Fast-Food Industry: A Timeline of Its Origins

The origin of the fast-food industry dates back to the American economic boom that followed World War II in the mid-20th century (McCrory, et al. 923). The growing economy created a culture of consumerism as the buying and spending power of Americans increased. Besides, the growing desire to have more things, women had made important strides during the war while the men away, and they too went out to work. Previously, eating out was considered a luxury but then it became a common practice and even a necessity. Households of working couples needed inexpensive food that could be served quickly. It is this need that led to the remarkable success of the pioneer fast food giants that served clients on the go.

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Hamburger joints were the earliest businesses in fast food industry. White Castle began commercialization and popularization of hamburger when it opened its first outlet in Wichita, Kansas in 1921 (McCrory, et al. 924). After that, hamburger joints were opened throughout the United States. One of the most notable earliest hamburger joints was a family restaurant was McDonald's which was opened in San Bernardino, California by Maurice and Richard McDonald in 1948 (Sudhagar 1). McDonald's sold more than 100 million burgers in its first ten years of operation, changing the eating habit of Americans (Sudhagar 1). The success of McDonald's' inspired many other fast food restaurants to enter the market both at the national and regional levels. Most of these joints sold fries and burgers but some specialized in serving exotic fast foods and Mexican American fare like Taco Bell.

Following the continued expansion of the fast food industry, the restaurants began to employ teenagers as part-time workers in the 1970s (McCrory, et al. 928). By 1980, at least 60% of teenagers were involved in some kind of part-time work, with the majority in the fast food setting (Leidner 1). As the income of young people increased, their also expenditure rose, further driving the trend of staying and taking meals outside the home. In turn, the food industry grew to become one of the leading employers in the country. Recent research showed that one in every 8 Americans has worked at McDonald's at some point (Leidner 1).

The mushrooming of fast food joints intensified competition in the American food industry, leading to "Burger Wars" which ensued in the 1980s through the 90s (Kara, Erdener and Orsay 10). The choices of consumers increased, making food outlets to strategize and build their brands around specific areas. With time, fast food joints added drive-thru and seating. Besides the normal meals, they also began creating specific products for children to appeal to the whole family. Expanded menus and healthier options distinguished between chains.

In the wake of the 21st Century, casual restaurants and coffee chains became serious competitors of established fast food companies (Brown, et al. 3). Brands such as Chipotle, Panera, and Starbucks do not only pride in the quality of their food but also strive to replace the quick turnaround culture in fast food restaurants with a setting that enables prolonged stays. While they are also self-service, fast casuals are less accessible than fast food joints because they do not have drive-thrus. The market shift is driven by Millenials who want to eat in places where they can get food at sustainable prices and use their electronic handsets.

Importance of the Fast Food Industry to the US Economy

Due to digitization and increased automation of work, many sectors in the US economy have been able to maintain or even increase their productivity with considerably fewer workers. As such, restaurants remain the last stronghold of urban manufacturing, employing a large portion of the American workforce. Currently, about 10% of the entire American workforce is employed in the restaurant industry, and the numbers keep rising (Leidner 4). The National Restaurant Association predicts that the industry will employ more than 15 million people by 2024 (Leidner 3). Since they employ many people, the restaurant industry has helped bridge the economic mobility gap due to its accessibility across different levels of the economy and low barriers to entry.

There are more than 200,000 fast food restaurants in the US, estimated to serve over 50 million people each day (Kara, Erdener, and Orsay 11). Americans working in fast food restaurants represent more than 4 million members of the country's workforce. In 2015 alone, for example, fast food restaurants created over 200,000 new employment opportunities (Kara, Erdener, and Orsay 1). Unfortunately, the fast food restaurants pay their workers very low wages with little benefits or security.

The global fast food industry generated $647.7 billion in revenue in 2019 (McCrory, et al. 930). In the United States, the industry generated over $200 billion last year (McCrory, et al. 930). The fast food industry has grown steadily and significantly since the 1970s when it generated less than $10 billion in revenue. In 2015, it was estimated that the sector would register an annual growth of at least 2.5% throughout the decade (McCrory, et al. 931). Although this is lower than the long term average of the fast food industry, it was considered a big comeback from a decline that lasted several years.

How the Fast Food Industry Compares to Other Industries

The fast food industry in the US can be compared to the retail sector in many ways. First, both industries are big employers, though retail has a larger workforce than fast food sector. The US fast food industry was estimated to employ 4 million people in 2019 (Socialist Alternative 1). The retail industry employed about 5 million workers in the same year (Kara, Erdener, and Orsay 13). Just like the fast food restaurants, most retail businesses do not require a high level of training; hence, they are available to most of the population. Besides, retail stores have also helped reduce labor mobility because they are distributed all over the country just like fast food joints. The retail industry accounts for about 3% of all jobs available in the US (Socialist Alternative 1).

