CH-1 PLAN OF THE STUDY

1.1 INTRODUCTION
If the development capital is what establishes a business, sales & development management is
what keeps it going. One of the most common problem of every business is the selection of
wrong channels and wrong strategy. What is important is not just the size of operating costs, but
the management function of managing sales & distribution i.e., increasing sales volume & the
flow of regular customers by adopting the most effective strategy.
McDonalds was established in California during the 1940s by two brothers. McDonalds is a
leader in convenient foods and beverages, with revenues of about $23 billion and over i.6 million
employees serving the customers worldwide. On the contrary Subway is an American
restaurant franchise that primarily sells submarine sandwiches (subs) and salads. It is owned and
operated by Doctor's Associates, Inc. (DAI). Subway is one of the fastest growing franchises in
the world with 36,558 restaurants in 99 countries and territories as of April 7th, 2012.
The project is small attempt to study the current market scenario in the fast food industry
prevailing in India. Added to this fact the fast food industry in India is growing with a rate of 30
35 % currently.











OBJECTIVE OF THE REPORT

It is well known fact that we remember 20% of what we hear, we remember 40% of what we see
but we remember 75% of what we do.
Undergoing B.B.A is the first step to visualize the ever-dynamic business world and my main
objective while preparing the report is to explore the current management literature so as to
develop an individual style and sharpen my skills in the area of leadership communication,
decision making, motivation and conflict management. Preparing the report was to familiarize
myself with the current market trend in the fast food industry prevailing in India.
To present study in fast food industry mainly focus on the comparative study between
McDonalds And Subway and between its other competitors with the help of primary data.















1.3 THEOROTICAL BACKGROUND
McDonalds vs. Subway
McDonalds and Subway are the first things that come to the mind whenever we are in a rush for
work, school or for any other urgent matter when we are hungry. They have these diverse variety
of ready-to-go foods that one can bring along in the bus or when one walk along the road. The
difference between McDonalds and Subway is very obvious. They are totally different from
each other so people with different palette have to decide whether to go to McDonalds with their
famous hamburgers or with Subway with their submarine sandwiches. Either one of them is
delicious enough to get confused about.

McDonalds
McDonalds has been in the market since 1940. The story of McDonalds started in 1954, when
its founder Raymond Kroc saw a hamburger stand in San Bernardino, California and envisioned
a nationwide fast food chain. Kroc proved himself as a pioneer who revolutionized the American
restaurant industry. Today McDonalds is the worlds largest fast food chain serving 47 million
customers daily. They have introduced their Speedee Service System that has become the
inspiration of modern day fast food chains. Their original McDonalds mascot, a hamburger-
headed man with a chefs hat, was replaced with the ever famous McDonalds clown. Who could
have gone wrong with that consistently laughing face of their mascot? McDonalds have
conquered 119 countries and is serving 58 million of consumers every single day. Some of their
restaurants are counter service alone, some are just drive thru like those locations on the
highways, some counter service restaurants of McDonalds have playgrounds and others have
inner and outer seats which are usually of colour red and yellow. Their products are suitable for
any type of people, any time of the day and any mood of the season. Aside from their famous
hamburgers, they have chicken sandwiches, soft drinks, breakfast menu, French fries and
desserts. A lot of McDonalds restaurants have something for vegetarian consumers also.
McDonalds is also fond of adopting its products upon the countries food taboos. For instance,
McDonalds in Portugal offer soup and the McRice in Indonesia.


Subway
Subway is labeled globally as the fastest growing fast food chain franchise. It started from Fred
De Lucas youth. He was still 17 years back in the year 1965 and was struggling to pay for his
college fees. What he did is he borrowed money from his family friends and put up a restaurant
that sells sandwiches and was originally named as Petes Submarine. Subway is now serving
33,930 restaurants in 95 countries. Their consumable offers are submarine sandwiches, cookies,
Danishes and muffins that are of various flavours like chocolates and nuts. They also have
Veggie sandwiches for vegetarian consumers.
The difference between McDonalds and Subway is crystal clear because the actual competitor
of Subway is Quiznos which sells sandwiches as well. However, because of their popularity and
their unquestionable delicious foods, we usually wonder as to where we really like to eat,
because we want both. Subway is truly generous with their products that they have been legally
questioned before for their oversized sandwiches; McDonalds have fought well to protect their
Mc trademark with their foods because they, too, have faced several lawsuits about it. Which is
which never matters when theyre, both, are truly satisfying.















