its emergence and

several other factors that are responsible for its growth. India is a developing country with 2

percent of organized and 98 percent of unorganized sector. So most of the fast foods came

into Indian market as India has a high growth in every sector. Some of the competitors of

domino’s are

McDonald's

Pizza Hut

Barista

Coffee Day

BARISTA

Barista coffee was establishes in 1999 with the aim of identifying growth opportunities in

the coffee business. Increasing disposable incomes and global trends in coffee indicate

immense growth potential in one particular segment.

Barista Coffee is a chain of espresso bars in India. Headquartered in Delhi, Barista currently

has espresso bars across India, Sri Lanka and the Middle East. It was founded in 1997 by

Amit Judge and was part of his group of companies. He sold part of the equity to first Tata

Coffee. Then after he and Tata Coffee fell apart, Sterling then bought over the firm. In 2007,

Sterling divested all their stake to Lavazza. Barista Coffee Company is currently owned by

Lavazza, Italy’s largest coffee company

At Barista Lavazza, we do all we can to make every guest feel comfortable and welcome. We

serve nothing but the finest Arabica coffees and cuisine at great value prices. We have

friendly and efficient brew masters who believe in service with a smile. And provide a

cheerful, interactive ambience that makes guests wish their coffee breaks lasted just a little

bit longer.

To share our cup of joy, we have always stuck to our Italian roots, guarding them zealously

to ensure that our espresso bars reflect the warmth and character of traditional Italian

coffee houses. And in the process, make Barista Lavazza the place ‘where the world meets’.

Our aim is to passionately deliver the highest levels of experiential services. Maintain

consistency in serving the highest quality products and become a globally competitive

organization – one that is driven by an insatiable thirst for excellence.

CAFÉ COFFEE DAY

Café Coffee Day is a chain of coffee shops in India having its headquarters in

Chikkamagaluru, Karnataka. A division of Amalgamated Bean Coffee Trading Company

Ltd. (ABCTCL), it is commonly known as Coffee Day or CCD. It opened its first cafe in

1996 on Brigade Road in Bangalore, and today has the largest cafe retail chain in India – with

over 800 cafes in 112 cities.

Large number of coffee day cafes are located in Bangalore. The cafe chain has had much

success riding, and to some extent creating, the cafe culture wave that swept across

metropolitan India following strong economic growth resulting in an increase in youth

spending power. It has even tied up with World Space and Micro sense to enable its cafes

with satellite radio and Wi-Fi, respectively. Its first Wi-Fi cafe was opened on Lavelle Road,

Bangalore.

Café Coffee Day sources coffee from 5000 acres of coffee estates, the second largest in Asia,

that is owned by a sister concern and from 11,000 small growers. It is one of India’s leading

coffee exporters, with clients across the USA, Middle East, Europe and Japan.

With its roots in Chikmagalur, the home to some of the best Indian coffees, Coffee Day has

its business spanning the entire value chain of coffee consumption in India. Its different

divisions include: Coffee Day Fresh 'n' Ground (which owns 450 coffee bean and powder

retail outlets), Coffee Day Xpress (which owns 730 Coffee Day kiosks), Coffee Day

Takeaway (which owns 9000 vending machines), Coffee Day Exports and Coffee Day

Perfect (FMCG Packaged Coffee) division. It is entering the European market by opening

two Cafés in Austria as well, making forays into Pakistan and Germany to set up cafes

abroad. The strategy CCD has adapted is to place a cafe in every possible location where

some business can be generated. So in Bangalore, in the main shopping district, there are six

outlets in a 2 km radius and overall 120 cafes in Bangalore alone.

Another model which CCD has adapted is to be present in educational institutions and

corporate campuses either in the form of detailed cafes or its economical model of CCD

express.

These innovative strategies have ensured that the competition is at bay and ensured CCD's

dominance in the Indian market though many of its outlets are incurring losses.

Cafe Coffee Day competitors include but are not limited to

Barista

Cafe Mocha

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LITERATURE REVIEW

Zenk, S. et al. “Neighborhood Racial Composition, Neighborhood Poverty and the Spatial

Accessibility of Fast Food Stores in Metropolitan Detroit”. American Journal of Public

(2005); 95(4).

