This PESTEL Analysis of Fast Food Industry examines the political, economic, social, technological, environmental, and legal factors that impact the industry. By analyzing these factors, businesses can make informed decisions about their operations and strategies.
The trend of eating fast food is not new and it started in the late 1950s. The fast food is basically the food sold in restaurants with the precooked or preheated ingredients. The food menu is served to predefined customers in the form of take away. Although people are becoming more and more conscious about health, still the growth of fast food industry has not been affected. Now people want to stay in shape so they are avoiding junk food but the industry has responded and catered to customer needs effectively.
The restaurants are offering healthy menus consisting of low calorie dishes. The customer friendly services offered by various brands as McDonalds, KFC, Dominos and Subway and new styles of marketing have retained more customers.
Fast food is a global industry generating billions of profit. However this sector has also faced challenges from changing trends and laws. These trends may range from innovation to marketing and customer service. There are other political, economic, technological and legal factors that affect the industry too.
Political Factors
Politically balanced atmosphere and environment has a great importance in the decisive or productive fast food business. These factors vary from one country to another. The political regulations as hygiene, food quality and wages require the fast food companies to comply with the standards. The high or labor costs determine the wage rates in various countries. The government may change packaging regulations and addition of healthier items in menus anytime. The performance of business is therefore affected by the attitude of government towards that business.
Economic Factors
While economic recession has affected many businesses at global level, it has brought significant influence to fast food industry as well. Due to increased spending per consumer the restaurants have focused on improved customer service and cheap menu options. Customer love junk food for its deliciousness but health consciousness among people has affected the sales. Now brands have to provide more convenient and cheap food items for attracting and retaining customers.
The successful industry can only be satisfied if the fast food services are operational, systematic and dynamic in nature. Economic surrounding is main concern of any system. The increased variety of products on the food chain menu has also been done to adjust with recession in a more effective manner. The economic conditions in any market have always influenced the individual spending on fast food.
Social Factors
Customers have shown complex behaviors regarding international and local market. The dynamic or modern behavior of fast food chains is easily adopted or accepted by customers. Lifestyle and health trends put a major influence to fast food industry. Now people are thinking before eating. Customers’ diversion towards healthy and clean eating for staying in shape has put the pressure on restaurants to introduce low calorie healthy dishes. Social media has played major role in creating and increasing the health awareness among people.
Before it was thought that fast food industry is destroying young children health. People are avoiding junk food for high calories. These trends have put the industry sales at risk. Now the brands are offering menus with described ingredients nutritional content and caloric measurements. Cultural values also play important role since many cultures do not adopt the consumption of fast food.
Technological Factors
Like many other industries, fast food industry is also influenced by changing technological trends and innovation. These factors have greatly affected the ways and methods the brands are using for attracting and engaging the customers. Online order placement and social media sites have played major role in changing the ways of customer service provision. Number of orders and labor costs cannot remain unaffected by digital displays and use of media.
Technology has brought innovation to the customer service methods used by various brands. Not only customer service methods have changed but new trends have also been introduced in engaging customers on social media and getting online feedback. It has given new directions to the level of competition the fast food brands are facing. The new technology has changed the perception of market and promotion.
Legal Factors
The specific legal environment is highly dependent in every country. The food regulations and laws have affected the food quality and nutrition standards. All of the food industries must produce items in the safe and healthy environment. The packaging and waste management laws have created new demands. All the companies operating in fast food industry must comply with the marketing and sales regulations imposed by particular country.
Competition has increased to highest level when it comes to the ways of engaging customers. The marketing needs must comply with the legal regulations. Other important things need to be considered by fast food brands are hygiene, compliance and sustainability.
Environmental Factors
Environmental issues have been increasing regarding fast food industries. This will ensure public consciousness with the increasing initiative of environmental movements and green strategies. The typical methods include replantation of trees and energy saving initiatives. Environmental concerns include various business operations which will be implemented in various food production techniques.
The regulations regarding food quality have got restricted. With strict quality standards, the fast food brands are pressurized to change strategies towards waste management and children food. The green approach has been adopted by various brands which have added to the customer loyalty. Sustainable supply chains have become need of the day.
The fast food industry reputation has become very important due to increased competition and social media appearance. The marketing reputation in the fast food industry means losing or gaining customers. The brands need to remain engaged with the customers through social media accounts. The size and presence of customer service cannot be ignored.