If a new fast food business was to be set up on Riddy lane two stake holders in the business would be mostly affected or benefited buy the roads leading to the Riddy lane area. The site were a new Fast Food restaurant is looking to be located has many advantages such as its drivable, near and visible from New Bedford road and coming down the A6 , this is an advantage for suppliers as fast delivery is available. The business would also be more known then other Fast Food firms as other Fast Food locations are not visible from a main road where over 15,000 cars pass each day. However the location does have a disadvantage as it already has 5 fast food restaurants on the same location, which are all established and have loyal customers.
If a new business was to be set up on Riddy lane the target market would be the residents of the Riddy lane area, the pupils and staff of Icknield High school.
I believe the potential target market suggest that Riddy Lane is a good location for a new fast food business because the business will be near to many schools and colleges which will have potential customers who may wish to try out the new business.
From the research I have collected it pointed out that the Barnfield campus is planning to develop in to a bigger college which will intake more students and higher more staff, this will benefit the fast food business on Riddy lane as if the college gets bigger more students and staff will have to come in to the college which will mean the fast food restaurant will have more potential customers which may increase demand for there business. Also the Arndale centre is planning to extend the premises to have more businesses which will lead to the businesses having to hire more staff. As the staff may have to travel down the A6 to reach work, the fast food business may attract more potential customers. I believe these new developments suggest that Riddy lane is a good location for a new fast food business as the area is devolving, more businesses are developing and businesses will need staff to run the business. This suggests in the future there would be more demand for a new Fast Food restaurant on Riddy lane.
The census which was produces in 2003 indicated that the population in the Icknield borough is 7,556; the results for this may be unreliable so I recommend a new business should look for more up to date information. If Icknield Borough in Luton had a low population then It would not be suitable to locate in as If then it may not be a good place to set up a business because there are not as many customers than maybe in the town centre. The result could indicate that there will be low demand as well as a decrease in potential customers, which could result in the business suffering from making profit as well as success. However If the Icknield borough in Luton showed a high population figure, then it would be a successful place to locate as there would be more potential customers, which will increase demand for the business, resulting to more sales and more profit. Also the business would have to promote in a way that it would attract most if not all customers. If the business has increasing customers and satisfaction then the business can set up another franchisee and start to grow around Luton. This would lead to good growth, profit and satisfaction of customers.
Overall I believe that Riddy lane is a good location for a new fast food business because of the developing that is going to happen in Luton, this will affect the Riddy lane area greatly as there will be more sighs of demand. It also has over 15, 000 cars which pass Riddy lane every day. However even if the Riddy lane area is developing which is leading to more potential customers who may visit the fast food business, the business still has a lot of rival businesses in the area which could attract customers to there business which you will make a loss from as you are losing potential customers who could have consumed from your restaurant.
2. Fast Food Market –
The business concept I will use is Market trends. If a new Fast Food business is trying to figure out what fast food market to trade under it must bare in mind whether or not the fast food market is showing sighs of growth or decline. With a market showing signs of growth, profit and high demand it shows that the fast food market is successful. This would indicate to open a new Fast Food business on Riddy lane. However with a fast food market in decline it will be hard to be successful as demand will be low.
Fast food is a term given to food that can be served quickly. While any meal with low preparation time can be considered to be fast food, typically the term refers to food sold in a restaurant or store with low quality preparation and served to the customer in a packaged form for take-out/take-away. Most fast food business is franchises. Excamples of Fast Food businesses are McDonalds, Subway, Pizza Hut, Kfc, and Domino’s Pizza. The UK is largest fast-food and take-away market in Europe, double the size of Germany and three times the size of the French market. Sales Growth in the UK Fast Food Market in the Period 2005 to 2009 is forecast to be less than the Previous Five Years. The UK fast-food/takeaway was estimated at GBP 8.38bn in 2004 at retail selling prices representing a sales growth of 3.9% over the previous year. The pace of growth in the market was increased in 2004 following a sales increase of just 3% in 2003.
In the table above you can notice between 2003 and 2004 the sandwich market increased growth buy 0.2%. For the burger market the growth stayed roughly the same so did the chicken market. The fish and chips market decreased 0.3%, the pizza market increased buy 0.1%. Overall from all the information I have gathered I realised that the sandwiches market has increased the most growth in the United Kingdom because of stores, such as the big high-street retailers and supermarket chains, but also containing businesses such as Pret a Manger, Subway and Benjys. The fish and chips market decreased its growth buy 0.3% which means it didn’t grow as much as other food markets. A fast food business may show a decline in demand because customers are not happy with the restaurant or competition has increased which has led them to loose potential customers, without customers there would be no profit as customers are the people who are paying you to keep trading. The trends that change the fast food market are restaurants such as subway because they are serving healthy food this is because the government are recommending healthier food in a diet, as well as parents wanting there children to eat healthier food as there is a risk of obesity in children is increasing. From all the secondary research I have carried out I believe that it is a good time to open a fast food business. The advantages of opening a fast food business at this current time is that there is Strong development in market growth also fast food restaurants are becoming much more common throughout the world. While going ahead with my questionnaire I decided to dismiss asking the population if they prefer an Indian restaurant, a Chinese restaurant and a fish and chips business as well as a bakery as all the business mentioned are already nearby the planned location. Based on the secondary research I have carried out I have realised that the sandwich market is showing signs of profit and growth. This indicated be to include an option of subway in my questionnaire as it related to the sandwich market. I also included McDonalds in my questionnaire as it is showing signs of growth however as McDonalds do not provide more of a healthier option it proved to show no demand from my target market, as most of them prefer a healthier option. I included Burger king in my questionnaire as I was curious whether there is demand for burgers; also they are McDonald’s biggest rival business. Overall all the businesses I included in my questionnaire are all franchises as from the secondary research I have gathered it is proved the best business structure for a new Fast Food business trying to establish itself in the market is a Franchise.
