Industry Analysis & Industry Trends
Over the past five years, the Global Fast Food Restaurants industry has expanded despite changing consumer tastes and a struggling global economy. As disposable income decreased due to the recession, consumers cut back on luxuries such as eating out. However, fast food operators outperformed full-service restaurants during this time, as many consumers found room within their budgets for lower-priced and convenient food options. The industry also experienced steady and growing demand from emerging economies, which boosted the industry's overall performance. Despite countering global economic trends, the industry has been forced to adapt to increasingly health-conscious consumer preferences... read more
The industry's capital intensity is determined by the ratio of capital to labor costs. To calculate the ratio, wages and depreciation are used as proxies. In 2014, IBISWorld estimates that for every dollar spent on wages, about $0.17 is spent on the use and replacement of buildings and equipment, indicating that this industry has a medium level of capital intensity.
Fast food operators need to invest in cooking and storage equipment such as burners, grills, deep fryers, fridges and freezers. Capital outlays can be reduced by renting or leasing buildings and equipment. Most franchise agreements are arranged so the franchisee is not exposed to excessive capital costs, meaning the building they operate out of is rented and much of the equipment is leased... read more