Much of the threats that BK and TH face have to do with competition. The fast food and fast casual industries include large and small competitors and many of both. While the growing fast casual industry is an opportunity for a combined BK and TH, it widens the scope and number of competitors, which also makes it a threat. In addition, the fast food industry is seeing declining sales and this is a threat because BK is currently competing in fast food. These two industries have low barriers to entry, but the strong level of competition makes low barrier to entry a small threat, not a large threat. BK in particular faces a threat in its product offering. BK has not jumped on the bandwagon with the healthy food movement and therefore, BK has been falling behind. They are not seen as socially responsible. Adding to the issues, BK’s bad press in regards to the TH acquisition could threaten the image of the combined company in addition to any potential legal ramifications or political pressure due to corporate inversion.
Other external threats include the push by fast food workers for the minimum wage to be increased. If the federal government raises the minimum wage, it will have a negative effect on the margins or will force an increase in food/beverage prices. This unrest, along with rising food cost and inflation will potentially be a large hurdle for BK and TH.
BK and TH do have significant opportunities. These include expansion of TH outside of Canada and the opportunity to gain market share in the breakfast segment. BK has the opportunity to use TH’s menu to bring in healthier options and to compete in the growing fast casual industry. These opportunities have the possibility of overcoming many of the threats BK and TH face. In addition, BK and TH have the opportunity to take market share from McDonalds, who has seen its sales decline recently.
The Term Paper on Fast Food Nation part 1
Fast Food Nation "Eric Schlosser's book on the economy and strategies of the fast-food business should be read by anyone who likes to take their children to fast-food restaurants. I shall certainly never do that again. He employs a long, cold burn, a quiet and impassioned accumulation of detail, with calm, wit and clarity. (...) Fast Food Nation is witness to the rigour and seriousness of the best ...
A larger company also means a potential for more bargaining power with suppliers, therefore helping BK/TH margins. TH offers a loyalty credit card, which may be appealing to US customers, especially with the number of US locations. This is an opportunity for the combined company to increase repeat purchases across all US and Canadian locations. In addition, BK and TH can look at streamlining their ordering/payment processes by implementing new technology.
Works Cited
Trefis Team. “Burger King-Tim Hortons Cross-Border Merger Much More Than Tax Inversion.” Forbes.com. 29 August 2014. Trefis.com. 27 September 2014. “The Morning Risk Report: Values and Reputation Risk in Fast Food.” Risk Compliance RSS. N.p., n.d. Web. 27 Sept. 2014.