3. Competitors-
The business concept I will use is competition. Competition in business is the effort of two or more businesses acting independently to secure the business of a third party by offering the product which is in most demand and the product which has features that show high demand. It is important that a business understands the concept of competition as for the business to succeed it will need to know who there rivals are, what they do and how they price there product as this will allow you to know how to shape your business. Also the business needs to understand market shares as the more market share a rival business has the higher success they have in the market.
The businesses in Riddy lane include a bank which is called Lloyds Tsb, Bargain Booze with provided alcohol, and a Chinese restaurant which is called The Meedou, a Chicken and Chips Shop. They also have an Indian restaurant called Zaffarani, a newsagent which is called Early till Late, Annie’s bakery, the Chippy, hairdressers called Pinks and Blues, an estate agent called D&G. A copy of my street map of Riddy lane can be found in my appendices.
Lloyds Tsb is a local bank which provides people with accounts and lets them withdraw money, Bargain Booze is an off licence which provides alcohol and soft drinks, The Meedou is a Chinese restaurant, Chicken Hut supplies and specialises in chicken and chips. Zaffarani is an Indian restaurant. Early Till Late is a local newsagent, Annies Bakery is a bakery supplying food such as donuts, sandwiches etc. As well as the Chippy this specialises in the fish and chip market. Hairdressers called Pinks and Blues which cut both men and women hair. Also a local estate agent called D&G.
The businesses that may prove to be rival businesses to a new fast food restaurant on Riddy Lane are Chicken Hut, The chippy, Annie’s bakery, The Meedou, Zaffrani. All these are fast food businesses so if a new fast food business was looking to locate on Riddy lane these business would be potential rivals to a new fast food business. They would be rivals to a new fast food business on Riddy lane as they compete for business in the Fast Food market as well as being 30 meters within each other. I believe Chicken Hut and The Chippy as well as The Meedou would be the most rival businesses as they have been in business for long enough to be established it self in the market with customers that are satisfied with the service they are provided. However The Meedou is a business that is not taking advantage over the location it is trading in, as my research shows they open after 5pm and close before 11.30pm, so if a new Fast Food business would take advantage over this I believe they can become much more successful then The Meedou. My research shows that the fish and chips market is showing a decrease in growth and demand which would mean the Chippy may suffer from this, resulting in them failing.
4. Target market-
The business concept I will use is target market, the target market is a group of people in a population, which you want to aim your product at. It is mainly based by gender, ager and socio-economic grouping. It is important to have a target market because it will help you to concentrate on appealing to them as it would be unlikely that a small business that is trying to establish it self in the market can appeal to all markets because they will not have enough resources to do that. For example if a car dealership which sells farrieries would promote there product while concentrating on people who have a low wage it would not be wise as they would waste money trying to promote to people who do not even have the money to purchase the product.
From the results of the questionnaire 56% of the people I surveyed were 45 and over, 24% were high school students and 16% were aged between 26-24 and finally 4% were aged between 17- 25. The majority of the people I surveyed were 45 and above. The least popular were aged between 17 – 25. The results of my findings for this question show that the majority of the target market is aged above 45. This could help decide on what time a new fast food restaurant need more employees because if the target market are aged above 45 this would mean that most people travelling from and to work around 5pm , so a new fast food business would mostly be busy in the evening which could indicate it to higher more stuff. However this may be a disadvantage to the business as hiring more staff may result in more cost which will decrease profit. All though this may be the case my research shows that there will be an increase of possible customers around the area at the time there for all cost will be paid for, which will result in profit. Even though people aged between 11 – 16 received the second highest votes a new fast food business should also bare in mind that the population in this age bracket is huge, as well as it only being across the road. If the business was to concentrate more on people aged between 17 – 25 it would not be wise as it was the least popular result. This could suggest that people aged between 17 – 25 might not show enough demand for fast food, so it would no be worthwhile to concentrate on people who are aged from 17 – 25. From the results of my questionnaire it shows that a new fast food restaurateur should segment the market by age as my results show that people aged above 45 are showing high amounts of demand then any other age.
According to my results of the questionnaire 64% of the people I surveyed were female which left 36% male. The results showed me that the majority of the target market is female. This suggest that a new fast food restaurant in Riddy lane should provide food that mostly aims at females e.g. healthy food, as the majority in the area are female and that could show possible sighs of demand from females for fast food. However if you concentrate more on fulfilling females needs this may result in a loss as male customers may not prefer a healthy option so it would lead them to consume fast food at a rival business.