Abstract: Residential environment is clearly related to health, specifically dietary health. In

fact, many of the most serious chronic illnesses in the United States are associated with

dietary deficiencies. Proper access to nutritious foods is essential to decreasing dietary

related chronic illness. Supermarkets provide dietary health resources through higher

quality and lower costs of nutritious foods. This study examines the spatial accessibility of

supermarkets for 869 neighborhoods within Metropolitan Detroit with relation to

community's poverty and racial composition. The percentage of residents below the poverty

line serves as the measure of neighborhood poverty for the study. Supermarkets are defined

as either a Supercenter such as Super Kmart or a full-line grocery store associated with a

national or regional grocery chain such as Kroger. Spatial accessibility is equivalent to a

Manhattan block. The study found that the distance to the nearest Supermarket increased

with increasing levels of neighborhood poverty. While the distance to the nearest

Supermarket was similar among the most impoverished neighborhoods, African American

communities averaged 1.1 mile greater distance to the nearest supermarket than

predominantly white neighborhoods.

Relevant Data:

Literature now associates residence in economically disadvantaged neighborhoods, after

controlling for socioeconomic status, with a variety of adverse diet-related health outcomes.

Disparities in Supermarket accessibility on the basis of race were evident among the most

impoverished neighborhoods: the most impoverished neighborhoods, in which African-

Americans resided, were on average were 1.1 miles farther from the nearest supermarket

than the most impoverished white neighborhoods.

Mean distance to the nearest supermarket increased with each successive tertile of

percentage poor for neighborhoods with a high proportion of African Americans but

remained approximately the same across all tertiles of percentage poor for neighborhoods

with a low proportion of African Americans (predominantly white) .

Inadequate accessibility to supermarkets may contribute to less nutritious diets and hence

to greater risk for chronic diet related disease.

Affordable public transportation needs to be improved integrating transportation routes

with supermarket locations .

Powell, Lisa M. et al. “Food store availability and neighborhood characteristics in the

United States”. American lifestyle(2007 Mar); 44(3):189-195.

Abstract: A 2006 study of the United States linked zip codes to census data, finding various

statistics about the availability of grocery stores in accordance to neighborhood descriptions

and demographics. There are distinct disparities between the access of blacks, whites and

Hispanics to supermarkets, with a definite correlation in location, socioeconomic status, and

race.

Relevant Data:

Low-income neighborhoods have fewer chain supermarkets with only 75% (p < 0.01) of that

available in middle-income neighborhoods .

Even after controlling for income and other covariates, the availability of chain

supermarkets in African American neighborhoods is only 52% (p < 0.01) of that in White

neighborhoods with even less relative availability in urban areas .

Hispanic neighborhoods have only 32% (p < 0.01) as many chain supermarkets compared to

non-Hispanic neighborhoods.

Larger sized food stores such as supermarkets versus smaller stores and chain versus non-

chain supermarkets have been shown to be more likely to stock healthful foods and to offer

foods at a lower cost.

Furthermore, given that low-income populations are less likely to have private means of

transportation and given that the nature of food shopping involves either transporting

multiple shopping bags or making more frequent shopping trips, the mobility strategies for

food shopping among low-income families will exacerbate the barriers to a limited number

of available local area supermarkets, in particular chain supermarkets. Indeed, several

studies have highlighted the mobility constraints faced by low-income households in their

daily activities including food shopping .

A recent report finds that African Americans prefer to shop in chain supermarkets and that

one of the key factors that influence these shoppers is transportation and location.

Proximity is important—37% of African American shoppers travel one mile or less to their

primary grocery store .

Grengs, Joe. “Does Public Transit Counteract the Segregation of Carless Households?

Measuring Spatial Patterns of Accessibility”. Transportation Research Board of the

National Academies (2007);

Abstract: This study researched Geographic Information Systems, technology that measures

transit use on smaller scales, to address the problem of urban populations that depend on

public transportation but have a lack of access to their everyday needs, including food.

Relevant Data/Quotations:

The analysis finds that over 7,500 households, representing 12 percent of New York City's

households, do not have reasonable access to supermarkets.

The study provides statistically significant evidence that poor accessibility is associated both

with low-income neighborhoods and with neighborhoods with disproportionately high

populations of African Americans.

Service Quality: An investigation into Malaysian Fast food consumers using DINESERV

Keang Meng Tang, University of Newcastle

Ursula Bougoure, Queensland University of Technology

As noted by Doran (2002), it is imperative that we seek to examine commonly accepted,

western-based marketing theory in the context of different countries to see whether such

concepts explain the same phenomena in consumers from different countries. Whilst

extensive research has been conducted on service quality over the past two decades (e.g.

