The Fast Food Industry in Houston, Texas - Essay Example

The Fast Food Industry in Houston, Texas Houston is the largest city in Texas. The fast food industry, in Houston, is one of the top industrial sectors in terms of growth and development. The concept of fast food originated as a result of urban development. Fast food restaurants make meals available amidst tight work schedule. It offers a considerable opportunity for parents who shuttle between home and work for a major part of the day. Fast food restaurants serve delicacies like vegetarian and non-vegetarian pizzas and burgers, fish and fries, and aerated and ales drinks (Schlosser, 2012). Currently, the fast food industry, in Houston, has become highly competitive with its key market players creating a form of monopoly market, where new fast food restaurants are exposed to stiff competition. The leading fast food companies operating in this market include Frenchy’s Chicken, Steak N Shake, Whataburger Restaurants, Wendy’s, Subways, McDonald’s, Sonic Drive-In, Jack in the Box, El Pollo Loco, and Burger King amongst other restaurants. In 2010, Ibisworld report indicated that McDonald’s Corporation had a market share of 12.7 percent, Wendy’s had 6.6 percent, Starbucks Corporation had 5.9 percent, and Burgers King Corporation had 5.1 percent (Schlosser, 2012). This indicates that these four companies are the leading market players in Houston’s fast food industry with McDonald’s corporation being the market leader. Additionally, according to the New York Stock Exchange financial market (NYSE), McDonald’s share price is $90.79. In 2011, the company’s profit rose to 19 percent that is equivalent to revenue of $6.91 billion. Wendy’s current-year income is projected at $2.69 billion, and Jack in the Box earnings and revenue is projected at $2.16 billion and $1.53 a share (Schlosser, 2012). In spite of gloomy economic condition, Houston fast food industry is experiencing robust economic growth. Studies have predicted that the fast food market is expected to grow in the coming years, and will cross the $179 Billion mark by 2013 (Schlosser, 2012). The fast food industry, like any other industry, also experiences the economic ups and downs. In addition, they provide products and services that many other businesses depend on. Various business trends such as social and financial markets significantly affect the economic status of fast food market. Some of the key factors that affect the demand and supply of fast food include health, supply, spending and financing. The impact of fast foods on health is one of the most significant challenges that the fast food restaurants are currently experiencing. Businesses and consumers are increasingly focusing the impacts of fast foods on health. Fast food restaurants, on the other hand, feel the pressure of providing healthier delicacies to their customers, and eliminating toxins from the environment and reducing obesity (Schlosser, 2012). Consumers prefer healthier, safer, and more nutritious meals at Houston’s local restaurants. Moreover, most companies, the media and health-care industry focus on maintaining healthier workforce. The demand for healthier fast foods influences the supply available for local consumption (Schlosser, 2012). Fast food suppliers affect menu development, pricing, and success of restaurants and their local perception. Fast food restaurants usually align themselves with the practices of other local businesses due to the increasing trend of buying local produce and other food. In Houston, small enterprises are currently advocating for buy-local products campaign. This has exerted pressure on the local restaurants to gain local business support through buying local products. Suppliers of restaurant and local food supplies strive to keep up with the growing demand. Therefore, when suppliers cannot meet restaurants’ demands, then the fast food restaurants are forced to look elsewhere for supplies (Schlosser, 2012). A report released by the U.S. Department of Agriculture in 2010, indicated that rising income is the leading factor, which affects restaurant spending. As the fast food restaurant’s business operations expand, so do their expenses. This increases restaurants’ spending because they need to meet the increasing customers’ tastes and preferences. At the same time, wealthier customers usually demand more amenities, which drive the restaurants to increase their spending (Schlosser, 2012). Business activities of Houston’s banks and other financial institutions also affect the demand and supply of the fast food industry. When financial institutions tighten credit limits, fast food restaurant owners cannot meet the requirements of new restaurants, thus curtailing expansion. Additionally, acquisition and mergers of single-owner and chains properties are derailed when banks tighten credit availability (Schlosser, 2012). The U.S. Food and Drug Administration’s (FDA) Model Food Code that provides the “best practice” guide to food presentation and handling in the fast food industry is updated each year (Schlosser, 2012). The codes nutritional value has set standards for nutritional value of individual meals and foods. There is the need to establish the relationship between fast foods and the increasing rate of obesity among American teenagers. Most researches have established that the increased consumption of fast foods with high fat content is one of the leading causes of obesity in the United States. Therefore, to address obesity issue and its health related conditions, the FDA has realized the need to regulate the amount of fats in the fast foods. Its regulations that set standards for nutritional values of fast food are responsible for monitoring the amount of fats in fast foods. Most fast food restaurants in Houston also allow smoking inside the restaurants. Most non-smoking citizens have complained about the effects of secondary smoking inside the restaurants. This has called for Houston’s local authority to begin enforcing smoking bans in the restaurants. The number of fast food restaurants is also increasing at an alarming rate across Houston. This has called for the local authority to impose franchise promotions and sales regulations on the fast food industry (Schlosser, 2012). This regulation is also aimed at reducing the obesity rate and its health related conditions among the American teenagers. In conclusion, Houston’s fast food industry has emerged as one of the leading industry in Texas. This industry has been experiencing continuous development and growth over the past few years. Despite the economic down fall across the US, the fast food industry grew at an average rate of 4 percent annually since 2009. Leading industry players, like McDonald’s and Wendy’s Inc., are willingly spending on promotional activities to boost Houston’s fast food industry and expand their businesses. Like any other industry, the fast food industry is also dependent on the factors that affect the demand and supply of products and supplies. Some of the factors that affect the demand and supply in this industry include spending, financing, supply and health. Some effects of fast food business operations, like the effect of fast food on the health of American teenagers, have called for the state authority to impose regulatory measures, which monitor the nutritional value of fast food. The U.S. FDA is responsible for formulating and enforcing food regulatory measures. Reference Schlosser E. (2012). Fast Food Nation: The Dark Side of the All-American Meal. New York: Houghton Mifflin Harcour. Read More