For fourteen days, people waited in lines for the newly opened American fast food Popeyes in Prague on Wenceslas Square, some perhaps for up to 26 hours. God knows if it’s still standing there today. Why?
The people who stood there for 26 hours were there for the launch event. But I was there this week and the queues were still there. Even if it seems ridiculous to some, the entry of a new fast food restaurant into the Czech Republic is such a big event that people go there.
It is also a bit of a reference to the front that stood not far from there in Vodičková street thirty years ago, we keep returning to that in our thoughts. It’s a tradition here when someone like that enters the market. The queue also signals that there is a huge demand for new, more chains, and that the market is literally hungry for fast food.
However, the Czech Republic is not exceptional in this regard, because similar queues that we could see in Wenceslas Square in recent days also stood at newly opened branches elsewhere in the world. But if we stay with us, how challenging is it from a business point of view to break into the market of fast food chains in the Czech Republic? From my point of view, it is a very narrow market to which led by the triumvirate of Burger King, McDonald’s and KFC.
It depends on what you want to do and what you expect from it. According to research, only 13 percent of people never eat fast food, so the market is big enough to feed enough players. If you want a small fast food, a small stand on the street, the entry costs are relatively small. You take the space, modify it for your needs, and that is an investment in the order of hundreds of thousands of crowns. It can be done with one loan, or with an investment from the family, etc. When you want to enter the market with a big chain, it can be several years, because it represents a huge investment in marketing, a huge cost to find your market, create a franchise, get a license and so on. It’s probably not even possible with one branch, you need to have more, to cover a larger market, to earn back the costs. In addition, there is now a lot of talk about “Jurečky regulations” such as the difficult hiring of students through agreements, DPP, DPČ as part of the recovery package, which will have a very bad effect on this sector, since its backbone is made up of students on an agreement. It means that the costs and certainly the price in fast food restaurants will increase.
You are referring to the Ministry of Labor and Social Affairs Marian Jurečka from KDU-ČSL.
Again.
McDonald’s or KFC are brands that have dozens of branches in the Czech Republic, perhaps over 170. Fast food is simply appealing to the Czech Republic, one might say. AmRest, which operates KFC, Burger King or Pizza Hut, saw a year-on-year profit increase of more than 40 percent. Do you think the pandemic has helped the fast food industry? Have profits been growing continuously since then, or have they been growing steadily since 1992, when Czechs first tasted fast food in Vodičková Street?
I think it’s covid completely changed the game as in many other industries. Home deliveries of food started during covid. It was a trend before, but during covid, even restaurants that didn’t do anything like that got involved, they were pushed into it and it has remained with them to this day. I have the feeling that before the pandemic, McDonald’s had no delivery service, and during covid it was introduced, or at least mostly implemented.
Does it go hand in hand with the expansion of the delivery services of the companies Wolt, formerly Dáme jídlo, now Foodora and the like?
Yes. When you come across We’ll give food, that also proves how terribly big a market it is. You asked about growth: it is interesting that even though we are in a period of declining retail sales, fast food sales are still growing despite the decline in consumption elsewhere.
Let’s go straight to 1992, when the first McDonald’s was opened in Vodičková Street in the Czech Republic.
“McDonald’s enters Prague and with it a perfectly elaborate work system, quality and cleanliness.”
(ČST Daily, 20.3.1992)
It was a huge event back then. At that time, they served perhaps 11 thousand people in one single day. Is the beginning of fast food in the Czech Republic a revolution in catering?
I think so, and not only here. Post-Soviet countries were known for the fact that the moment fast food entered there, the Western economic system really won and capitalism entered them with all its might.
So it was a capitalist symbol.
The same thing happened in Moscow already in 1990, when the McDonald’s company entered there. There, they served 30,000 people in one day, which was much more than here, while a Big Mac cost one and a half rubles at an average salary of 150 rubles a month. Although it was not very cheap, it was a huge success. But now Russia has lost McDonald’s.
“Other companies have decided to withdraw from Russia because of Russian aggression.”
(TV Nova, 17. 5. 2022)
History of fast food
Is the beginning of fast food in the world associated with hamburgers or fried chicken?
If we go all the way back in history, that means about 200 years back, the start of fast food can be dated to the American plantations, where slaves prepared the classic fried chicken for their masters as we know it today. Historians believe that this method of preparation, that is, immersion in oil, deep frying, is an original African way of preparing food. TOonce slavery was outlawed and slaves became free, they had terribly important know-how in their hands, which they then used to emancipate themselves economically when they were away from the plantations. States like Louisiana are still famous for the cuisine that has been cooked there since then, and these are the fast foods that we still know today.
However, the beginning of the development of fast food with fried chicken is paradoxically associated with a white man, Colonel Sanders.
