Porter's Five Forces Analysis

I. Industry Overview

SIC Codes: 5812

NAICS Codes: 722513 Limited-Service Restaurants

The limited Service Industry consists of restaurants in which customers order and pay before eating. This industry can be classified into fast food or quick service, fast-casual restaurants, pizza restaurants, and cafés.  Fast food major companies include McDonald's, Wendy's, Burger King, Chick-fil-A, Whataburger, to name a few. Fast-Casual restaurants includes restaurants such as Chipotle Mexican Grill, Panera Bread, Subway, etc. This industry also includes Pizza restaurants such as Papa John’s and Domino’s Pizza. Coffee chains such as Starbucks and Dunkin Brands also fall under this category.

• Revenue by Menu Category:  Hamburger establishments 34% of sales among US limited-service restaurants; pizza 15%, Sandwich shops 12%; chicken restaurants 8%, and Mexican food establishments 7%
• Revenue for US food services and drinking places, an indicator for fast food and quick-service restaurants, is predicted to grow at an annual compounded rate of 4% between 2016 and 2020
• Sales at major US fast casual chains grew by nearly 13% in 2014
• Three fastest-growing restaurant brands in 2015 were build-your-own pizza chains, including Blaze Fast-Fire'd Pizza, MOD Pizza, and Pieology Pizzeria (Techonomic. Online, n.d.)
• Four-Firm Concentration Ratio: 34.9 % (McDonald’s, Yum! Brands, Wendy’s, Starbucks)
• Revenue of U.S. fast food restaurant industry 2014: $198.9 billion; forecasted revenue 2020: $223 billion
• Average Operating Income: 3.1%
• Operating Expenses: 49.5%        of revenues

*stats above came from Hoover Inc. unless stated otherwise        

II. PEST Analysis

a. Briefly describe the steps undertaken to complete the PEST analysis, and then

use the information you have gleaned to identify the top 1-3 forces in the

broader environment.

III. 5-Forces Analysis

a. Briefly describe the steps undertaken to complete the 5-Forces analysis and then

use the information you have gleaned to identify the top 1-3 forces in the

industry.

b. Briefly describe top 3 overall forces from PEST and 5-Forces analysis.

IV. Key Survival factors (KSFs)

a. Use information from III b. above to identify the top-3 KSFs.

b. For each identified KSF, explain why it was selected from as a top-3 KSFs?

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V. Drivers of Change (DOC)

a. Use information from your response to III b. above to identify the top-3 DOCs.

b. For each identified DOC:

i. Why was it selected as a top-3 DOCs?

ii. How do you expect this DOC to change the industry in the next five

years?

VI. Industry Attractivene

 a. Use information gleaned from the process of identifying the top-3 KSFs and