From the results of the questionnaire I realised 40% were married, 36% were single, and 24% were family members. Overall I realised that most of the population I surveyed were married and the least were family members. The result of my findings for this question confirms that most of the target market is married. This could indicate a new fast food business in Riddy lane to provide more deals for couples as they would be the main target market. However as single received the second highest vote and the difference between married and sing is only 6 % the business should also think of providing single deals because if a customers want a single deal and you don’t provide them with it, it could result in loosing potential customers, which could impact on profits. If there was a new fast food business on Riddy lane, it would be wise to segment the market buy age and gender. As the business will not have enough resources to provide for all the market. Also It will allow a firm to identify a specific group of customers wants and needs, which will give it a better chance if success.
5. Product-
The business concept I will use is part of the marketing mix which is called product. The product in business is the thing you are trying to sell and make profit. If the business has a product which is successful it will lead to profit which will give the business a greater chance of success. However if the product turns to be unsuccessful the business may suffer a loss. Each product will have an actual feature as well as a subjective feature; an actual feature is some think which exists in the product such as, colour, shape size. A subjective feature is when an image is created in the mind of the consumer when they have owned or ate the particular product. A fast food restaurant should concentrate on both of these aspects as it will increase the chances of the products success as well as profit.
From the results of my questionnaire 48% of the people I surveyed said they prefer Subway, 20% said Pizza hut and also 20% said Burger king. 12 % of the target market said they prefer McDonalds. The most popular results were subway and the least popular result was McDonalds. The result of my findings for this question confirms that if an investor was to open subway in Riddy lane it could possibly be successful as there is demand for it. Also some people may prefer healthy options which will be provided buy subway. If an investor was to open the business as McDonalds it might not be as successful, as customers don’t show demand for it, so if there is no demand the business may suffer from a possible loss. This could indicate that most of the target markets do not prefer junk food as McDonalds mainly sells a lot of junk food.
According to my results 60% of the people I surveyed preferred takeaway which left 40% preferring delivery. From the people I surveyed the most popular result was takeaway and the least popular was delivery. So the business should aim on providing customers with takeaway because it shows a higher demand then delivery, this might benefit the business as the majority prefer takeaway so the business dose not have to waste petrol money delivering Fast Food to customers. However the difference is only 20%, so maybe the business ought to aim on supplying customers with delivery options as well as takeaway, but this could increase costs as you would have to set up a telephone line. All though this is the case there is possible demand for delivery so therefore all cost may be paid resulting in profit.
From the results of my questionnaire 84% of the people I surveyed would consume fast food around 6pm – 10pm, 8% would consume fast food from 3pm – 5pm. Also 8% would consume fast from 11am – 2pm and 0% would consume fast food 11pm or late. The most popular time for a new fast food restaurant to be opened is from 6pm – 10pm the least popular time was 11pm and onwards. So a new fast food business would benefit from being prepared between 6pm – 10pm as there is more demand at that time. However the business may have to hire more staff because the business will get busier and will need more staff to operate. This might be a disadvantage to the business because hiring staff may increase costs resulting in loss of profit however this may not be the case as if the business is prepared and ready they could take advantage of the demand between 6pm – 10pm. If the business was to operate the business 11 pm and onwards it would not generate as much profit, it will increase the cost as the business has to use its assets such as light , oven, grill etc. If the business was to open after 11pm it would higher the cost and decreases the profit because as my results show there will be no potential customers. So there would be no point of opening the business, as while opening you are using your assets such as lights which will cost more and decrease the chance of profit being made.
While purchasing fast food 80% of the people I questioned said they would buy Fizzy drinks, 4% said nothing, 8% said tea, and 8% said coffee. The most popular result was Fizzy drinks and the least popular result was customers saying nothing. The results of my finding for this question could suggest that a new fast food restaurant in Riddy lane should provide customers Fizzy drink because there is a lot of demand for it. To make there Fizzy drink stand out they could change the design or shape that makes it more unique this could attract more customers from rivals firms. Also they could make the Fizzy drink a possible impulse purchase which could attract customers to the restaurant, this might result in the customer coming in to the restaurant and spotting a good deal and spending more money, this will lead them to higher profit.
From the results of my questionnaire 72% of the people I surveyed said they would walk to the fast food restaurant and 28 % said they would travel buy car. 0% said they would travel buy Taxi, 0% said cycle. The most popular way of transport was buy walking and the least was car and taxi. So if a investor would considering opening a new fast food restaurant on Riddy lane they could take in consideration that most potential customers would walk to the fast food restaurant, so they would not have to provide customers with cycle stand which would help them keeping there cost low. They would not have to provide potential customers with parking space as there is already parking space available as well as my results showing not a lot of people would travel buy car. Actual features are what exist in the product itself, such as design, colour, shape, size. From the evidence I have collected I have realised the actual features provided buy the new restaurant might be the takeaway, as it was the most popular result. A subjective feature would create an image that is created in the mind of the consumer. From the evidence I have gathered, I have realised that leaflets is the most popular result. A leaflet is a great way of creating an image of the business in the customers mind as you can describe the business in a way which will attract the customers
6. Demand-
The business concept I will use is demand. For a new Fast Food business to succeed it must shows sighs of profit. Potential customers must show demand for the product which is going to be up for sale. Using the demand concept will allow me to identify the consequences if demand is too low or high. If demand is too low, not enough sales will be achieved to cover cost resulting in the business making a loss which could lead to failure. If demand is high this will help the business succeed as potential customers are willing to purchase the product, this will minimise cost and increase profit.
