1 GENERAL CHARACTERISTIC OF A FAST FOOD MARKET
1.1 Creation and development of a fast food (fast food)
1.2 Current condition of fast food in Russia
1.3 Franchise as the new concept of development of fast food
2 SEGMENTATION OF MARKET
2.1 General characteristic of fast food market
2.2 Segmentation of the market
2.3 Price policy
2.4 Competitive environment
2.5 Product promotion on the market
2.6 Development prospects of fast food in Russia
3 PROPOSAL FOR ACTIVITY OPTIMIZATION ON AN ENTERPRISE EXAMPLE
THE LIST OF LITERATURE
"1.A.T.Kearney Growth opportunities for global retailers., 2007.
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6.Erdem, T., S. Imai, M. P. Keane, 2003, .A Model of Consumer Brand, Quantity Choice Dynamics Under Price Uncertainty,"" Quantitative Marketing and Economics 1: 5-64.
7.Eric Schlosser, Richard R. Wilk Fast food nation: the dark side of the all-American meal, Том 1000
8.Fast food chain // http://www.sevenltd.ru/news/articles.php?subaction=showfull&id=1234179180&archive=&start_from=&ucat=2&
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10.Fast-promotion. Или продвижение в фаст-фудах. http://guest-marketing.com/restorannyj/1459-Fast-promotion.Iliprodvizhenievfast-fudah..html
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14.Franchising market review // http://www.beboss.ru/franchise/articles/76
15.GolovanovM. Franhasing//Trade equipment, 2007.-№ 12.-с. 20
16.Josh Wilson The Fast Food Phenomenon. Russia's Other Booming Market//SRAS, 2004
17.Kare Anderson 19 ways to co-market with other businesses.// http://www.sayitbetter.com.
18.Kolzova L. Franchasing in Russia // Economict reference book, 2009.- №6.-с. 30-31)
19.Kozlov S Connected with one chain//Exspert, 2009.- №46-47 (261).- с. 37
20.Kozlov V. Fast-food profits offer food for thought, 2001
21.Markova V.Franchising // Eko: Economy. – М., 2007.- 232 c.
23.Mezuev S. Franchising in Russia// Vestnik Minicsterstva RF, 2007
24.Nelson, J., 2003; www.mcdonalds.com
25.Nikolayev S.Fast-eating Russians never fed up with Western brands// Pravda, 2010
26.Restaurant segmentation ////http://www.stardogs.ru/club/column/1182
27.Richards, T. J., S. F. Hamilton and P. M. Patterson, 2007, ""Fast Food, Addiction and Market Power, forthcoming in the Journal of Agricultural and Resource// Economics
28.Russian fast food market tendencies // Tendencie, .2010
29.The Russian Investment Boom Continues // Kommersant, 2007.
30.Tracy V. Wilson How Fast Food Works // // http://recipes.howstuffworks.com/fast-food4.htm
31.U.S. Department of State: Bureau of European and Eurasian Affairs, 2007.//http://www.state.gov/r/pa/ei/bgn/3211.htm
- "Boutique" restaurants -- higher priced outlets
- "Democratic" restaurants -- moderately priced outlets
- Coffee shops -- combination of coffee and food, counter-style service
- Fast food -- which has two separate sub-segments
1. Street/Mobile fast food - kiosks, stalls, and carts
2. Walk-in/Sit-down fast food outlets -- with counter service
We classify in more details:
3. Quick & casual;
The stationary fast food generally is presented by zones of a food court as a part of trading complexes, and also sometimes office centers. Popularity of this type is caused in operators basically by the big stream of visitors of large qualitative shopping centers.
According to Praedium Oncor International usually the food oc
Показать всеcupies an order of 8-12 % from a total area of shopping center and represents in aggregate a high-grade anchor which can generate considerable streams of buyers. However in comparison with other anchor tenants the rate for operators of a food court, as a rule, is higher. It is caused generally by great demand.