McDonalds vs. Subway Menu Facts. The Calories & Nutrition War Begin
Here!
The most controversial yet popular topic engulfing two major giant in the worldwide fast food chain
restaurant McDonalds and Subway. So which is better? Which one is healthier? Which one offer less
calories? Which one will help you to shed some pound? What is the calories and nutrition index of these
two franchises?

Subways Menu Nutrition Facts
Subway always offers meal with comparatively low calories from fats. However the nutrition
from Subway may vary depend on the person who prepares the meal. If you check out Subways
nutrition chart here Subway Nutrition Value you can find that most of the sandwiches served
are less than 400 calories. And most of the item are low in fat, cholesterol and free from trans-fat
while Subway always serving fresh ingredient, not fried and adding lots of veggies in the menu.
But the calories and fat level will go up if you happen to add some cheese or mayo to these
sandwiches. Its price will be slightly more expensive compare to McDonalds, however Subway
is still a preferable choice for most of the fast food lover out there due to its healthy menu
choices.
McDonalds Menu Nutrition Facts
McDonalds on the other hand seem to have suffered from a multiple of personality disorder.
McDonalds is tirelessly campaigning about their healthiness in the meal they offer e.g. their
salads, and their healthy options even persuading athletes to appear in ads. One thing good
about McDonalds is that they serve it real fast, you can walk in there, order something, slap
money down, and be walking out with food within 60 seconds. While some claim that the menu
in McDonalds is cheaper compare to Subway. But sorry if you thinking of having a fresh
vegetable there as most of the time the foods are served in deep fried or deep grilled in most
country. You can check out McDonalds nutrition chart here McDonalds Nutrition Value.

Simple Comparison Between McDonalds and Subway
McDonalds Hamburger: Patty (100% pure USDA inspected beef; no additives, no fillers, no
extenders.), Bun, Ketchup, Mustard, Pickle Slices, Onions (Dehydrated), Seasoning Salt,
pepper, partially hydrogenated vegetable oil (cottonseed and soybean).
Subway Sub Sandwich Turkey Breast: Sliced Turkey Breast and Standard Vegetables (Can
be Altered Iceberg Lettuce, Tomatoes, Red Onions, Green Peppers, Olives and Pickles).
The ingredients are DI FFERENT
Subway 6 Inch Turkey Breast: 280 Calories, 5 FAT (Grams).
McDonalds Big Mac: 560 Calories, 30 FAT (Grams).
A Subway Sandwich compared to a McDonalds Big Mac can save hundreds of calories and at
least 25 Grams of Fat.
It is clear that from the comparison above, Subway always associate themselves with the The
Biggest Loser while for most of the time, McDonalds is on the other way round The Biggest
Gainer.

McDonalds versus Subway The Sandwich
Hamburger battle
In March 2011, sandwich chain Subway surpassed the worlds largest hamburger chain,
McDonalds in terms of the number of stores globally. In 2002, around nine years ago, Subway
had already surpassed McDonalds in number of stores in the U.S. However, McDonalds still
rules in terms of revenue with $24.1 billion, as compared with $15.2 billion for Subway last year.
Subway Rapid growth strategy opening outlets in
non-traditional locations
Subway has opened around 8000 outlets in non-traditional and unusual locations. E.g. in
Automobile showrooms, Goodwill stores, high schools, zoos, appliance stores, ferry terminals,
riverboats, and even a church. In China it has around 200 stores and has plans to expand it to
around 500. Subway has competitive advantage over other chain restaurants as it costs less for it
to open and operate a smaller format store.







