Fast food global boom, huge profits, as recession hits incomes

The fast food industry is expanding as the increase in people cutting their budgets fuels new business. McDonalds plans to open 1000 new outlets worldwide, and other big fast food companies are following suit.

The big boom comes as people start “eating down”. There’s a series of circular ironies in the move. The increase in demand from the big franchises will stimulate trade in a range of sectors, but also put pressure on businesses which are dependent on voluntary purchases. So the boom in fast food will decimate restaurants, etc. Also likely to be affected are the various local businesses in the areas where the franchises show up. Fast food franchises are the shopping malls of the food business. Where they show up, they decimate the locals. On the other hand, they do also attract some trade in areas where they establish themselves. Something’s definitely going right for fast food. McDonalds reported an 80% increase in profit last year. That’s not even a theoretical coincidence. It’s obvious that budgets are trying to dodge the rising costs of basic groceries. The good news is that the big expansions by McDonalds, KFC, Pizza Hut and their competitors will at least create a few jobs. Pizza Hut is also expanding as Pasta Hut, which is another strong bottom line approach, using the good cost profiles of pasta meals. Europe is the big area of expansion, and grabbing a few billion extra potential customers probably isn’t such a bad move. Just a bit of perspective: McDonalds and the other food giants could turn into the best distributor of good quality food with some relatively minor changes to their food processing methods. McDonalds has made a few positive moves in terms of healthier food. But in a recession, where incomes and food quality are in direct competition, they may turn out to be the main food distributor in depressed areas. If you were looking for a current social reality, this would be it. Food for thought, at least.