From the results of my questionnaire I have realised that 12% of the people surveyed said they would visit a fast food restaurant once a month. 28% of the people I questioned said 1-3 times a month, 60% said 1 – 3 times a week. 0% said they would visit a fast food restaurant 4 – 7 times a week. So my results show the majority of the population questioned said they would visit a fast food restaurant 1 – 3 times a week. The least popular result was once a month. These results show that there is demand for a new fast food restaurant as 60 % of the target market said they would visit the fast food restaurant 1 – 3 times a week; this would benefit the business as they will know they will be in high demand during the week which could lead to higher sales and profit. However this may not be true as my results also show that 0% of the people surveyed would not use it more then 4 - 7 times a week, this may indicate to the business that there won’t be a lot of demand for fast food. I believe if a business is just trying to get established in the market it could still benefit from demand, as my results show that the majority of the people surveyed said they would visit the fast food restaurant 1 – 3 times a week. This is still a good sigh of demand for a new business which is trying to get established in the market. If the business stays open most days of the week the business will be able to maximise profits because the as my results show customers will mostly consume fast food between 1 – 3 times a week and therefore showing demand for the products. The business will benefit from this because the people surveyed will purchases products from the fast food restaurant and the business will make a profit.
From the results of my questionnaire 88% of the people surveyed said there should be a new fast food restaurant on Riddy lane, which left 12 % saying there should not be a new Fast food restaurant on Riddy lane. So the most popular result was yes to a new fast food restaurant to be open on Riddy lane. The least popular result was no to a new fast food restaurant on Riddy lane. The result for this question shows that there is a high demand for a new fast food restaurant to be opened on Riddy lane; this would benefit any new fast food business as they know there will be demand for fast food, however the results of this question dose not confirm that the interviewees would actually use the fast food restaurant.
If there was to be a new Fast food restaurant on Riddy lane 64% of the people I questioned said they would use it, 28% said they would not use it and 8% were not quite sure. 64% of the people surveyed said they would consume from the fast food restaurant, this was my most popular result. The least popular result was 8% of the population saying they may use the product. My previous result shows that the majority of the population surveyed said there should be a new fast food restaurant on Riddy lane, this dose not mean that potential customer would use it they might just have tick the boxes on behalf of other people who live around there area for example there family member. However the results from this question confirm that 64% of the population said they would use the fast food restaurant on Riddy lane, this confirms there would be a high demand for a new fast food restaurant on Riddy lane. A business will have benefit from high demand as it would lead to more sales and profit.
7. Price-
The business concept I will use is price, Price is also part of the marketing mix, a business may base the price of the product on the quality of the product, rival prices, demand, cost of production and what customers are willing to pay. Businesses mostly aim to sets a price of the product so it can reduce cost and increase profits. It is really important for a business to get the price of the product right as it can create an image of the product in the customer mind. For example if the business sets the price of the product too cheap customers would think it is a cheap product which will result in not creating a good image in the customers mind.
From the results of my questionnaire 44 % of the people I surveyed said there maximum on one meal would be between £3- £5.99, 32% said £16 - £19.99 whilst 12% said between £6 – £10.99, 8% said £11 - £15.99 and 0% said they would spend £1 - £ 2.99, which left the final 4% said there maximum on one meal would be £20+. From the population I surveyed I realised the majority of them would pay £3 - £5.99 for one meal; the least popular result was £1 - £2.99. Knowing that most customers would be willing to pay £3- £5.99 as there maximum on one meal, this may please any business as the business can afford to charge the products at a price which can result in high profit and still be in high demand. This is good for the business as they can decide on what price to charge and to see at what price an average meal will sell at. The least popular result was customers saying there maximum on one meal would be £1 – £2.99. This may be pleasing for a new fast food business as they don’t have to set there price low and still be in high demand as none of the people surveyed are willing to pay that price as there maximum on one meal.
From the results of my questionnaire I have realised that 96% of the people I surveyed said there method of payment would be buy cash, which left the 4% preferring debit card. The most popular method of payment was paying buy cash which left paying buy debit card as the least popular. This indicates to a business that most people who pay buy cash and only a small percentage would pay buy debit card so could suggest not purchasing a debit card facilities as there is not a lot of demand for it. This could keep costs low as you don’t need to spend capital on buying the debit card facilities. However this may not be the case as some potential customers may not have any cash on them, so they would need to pay by debit card, so if you do not have the debit card facilities you may loose potential customers.
I went out and collected 2 menus from the potential rivals businesses from Riddy lane to identify what the average price a meal sells for at a competitor’s fast food restaurant. They were menus from Chicken hut, and the Chippy, however I could not collect a menu from the Chippy as they did not supply one so instead I observed there prices. I went out and done this to see what prices potential rival businesses are charging so I could compare it for a new Fast Food business. All the menus mentioned can be located in my appendices on page......