McDonalds Subway
Restaurants (end of 2010) 32,737 33,749
Number of Countries 117 95
Restaurants in U.S. 24000 24017
Franchised restaurants
around the world
More than 75% >32,800 franchises in 92
countries
Revenues in 2010 $24 billion $15.2 billion
Owned by McDonalds Doctors Associates Inc.
(DAI)
First Restaurant 1948 1965
First franchised restaurant 1955 1974
First international restaurant 1967 in Canada & Puerto
Rico
1984 in Bahrain
Became billion dollar
corporation in
1972
10,000
th
Restaurant 1988 1995
Number of worldwide
employees
1.7 million 3,00,000
Founders/Owners Ray Kroc (Dick and Mac
McDonald)
Fred DeLuca and Dr. Peter
Buck



BCG Matrix:

According to BCG Matrix McDonalds is a star. The reason for this is its high market growth
and high market share in the Indian market. On the other hand KFC and Pizza Hut are the cash
cows because of their low growth rate and high market share. During past some years KFC and
Pizza Hut have lost their market growth because of the fact that they lost their standard war to
their competitor i.e. McDonalds.
Another direct competitor of McDonalds is Subway. According to BCG Matrix it is a dog.
Some of the reasons that are responsible for its low market share and low market growth are the
less expansion strategies being followed by the company. Secondly they are not focusing at all
on all the major cities.



COMPETITOR ANALYSIS
PIZZA HUT:
Pizza Hut is a global fast food chain, a subsidiary of Yum! Brands Inc., the worlds largest
restaurant company. It was founded in Wichita, Kansas, USA in 1958 and is running its
operations in about 91 countries worldwide. It is one of the major competitor of McDonalds.
Pizza Hut serves a large variety of starters, soups, salads,
sandwiches, Pastas and deserts.
Strategic Objectives:
When we talk about strategic objectives, Pizza hut says: We
want to satisfy our customers by offering them The best.
Diversification of the products that they offer has always
been a focal point of strategies at Pizza Hut. The strategies at
Pizza hut are guided by principles like Cleanliness, Hospitality, Accuracy, Maintenance, Product
quality and Speed (CHAMPS). Since its a global chain, the strategies are based upon
customizing the services, advertising and marketing activities according to the countries that they
are operating in. Customer service and satisfaction have of course always been a vital aspect of
the strategies. Another important feature of the Pizza Huts strategies is the 3 Fs (Fun, Friendly
and Familiar).
Problems and Weaknesses:
At one time, the biggest marketing problem Pizza Hut faced was lunch. As compared to
McDonalds, its restaurants had virtually no lunch time sales, and neither did any of its pizza
competitors. The reason, of course, is that it takes 20 minutes to cook a pizza from scratch in a
traditional pizza oven, and most people wont spend that long at lunch time waiting to be served.
By using a new, continuous-broiling technology adapted from burger business, Pizza Hut
developed a personal pan pizza that could be served in less than 5 minutes. It was quick, tasty
and moderately priced. And Pizza hut rolled it out to all 4500 stores worldwide and locked up the
pizza-lunch business almost everywhere, almost overnight.
One of the weaknesses of Pizza hut that it hasnt overcome yet is its price. Local chains are
constantly springing up, offering lower prices and similar recipes. Most people dont mind
giving a lower price for slightly different taste because of which the sales at pizza hut at are
suffering.
Growing awareness about eco-friendliness has forced a lot of the food chains to maintain
practices that conform to international environmental standards. For example McDonalds is
introducing coffee beans grown in environmental friendly conditions in order to appeal to the
people who are conscious about environmental friendliness. In the Pizza selling restaurants,
organic pizzas are the new concepts that are appealing to the masses to these days. Its a
phenomenon that highlights the health conscious attitude as well as environmental friendliness.
Pizza Hut on the other hand has not come up with any strategy in this area and if it doesnt even
in the future, it is going to lag behind the chains that offer healthier food.
Competitive Advantages:
Pizza Hut has the first mover advantage in the pizza chains because of which it has developed a
strong customer base which is one of its strengths.
The delivery service of Pizza hut is clearly a competitive advantage that it enjoys. Pizza huts
delivery service is one of quickest and the pizzas delivered are oven hot in the real sense of the
world.
Pizza Hut is often referred to as Pizza Innovation Leader because it is constantly coming up
with new varieties of pizzas to appeal the different audiences and at the same time, people at the
pizza hut have a really good idea about which varieties are appealing to the customers and they
are thus retained in the menus
The first mover advantage is an advantage that Pizza hut was born with but time, Pizza hut has
been successfully creating competitive advantages like a traditionally strong brand name for
itself and the quality service that it provides.
KENTUCKY FRIED CHICKEN (KFC):
KFC, founded and also known as Kentucky Fried Chicken, is
a chain of fast food restaurants based in Louisville, Kentucky.
KFC is a brand and operating segment, called a "concept",

