Monday, January 28, 2013

Chapter 5 Industry and Marketplace

5.1 The Industry

5.1.1 Definition of the Industry

Fast food restaurants have spread rapidly throughout the country, even into small towns. There is probably no universally accepted definition for the term “fast foods”. Used loosely and in a wide sense, it can be taken to mean meals that are served on demand and made available in a short time. This would include the franchised western-type fast foods as well as local hawker foods. For the purposes of the proposed guidelines, Ministry of Health has defined “fast foods” as “foods that are prepared in large quantities, following standardised procedures and served rapidly in restaurants commonly known as fast food restaurants, which usually advertise their services through the electronic and print media”.

5.1.2 Shape of Industry

U.S. franchises dominate the fast food and restaurant industry and include the following: Kentucky Fried Chicken (KFC), McDonalds, A & W, Burger King, Starbucks, Seattle's Best Coffee, Dunkin Donuts, Pizza Hut, Domino Pizza, Shakeys Pizza, Kenny Rogers Roasters, Long John Silvers, Dairy Queen, TGIF, Chilis, Hard Rock Cafe, Planet Hollywood, Baskin Robbins, Haagen Dazs, Swensons, Famous Amos, Auntie Annes, Outback Steak House.

Due to the high capital investment required for a foreign franchise, owners of foreign franchises tend to be Malaysian conglomerates and wealthy investors. As more and more manufacturing heads towards China and other neighboring low-cost labor markets, Malaysian manufacturers are beginning to look towards services and franchising as a way to diversify their operations, often in very different sectors.

5.1.3 Development of the Industry

Malaysia is a developing economy located in Southeast Asia. It is ideally located for export business to Indonesia, China and India, and will likely benefit from the strong economic growth predicted for these countries in the coming years. Malaysia also has a young population and increasing wealth of its own. Because of these factors, Malaysia is poised to become a major consumer of agri-food and seafood products in the near future. This growing demand for agri-food and seafood products, as well as the changing demographics and culture of the country, will likely spur growth in an already fast-growing consumer food service industry.

The leading sectors in the Malaysian consumer food service industry are the café/bar segment, the full-service restaurant segment and the fast food segment. These three segments of the foods ervice market account for over half of sales in both value and volume terms. However, there are opportunities to be found in the smaller sectors of the market as well.

The Malaysian food service sector is very diverse and offers an array of options for consumers. Approximately 75% of the foodservice sector consists of small foodservice chains or stand-alone operations (USDA, 2010). This means the sector is highly fragmented and competitive as the varying operations battle for market share.

According to the USDA, the sector is composed of the following groups (2010):
19% food caterers
8% full-service restaurants
3% fast food restaurants
70% other areas of the industry

Source: USDA, 2010

The Malaysian foodservice sector is in a period of expansion, with the value of sales increasing faster than volume. In the review period of 2004 to 2009, Malaysian consumers had more disposable income than ever before and were interested in trying new and higher quality food products. This has allowed for significant growth in the industry at a compound annual growth rate (CAGR) of 8.25%, and absolute growth of 48.64%

In the period of 2004 to 2009, the fastest growing sector in the foodservice industry was the pizza foodservice industry, which grew at a CAGR of 13.4% and by 87.11% in absolute terms. However, the sector is quite small when compared to the fast food sector (CAGR of 11.46%; absolute rate of 72.06%) and the café/bar sector (CAGR of 10.48%; absolute rate of 64.58%).
The fast food sector continued to grow in 2009, in spite of the economic downturn, although at a slower pace. In 2009, the industry focused on boosting sales through marketing and limited time promotions. This allowed the industry to continue to increase volume and value of sales in the face of the downturn.
Again, the young population of Malaysia and rising incomes will likely drive growth in this sector into the near future.
Similar to the café and bar sector, the Malaysian fast food industry is on track to provide more diversified offerings, presenting many opportunities for potential exporters of new or different products.
It should be noted that the fastest growing area of consumption in the fast food industry is poultry products. While Canada has supply management in place, significant quantities of poultry products are still exported. Poultry products are more popular in the Malaysian fast food industry because of religious restrictions surrounding both pork and beef within the Islamic and Hindu populations, respectively.

5.2 The Marketplace

5.2.1 Current Condition of the marketplace

The market of fast food restaurant is currently rapidly increasing as there are a lot of different fast food restaurant in the market from new to old competing against each other directly and indirectly. A&W is the first franchise which entered Malaysia in 1919. With their famous “A&W Root Beer”, it attracted lots of loyalty customers who visited to A&W. But currently with the increasing of competitors and lack of advertising, A&W is losing its popularity against others. Due to the lost profit, A&W is closing down their outlets or replaced their outlets in suitable venue.

To make the brand stand out from the competitors, A&W would wish to reposition back their brand in market. With the marketing strategy, A&W have to be more creative and promotions and in the product itself.

5.2.2 Changes in Marketplace

Positive = Successful reposition to compete with other fast food restaurant in the market and produce higher quality thus boosting the growth of the industry.

Negative = Less promotion will cause it lost its popularity in the market and increasing of competitors

No comments:

Post a Comment