Bitner, 1990; Cronin and Taylor, 1992, Parasuraman, Zeithaml and Berry, 1988), relatively

little attention has been paid to issues surrounding service quality in non-western countries,

like the Asian region and in particular, Malaysia.

Of the knowledge gained in the service quality literature, the work of Parasuraman,

Zeithaml and Berry (1988) provides an approach to defining and measuring service quality,

known as SERVQUAL. Incorporating five service quality dimensions of tangibles, reliability,

responsiveness, assurance and empathy, SERVQUAL has been well utilised within the

literature. This being said however, it is important to note that SERVQUAL has been found to

possess certain limitations, particularly when applied across different service industries (eg:

Babakus and Boller, 1992; Schneider and White, 2004). For example, DINESERV for

restaurants was developed by Stevens, Knutson and Patton (1995), in response to findings

that SERVQUAL was inadequate for the ‘unique’ restaurant environment (Dube, Renaghan

and Miller, 1994).

Prior research suggests that not all service quality elements (within tools such as SERVQUAL,

DINESERV) are able to predict a consumer’s overall service quality perceptions or (OSQ)

(Oliva, Oliver and MacMillan, 1992). Therefore, it is important to identify the importance of

service quality and its dimensions in determining overall service quality (OSQ), as perceived

by customers. By addressing this issue, firms can gain an understanding of the areas they

should concentrate on when seeking to improve their overall service quality provisions

(Oliva, Oliver and MacMillan, 1992). In the context of the fast food industry, it appears likely

that service quality dimensions from DINESERV will positively effect overall service quality

(OSQ) perceptions by Malaysian consumers. Thus,

H1: Service quality (DINESERV) will positively effect Overall Service Quality

perceptions (OSQ) for Malaysian fast food consumers.

Customer satisfaction has long been recognised as a process (Oliver, 1981) and is the

difference between consumers’ perceived and expected performance of a product or

service. In other words, customer satisfaction occurs when performance is higher than

expected, while dissatisfaction occurs when performance is lower than expected. Overall, to

gain customer satisfaction, some argue that organisations need to exceed predictive

expectations of customers, rather than just satisfy expectations (Spreng and Mackoy, 1996).

Service quality and customer satisfaction are inarguably fundamental concepts within

services marketing theory (Spreng and Mackoy, 1996) and their relationship has seen

increasing research interest over the years (Bitner, 1990; Dabholkar, 1995; Spreng and

Taylor, 1997; Mohsin, 2003). While it is generally accepted that a positive relationship exists

between service quality and customer satisfaction, there is debate (Shemwell, Yavas and

Bilgin, 1998) with proposals of a causal link from customer satisfaction to service quality

(Bitner, 1990), service quality to customer satisfaction (Bolton and Drew, 1991; Spreng and

Mackoy, 1996; Parasuraman, Zeithaml and Berry, 1994); suggestions that directionality

varies according to the service situation (Dabholkar 1995) and even that there is no

relationship under particular circumstances (Parasuraman, Zeithaml and Berry, 1985). Such

contention within the literature has lead to repeated calls for further examination of this

relationship (e.g. Rust and Oliver, 1994; Anderson and Fornell, 1994). In the case of fast

food, however, it seems likely that high service quality will lead to increased satisfaction for

consumers. Thus,

H2: Service quality (DINESERV) will positively effect customer satisfaction for

Malaysian fast food consumers.

Intention to repurchase is an individual’s judgment about re-buying a designated service,

taking into account their current situation and likely circumstances (Hellier et al., 2003).

Within the literature, repurchase behaviour is seen as a form of loyalty, which according to

Law, Hui and Zhao, (2004) and Oliver (1997) is a deeply held commitment to consistently

repatronise a service in the future. Repurchase intentions have a powerful effect on

potential business profit with some reports arguing as much as 95 percent of profit arises

from repeat purchases (Hoffman et al., 2003). As such, loyal customers are valuable

marketing tools, telling friends and families of their positive experiences and creating new

business and increased revenue for successful service organisations. Service quality is tied to

desirable business outcomes, such as customer loyalty, which ultimately lead to increased

profits (Schneider and White, 2004). As argued by Rust, Zahorik and Keiningham (1995),

service quality generates consumer intention to return, which can translate into actual

behaviours that may lead to increased revenues and profits. In the extant literature

however, there are mixed findings as to the relationship between overall service quality and

behaviors that are indicative of customer loyalty. For example, while Boulding et al (1993)

and Rust and Zahorik (1993) provide empirical support that higher perceptions of service

quality increases loyalty intention, Cronin and Taylor (1992) found that overall service

quality did not effect repurchase intentions. Overall however, results tend to support this

relationship and it seems likely that this will be the case for Malaysian consumers of the fast

food industry. Thus,

H3: Overall service quality (OSQ) will positively effect repurchase intentions for

Malaysian fast food consumers.

