American fast food restaurants:

The market of American fast food is monopolistic competition. First, we can prove in numbers. There are 85,000 fast food restaurants in American. So many restaurants in America, it accords the number of monopolistic competition. Second, The American fast food restaurants have moderate differentiation. So the market accords the second characteristic, products differentiated. Third, price is a decision variable, but limited. So it accords price characteristic of monopolistic competition. Forth, the fast food is not like any other companies, need governments special examine and approve. The fast food restaurants in America only need hygienic license and tax compliance. So the market is easy to entry. It also accords the characteristic of monopolistic competition. Last, the fast food market is price and quality competition. However, if we see the number of American fast food restaurant, it may be too many in the market. This will be recognized as perfect competition. To sum up, most of characteristic of American fast food market accords monopolistic competition.

The American fast food market has moderate differentiation. Why the market is not prefect differentiation? Because some of fast food restaurant still sell same products. In other words, the products in American fast food restaurants have intersection and repetition. For example, McDonald’s, KFC and Burger King, both of them sell the same product, hamburger, so we only say the market of American fast food only moderate differentiation. The differentiation of American fast food has many aspects. Then, this essay will introduce two aspects of differentiation, differentiation of products characteristic and differentiation of service characteristic.

First, I will talk about the differentiation of products characteristic. I divide the American fast food market into two parts, indigenous American fast food and external food. The first and the most important part is the indigenous American traditional fast food. These restaurants sell traditional America. IHOP, JACK IN BOX, KFC and McDonald’s are the typical emblem. Especially, McDonald’s, it is an indigenous restaurant, and the taste of McDonald’s accords American. So it could have 13,000 restaurants in America. The external fast food can detailed divide in three parts. First, Mexican Food, the typical emblem is Taco Bell. Taco Bell has Mexican style. All the waiters in Taco Bell wear Mexican national clothes. The restaurant has the Mexican style decoration. And in the restaurant, you will hear the Latin music. The foods are also has the Mexican taste. The characteristic of foods are tortilla rolled with mixture containing and chili called salsa. Second, Italian pizza, because pizza has go into America for a long time, so most of people think pizza has become a American food. However, pizza comes from Italian. The most successful pizza restaurant is not belonging to Italy. Pizza Hut is a typical emblem of Italy pizza in America. Third, Chinese fast food, the typical emblem is Panda Express. Panda Express is opened by two Chinese. Panda Express sell Chinese food, the seasoning was mixed before, so it can keep each of the food have the same flavor.  Cookers in Panda Express put the food in a box and keep it hot, and they will cook a new one after the old was sold out.

Second, I will introduce the differentiation of service characteristic. I have two typical examples. First, IHOP, it is a special fast food restaurant. IHOP is very good at breakfast. And some of the IHOP near the school have the space of the study and it has free water and 24h system for student. So IHOP is very popular with students. Moreover, some of the fast food restaurants have drive-thru. The first drive-thru is built by McDonald’s in 1975.

In conclusion, the American fast food market is monopolistic competition, however because of the number of the firms, it near a perfect competition. The market of American fast food has differentiation, but the differentiation is not very detailed. So we call American fast food market is moderate differentiation

Reference list:

1. http://www.ibisworld.com/industry/default.aspx?indid=1676

2. http://zhidao.baidu.com/question/124894105.html?fr=qrl&cid=183&index=1

3. http://quote.morningstar.com/Option/Options.aspx?sLevel=A&ticker=MCD

4. http://moneycentral.msn.com/ownership?Symbol=MCD

5. http://wiki.answers.com/Q/How_many_fast_food_restaurants_are_in_the_US