As marketing researches show, narrow specialization on a certain product is very important for fast food: pies, pancakes, hamburgers, the hot dogs, a baked potato, fried chicken wings and legs. Doing an emphasis on the various menu and having wider assortment "Elki-Palki" and "Russian bistro» have not appeared successful.
As a rule, buffets of various networks settle down on in one place. But, occurrence of "neighbors" did not reduce sales, but even increase 15-25 %.
This specificity has created favorable conditions for alliances creation that unite for the creation of food courts (restaurant court yard) in network hypermarkets and large shopping centers.
The popular concept in the west «family restaurant» hasn't received a wide circulation in Russia. Such system of the organization of fast food is very favourable to businessmen and gives considerable tax privileges. In Russia unfortunately similar privileges aren't present. But prospects of this type of restsurant are considerable: with development of this segment it can become sphere of employment and a source of the income for many families.
The structure of domestic market looks as follows: at the heart of a fast food pyramid is mobile carts (them nearby 10 000) , then there are autobuffets (nearby 1000) and at top - stationary. However, both autobuffets and carts are earn approximately on 100 mln. dollars per year. During the last years all participants of the market have realized that the branch will work and develop by a network principle. Due to initial expenses on the business organization, advertizing and other fast food restaurants start to make real profit on the average after opening of the tenth point. And though now network autobuffets, for example, occupy only 30 % in this form of fast food, they quickly force out singles.
Pic. 2.2.1 - Fast food restaurant attendance 17
Among different types of fast-food outlets the leaders are classic fast-food points in a special building or at a food-court of a trade center – during a month before the poll this type was preferred by 88% of regular clients.
Pic. 2.2.2 - Factors influencing the likelihood of new entrants in the global fast food market18
Over the same period one third of regular fast-food clients were attending the same cafe or several cafes of the same chain. The majority of regular consumers preferred two or more fast-food points. Analysis of this information and attendance frequency data allows the following conclusions:
active fast-food clients – attendance frequency at least twice a week – as a rule choose 2-3 fast-food points and stick to them; during a month before the poll 86% of this group visited no more than 3 fast-food cafes - chains;
regular clients attending fast-food points at maximum once a week prefer to visit different cafes – over 60% of this group visited more than 2 different fast-food points during a month before the poll.
During the review period American fast-food was chosen by 62% of regular consumers. Russian cuisine is preferred by 49% of this group. Meanwhile fast-food menus based on other cuisines are far less popular in comparison to leaders
Almost half of regular clients – 49% – think that taste and quality of served meals are key choice criteria for fast-food. Second important influence factor is convenient location which is decisive for 21% of respondents. Price determines the choice only of every tenth regular fast-food client.
Entry to the global fast food market does not require large capital outlay; setting up a single, independent fast food outlet is within the means of many individuals, even in countries like India and China, where median incomes are quite low...”
2.3 Price policy
The price policy of fast food depends on several factors:
Type (restaurant, a bar, fast food, cafe, a dining room and so on);
Degree of service;
Price policy indicator is level of the average check. Recently the public catering market can be divided into five basic price segments:
Street food with the average check of 100 roubles
Fast food (QSR) with the average check of 250 roubles
Quick&Casual (Fast Casual) with the average check of 600 roubles
Casual Dining with the average check of 500-1000 roubles
Fine Dining with the average check over 1000 roubles
Pic. 2.3.1 – Revenue19
Pic. 2.3.2 - Clients flow 20
High price segment is a democratic restaurants such as Elki-Palki, Grabli, Mu-Mu.
The average price segment is presented by restaurants McDonald's, Rostiks, Sbarro.
The bottom price segment of a fast food is a street and mobile fast food. It is presented by such networks as Teremok, Kroshka-Kartoshka, Stardogs, Sbarro. Some representatives of this segment actively try taking root in food courts.
Rather recently there was appeared a new fast food segment with a bias on health and a useful food. Its occurrence became as answer to inquiries of the modern audience caring about health. A foreign example of such concept is network Subway that hasn't got accustomed in Russia. Other examples of a healthy fast food are a Prime, Five stars, City-burger, Bagetterija.
