Local Restaurants And Fast Food Chains example essay topic

Introduction Quality Consulting is happy to present our marketing research data to Pat Smith. Pat is interested in possibility of opening a Wing Zone or Freebirds in the San Marcos area. The management decision problem in this case is should Pat open either of the restaurants. The other problems Pat faces are who would be the target market and where would be an excellent location. Wing Zones and Freebirds are typically opened in college towns, as they were both started in one. The Freebirds World Burrito chain was started in College Station in 1990 ("Burrito battle", 2003), and Wing Zone was created on the Campus of the University of Florida in 1991 (web).

Both of their target markets are primarily college students. Quality consulting has studied the management decision problems on specific subject of opening these restaurants. These areas of study include the demand and market potential for such restaurants, trends in eating out, the competitive market of fast food, and location preference. First demand and market potential will be discussed. Demand / Market Potential Demand for Dining Out In the year 2000, Americans spent more than $110 billion on fast food. This is and enormous increase from the $6 billion that was spent in 1970.

Figure 1 below shows the gradual increase of eating food away from home beginning in 1970. In a given year, U.S. residents will spend more on fast food than they do higher education, personal computers, computer software or new cars. They spend more on fast food than on movies, books, magazines, newspapers, videos, and records combined. Overall, food spending away from home (including fast food and sit down restaurants) has gone up more than 900% since 1970 (Fast Food 2).

Figure 1. (Source: Farm to Table: U.S. Department of Agriculture, Economic Research Service) One of the major contributors to this increase in, away from home food consumption, is the 19- to -39 year old segment. Between 1977 and 1996, away from home consumption doubled from 14% to 28% in this category (Fast Food 1). One of the main reasons for the increases in this particular category is the increase in college enrollment in the past 20 years. In general, college students eat fast food more often than others because of either they " re lack of cooking abilities or hectic schedules.

Juggling work and school, most don't have the time necessary to cook a three-course meal so they settle for a burger or pizza instead. These factors make towns with universities ideal locations for fast food and sit down restaurants. Market Potential in San Marcos Southwest Texas State University in San Marcos, TX is a growing community with a population of 45,000. Of those 45,000, more than 25,065 are enrolled in classes at SWT (Enrollment 4).

Fall 2002 marked the fifth straight year of enrollment increases at SWT as shown in figure 2 below. Figure 2. (Source: SWT Homepage) Between the students and faculty at SWT, more than $200 million is spent each year on local businesses, and a big portion of that is going into local restaurants and fast food chains. Visitors spend another $23 million when in San Marcos (Impact Study 5). With the steady growth of the university and its visitors, there will be a growing market for fast food and sit down dinning facilities. Market Potential for New Restaurant Alternatives There's a lot of market potential for fast food / delivery places that don't just sell the usual selection.

Especially in college towns like San Marcos where eating out is common, most people are bored with foods such as burgers and pizza and seek new alternatives. Restaurants featuring chicken wings are now part of a national trend. For the last eight years, food places have been adding wings to their menus in an effort to meet this rising demand for new items (Godinez, 2003). The popularity of wings as a restaurant food just seems to be growing, as Lee Sanders says, senior vice-president of development and franchising for Buffalo Wild Wings, "I believe we " re on the beginning of a growth curve". He also says "the two markets where they " re ubiquitous are Atlanta and Texas" (Butler, 2002). Freebirds also has a lot of market potential due to its fresh approach to dining.

According to Dean Mc sherry, president of consultancy firm Preferred Restaurant Services, restaurants such as Freebirds "that serve fresh Mexican food in a fast-casual environment are enjoying increasing popularity" (Wethe, 2003). Even all of the big fast food chains are toying with new ideas for restaurants to tap into this growing market for new restaurant concepts. San Marcos seems the ideal area to open new food service businesses in the near future. The combination of high demand for eating out coupled with consumers' desire for new dining alternatives should make San Marcos a great market for a Wing Zone or Freebirds. Now, we will discus some of the latest trends in eating out. Competitive Market The competitive market in this time for fast food is at different height.

With many burger places and fast food establishments in San Marcos these businesses would face competition. San Marcos has such places as Arby's, Burger King, Taco Bell, Taco Cabana, Pizza Hut, Domino's Pizza, and new fast food places like Roly Poly and Jive Turkey (San Marcos). This is just a few of the fast food and delivery competition in San Marcos. In figure 3 below, there is a list of the other competition in San Marcos for Wing Zone or Freebirds. The growing amount of restaurants in San Marcos could be due to the population growth of the town and the local Southwest Texas State University. San Marcos had a growth of nearly 6,000 citizens from 2000-2002.