The Chippys average price meal is £3.40p. For Chicken hut is £3 70p. This led me to work out the average price meal for a competitors fast food restaurant, which was £3.40p + £3.70p =£7.10 divide 2 = £3.55p. So £3.55p is the average price for a competitors’ meal. If a new fast food restaurant sets their prices based on competitors pricing it would be the right method as they are charging the prices which are the same as rivals, therefore not leading to a price war. A new fast food business on Riddy lane is going to be charging a price with in the range of £3 - £5.99, as this was the most popular option and should start at £3.55 to fit in with rivals. If it starts at £3.00 the rival business would have the funds to lower its prices in line with this or lower, as they will have profits from previous years to use. A new fast food restaurant would not be able to compete with the pricing war with rivals because they will be trying to establish themselves in the market and would not have made a profit at this stage. They will not have the resources to lower their prices in response to rivals’ actions. The starting price for a meal must be must £3.55.
8. Promotion-
The business concept I will use is promoting. This is also a part of the marketing mix. This is spreading the name of the fast food restaurant while trying to describe the product in a way which will attract customers to the restaurant. A Fast Food restaurant needs to find a way to promote the business which will try to increase profit and minimise there cost. If the business does not promote the business in the right way the business will be unable to get customers resulting in customers not even knowing if the product exists.
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From the people I surveyed 72% of them said they would like the Fast food business to be promoted to them via leaflet, 20% preferred a local newspaper, and 8% said a local radio which left 0% preferring poster. So if a new fast food business was to open on Riddy lane the investor should bare in mind the best promotion method would be handing out leaflets as there is high demand for it, as well as it would benefit the business greatly as the manufacturing costs for producing the leaflets would keep cost low also it will allow a business to specifically aim at a target audience who may use the product as it would be unlikely for any other promotion method to aim specifically at an area which may use the product, for example a newspaper would aim at a wide range of customers who may not even use the product, this would result in the business increasing unnecessary costs. If the business was to advertise the fast food restaurant via posters, it would not be wise as there is no demand for it, as well as some customers may not pay attention to the posters, producing the poster would also cost highly as you have to higher someone to produce it for you that would also increase costs of the business resulting in lack of profit.
For a new Fast Food restaurant on Riddy lane, I believe the preferred interview method of promotion would be below the line promotion; this is promoting a product but not through advertising using the media, it involves promoting the product by direct mail, packaging and personal selling. For a new Fast food business on Riddy lane they could use direct mail as there promotion method as it is when a leaflet is directly delivered to a house or another business through the post, this is beneficial because it allows specific groups of customers to be targeted directly, however the drawback for this promotion method is it is also known as junk mail, some people who receive direct mail may end up throwing it in the bin. They could also use personal selling; this involves providing a sum of money to an organisation, such as a school or football team, in order for the name of the business or product to be displayed on premises, the drawback for this method is that some people may not pay attention to the promotion method resulting in no potential customers being attracted to the business.
9. Business structure-
I believe a sole proprietorship and a franchise are both very good business structures for a new Fast Food restaurant on Riddy lane, as it is known to be easily manageable, if a new business is trying to establish itself in the market it would benefit from being a sole proprietorship or a Franchise.
If a new fast food restaurant was opened on Riddy lane it could be a franchise. A franchise is a right give buy one business to another to trade a good or service under its established name. A Franchise offers a variety of services such as managing the business, regional and national advertising, and an exclusive area in which to sell also a range of back up services such as advice, cheap loans and insurance cover to the franchisees. However the franchisor takes money and provides a well known brand name, advertising, training and equipment to the franchisee, in the franchisee has to pay for the right to trade under the established name of the franchisor. The franchisee has to put money in the start. An advantage for a new fast food restaurate to be a franchise is that they are given a well known brand name which can immediately establish in the market, there is also no need for promotion as it is already being promoted. A drawback is that certain shares of profits have to be paid to the franchisor. Another disadvantage for operating as a Franchise is that most of the decisions have to be made buy the franchisor however these decisions can wise leading the business to be more successful.
Another business structure a new Fast Food restaurant on Riddy lane could be a Sole proprietorship. A sole trader is person who is their own boss; they set up and run a business on their own, it is also owned buy them. In a sole trader ship decisions do not have to be consulted with anyone they are on their own boss and have 100% control of their own business. However this may be a disadvantage as if the business ends up in debt all debts have to be paid of buy them selves as they will have unlimited liability. In order to meet these debts the business may have to face giving up personal possessions such as there house and there car. One of the main advantages of being a Sole trader is that they are permitted to keep all the profits to themselves, and do not have to be shared. However a sole trader ship may not have time of work for things that matter in life for example taking a day of, going on holiday, as the business is all on their hands for it to be successful or not.
Both business structures have advantages and disadvantages that could benefit the business or lead it to failure. In a sole trader you keep 100% of the profits and you also have 100% control off all aspects of your business. In a franchise you have to pay royalties to the franchisor, you don’t have 100% control of decision’s making and control of the business. Also some of the profits may have to be given to the Franchisor. However it is known that franchises have a lower chance of failure then a sole trader, as sole traders are considered to be very risky with the tag of unlimited liability. Also a sole trader may find it hard to get established in the market. In franchises you have a head start over a sole trader as you already are established in the market because of the success of the franchise.
10. External Influences-
10. Interest Rates-
An interest rate is the price a borrower pays for the use of money they do not own, for instance a new fast food business trying to establish itself in the market, might borrow from a bank to kick start their business, and the return a lender receives for deferring the use of funds, by lending it to the borrower. Interest rates are normally expressed as a percentage rate over the period of one year.Interest rates often as a of and . For example, if a (such as a ) a £90 in a year on a of £1000, then the interest rate would be 90/1000 *100% = 9%. Interest rates are used to control variables like investment, inflation and unemployment.