Secondly, the retail industry generates much more revenue than the fast food industry. When the US fast food industry was making approximately $647.7 billion in value-added in 2019, the country's retail industry had hit $1.14 trillion by 2017 (Socialist Alternative 1). The retail sector revenue was equivalent to 5.9% of the gross domestic product (GDP) of the United States in 2017 (Socialist Alternative 1).

Both fast food sector and the retail industry are accused of underpaying their workers. On average, an employee of fast food joint in the US earns $11 per hour today. However, the hourly wages range between $10 and $12 in this sector (Leidner 1). Some of the factors considered when determining an employee's hourly rate are the number of years of experience in the profession, the ability to offer additional skills, education, training, and certifications. Similarly, the median hourly wage for people working in the retail industry is $10 (Leidner 1). Notably, most of the jobs in the retail industry are entry-level roles that do not require much education or training. Unlike fast food restaurants, retail businesses offer their workers solid training on how to handle the public.

Moreover, sales in the fast food industry fluctuate with seasons just like the retail sector. Casual fast and fast food restaurants also make more sales during holidays when most shoppers busy and prefer a quick meal between activities such as entertaining guests or shopping. Retail businesses make huge sales in the holiday shopping period. Events such as Black Friday, Cyber Monday, and Green Monday which comes between Thanksgiving and Christmas drive huge sales in this sector. The period accounts for 20% of all retail sales every year (Leidner 1).

Another industry that compares with the fast food sector interestingly is healthcare. With a workforce of 16.2 million people, the US healthcare sector employs almost four times the number of people working in the fast food restaurants (Socialist Alternative 1). This number represents about 11% of all jobs in the country's entire economy. The main areas in the healthcare industry are ambulatory services, which employ 7.6 million people and hospitals, which employ more than 5 million workers (Kara, Erdener, and Orsay 11).

The healthcare sector has very diverse hourly payment schemes which range as little as $10 to as much as $108 depending on the nature of work and specialty (Socialist Alternative 1). Healthcare support staffs earn a median wage of $10 because they often do not require training or specialization. The hourly wage rates include $23 for dieticians and nutritionists, $51 for pharmacists, $76 for surgeons and physicians, and $108 for anesthesiologists (Socialist Alternative 1).

Moreover, the healthcare industry is one of the fastest-growing sectors in terms of employment opportunities. In 2018 for example, 346,000 new jobs were created in the healthcare sector of the United States (Socialist Alternative 1). The growth exceeded those of both overall food services and retail sales which ended the year with 261,000 and 92,000 more jobs respectively (Socialist Alternative 1). It was only second to business and professional services which created 583,000 new employment opportunities (Socialist Alternative 1). Employment in the healthcare sector is expected to grow even further and much faster than all other occupations over the next five years due to the growing demand from the aging population. Healthcare spending reached $3.6 trillion in 2018, and it accounted for 17.7% of the nation's GDP (Socialist Alternative 1).

Application of Concepts Learned in Class

Perfect Competition

There is no denying that the fast food industry in the United States is a perfect market. Since the ease of entry and exit into the fast food business is high, the market has several huge and small sellers distributed throughout the country, and it serves more than 50 million buyers daily (Kara, Erdener, and Orsay 11). The US food consumers are pretty well-informed about the advantages and disadvantages of each fast food chain and can choose where to buy products based on their preferred service time, food type, price, and quality. As such, neither individual fast food brands nor their customers have control over the market prices of the products.

There are thousands of suppliers of food products processed in the fast food industry. American fast food chains that offer exotic products import supplies from other countries, especially in South America (Kara, Erdener and Orsay 9). However, most of the supplies are sampled locally from the country's large agricultural industry. Owing to their large numbers, the suppliers in this industry have relatively low bargaining power.

Also, the degree of product uniformity is very high in the fast food business. The best-selling products are chicken, burger, pizza, fries, taco turkey, and soft drinks (Brown, et al. 5). Except for taco, these products are sold in nearly all fast food restaurants in the country. Fast food consumers in the US, therefore, have many options, and that puts pressure on the sellers to maintain competitiveness by improving food quality and service time. Some chains like McDonald's have adopted a strategy of trading off freshness with speed. For example, when McDonald's replaced its popular Quarter Pounder with fresh meat, it added on the waiting time for the product by a minute (Brown, et al. 8). The change in time was significant because in the fast food industry, increasing serving time by even one minute could advantage the competitor. Nonetheless, the volatility of the fast food market makes it is more convenient to pla...