The basic postulate of health is use of the qualitative natural raw materials which are not containing additives, stabilizers, dyes, taste amplifiers.
In democratic restaurants the basic way of earning is not high margins but manufacture scale.
Fast food restaurant’s offer customer self-service: clients stand in a queue in cash desk. At democratic restaurant waiter serves clients. The menu is laconic and limitated (a maximum of 20-20 basic dishes). Democratic restaurants menu is about 200 names.
Profitability of some fast food restaurants is presented on picture in comparison.
Pic. 2.2.3 - Fast food restaurant profitability, %21
2.4 Competitive environment
Nowadays the market strongly fragmented, a considerable share is occupied with single institutions of public catering. According to results of research in 2009 in the largest cities Russian and international networks of institutions of public catering were 393 (3 and more institutions uniting under one brand), and 10 largest networks made up about 30 % of total amount of network institutions of the public catering working in Russia.
There are some systems of the fast food enterprises have already operated in Russia.
Though "McDonald's" is the first who has stepped into the Russia, but the classical franchise in fast food sphere was brought by Subway American fast food operator. The first Subway has opened in the USA in 1965. Today this network totals more than 27000 restaurants in 86 countries of the world. Network Subway develops with tremendous speed - more than 1000 new restaurants open annually in the world, using advantages franchise schemes.
In Russia Subway is positioned as fast service systems with basis menu are sandwiches and salads. This network is developing since 1994 exclusively on a franchise, and it is engaged by Subway Russia Franchising Company. Now there are 39 enterprises of fast service in the Russian network Subway: Moscow, Moscow suburbs, St.-Petersburg and large regional cities.
Franchise Subway stands out for 20 years on the concrete address of one sandwich-type. Cost of Subway franchise is $12 thousand, and organization of one sandwich-type cost $120-200 thousand and a premise cost 100-150 sq. m, provided with the electric power, water and the water drain. Franchisee Subway pay to the head company monthly a royalty 8 % from a gain, and also payments in advertizing fund – 3,5 % from a gain. Average term of return of investments is 2 years.
The menu of Subway assumes not less than 15 various cold and hot sandwiches, the same quantity of salads and "rolls", hot and cold drinks. All dishes prepare within sight of the buyer, with use of qualitative products and fresh vegetables. Bread for sandwiches is baked directly in a hall. The system doesn't use hot kitchen and doesn't demand a special extract.
There is a certificated educational center In St.-Petersburg where franchisee and managers preparation for Russia, the CIS countries and the former socialist countries. Franchisee has possibility to receive the equipment for an opened institution in leasing.
Since 1994 first fast food restaurant GRILLMASTER has started to work in St.-Petersburg. The owner of a brand is the German fast food restaurants network GRILLMASTER SYSTEM. Since 2003 master franchisee GRILLMASTER SYSTEM in Russia is the company "Grill of Master-Moskva", based in Zelenograd. Its license powers extend, except Russia, to the CIS countries, Latvia, Lithuania and Estonia. In Russia "the Grill of Master-Moscow" has opened on a franchise 11 restaurants GRILLMASTER in different cities.22
Concept GRILLMASTER is a family fast food restaurant. The assortment of dishes includes firm baked pork fores hanks, German hamburgers and sausages, a hen-grill, shish kebabs from pork and a hen, stakes from fish, hot dogs, a pizza, French fries, salads, confectionery, ice-cream and cocktails, juice, tea, the coffee, the aerated drinks, some grades of beer on draft. For children at restaurant the game room is provided.
Lump-sum payment for GRILLMASTER franchise is $15 thousand. It is required $120-150 thousand investments for opening a restaurant by the area of 250-300 sq. m. This sum are necessary includes expenses on working out of the technological project, delivery and installation technological and a refrigerating machinery, POS-terminals, the software, a bar counter and furniture, personnel training. Overall payback period is 2-3 years. Franchisee gets constant consulting support from the head company. Franchisee monthly pays the companies "Grill of Master-Moskva" a royalty: 500 euros plus 3 % from restaurant total receipts.
