Fast Food Business in Canada:
Traditionally, Canada is considered to be one of the most developed countries of the world. The economic situation in the country is quite stable. This is why it is possible to speak that the development of the fast food business in Canada may be quite perspective. At the same time, it is hardly possible to speak about real perspectives of fast food business without a profound analysis of the current socio-economic and political situation in Canada because fast food industry is traditionally sensitive to the dramatic changes in socio-economic or political life of a country. It is equally important to discuss the current development of fast food industry in Canada in order to properly assess the existing competition and possible problems the company entering the fast food market of Canada may face. In such a way, only after all the essential factors are taken into consideration, it will be possible to definitely say whether fast food business in Canada is as perspective as some specialists estimate.
a. Demographic picture
Speaking about the current demographic situation in Canada, it is primarily necessary to underline that the general population of Canada constitutes over 31.5 million people (Shaw 2002). It is worthy of mention that the vast majority of Canadian population is concentrated in coastal both Western and Eastern regions and Southern part of Canada, though Canadian South-East is considered to be the most densely populated region of the country. For instance, Toronto, Onthario is the most populous metropolitan area in Canada, with over 2,5 million residents in the city and over 5 million people living in the greater metropolitan area (Shaw 2002).
Basically, it should be said that the current political situation in Canada is stable but, it is necessary to underline that the problem of Quebec still provokes numerous debate and engenders certain apprehensions among investors, including those who are ready to invest in the local fast food industry which is primarily oriented on the large cities and densely populated areas. In this respect, it should be said that the problem of Quebec is the result of the long-lasting ethnic conflict or, to put it more precisely, opposition. It should be said that Quebec is mainly inhabited by French-Canadians while the rest of Canada is predominantly English-Canadian (Bickerton 2004). It should be said that it is a historical opposition of two different ethnic groups of British and French origin and dates back to the early epoch of Canadian history and the period of the colonization of the continent.
Unfortunately, in the course of time the opposition between representatives of two main ethnic groups of Canada has never disappeared, instead there appeared political movements which argued the necessity of proclamation of independence of Quebec (Bickerton 2004). However, such a position is considered to be quite radical but, potentially, it can threaten to the political stability in the region which seems to be particularly attracting to the development of fast food business. In such a situation, it is necessary to take into consideration that, in the case of political turbulence in the region leading to attempts of separation of Quebec from Canada, it is possible to presuppose that it will to not only political but also profound socio-economic crisis, affecting dramatically fast food industry.
Nevertheless, it should be said that such a crisis is rather hypothetical than realizable in the nearest future. At the same time, along with such potential political threat, Canada is characterized as highly democratic country with an open market economy which provides ample opportunities to develop fast food business on the principles of fair competition and the rule of laws. In general, from social and political point of view the current situation is favorable to investments in fast food industry, though it is worthy of noting that there are certain public resistance to the spread of fast food restaurants in Canada because of the growing fear of the danger of fast food consumption (Shaw 2002). Nonetheless, there is no serious opposition and no real threats to the normal functioning of fast food restaurants in Canada.
b. Micro- and macro-economic conditions
Not less stable is economic situation in the country. On the macro-economic level, Canada is a steadily progressing country which GDP growth is stable, even though it is not large and, as a rule, within last few years it constituted about 2-4% but still it is possible to speak about Canada as the country that tends to the stable and sustainable economic development (Shaw 2002). The national currency is not susceptible to dramatic changes that, along with the predictable national domestic and foreign policy, make investment in fast food industry of the country quite attracting to investors.
Speaking about micro-economic environment it is worthy of mention that the microeconomic conditions of Canada are also quite favorable for the development of fast food business. To put it more precisely, there are clearly defined markets of fast food business which may be defined as coastal and Southern regions of the country where the concentration of population is the largest. Also Canada, being a well-developed country, has a perfect infrastructure that contributes to the effective supply fast food with essential products. Finally, Canada has a great agricultural potential that is also important for the normal development of fast food business.
a. Market size and competition
As for the market size, it should be said that it involves the vast majority of the population of the country inhabiting the urban areas from Eastern to Western coast. In fact, it is only Northern territories with a few population that are not very convenient to the development of fast food business. This is why it is possible to estimate that the number of potential customers that can use the services of fast food restaurants is approaching to 80% or even more of Canadian population and it is necessary to take into consideration the fact that the larger part of this group will use fast food restaurants regularly (Shaw 2002).
On the other hand, despite the presence of a large market, still it seems to be quite difficult to enter this market because of the presence of strong competitors. Basically, all the competitors in the fast food industry of Canada may be divided into the national, Canadian proper and American ones. Among the latter may be named such giants as McDonalds, Pizza Hut, KFC, which have a widely spread network of fast food restaurants and are extremely popular not only in Canada but in other countries of the world. As for Canadian fast food restaurants they are also quite popular and may be considered as serious competitors since many Canadians prefer these fast food restaurants as alternative to American-owned ones. Among the largest Canadian fast food chains may be named Tim Hortons, Pizza Pizza, Toppers Pizza, and some others (Shaw 2002).
At the same time, despite the strong rivalry all the companies operating in Canadian fast food industry are characterized by stable though not exorbitant revenues. This is why it is possible to estimate that on the condition of substantial investments and the development of the national network of fast food restaurants it will be possible to steadily increase the revenues and profitability of the company.
b. Unique input factors
Speaking about unique input factors, it should be said that Canada ahs ample resources for the development of fast food restaurants. To put it more precisely, while developing the network of fast food restaurants, it is possible to orient on the local resources due to the well-developed agriculture. It proves beyond a doubt that the local agriculture can supply fast food restaurants with sufficient amount of all essential products (Britton 1996). This is why, on launching a fast food business in Canada, it will be quite logical to use the local suppliers that naturally decrease the cost of products.
On the other hand, the costs of product may increase substantially because of the high level of salaries which constitute a significant part of the final price of the product (Britton 1996). Another problem that a company entering fast food business in Canada may face is the unwillingness of the local population to get employed in fast food industry which is considered to be not prestigious and work in fast food restaurants is often viewed as a temporal or just a part-time job (Shaw 2002). Nevertheless, in such a situation, it is possible to focus on the use of immigrant labor force which is cheaper and always available but it is important to avoid violation of local laws concerning immigrants’ employment.
Thus, taking into account all above mentioned, it is possible to conclude that fast food industry in Canada is quite perspective, regardless certain political risks and high level of competition in the local fast food industry. In fact, it is obvious that the buying power of local customers is quite high while the potential to attract the large amount of customers is very high due to the fact that the vast majority of Canadian population resides in metropolitan areas which are the most favorable for fast food business.
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