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The United States leads in the world in the fast food industry. Fast food restaurants from America are found in over one hundred countries worldwide. An approximate two million employees in the United States are employed in the fast food industry including areas such as food servicing and preparation. In the US alone, there are available more than 200, 000 restaurants, generating a revenue of $ 120 billion in sales. Restaurants dealing with fast food are also called quick service restaurants; this name resulted from the fact that they take a shorter time to prepare their foods. Some of the international players include McDonalds’ as well as Yum Brands. Nationally, there are brands such as Wendy’s, while regional players include Sonic among others.
There has been a slow growth in this industry since 2006, attributed to the prices of energy and food which has been continuously soaring. The high costs of goods, coupled with the weakened job market and slump in houses, have taken a toll on the amount of money people are spending on fast food restaurants in United States. In addition, the inflation being experienced in food and energy has an effect on consumer spending, thus affecting the profit margins of the fast food industry.
Fast food restaurants such as McDonald’s have however been able to navigate through these hard times with varying success levels. They have taken advantage of the growing market in the fast food industry thus, enabling them to offset the ever increasing costs and American slowdown. As a result, they have been able to grow and expand extensively. Other organizations such as Sonic have employed strategies such as product innovation as well as marketing campaigns, to help them boost their profitability and growth.
The Impact of US spending on Fast Food Sales.
The United States spend the largest amount of money in the whole world on fast foods. From the beginning of 2007, numerous factors have taken a toll on the amount consumers spend on fast foods. For instance, the falling housing market, especially in Florida and Nevada, has affected the wealth of consumers in a negative way, which in turn has discouraged them from spending. Another point is the increasing costs of energy and foods; they have increased inflation rate, thus reducing the spending power of consumers. Finally, there has been a deterioration in the job market in the US, in the first half of the year 2008, where more than 485,000 jobs were lost in the private sector; reduction of job hours have also affected the spending of many consumers. Although major players such as the McDonalds’ have witnessed growth in sales from the similar stores, as customers prefer food alternatives that are relatively cheaper, generally, there has been a struggle in the sector. According to reports by the National Association of Restaurants, 55% of operators of restaurants have reported a decline in sales from the same store in 2008 (March). This is in comparison to the 28% of restaurant owners who reported to have increased their sales from identical stores (Schlosser 297-300).
Numerous factors have led to the increase in food prices in the recent past such as high energy prices, worldwide growing demand from economies that are still developing such as India and China; another factor is the diversion of the grain market to production of ethanol. As a result, the costs of commodities such as wheat and corn have increased rapidly.
According to Schlosser (297-300), food, labor and beverage inputs are the major cost factors facing operators of fast food restaurants, contributing to 33% of each dollar of sales. Because of low operating margins in comparison to other industries, a minimal rise in these costs, will affect the profitability positively. There has been an increase in whole sale price over the years, in 2008 (March), it was 8.5%; this is an increase from the 7.6% whole sale food prices recorded in 2007. In addition, stiff competition has reduced the ability of owners of fast food restaurants to pass the increase in cost to the customer. Note that, increased costs have negatively affected the fast food industry in the US with companies such as Wendy’s and Domino’s recording steady declines in their operating margins, from the beginning of the 2nd half of the year 2007.
History of Fast Foods in the United States
According to Pilcher (75-100), many Americans associate the emergence of fast foods in the US with the McDonald brothers. However, this is not true; the White Castle burger chain is the one that started off the history of fast foods in the America. The first fast food restaurant, called First White Castle was opened by the Anderson, J. A. in Kansas in 1916. The foods provided then were not expensive and they included fries, beef burgers and colas. The full reception of the fast foods in the US was not to be until later after World War II, when Americans began loving their cars, where they spent a lot of time driving around that led to them eating out most of the times.
Maurice and Richard MacDonald, the McDonald brothers are actually the true heroes, when it comes to the history of fast foods in America; in 1948, they made the first McDonald eatery in California. They wanted the restaurant to be cost efficient and effective, so they first established a little restaurant with no tables. Driven by determination to franchise their idea, the two brothers started two places; in Downey as well as capital of Arizona.
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As the McDonald’s climbed the ladder of success, other people tried to emulate their idea. Keith Cramer, was the name of the imitator, he started an operation in the State of Everglade; it moved into Ray Kroc and Harm burger King. Having been impressed by the business of the McDonalds, he asked them if he it was possible that he could buy their business. In 1954, he opened his own restaurant called, McDonald’s in Des Plaines. Finally he managed to purchase the McDonald brothers. This was the start of the opening of numerous food chains in America in the fifties and sixties (Pilcher 75-100).
As more people enjoyed eating in their cars, the demand for fast foods rose. As a result, there were numerous stores of fast foods being established all over the US. Jack in the Box was established in 1951, and by the year 1960, it had expanded to other regions including California. In 1954, the first Sonic Drive In. was opened in Shawnee by Smith Troy. In 1962, First Taco Bell was established in Golden State (Downey). All these restaurants found their ideas from the McDonalds and made some alterations to suit their areas of specializations.
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Currently, fast food restaurants have spread globally, and interestingly, they have taken the culture of America with them. Famous food chains such as the Dairy queen and Domino’s among others are demonstrating to people that fast foods should not always be about burgers. The history of fast food in the United States has become the basis of fast food business in the whole world, and many people have successful fast food restaurants in different parts of the world many of them drawing their ideas from the McDonalds’.
USDHHS goals and objectives are addressed by this topic
The USDHHs goals include decreasing the health disparities amongst American citizens; increasing healthy life span of Americans and achieving preventive services that is accessible to all Americans (U.S. Department of Health and Human Services 48). Since the, consumption of fast foods in America has become part of the daily lives of Americans, the health aspects that these foods have on Americans lives should be taken into consideration. That is why, implementing the goal aimed at increasing the span of healthy living for the American people is important. The effects of taking fast foods are obvious such as being obese, which increases the risk of diseases such as heart disease among high blood pressure others. We do not want the population of Americans to die at an early age just because of unhealthy eating; what will happen to the fast food industry if their customers of health related problems caused by eating junk food? The USDHHS objectives that touch on healthy eating include promotion of healthy lifestyle that is physically active as well as promoting eating of a healthy diet.
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The United States of America is ranked as the leading in the fast food business worldwide, with over 200, 000 restaurants dealing with fast foods operational in the US alone. In addition, these restaurants have given about two million people employment in different areas including food service as well as preparation.