The university grew by nearly 1,100 in the same time period (Population Growth). 60 percent of the market for the fast food industry will be from the take-out segment in the next 10 years according to statistics (Wing Zone). Figure 3. Freebird Competitors Wing Zone Competitors Taco Bell Domino's Pizza Taco Cabana Pizza Hut Roly Poly Tap Room Subway KFC Herbert's Taco Hut Popeye's Rogelio's Golden Fried Chicken The sales of two delivery places like Domino's and Pizza Hut are less than $50,000 in most areas. This goes for the sales of Wing Zone and Freebirds. These two restaurants would be right in the competition of these major competitors (Hoovers On-line).

The fast food market was slow for the year of 2002 due to many negative factors. The economy was very bad last year domestically and globally, which made it hard for new businesses to survive big chain competitions. There was a rise in raw material prices, declining profits and increasing competitors did not help the market for 2002. During this economic slowdown, fast food restaurants made dramatic changes. Fast food operators have employed various marketing strategies for their businesses.

These strategies help them keep their market share of their industry. One key to fighting the competition was price. Price was used to attract more customers, but it was also attributed to lower profits during last year. Fast-food chains that do survive the competition will have to reassess their marketing strategies in a timely manner to fit changing conditions in the economy (Current Issue). Next, we will discuss the prime location for a new Freebirds or Wing Zone. Location Preference The location preferences for a new Wing Zone or Freebirds are very similar.

San Marcos is a small town where travel time is minimal. Restaurants that would be competing with Wing Zone or Freebirds are mostly all grouped around major intersections on the IH-35 corridor and within downtown San Marcos. The downtown area and the intersections of IH-35 with Highway 123, and IH-35 with Highway 80 are the most densely populated areas. Figure 4. In Figure 4 above, the map diagrams the locations of existing restaurants. These are the ones that would be competing with our new restaurant chain.

The red circles are the restaurants that would be in competition with Wing Zone, while the blue squares are Firebird's competitors ("Restaurants", 2002). The green numbers represent the annual average daily traffic counts in those specific locations on IH-35. These figures represent the potential number of people who would either pass by our restaurant or at least be exposed to our restaurants location and sign ("Annual Average Daily Traffic Counts", 2001). The intersection of Highway 80 and IH-35 already has a large number of restaurants, and may be nearing capacity. Downtown San Marcos contains quite a few competitors for both locations, but also has two key elements that make this location optimal for a new restaurant. It is near the highest traffic volume of 86,000 vehicles per day, and is within walking distance to the university.

Wing Zone and Freebirds are aimed at catering to a younger crowd. It is essential that the restaurant be located near the university for those students who may not have a vehicle to travel across town. Southwest Texas State University students approximately spend $146 million a year ("SWT & San Marcos", 2002). Locating the restaurant downtown will provide a "walk-in" crowd for both restaurants, and provide efficient delivery to dorms at the university for Wing Zone.

Both restaurants will maximize profits from a location within downtown San Marcos. Conclusion In closing, this is the research of Quality consulting for the business opportunity for Pat Smith based on the possibility of opening a Wing Zone or Freebirds Restaurant. This market research was conducted on the basis of the demand and market potential for fast food, trends in eating out, the competitive market for fast food, and the basis for a location in San Marcos for these facilities. Any information from this market research report is from secondary data. Quality Consulting would like to thank Pat Smith for giving us the opportunity for our company to allow our services.

Bibliography

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From Farm to Table: Making the connection in the Mid-Atlantic food system. Godinez, Victor. "Chicken-Wing Chains Plan Continued Expansion in Dallas, National Markets". The Dallas Morning News. 29 May 2003.
Hoover's On-line. Fact Sheet for Wing Zone, Freebirds, Domino's, and Pizza Hut. 16 July 2003.
Population Growth: San Marcos, Hays County, United States, and SWT. 13 July 2003.
Restaurants", San Marcos a Texas Natural. 16 Jul 2003.
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Southwest Texas & San Marcos: Economic Impact Study Southwest Texas State University: Office of vice president for student affairs, Enrollment reports 1998-2002.
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Burrito battle looms as Freebirds comes to town". Dallas Business Journal. 21 April 2003.
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