According to Schneider and White (2004), satisfied customers most likely will become loyal

which can then translate into higher profits organizations. As such, the relationship between

customer satisfaction and repurchase intentions has been examined with results implying

that satisfied customers are more likely to intend to repurchase (Taylor and Baker, 1994;

Patterson and Spreng, 1997). According to such findings, it appears likely that this will also

be the case for Malaysian consumers in the fast food industry. Thus,

H4: Customer satisfaction will positively effect repurchase intentions for Malaysian fast food

consumers.

Sample and Research design

A descriptive research design was adopted to do the survey with the help of the questionnaire. The

study used non probability convenience sampling. The methodology of study is the interview

method survey. The study is completely based on the primary data which is collected from different

Fast food stores and the sample size taken for study is 100 people.

Tools and Methods of Data Collection:

The interview is conducted for about 15 minutes with each person and collected the data. The tool

for the collection of data is a questionnaire. The questionnaire has 15 questions.

Data Processing and Analysis:

The data processing consists of coding the data collected in the form of questionnaire. The data

collected with the help of questionnaire is having the closed replies. One open ended replies have

been taken for that if any problems they are facing and for the close ended the replies are measured

using scales.

Major Findings

This study indicates that majority of the customers visit the fast food retail store

weekly (i.e. 38%) and minority of them (19%) visit fortnightly

This study indicates that majority of the customers are willing to spend money of

price range 200-500 (i.e. 60%) and minority of them says that they will spend money

of price range 100-200 (i.e. 24%) in the fast food retail store

This study indicates that majority of the customers (i.e. 50%) prefer special offers in

the store and minority of them (i.e. 29%) prefer easy accessibility

This study indicates that majority of the customers (i.e. 44%) of them are neutral to

prefer the store for friendliness of staff and minority of them (i.e. 40% ) of them

agree that they will prefer the store for friendliness of staff

This study indicates that majority of the customers ( i.e. 39%) of them agree that they

will prefer the store due to the variety of menu and minority of them (i.e. 21% ) of

them neutral about the variety of menu in the store

This study indicates that majority of the customers (i.e. 33%) of them disagree that

they will prefer the store due to the calorie content in the food and minority of them

(i.e. 31%) agree that they will prefer the store due to the calorie content in the food

This study says that majority of the customers (i.e. 40% ) of them agree that they will

prefer the store for ambience provided in the store

This study says that majority of the customers (i.e. 35% ) of them agree that they are

satisfied with the menu that was offered in the fast food store and followed by some

of them are neutral about the menu for their family

This study indicates that majority of the customers (i.e. 45%) of them agree that they

will prefer the store due to easy accessibility and locational advantage

This study indicates that majority of the customers (i.e. 33%) of them are neutral

about the advertising strategy provided by the store and followed by that customers

agree the store for the advertising strategy

This study indicates that majority of the customers (i.e. 41% ) agree that they will

prefer the store because of special offers and discounts.

Major suggestions:

As majority of customers (38 percent) visit the store weekly especially weekends. So it is

suggest to stores give special offers and discounts to capture more customers and retain

loyal customers.

As study refers more customers are looking for the special offers ,so it suggest stores to

more concentrate on the special offers but no compromise in the quality of food.

It is found that majority of customers are not fully satisfied with the friendliness of staff. So it

is suggest that the stores should conduct soft skill training and make them give more

customer service .Regular monitoring of the staff behavior towards customers is also suggest

here.

Customers are happy with the MENU verities available in the stores .But it is suggested that

add more customized menu and review the menu for every 3 months.

As study shows that customers are not aware of the calorie contents exist in the food. So it is

suggest that stores should display the calorie contents available in a particular food.

It is suggest the stores to concentrate on the areas of ambience and locational strategy.

Advertising strategy of the stores are not making attention the customers .So it is suggest

the stores to think of the design of different innovative advertising campaigns.