Over the last twelve months the interest rates including have fallen by 1% to 0.5%. From February last year the interest rate was 5.25% but now in March 2009 the interest rate is 0.5%, it shows it has decrease by 5.25% - 0.5% = 4.75%. From gathering this information I have realised there has been a massive decrease in interest rate. The impact that it would have on the businesses would be positive as the cost will go down, therefore there start up cost will become cheaper resulting in more and more business opening. From these results it would be a good time to open a fast food business because money can be loaned and a decreased rate is paid back because maybe next year the rates will have increased and it could be more difficult to pay the loan and interest as more money has to be added toward the interest rate .
11. Consumer Spending-
It’s very important to understand the concept consumer spending because if the business knows that people are not purchasing goods, it should indicate them to maybe lower their prices so that they can make a profit and make the product to look more appealing to customers so they will buy the products. However this may be a disadvantage as if you lower your price rival business may lower the prices causing you to follow that sequence, resulting in the business to suffer a loss.
From the research I have collected above it shows that the consuming spending in 2002 quarter 4 has increased by 1.5 % on the previous year. Leading on to year 2007 quarter 4 has increased by 2.8% on previous year, this shows customers are willing to spend, therefore a new fast food restaurant on Riddy lane would benefit from this as if customer are willing to pay it will increase the chances of demand as well profit.
Conclusions and recommendation-
1. Location
The planned location for a new Fast Food restaurant on Riddy lane is easy to locate as it has many roads which run alongside it, as well as it being visible from a far distance. This will benefit the business as customers can reach the business either through public transport or their own method of travel, as well as deliveries being able to reach on time. It has a school which is directly opposite the planned location, the school contains 1500 students as well as teachers who may consume from the Fast Food restaurant, and therefore this will increase more potential demand for the business. However the drawback for the planned location is that their are 5 rival businesses on the same road, which are already firmly established in the Fast Food market as they have been trading in the market for over a year. This may make it difficult for a new fast food business to compete and make profit at the same time as there are 5 rival businesses that have loyal customers. From the secondary research I conducted it stated the census which was produces in 2003 indicated that the population in the Icknield borough is 7,556; from the information I have gathered the business will have high population figures and therefore it would be a good place to locate as there would be more potential customers, which will increase demand for the business, resulting to more sales and more profit. Also the Barnfield College and the Arndale centre is planning to expand, this will benefit a new Fast Food business as there would be an increase in the amount of potential customers the business may have. Overall I believe the location for where the new business is to be set is suitable and efficient, the reason why is because of the high population figure as well as the high school of 1500 students and teachers who may consume from the fast food restaurant, this shows that the business will be successful as the location is showing strong sighs of demand resulting in profits for the business.
2. Fast Food Market-
From the secondary research I have conducted it showed “The UK fast-food/takeaway was estimated at GBP 8.38bn in 2004 at retail selling prices representing a sales growth of 3.9% over the previous year. The pace of growth in the market was increased in 2004 following a sales increase of just 3% in 2003”. According to my evidence collected a new Fast Food business would benefit from trading in the Fast Food market as it is showing signs of growth and demand; however they have to bear in mind which specific fast food market to trade under, I recommend that a business should trade under the sandwich market as it has increased growth by 0.2%, this is the most growth rate in the whole of the Fast Food market which shows that the sandwich market is proving to be successful while in demand. As well as more and more people prefer healthier options which will be provided buy the sandwich market. However the information is valid but I recommend a new fast food business should try to look more up to date information to ensure the business sets up the right fast food business to maximise sales, profit and demand which will lead to a successful business.
3. Competitors-
Competition in the local Riddy lane market for fast food in my opinion is not that difficult for a new Fast Food restaurant on Riddy lane to establish itself in the market. However I believe Chicken Hut may prove to be some competition as it has been in business for long enough to establish itself as well having the right to open while students are finishing school. From the evidence I have collected I have realised The Chippy would not be that much of a threat as the Fish and Chips market is showing the most decline in growth and demand. The Meedou and Zaffrani are businesses that are not taking advantage over the location there are trading in; as my research shows they open after 5pm and close before 11.30pm so if a new Fast Food business would take advantage over this I believe they can become much more successful then The Meedou and Zaffarani.
4. Target Market-
From the results of my questionnaire 64% were female; this points out that a new fast food business should mostly aim its products at female, however if the business mainly concentrate on the female market they could possibly miss out on other potential customers such the male market resulting in the business loosing out on potential customers as well as profit, so I recommend fast food business should aim its products to both the male and female market as it will be the best way to increase profits. Also from the results of my questionnaire it pointed out that a new fast food business should mainly aim its products at people aged above 45 as it received the highest vote, as well as this age bracket would travel from work and to work down the A6 which they might spot the new fast food restaurant and consume from. However my questionnaire was conducted during the day time and I did not really have a chance to question children, so this lead me to carry out some primary research, while carrying out the research I realised that after 3pm the Riddy lane area is completely full of high school students as well as college students. So as well as aiming at people age above 45 I also recommend a new Fast Food business should consider aiming at people aged between 11- 16 as the population in this age bracket who might use the product is huge compared to any other age, an Advantage of aiming at this age bracket is it is close to the planned location of the new fast food restaurant.