Today more than more than 1000 Italian restaurants "Sbarro" work in 30 countries, more than 600 is a franchise. Since 1997 the Russian firm "Brazers and the company" is exclusive franchise networks of the Italian fast food restaurants Sbarro in Russia. During this time it iwas opened more than 100 restaurants in the Moscow region, St.-Petersburg, Kazan and other Russian cities. The brand of "Sbarro" became widely known to the Russian consumers and associates with qualitative and tasty dishes for reasonable prices.
The menu of Sbarro restaurants consists of more than 500 various dishes, over 50 kinds of a pizza, 150 names of hot dishes and paste, more than 30 various salads, a wide choice of desserts and drinks.
Franchisee gets access to the unique system intended for designing, building, opening and operation of Sbarro restaurants. Franchiser offers two concepts of Sbarro restaurant: with buffet or without buffet. The total amount of the investments necessary for opening is an order $550 thousand, including a payment for the franchise ($40 thousand). The necessary investments is about 250-350 thousand USD for food court. All expenses are necessary for preparation of restaurant to opening are included a lump-sum payment, designing, repair and premise furnish, purchase, delivery and installation of equipment and furniture, personnel training.
"Brazers and the company" as franchiser strictly observe of corporate standards of conducting restaurant business in a network "Sbarro", applying for this purpose various ways of control for franchisee.
Since 1993 the Russian corporation "Rostik Groups" developed a network of public catering under own brand "Rostik’s". Today more than 100 corporate enterprises work in different cities of Russia. But in 2005 corporation "Rostik Groups" and the world's largest restaurant company Yum! have created a strategic alliance to become leaders in the market of the fast service enterprises in Russia and CIS countries. Enterprises opened on the basis of the license agreement. To work under a new brand the investors having financial resources and skills began to be invited.
Requirements to premises of " Rostik’s -KFC" depending on an enterprise format. It is 250-450 sq. m for the built in premises (in line) on 1st floor of the structure located in brisk streets of big cities. Investments for opening in line is from $400 thousand. Is necessary premise of 90-110 sq. m in the main shopping centers or large entertainment complexes for a restaurant court yard (food-court) format. It is required from $250 thousand for opening of a restaurant court yard.23
The third format is a separate premise (drive-through) the area of 250-400 sq. m, located near to the trading and entertaining centers, in densely populated city area, on the basic transport highways. There should be a parking at least on 30 cars. Investments into a similar format is from $900 thousand.
The lump-sum payment of the company-franchisee is $40900 (without the VAT). The size of a royalty and marketing deductions is accordingly 6 % and 5 % from monthly turn. The contract consists for 10 years with prolongation possibility for the same period. Franchiser gives to partners access to corporate contracts on equipment and raw materials delivery, business dealing standards, consultations, training.
There is some kind of champions of expenses for the business organization among domestic fast food franchising. The franchise of fast food restaurant "Edok" is such kind of company.
Company "Syntagma groups" is the leading supplier of the equipment for trading enterprises and public catering in the Nizhniy Novgorod and Chelyabinsk during 15 years. The company develops own network of fast food restaurants "Edok" since 2003. All of them are located in large trading and business centers. Restaurants are constructed by a principle free-flow with set of seats, a line of distribution and a transport tape for gathering of dirty ware. In daily assortment of restaurant is about 50 dishes, snack, salads and garnishes, 40 names of a batch and desserts, drinks and ice-cream. Dishes prepare only from fresh products, semifinished products aren't used. Edok" target audience isf 18-45 years old. The average check is about $10.
"The syntagma groups" invites partners which do not have experience in sphere of a public catering. Cost of the Edok franchise is 300 thousand euro. Besides, franchisee monthly pays to the head company for advertizing 1 thousand euro and a royalty 6 thousand euro under the contract. For the organization of restaurant a total area of 900-1000 sq. meters (on 160-200 seats) and 1 million euro are required. An important condition "the Syntagma of groups" is that the future restaurant shouldn't have large competitors in radius of 1-1,5 km.