If I pull it by the hair, it can be said that it is one cultural or culinary an appropriation that has been going on to some extent since the beginning until now. It is, for example, combining Asian and Mexican cuisine and the like, the question is whether it is wrong, but in my opinion it is not. However, KFC brought fried chicken to the world and has an interesting history as well. Its founder became famous only at a late age, he was 62 years old when he founded KFC, then he only got it into the world.
What attracted people to it? That it’s a combination of salty and sweet, with fries, everything is very spicy, with some sweet drink? It is often very addictive and unhealthy, as experts on healthy nutrition have been pointing out for a long time.
It is, as you say, a better release of dopamine and other such substances into the brain, which of course is important for both customers and manufacturers. But at the same time from an economic point of view, and this is even more interesting to me, the most important feature is consistency. The food is exactly the same here, in Slovakia, Japan, Austria or Iceland. There’s the exact same Big Mac, the exact same KFC. It does a lot for the reason that if we want to choose some food to have in the evening, if we want to take someone out for dinner or lunch, then there is some cost involved in choosing a restaurant, where we will go, what we feel like, now we don’t know what to choose, the listeners do. We have so many options to choose from that we are paralyzed by the choice, and fast food makes it so much easier. They minimize costs because the food is the same every time, we know exactly what to expect from it, and they reduce the risk of it going bad because someone new is there and has cooked it wrong. Their processes are so mechanized and made for anyone that the food is the same every time, and that is a huge advantage of fast food.
It’s still fast, but it’s no longer the cheapest meal. Even fast food is becoming more expensive with inflation.
It is so. Jas I said, even because of the agreement workers, I might still go up.
“According to the amendment, contract workers should have holidays and additional payments for working on holidays, weekends, at night or in a difficult environment.”
(ČRo Radiožurnál, 13 September 2023)
As you talked about the unification of products all over the world and globalization, economists eventually started using the Big Mac because of that.
It is already a relatively well-known so-called Big Mac index. The idea is that the Big Mac is sold all over the world except Russia. It is produced exactly the same everywhere and using the same procedures, which means that, in terms of the given currency, it should theoretically cost the same here as in the United States or Japan. But that doesn’t happen, and this is how the Big Mac index was created, which expresses the undervaluation or overvaluation of the currency calculated through Big Macs. If I were to give an example with concrete figures, a Big Mac now costs 105 crowns here, and in the USA it costs 5 dollars and 58 cents, which translates to 125 crowns. If we take it through the Big Mac index, our currency is roughly 13 percent undervalued against the American currency.
By the way, the Big Mac index is published by the British magazine The Economist.
The explanation is that rents and local regulations are included in the price of a Big Mac. We talked about contract workers, and their position will then also enter into it, as well as the wages of other employees. This then makes a difference in price.
Business opportunity
You talked about the fact that the market in the Czech Republic is not yet saturated and there is room for new fast foods. We can also see it in the example of the American one, which recently opened a branch on Wenceslas Square. You thus agree with Jan Kotrbáček, head of retail space leasing for Central and Eastern Europe at Cushman & Wakefield, who told the ČTK agency that there is still room for growth here. So does this mean that it will not only be Bageterie Boulevard, Subway, Pizza Hut, Burger King, KFC, McDonald’s and now Popeyes, but that there will be even more fast food in the Czech Republic in the future?
I think yes. As the queue on Wenceslas Square shows, there is absolutely room for more new chains. There is room not only for the big players, but also for those small, local fast food places that will do a little better than the competitors on the same street and that will only feed that street. There is a lot of room for these things too, because only 13 percent people don’t eat fast food. The eating habits of people under the age of 25 also go against this. When they go for lunch during their break at work, they don’t go to a restaurant for cash, but instead go to Mexican or Asian fast food. These people will always want a great deal and as they get older the market will only get bigger as they get richer.
I will come back to the option for local merchants. So in your opinion, it is not just a matter of large captive chains that have a master franchisee and dozens of branches in the Czech Republic, but it is also an opportunity for entrepreneurs in gastronomy who could seize the opportunity and say that fast food is flying and that they could open?
However, they have to reckon with a relatively fierce competitive environment and it’s still work with food, so hygiene and so on also come into play. There is certainly room for them, but it is not an easy business.
What growth potential, expressed in money, do you think fast food still has in the Czech Republic?
I think double-digit growth is there. It is enough to come up with other innovative ways to serve the 87 percent of people who want to eat fast food.
To what extent does marketing play a role in the success of fast food?
Considering how big the market is, how many players there are in it and what the costs are for choosing – when I look out the window at home, I see five different options where to go for lunch…
You have a nice view.
I have Marketing has the task of bringing the customer closer to what he will get at that moment, so it is extremely important in this regard.
In addition to sounds from Czech Radio, the following sources were used in the podcast: Czech Television, CNN Prima News, idnes, prazskydenik.cz, expres.cz, YT Ronald McDonald, BBC News, FCB Petr Pešek, YT THE MAG.
2023-11-22 05:00:44
#Fast #food #queue #Czech #market #hungry #customers #dont #burned #publicist #explains