of
Yum! Brands since 1997, when that company was spun off
from PepsiCo as Tricon Global Restaurants Inc.. KFC has
more than 11,000 restaurants in more than 80 countries
Strategic Objectives:
KFC has the strategic objectives of expansion along with profits and sales growth. KFC has also
been applying its strategies at improving services and making them more and more customer
friendly. It has not only been customizing it's menu according to the countries that it has been
operating in, it has also been trying to cater to different ethnic groups like African Americans
and Hispanics. Such types of strategies are focused on increasing the customer base by better
customization of products. Other than the traditional eat-in restaurants, KFC has also been
expanding into non-traditional facilities like shopping malls, hospitals, universities, stadiums;
office buildings etc and a number of strategies have been formulated to aid this kind of
expansion.
Problems and Weaknesses:
The advertising campaign of KFC does not specifically appeal to any segment. It does
not appear to have a consistent long-term approach. The U.S. has enormous changes in its
demographics. Only in US, single-person households increased from 12% in 1970 to 25%
in 1995. With this kind of dramatic change, KFC does not have a proper approach to its
target market.
The increased health concerns of the masses has put KFC at a great disadvantage because
of the word 'fried' attached to its brand name which gives an instant idea that the food
would be oily and unhealthy.
Another weakness of KFC is that of the lack of a corporate direction because it has been
a part of four different parent companies till now namely, Heublein Inc., R.J Reynolds,
Pepsi Co. and Yumm! Brands Inc. The corporate functioning of these companies has
been pretty different from each other because of which a strong culture could not be
established at KFC and it had long been struggling with it.
Because of the nature of the chicken segment of the fast food industry, innovation was
never a primary strategy for KFC. However, during the late 1980's, other fast food
chains, such as McDonald's, began to offer chicken as a menu option. During this time,
McDonald's had already introduced the McChicken while KFC was still testing its own
chicken sandwich. This delay significantly increased the cost of developing consumer
awareness for the KFC sandwich.
Competitive Advantage:
A very strong financial background is one of KFCs competitive advantages.
KFC has been functioning as a multinational corporation for several decades. As a result,
the company is familiar with the logistical and quality problems which accompany
operating an international food operation, and has demonstrated that it can work with host
countries and businesses within the host country to develop a strategy which works in the
most cost effective way.
With the passage of time, KFC has developed another very important competitive
advantage for itself- Environmental Friendliness. In March 2009, the first eco-friendly
green KFC was opened in Northampton USA. The restaurant is designed according to
environmental goals that include cutting energy and water consumption by 30 percent
and reducing CO2 emissions. Operations at the new site are also expected to reduce
waste and the amount of rubbish sent to landfills; the restaurant composts and recycles
other waste, grease and used cooking oil. Other than this, in an effort to reduce its
packaging by 1,400 tons, KFC is now switching from cardboard to recyclable and
biodegradable paper wrapping for some of its products.







Subway:
Subway is a restaurant franchise that primarily sells submarine sandwiches and salads. It is
owned and operated by Doctor's Associates, Inc. (DAI). Subway is one of the fastest growing
franchises in the world with approximately 30,052 restaurants in 90 countries as of April 2009. It
is the second largest restaurant operator globally after Yum! Brands (35,000 locations).
Subway restaurants are known for their sub sandwiches and salads. The Subway restaurant chain
is the fastest growing restaurant chain in the world surpassing even McDonald's. Subway has the
second most stores of any chain restaurant system in the world after McDonald's, and the most
locations in North America of any chain. Subway was founded in 1965, however the franchising
started in 1974.