Prospective monthly average turn of Edok restaurant is 100-150 thousand euro, and profit for the same period is 20-30 thousand euro. Payback period is 4-5 years.
Certainly, fast food is for large business. Small and average business are interested in modest projects. Such, as, for example, the franchise network Teaspoon that is offered by Petersburg holding company "Teaspoon". The company is created in 2001 and today consists of 46 in St.-Petersburg and 9 in regions (Moscow, Petrozavodsk, Tver, V.Novgorod, Perm, Novosibirsk, Kaluga) factory and office.
The teaspoon uses the high technologies of the organization of a fast food that allows to duplicate repeatedly tea not only in St.-Petersburg, but also in any other city of Russia, and abroad. The basic assortment includes three groups of products: pancakes with stuffings (19 kinds), salads (10 kinds), tea in a teapot (15 kinds). The network "Teaspoon" actively develops: in plans of the company opening more than 300 across all Russia.
Nowadays Teaspoon’s franchise costs $30 thousand, and the organization of one tea will cost $200-250 thousand. Franchise is given for a period of 10 years. The royalty is 5 % from a monthly gain. Deductions in advertizing fund aren't present. The premise is comprehensible. The area of 150-350 sq. m with ceilings not less than 2,9 m, corresponding to the sanitary code (an electricity, heating, water, the water drain) is required. The premise can settle down both in a separate building, and in a trading complex. Experience of operating tea testifies that the similar project pay back for 2,5 years.24
Kroshka Kartoshka: the ultimate potato
This is the one fast food chain in Russia that has it all: it isn’t a franchise; it serves type of food offered by no one around the world; it’s 13 years on Russian market and is now spreading to Ukraine.
You can find these all around Moscow either at palatkas by metro or within food courts. What adds even more credits to this chain is that it has nothing modern fast food gets blamed for. It’s impossible to imagine anything on the menu cooked from genetically modified products or on a lot of oil. Salads and fillings look natural and actually taste well; potatoes are baked in foil in iron stove just there, on the spot.
On the menu: potatoes baked in foil, 20+ types of salad fillings, meat and vegetable pies, sandwiches (not hamburger-style ones). As for Russian specialties, there are vareniki and couple of soups: borsch and okroshka (Russian traditional dishes’ recipes will be published at B&V very soon). As for beverages—they offer traditional sodas plus kvass and beer.
Another Russian food dealer is ‘Teremok’. They are leading in a different type of food: Russian pancakes and porridges. And they have them galore and of highest-quality. There are a lot of porridges too: from sweetest Gurjevskaya porridge with honey and jam to the ‘Greek’ porridge with bacon, sheep cheese and dill. The pancakes are baked on the spot both in standalone restaurants and moveable kiosks—so it’s quite something to see.
As for drinks, under this brand they also make some old-style Russian drinks: kvass, birch tree juice and mors (a specially cooked berry juice). Except for them, of course, ‘Teremok’ offers the traditional range of sodas. One lovely trait of their corporate culture: all the cashiers address to the customers in old-Russian style: cударь, сударыня (soodar, soodahreenya).
‘Teremok’ isn’t the only one serving this kind of food but it by far is the most high-quality. His followers offer the same range of dishes but something is always not enough to call it a tie with ‘Teremok’, either high price in ‘Raspekay’ and ‘Ladooshki-Oladooshki’, or incomprehensible choice of dishes on the menu in ‘Melenka’, or low-quality service in all three of them. So Teremok is ahead, and way ahead.
Even though hotdogs by no means are traditional Russian cuisine, the high quality and almost no competitors supplied ‘Stardog!s’ with a lot of customers support and high profits. It is the only reliable place in Moscow to get your hotdog. What is shocking, is that this fast food chain has been existing in Russia for 17 years now! And it is very high quality and not overpriced either. And you can find one almost next to every station of Moscow metro which is very convenient—the basic feature of any successful fast food chain. Скрыть
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