Pest analysis of fast food Industry

Political

Health and Safety Guidelines:

Food laws and RegulationsTo meet a country’s sanitary and phytosanitary requirements, food must comply with the local laws and regulations to gain market access. These laws ensure the safety and suitability

of food for consumers, in some countries; also govern food quality and composition standards.

The requirement of food regulation may be based on several factors such as whether a country adopts international norms developed by the Codex Alimentarius Commission of the Food and Agriculture Organization of the United Nations and the World Health Organization; good agricultural and manufacturing practices; or a country may also has its own suite of food regulations. Each country regulates food differently and has its own food regulatory framework. Usually more than one agency is involved in food regulations e.g. health and agriculture, they may have centralized or regionally controlled food regulations, and different agencies may be involved in enforcement activities.

Types of food safety and quality standards that apply in most countries:

Food Safety and Standards Act

The Indian Parliament has recently passed the Food Safety and Standards Act, 2006that overrides all other food related laws. It will specifically repeal eight laws:

The Prevention of Food Adulteration Act, 1954

The Fruit Products Order, 1955

The Meat Food Products Order, 1973

The Vegetable Oil Products (Control) Order, 1947

The Edible Oils Packaging (Regulation) Order, 1998

The Solvent Extracted Oil, De oiled Meal, and Edible Flour (Control) Order, 1967

The Milk and Milk Products Order, 1992

Essential Commodities Act, 1955 relating to food

The Act establishes a new national regulatory body, the Food Safety and Standards Authority of India, to develop science based standards for food and to regulate and monitor the manufacture, processing, storage, distribution, sale and import of food so as to ensure the availability of safe and wholesome food for human consumption. All food imports will therefore be subject to the provisions of the Act and any rules and regulations made under the Act.

As a temporary measure, the standards, safety requirements and other provisions of the repealed Acts and Orders and any rules and regulations made under them will continue to be in force until new rules and regulations are put in place under the Food Safety and Standards Act, 2006. For that reason, importers will for some time have to continue to take

into account the provisions of those repealed Acts and Orders.

GM Foods

“Sections of Indian government establishment are violating different laws regarding genetically modified food to illegally favour bio-technology multi-national corporations against the interest of citizens,” said renowned scientist Dr P M Bhargava, former vice-chairman, National Knowledge Commission, Founder Director of Centre for Cellular and Molecular Biology and Supreme Court nominee to GEAC, in a dialogue on GM crops: Need and impact assessment.

The dialogue was organised by the Alliance for GM Free and Safe Foods on Sunday and was attended by Chief Justice of Punjab and Haryana High Court, Mukul Mudgal. Dr Bhargava also said that the during and after the public hearings on the Bt-Brinjal, headed by Environment Minister Jairam Ramesh, undue pressure bereft of any scientific data and studies was put on the minister to favour Monsanto and its Indian subsidiaries.

He said, “This illegal pressure is now visible in the provisions of the proposed Biotechnology Regulatory Authority (BRAI) Bill, which in its present form not only contains unconstitutional provisions but is also a total sell out to the interests of selected bio-technology MNCs.”

Starting the dialogue, social activist Hemant Goswami said, “Before taking their final decision on GMO crops, the government must answer: Are we ready to allow some profit-seeking MNCs to control and monopolise our food chain, seed supply and crop related patents? Is the government working for the welfare of Indian citizens or just for the profit maximisation of MNCs at the cost of the health and future of Indian citizens?”

Animal Rights Campaigns

PETA India, based in Mumbai, was launched in January 2000. PETA India operates under the simple principle that animals are not ours to eat, wear, experiment on or use for entertainment, while educating policymakers and the public about animal abuse and promoting an understanding of the right of all animals to be treated with respect.

PETA India focuses primarily on the areas in which the greatest numbers of animals suffer the most: in the food and leather industries, in laboratories and in the entertainment industry. PETA India's investigative work, public education efforts, research, animal rescues, legislative work, special events, celebrity involvement and national media coverage have resulted in countless improvements to the quality of life for animals and have saved countless animals' lives.

ECONOMIC

Low set up costs- Since the set up of organisations in fast food industry is value add to the raw food and it’s a kind of immediate sales hence cost involved however high can be recovered soon.

Franchising facilitates set ups

FAI is a member of World Franchise Council (WFC), an amicable and non-political association of National Franchise Associationsunder the support of

the International Franchise Association (IFA)and supported by the European Franchise Federation. Full membership of WFC is open to all National Franchise Associations (NFAs) whose constitution requires a subscribing membership and a governing body which is in the majority composed of franchising companies.