Strategic Objectives:
The strategic objectives of Subway focus on creating a global strategic plan to enable Subway
Restaurants to succeed internationally. Other than this subway is intent upon introducing the
concept of healthy fast food. Sandwiches of Subway have been included in diet plans by
experts. Jared Fogle, an obese college student who weighed 425 pounds introduced a weight loss
plan called the subway diet and lost 245 pounds in 11 months. Subways stand regarding obesity
in children is not new to its customers. Strategies at Subway are not only about a really ambitious
increase in franchises all over the world but they are also about making the food more and more
appealing to the health conscious customers because health conscious attitudes, according to the
experts, are here to stay now.
Problems and Weaknesses:
One of the major problems that can be identified with Subway right now is related to the
franchises. Although Subway has long been named as the number one franchise
opportunity by The Entrepreneur magazine but it seems that Subway has developed a
myopic focus regarding the franchises. Subway has regional managers who have the
opening of new franchises as their sole aim and their bonuses and incentives are tied to
the opening of new franchises. These managers at Subway even don't care if the new
franchises are detrimental for the existing ones and because of this; many of the
franchises are becoming a victim of internal competition or cannibalization. For example,
in Lahore alone, Subway has 20 outlets. Instead of this, Subway could have targeted
Cities like Faisalabad and explored a new market. Franchise owners believe that Subway
has been irresponsible with allocating the franchises and uses bloated store sales
projections as part of their sales pitch for encouraging new franchises.
The opening up of a lot of new stores in close proximities are also resulting in decline in
sales per store because of which the franchisees are not very satisfies with Subway.
The environment at the Subway stores cannot be compared with that of McDonald's,
KFC or Pizza Hut. The Stores are small and suffocating and do not even provide the
necessary privacy to the people eating there. Subway has no standard size for any of its
store because of which the sales oriented Franchisees try to fix them at as smaller a place
as possible. This is tarnishing the image of Subway as an international brand.
The quality of the sandwiches and standards of cleanliness at Subway are going down
day by day due to the greater and greater autonomy that franchisees enjoy. The Subway
at Rawalpindi was recently closed down due to quality issues as well.
There is a dire need of a system to integrate the large number of Subway franchises and
to ensure that the original Subway practices are being followed there. The management of
the franchises is one part of their operations that Subway has not handled well.
Competitive Advantage:
One of the greatest competitive advantage that Subway was born with is it's healthy Menu. The
salads and sandwiches appeal much more to the people as compared to fried chicken, burgers,
fries and pizzas. With its advertising and promotion, Subway has long been highlighting its
healthy food in advertising and promotions and with the passage of time, it has established itself
as a healthy brand.
Another competitive advantage that subway enjoys is the fact that along with traditional
locations, Subway restaurants can be found in more than 4,000 non-traditional locations
such as food courts, health clubs, hospitals, universities, amusement parks or just about
anywhere. In fact, Subway restaurants can even be found in automobile showrooms and
Laundromats! This global presence is indeed a sustainable advantage for Subway and
needs to be managed properly.
Subway's fresh food is also a competitive advantage because unlike
its competitors like McDonald's it allows its franchisees to choose
their own food suppliers, to ensure they can access the freshest
ingredients.

McDonalds
Strengths:
McDonalds has been able to maintain its market share in Indian market very early and this is
actually the major strength of McDonalds that has made it so popular. Other major strengths are
listed below:
Products:
The reputation of the various products each season has made it possible for the company to
attract customers having different tastes and to try out the season specialties. A major strength is
the various deals that McDonalds offers so that it could be made affordable. Recently
McDonalds offered a deal for Rs.85 only, containing a beef burger along with a drink.
McDonalds offers many flavors of Mcflurry ice cream from a mix of M&Ms to Oreo cookies.
The M&Ms flavor was introduced about a year back and is still popular among the M&Ms
lovers. McDonalds has also customized its meal according to the tastes of India. People in India
do not eat beef so McDonalds does not offer such sort of meals in the country.