5. Product-
My questionnaire results show that 12% of the people surveyed show demand for McDonalds; this was the least popular result. I believe a new Fast Food business should not consider opening as McDonalds as the government and parents are trying to cut out the intake of fatty food as there is a higher risk of obesity in the UK, as well as the nearest rival business to McDonalds is not far away. My research shows that 48% of the people surveyed prefer subway; this was the most popular result. I believe that if a new fast food business opened as subway it would benefit as my research shows that the sandwich market is showing the highest sighs of growth and demand in the fast food market. Also as subway is a franchise it would already be established in the market so there would be no need to promote the business as it is already promoted, as well as the franchisor is helping you if you face any problems. As subway will be providing healthier options it would benefit from doing so as it is meeting the governments and parents needs. So I would recommend a new Fast Food business on Riddy lane should open as subway as it received the highest votes in my questionnaire as well as the advantages of the business being a success if was opened as subway.
A new Fast Food business on Riddy lane should provide customers with an option of takeaway as well as delivery as the difference was only 20% from my results. If the business mainly concentrates on takeaway options they would be missing out on customers who want delivery options, which if they are not provided with the option of delivery it may indicate them to consume from a rival business. While providing customers with subway I also believe they should add in an option of Fizzy drinks as 80% of the people surveyed would consume a fizzy drink, this shows there is a high amount of demand for Fizzy drinks. From the results of the questionnaire it shows that 84% of the people questioned would consume fast food from 6pm – 10pm, this indicates that at this time there would be the most demand, so I recommended a new fast food business should mainly be ready and prepared at these times as there will be more demand from customers, if the business is not prepared it may result in the business loosing out on profit and customer satisfaction.
6. Demand-
From the results of my questionnaire 88% of the people surveyed said there should be a new fast food restaurant on Riddy lane this shows there is high demand for a new fast food restaurant, 64% of the people I surveyed said they would use the fast food restarurte this backs up there is demand for a new fast food restaurateur and confirms that the target market would actually consume from the new fast food restaurant. These results confirm that there is defiantly adequate demand for a new fast food restaurant on Riddy Lane. This will have a positive impact on a new fast food restaurant as it will boost the confidence of the manager as he knows my business is showing sighs of high demand leading the business to gain higher sales resulting in increased profits and success. Due to the government and parents recommending more and more people to eat healthier I believe planning permission would not be a problem as subway is providing the healthiest menu in the fast food market. As well as the sandwich market is showing the highest sighs of growth and demand in the fast food market which will shows to the planning permission people that the business will not end up in borrowing a loan.
7. Price-
From the results of my questionnaire it states that the 44% of the people surveyed are willing to pay between £3. 00p - £5. 99p. The competitor’s average meal price is £3. 55p. The average meal for a competitor’s business does fit in with what customers are willing to pay, as £3.55 is within the range of the most popular price. A new fast food restaurant should be doing competition based pricing for the start range price, so it is not lower than the rivals and does not result in a price war in which they cannot compete, as they do not have the funds. However, if it is lower than a rival business it may force the rival to react and lower theirs. This could force the new business to lower theirs, resulting in less profit being made, but it is more likely to lead to business failure as they would not have made enough profits to allow them to keep lowering their price in response to rivals lowering theirs. Based on the information, I recommend a new fast food business should start its price at £3.55; therefore the price of a meal will be set between £3.55 - £5.99.
However, this price range may not be in control of the franchisee because the franchisor may make the decision of how to price the products, if the business chooses to run as a franchise.
Also from the results of my questionnaire it states that 96% of the people surveyed would pay by cash leaving 4% saying they would pay by debit card. As the result show the majority would pay by cash this would benefit the business as they would not need to provide debit card facilities which could keep costs low as you don’t need to spend capital on buying the debit card facilities. However this may not be the case as some potential customers may not have any cash on them, so they would need to pay by debit card, so if you do not have the debit card facilities you may loose potential customers causing them to consume from rival businesses. Therefore I recommend a new fast food business should also provide customers with a debit card facilities as if the businesses dose not it may result in the customer not consuming from them and to a rival.
8. Promotion-
I recommend that a new should use below the line promotion. Mainly concentrating on direct mail, in which they post leaflets. An advantage of this is that you can advertise specifically to your target audience and with leaflets you can give a bigger amount of information than an advertisement in a newspaper. Also this method of promotion is known to keep cost low. It is important that the fast food restaurant carry out promotion as it is needed especially for a new business to try and make customers aware of the products and the business. Also without promotion the Fast food restaurant could open and have low demand as it has not been promoting to its target audience and could struggle to establish itself in the market. However my research shows states that a new fast food restaurant on Riddy lane should open as subway, which is a franchise, so based on that I also recommends a new fast food restaurant should use above the line promotion as it can cover a wide a wider range of potential customers, resulting in higher amounts of demand and profit. However the downside for this method of promotion is that it is known to be quite expensive.
9. Business structure-
I believe that a new fast food business on Riddy lane should open as franchise. The main benefits for a franchise is that most business structures are known to be risky, a franchise is the least risky business structure as it has on going support such as recognized brand name, advertising, training, equipment. Also the franchise is usually firmly established in the market. However the drawback is that the franchisee has to put money in the start, as well as paying frequent royalties to the franchisor, also it doesn’t have 100% control of the business as the franchisor makes most of the decisions, but these decision can benefit the franchisee as well as the business as the franchisor is usually more experienced then the franchisee, so he would no what is best for the business. So I recommend a new fast food business on Riddy lane should trade under a franchise as there is ongoing support by the franchisor, there is not on going support in any other business structure.