Only one NFA is recognised by WFC for each country and from India, FAI is the only association which is a member of WFC. The objectives of WFC are to help connect the member Associations in 46 different countries towards the common goal of promoting the concept of Franchising and the related best practices.

Support from major suppliers

Growing market

Perceived value for money

Increasing disposable income

SOCIAL

Busy lifestyles- Since India is ever developing and the practice of DINK i.e. Double Income No Kids is evolving and this eating habit today holds a lot of importance in social life

Healthy Eating and Obesity- America the biggest and inventor of fast food industry in the world is the most obese nation in the world and this awareness is creeping in and people are getting more aware of the trend.

Increased Vegetarianism: Since India is a secular country so a lot of learned preachers are promoting the religious path and pushing the population towards vegetative diet as they promote the root cause of all diseases is non veg food.

Technological

The use of I.T. and heavy use of ERP solutions and CRM software makes this Industry a very I.T dependent industry.

McDonald’s

McDonald's, a name that instantly triggers a smile for its scrumptious burgers, has a wide network of outlets throughout the country. The company started its operations in India in 1996. In India, it is a 50-50 joint venture partnership between McDonald’s Corporation (US) and two Indian businessmen Amit Jatia and Vikram Bakshi. The company has evolved special menu in the vegetarian category to suit Indian tastes and preferences. Taking in consideration the Indian culture, it doesn’t offer any beef or pork items in India. McDonals’s imparts world class training to its employees.

Soon after setting shop in India, McDonalds’ Vikram Bakshi knew he had a problem — the signature French Fries weren’t right. It took him nine years and several experiments to get it right.

Name: Vikram Bakshi

Designation: CEO, McDonalds India (North and East)

The Challenge: To create the infrastructure to make the perfect McDonalds French fries in India

How He Did It: For nine years researched potato growing in India. Set up a processing plant in 2007

What Next? Source fish from India

In October 1996 we opened our first store at Vasant Vihar in New Delhi. There were long lines outside and this being an affluent neighbourhood, a lot of our customers had already tasted McDonald’s abroad. While we were very happy with the long lines outside our store, it became obvious very quickly that there was something wrong with the French fries we were serving. And customers began to notice too.

Worldwide, McDonald’s is known for producing what we proudly refer to as the gold standard as far as French fries are concerned. Our internal surveys have shown that 30 percent of customers come to our restaurants only to eat our fries. This is a huge number and we knew we could not afford to alienate them.

Those were also the days when foreign exchange was a scarce commodity. Before entering India we had promised the government that we would source everything locally. Now we had to go back on that promise. In 1997 we asked the government for a small window to allow us to import fries. At the same time we assured them that we would go about developing systems within the country to produce these fries. The government agreed and our initial plan to set up a plant to make frozen French fries was scrapped.

Clearly the problem, and one we hadn’t sufficiently anticipated, was with Indian potatoes. India is the world’s third largest producer of potatoes but none of the varieties are suitable for producing the fries we needed.

In general, Indian potatoes have very high moisture content — between 85 percent and 88 percent. But to make French fries we also need a fairly high amount of solid content in the potato of about 22 percent to 24 percent. Unless you have these solids the French fries would soak up a lot of oil and get very limpy. That in one stroke takes away from the crispness. These potatoes are usually not grown in India. Most potatoes are used for vegetable making in India and they hardly require these specifications. They are, at best, medium and round.

Another important requirement of our signature fries is the very large oblong shape. Medium and round won’t do; 200-250 grams in weight and about 4 inches to 6 inches is what we needed. And lastly, they need to have low sugar. Otherwise, while frying the sugar caramelises and it results in a brown tinge on the fries.

In 1997, we asked our global partners McCain Foods to extend their partnership to India and help us in developing the right kinds of potatoes in this part of the world. They agreed and set shop here with a team of two agronomists who started scouring the country for the ideal growing location.

Simply put, all that potatoes need to grow are long daylight hours, cool nights and sandy soil. Cool nights mean that this is primarily a winter crop in India and between Punjab, Uttar Pradesh and West Bengal, about 90 percent of the country’s potatoes are grown.

First off, we had to make sure we had the right seeds. The Indian government does not allow importing seeds and so we brought in some saplings to Lahaul in Himachal Pradesh. It hardly rains in Lahaul and all water there is fresh from the glaciers. We chose Lahaul as we could grow these saplings in a pollution free environment. Another advantage with Lahaul is that we are able to plant the seeds [that we got after planting the saplings] a lot quicker. Potato is a seasonal crop, usually harvested in March across India. The seeds are then stored for planting in November. In this case we plant the saplings in May in the hills and harvest them in September, making them ready to plant in November.

