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Page history last edited by PBworks 12 years, 2 months ago





1960's saw fast food pioneeers such as Ray Kroc of McDonalds, Colonel Sanders of Kentucky Fried Chicke, and others basically develop the value proposition that became the standard for the industry. (note: the first fast food chain was actually "White Castle"). This model became the stardard for expansion to the rest of the world. Target customers are time-constrained, looking for good quality food in a clean dining environment at a very low price. The success internationally is helped by the fact that the stores are the same everywhere. Standardization brings trust, which brings in customers. In foreign markets, also, customers see McDonalds as a symbol of America.


The basic business model depends on high customer traffic and very tight operations management. Opening a new outlet requires large investments in equipment and store fittings, and keeping it open requires a high amount of rent, utilities and labor. Due to this high investment requirement, the fast food industry turned to franchising to expand. To find new territory quickly, without needing lots of cash. Store location is critical. McDonalds is successful today because they are one of the best real estate scouts in the world.


Economies of scale are very strong in both advertising and purchasing.


Chain-wide consisentcy and reliability is key to success.

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