Social Responsibility:
The social responsibility acts of McDonalds are commendable. It has been able to maintain a
reputation as a socially responsible and aware enterprise all over the world. Its practice of going
green and serving in an environment friendly way has made it possible for McDonalds to gain
fame.
On 27th March 2008, McDonald's announced that it is giving further backing to Rainforest
Alliance certification by offering a cup of tea with a conscience in all of its 1,200 restaurants in
the UK.
Like KFC, McDonalds is also involving itself in educational and social activities so that people
should know that McDonalds isnt yet another business oriented corporation aimed at just
making money but it actually cares.
Employment Opportunities:
The equal employment opportunities regardless of race, color, sex, national region, age,
disability etc are offered to people. People looking for jobs can also upload their CVs online.
Brand Recognition:
McDonalds has gained recognition worldwide. The chain is present all over the world in more
than 122 countries. In India a large number of franchises are present, majority of them in
Mumbai and Delhi and McDonalds is regarded as a symbol of value and quality for your
money.
Good communication and friendly environment:
McDonalds has always ensured a friendly environment to offer to its customers. Children love
going there, having a happy meal and the toys that they get as a gift. Play places also serve as a
significant attraction where children can go and make friends and play. Employees are also very
polite and they are always ready to serve you in every best possible way that they can.


Party celebrations:
McDonalds offers its clients, especially children to celebrate their birthdays there. One can
invite friends, they decorate the party area, various party games are organized along with face
painting activity etc. Children are provided with an opportunity to celebrate their day in the way
that they want.

Partnership with Coca Cola:
McDonalds and Coca Cola are official global partners. Coca cola is a big brand name serving
people all over the world with beverages.

Partnership with telecom companies:
McDonalds offered special deals to its clients with up size meals who are the users of a particular
company such as Warid and Ufone.
Weaknesses:
More advertising:
In India, McDonalds rarely advertises at TV, however billboards often show off juicy
McDonalds burgers but this could affect its popularity in future. It definitely needs to advertise
more to reach the target and the potential customers.
Drive-ins:
The service at McDonalds drive-ins has been subject to criticism all over the world and a lot of
people complaint that the orders are either missing some of the items or are entirely wrong. The
service time at the drive ins is also subject to great variations and needs to be improved.




Opportunities:
Reasonable Prices:
McDonalds can broaden its market by offering meals at more competitive prices in comparison
to other local QSRs such as AFC, Al Maida etc. This way it could get hold of the potential
customers too.
Opportunity to be innovative:
McDonalds could make itself more innovative by offering deals that appeal more to Indian
consumers e-g it can introduce desi flavors in the present products such as Barbeque, Tandoori,
Masala and other spicy tastes which are staple of the country.
Breakfast and special noon meals:
Now in India most the trend of women going to work and opting for profession is increasing as a
result of which they are running short of time to carry out all the home chores along with their
work. McDonalds can offer deals to such market by catering them in the morning for breakfast.
During the office hours people mostly go out for their lunch to restaurants. McDonalds can avail
this potential market too.
Growing dinning out Market:
In India the dining out trend is increasing especially in youngsters and upper middle class.
McDonalds has the opportunity to grasp this market quite well. It is already doing well by
serving them but it could arrange various activities for the people of this age.
Dine in Cafes:
McDonalds can open up with small-sized cafes for the teenagers in their universities and
colleges.

McCafes:
McDonalds has opened coffee shops by the name of McCafes in UK. India can serve as a new
potential market for these cafes.
Threats:
More health conscious customers:
With increasing awareness about food and the importance of a balanced diet, people are opting
for low calorie food e-g salads and food with high fiber content. To remain in the scope,
McDonalds needs to serve this market as well as the present customers, this could be posed as a
threat to McDonalds. Subway is offering its low fat veggie and chicken sandwiches at prices
almost the same as McDonalds. For McDonalds diet meals could be a way out of this situation.
Foreign as well as local competitors:
In the growing market of India McDonalds competitors are entering not only from other
countries but from within the country too. Their competitive prices could be a reason due to
which McDonalds can lose its share in the Indian market.
Changing customer styles:
Indian culture has been changing for years now with new technologies and trends. People who
are not brand loyal move with the changing times. Some competitor can easily enter into the
market and make better offers to its consumers by focusing on their needs and the satisfaction
that they want. To remain competitive, McDonalds needs to be innovative and should change
along with the Indian consumer styles.