10. Interest Rates-
From the results of my findings it states “Over the last twelve months the interest rates including have fallen by 1% to 0.5%. From February last year the interest rate was 5.25% but now in March 2009 the interest rate is 0.5%, it shows it has decrease by 5.25% - 0.5%= 4.75%”. From gathering this information I have realised there has been a massive decrease in interest rate. The impact that it would have on the businesses would be positive as the cost will go down, therefore there start up cost will become cheaper resulting in more and more business opening. From these results it would be a good time to open a fast food business because money can be loaned and a decreased rate is paid back because maybe next year the rates will have increased and it could be more difficult to pay the loan and interest as more money has to be added toward the interest rate . However this may not be needed for a franchise is unable to meets its debts the franchisor usually pays the debts.
11. Consumer Spending-
From the secondary research I have collected it states that the “consuming spending in 2002 quarter 4 has increased by 1.5 % on the previous year. Leading on to year 2007 quarter 4 has increased by 2.8% on previous year”, this shows customers are willing to spend, therefore a new fast food restaurant on Riddy lane would benefit from this as if customer are willing to pay it will increase the chances of demand as well profit, leading the business to be successful.
12. Would the opening of a fast food restaurant on Riddy lane Luton Represent a sound business proposition?-
From all the information I have collected and analysed I believe a new fast food restaurant would be a sound business proposition. The main reason for why I have reached this decision is because of the high amounts of demand the business will gain as it will have over 7000 people in the target market. Also I believe as the business is going to be a franchise it would benefit highly from that, as it will have help all the way until the business is successful. I believe that a new fast food restaurant on Riddy Lane would be a profitable business as I have identified the products the competitors provide and have found a gap in the market for providing more of a healthier option as no rival business dose so. However due to the competition the business may not be as successful but I believe the only threat for a new fast food restaurant on Riddy lane would be chicken as it is the only business that is taking advantage over the location it has. Riddy Lane is an ideal place to locate the business as there are a large number of schools, colleges and local residents in the surrounding areas. Also, the easy access to the main road resulting on deliveries being delivered on time and customers are finding it easier to access the restaurant.
BIBLIOGRAPHY
Wikipedia
- I used this site to find the correct definition of fast food, also to find out what trends are affecting the fast food market. Website was visited on the 15/02/09.
I used this site to find out the definition of competition in business. Website visited on 05/07/09.
I used this site to find out the definition of interest rates. Website visited on 05/07/09.
Cater research
- I used this site to find out which fast food areas are showing an increase in demand also to show other trends influencing the fast food market. Website visited on 14/02/09.
Hungry Horse
I used this site to see the opening times of the Zaffarani. Website visited on 11/06/09.
Best eating
I used this site to see what time the Meedou opens. 11/06/09.
Travel line industry wire
– I used this site to find out if UK fast food market in increasing or decreasing. Website visited on 11/02/09.
Think Luton
I used this site to realise what developments are happening around Riddy lane. Website visited on 14/05/09.
Public health
I used this site to see what trends are influencing the fast food market. Website visited on 16/02/09.
Telegraph
- I used this site to see how subway took overview McDonalds. Website visited on 14/05/09.
Luton.gov
- I used this website to find population of Icknield high school. Website visited on 9/07/09.
Bank of England
I used this site to see how the interest rates have increased from the past years. Website visited on 9/07/09.
Statistics
I used this site to see whether consumer spending has increased or deceased. Website visited on 9/07/09.
Subway
http://www.subway.co.uk- I used this website to get information about future plans and got logo. Website visited on 9/07/09.
I used this website for a map of Riddy lane. Website visited on 9/07/09.
Appendices
Blank Questionnaire on a new fast food restaurant on Riddy lane?
How old are you?
What is your gender?
Which of the following are you related to?
Which of the following do you prefer?
Which of the following would you prefer?
What time would you consume the Fast Food?
What else do you buy when purchasing fast food?
How often do you visit a fast-food restaurant?
If you visited the fast food restaurant how much would you be looking to spend as your maximum on one meal?
How would you pay?
How would you like the fast food restaurant to be promoted to you?
How would you travel to the fast food restaurant?
How would you travel to the fast food restaurant?
Should there be a new fast food restaurant on Riddy lane?
Would you use a new fast food restaurant in Riddy Lane?
Questionnaire on a new fast food restaurant on Riddy lane?
Summary of the questionnaire results-
How old are you?
What is your gender?
Which of the following are you related to?
Which of the following do you prefer?
Which of the following would you prefer?
What time would you consume the Fast Food?
What else do you buy when purchasing fast food?
How often do you visit a fast-food restaurant?
If you visited the fast food restaurant how much would you be looking to spend as your maximum on one meal?
How would you pay?
How would you like the fast food restaurant to be promoted to you?
How would you travel to the fast food restaurant?
How would you travel to the fast food restaurant?
Should there be a new fast food restaurant on Riddy lane?
Would you use a new fast food restaurant in Riddy Lane?
Street map
