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Challenges At The Top For Premier Franchises

Building on yesterday’s discussion on the future viability of the drive-thru, let’s look at another big 2010 trend in the QSR world. If there are two words that may define the next year and beyond for fast food frachisees, it may be these: “eat cheap”.


Those are the two words of USA Today journalist Bruce Horovitz, who identified this as the one of the bigger QSR trends for the next year in a recent story. Interestingly, the story states that as high unemployment rates continue, consumers are heading more and more to the grocery store for cheaper eating. This is a problem for fast food franchises, because they already sell their food at such a relatively cheap price. Even with the promised roll-out of the $1 dollar breakfast menu at McDonalds and the like, many of the top franchises are asking themselves: how low can we go?


Underlying this question is the reality that the fast food market is getting more and more competitive.


"It's a tough economic situation out there, and the fast-food pie has shrunk," Ron Paul, president of Technomic, a consulting firm, told the newspaper.


The story also quotes Technomic figures which state that both Wendy’s and KFC have seen their third quarter shares drop by 2% compared to the last year. It’s hard to saw exactly if this is a permanent slide or just a blip. Perhaps that promised economic recovery will make bring about some new activity in the industry.


But either way, fast food franchisees head into the New Year with this knowledge: it’s a jungle out there.

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