After several years of testing out locations in states across India we finally settled on Gujarat for two reasons. Firstly, this part of the country does not get any winter rain and the nights and early mornings are without fog, which causes the potatoes to sprout. Also, Gujarat farmers are among the most entrepreneurial in the country and are quick learners.

We introduced them to drip irrigation that helped save 30-50 percent of the water they would have otherwise consumed. Our yields per hectare are also 30-40 percent higher. All this took us seven years and by 2007 McCain was confident enough to invest $40 million and set up a plant in Mehsana, Gujarat.

Our job hardly ends once the potatoes are harvested. This is probably the most crucial stage and we tell our people that potatoes have to be handled like eggs — delicately. We realised

that cold storage facilities in India were not up to scratch and had to set up our own. When potatoes are in storage they release a lot of carbon dioxide. That has to be pumped out and fresh air pumped in. Temperature also needs to be maintained. If you keep temperature too high, the potatoes tend to sprout. Keep the temperature too low and they develop sugar. French fries with sugar become caramelised when fried.

Our restaurant managers are given complete autonomy to reject any consignment of frozen fries that does not meet our requirements. We take out a few random packets from each delivery and measure the fries. Forty percent must be above 4 inches, another 40 percent between 2 and 4 inches and the last 20 percent less than 2 inches. Deviating a percent or two is fine but anything more than that and we send the delivery back.

Making the right French fries is the first assignment we put our young recruits on. Our requirements are very strict and unless they learn how to make the right French fries we don’t move them on to the next assignment, which is frying patties. I still remember my training at Jakarta when we learned how to fry them at 168o centigrade for three minutes and 10 seconds to get the perfect colour.

Beef and pork products are not offered to observe Indian religious sensitivities. Jhatka certified chicken and fish are the only meat products used in India.

In India, meat and vegetarian meals are prepared in separate areas of the restaurant because of religious laws about preparation of food for vegetarians and meat-eaters. Cooks preparing vegetarian dishes wear distinctive green apron

There is an Indian version of the Big Mac, called the Maharaja Mac, which is made with two grilled chicken patties and is topped with onions, tomatoes, cheese and a spicy mayonnaise. It was originally made with lamb, but is now made with chicken.

Mexican-style wraps for both vegetarians and non-vegetarians, like the Mexican Chicken Wrap, and Curry Pans in shahi paneer and chicken tikka variations are also offered.

The Paneer Salsa Wrap is sold in India. It starts with a small slab of paneer that has been dredged in a coating that is a cross between Mexican and Cajun in flavor. It is fried and the paneer patty is wrapped in flatbread and topped with a mixture that includes lettuce, red cabbage and celery and then is finished off with vegetarian mayonnaise, salsa and cheddar cheese.

Other items on the Indian menu include chicken and fish products like the McChicken,the Chicken McGrill and the Filet-O-Fish.

The vegetarian burger menu consists of the McAloo Tikki Burger. It is a veggie burger which includes a patty made out of potatoes, peas, and spices. It also includes tomato slices, onions, and vegetarian mayonnaise.[6]McVeggie is another vegetarian burger on the menu. It looks similar to the McAloo Tikki Burger (see above), but starts with a sesame seed bun. In between the bread, you'll find a vegetarian patty that is made from peas, carrots, green beans, red bell pepper, potatoes, onions, rice, and seasoning. The burger is then garnished with lettuce and has mayonnaise spread thickly on the bread.

There is also a Pizza McPuff, which also starts with a rectangular shaped crust, but instead of a creamy sauce, it is flavored with a tomato-based sauce and then is topped with carrots, beans, bell peppers, onions, peas and mozzarella.

A breabkfast menu is available in selected outlets. The menu includes veg items like Veggie McMuffin, hash browns, Cuppa Corn, hotcakes with maple syrup, and Spinach and Corn McMuffin. The non-vegetable menu features egg and cheese McMuffin, Sausage McMuffin and Chicken Salami McMuffin. These products are available at selected outlets from 7:00 AM to 11:00 AM.[7]

Recently the McSpicy Chicken and McSpicy Paneer burgers and wraps have also been introduced.

