With the market in the United States nearly saturated, the onus is on the market players to bring about innovation and creativity in their offerings to the customers so as to build up their customer base in America. However, the rise of the emerging markets form the silver lining on the cloud for the Fast food industry players.
Considering the above scenario, with Burger King Worldwide Inc (NYSE:BKW) taking active steps in the direction of product development, innovation and market penetration in the emerging countries through execution of strategic alliances will impart the company a definite competitive advantage and strengthen its standing in the industry.
Competitive landscape
The fast food industry is a very competitive space and Burger King Worldwide Inc (NYSE:BKW) directly competes with some of the biggest names in the fast food sector.
McDonald’s Corporation (NYSE:MCD) is an industry leader and the toughest competitor for Burger King. The company delivered decent performance in 2012 achieving a modest 3.1% year-over-year growth in sales and 4% (excluding foreign currency effects) year-over-year growth in operating income. The company generated a total of $ 7 billion as cash from operations.
The fast-food giant has successfully employed a strategy aimed at re-imaging of the restaurants in order to appeal to customers including substantial value addition to its product portfolio in order to meet the changing tastes and preferences of the consumers.
In response to the marked rise in the demand for healthy options for food, the company has made significant changes to its menu and introduced new product lines adding healthier alternatives on offer.
With the fast food industry set for a paradigm shift owing to the change in the demand patterns of the consumers and the emergence of the developing economies as a huge market, McDonald’s Corporation (NYSE:MCD) seems to have braced itself to meet the upcoming challenges and maintain its position as the market leader.
Yum! Brands, Inc. (NYSE:YUM) is another competitor to Burger King Worldwide Inc (NYSE:BKW). With a market capitalization of about $31.59 billion, Yum! Brands, Inc. (NYSE:YUM) is a prominent player in the fast food market. It owns popular brands such as Taco Bell, KFC, Pizza Hut, and WingStreet restaurants. The company dished out a decent performance in 2012 clocking a 5% year-over-year increase in system wide sales and a 12 % year-over-year growth in operating profit.
The company is presently focusing on worldwide international expansion with special focus on India and China which are touted to be the biggest markets for fast food segment in the times to come.
The company achieved a return on invested capital of 22% while generating an operational cash flow of $ 2.3 billion in the last fiscal year which speaks volumes about the company’s strong fundamentals.
With an aggressive expansion strategy at hand, the company is well placed against its rivals in the industry and is a strong candidate to attain the top spot in the global market space.
Foolish takeaway
Evidently, the global fast food industry is an extremely competitive place with strong and experienced players hogging the market. Nevertheless, Burger King’s balanced approach to business focusing on customers, markets, operational efficiency and brand building catapults the company in the running for robust and sustained growth.
An appraisal of the industry scenario reveals a massive opportunity for growth in the emerging markets and with Burger King Worldwide Inc (NYSE:BKW) having extensive expansion plans on its agenda, the company is well on its way to capitalize on it, creating a huge possibility for embarking upon a growth trajectory making it a worthy addition to your portfolio.
Lalita Chauhan has no position in any stocks mentioned. The Motley Fool recommends Burger King Worldwide Inc (NYSE:BKW) and McDonald’s. The Motley Fool owns shares of McDonald’s Corporation (NYSE:MCD).
The article Hungry….? How About Burger King! originally appeared on Fool.com.
Lalita is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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