PESTLE ANALYSIS

POLITICAL

The operations of McDonalds are affected by the government policies on the regulations of fast food operation. Currently government are controlling the marketing of fast food restaurant because of health concern such as cardiovascular and cholesterol issue and obesity among the young and children in the country. Governments also control the license given for open the fast food restaurant and other business regulation need to follow such as for a franchise business. Good relationship with government in giving mutual benefits such as employment and tax is a must for the company to succeed in any foreign market. McDonalds should also protect its workers by ensuring all the hiring, compensation, training or repatriation is according to Malaysian Labor Law as stipulated.

ECONOMICS

As a business entity, McDonalds need to face a lot of economic variables outside its company or its macro environment. Dealing with international sourcing for its material McDonalds should be aware on the global supply and currencies exchange. Remember, McDonalds import most of its raw material such as beef and potatoes due to local market cannot supply in abundant to meet the demand of its product. Any upside of currencies especially dollar will be impacting its cost of purchase.

Working on the local country, McDonalds must face government regulations on tax of profit where it gains from the operation and other tax such as entertainment and restaurant service tax. Each country may have different scale or types of tax available and McDonalds should follow the regulation if it wants to continue the operation. As a franchise, McDonalds should also pay certain percentage of the revenue to the parent company in United States.

The economic condition and growth of the country also is an important indicator to the demand of products that McDonalds offered. As the food priced slightly above normal foods, not many people will have the income range to consume the products. Moreover if the economy is bad and income percapita is affected, the demand of McDonalds product will certainly going down. On the other hand the good economy also means disposable income is more and people can spend more on more expensive food at fast food restaurant.

SOCIAL / CULTURAL

The changing lifestyles of Malaysia due to development of Malaysian economy should be also taking into consideration. While more people are able financially to eat at more expensive outlet such as fast food restaurant, they have higher expectation. They want to have quality in services and more conveniences that can differentiate one restaurant from another. Young urban consumers want technology in their life and facilities such as credit card payment, wireless internet, cozy and relaxing ambient place, and other attraction for their hangout and eating. All these needs should also be taken into consideration. There is not much difference between cultural and the purchase of products in a single country but for different countries cultural sensitivity should be upheld. For example in India people (Hindu) do not take beef, Muslim countries do not take pork, German like beers, Finnish like fish type of food menu, Chinese like to associate food with something good (for example prosperity), Asian like rice and Americans eat in big-sized menu. So far McDonalds has shown good efforts in localization of its menu to suit local taste but it should constantly survey and learn about local culture to better understand and design the best product for them.

TECHNOLOGY

For a fast food restaurant, technology does not give a very high impact on the company and it is not a significant macro environment variables. However McDonalds should be looking to competitors innovation and improve itself in term of integrating technology in managing its operation. For example in inventory system, supply chain management system to

manage its supply, easy payment and ordering systems for its customers and wireless internet technology. Implementation of technology can make the management more effective and cost saving in the long term. This will also make customer happy if cost savings results in price reduction or promotional campaign discount which will benefits them from time to time.

LEGAL

As a certified fast food operator, there are many regulations and procedures that McDonalds should follow. For example is the Halal certification that becomes a concern to Muslim consumers. McDonalds should protect its integrity and consumer confidence by ensuring all materials and process are as claimed or must followed.

Other legal requirement that the business owner should follow as stipulated in laws are such as operating hours, business registration, tax requirement, labor and employment laws and quality & environment certification (such as ISO) in which the outlet has been certified. The legal requirement is important because the offenders will be fined or have their business prohibited from operating which can be disastrous.

ENVIRONMENT

As one of world largest consumer of beef, potatoes and chicken, McDonalds always had been critics for world environmentalist. This is because high consumption of beef causing the green house effect by methane gasses coming from the cow’s ranch. Large scale plantation has effect the environment and lost of green forest opening for plantation activities. Vegetarian environmentalist criticizes the fast-food giant for cruelty to animals and slaughtering. In Japan, once McDonalds want to introduce whale burger causing uproar because whales are endangered species. Before using paper packaging, once McDonalds also had been criticized for being insensitive to pollution because using polystyrene based packaging for its foods. Imagine millions of people purchase from fast food operator and how is the impact to world environment by throwing away those hard to recycle packaging. Our world is getting concern on environment issue and business operating here should not just care for profit, but careful usage of world resources for sustainable development and care for environment safety and health for our future generation. Critics and concern from all public or activist should be review and support if necessary to ensure we play our social responsibility better.