Fast Food Restaurants Expedite Global Economic Development
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While the American fast food industry offers ample fodder for documentary films such as "Super Size Me" and "Fast Food Nation" it is providing its shareholders with strong returns and furthering economic development in countries around the world just starting to embrace the free market.
Companies in the American fast food industry such as Coca Cola (NYSE: KO), McDonalds (NYSE: MCD), Burger King Worlwide (NYSE: BKW) and Yum! Brands (NYSE: YUM) are among the first to take the risk of initiating operations in countries previously closed to businesses from the United States. As a timely example, Coca Cola is preparing to enter Myanmar, the former socialist Burma, after an absence of 60 years. After it begins operations in Myanmar, Cuba and North Korea will be the only countries where Coca Cola is not doing business.
For all of its detractors, companies such as Burger King, McDonalds, Coca Cola and Yum! Brands bring a great deal of opportunity to any country where operations are established. There is much more offered to the individual than what "Super Size Me" projected. For the citizens, there is the opportunity for a better job than working in the fields or a sweatshop factory. In this work, successful management and employee techniques are imported that have succeeded, literally, around the world. Standards for hygiene and the treatment of employees are established. Local managers and workers are educated, trained and promoted.
There are societal benefits too, despite the theme of the movie "Fast Food Nation." Heavy industry puts a premium on male workers: fast food restaurants allows for both sexes to progress. Allowing women economic advancement is the best way for a nation to evolve, in every meaning of the world. The small business sector becomes much stronger than it would from just remaining an assortment of unaffiliated restaurants and street vendors.
Capital and intellectual resources from around the globe are imported to wage the burger wars in new domains. Much needed accounting standards and business transparency are installed. Owners from the native country are encouraged to be franchisees. Overall, the entrepreneurial spirit of an indigenous populace is unleashed as motivated workers and managers will want to own their own franchises or open related businesses with practically the entire world its marketplace. Also of great importance is that the success of fast food restaurants proves to other investors that a nation is open for business.
This is evinced by a recent article in The Wall Street Journal about the opening of 1,000 new Burger King restaurants in China. In The Wall Street Journal piece by Nathalie Tadena, "China Joint Venture Aims To Open 1,000 Restaurants" it was reported that the owners would be a private equity firm, Cartesian Capital Group LLC, and Burger King master franchisees who have been successful in Turkey, the Kurdoglu family.
The Kirdoglu family of Turkey would not be in a joint venture to open 1,000 new Burger Kings in China if the fast food chain had not entered their country first. By opening in the People's Republic, those in China will now have the opportunity to participate in future deals in other countries for new Burger King restaurants. That would not transpire in the future if Burger King were not moving into China today, as it did before in Turkey.
A classic symbiotic relationship develops when a fast food restaurant moves into a new area. Yum! Brands, the owner of KFC and Pizza Hut, has done very well in China. In the last quarter for Yum! Brands, same store sales rose by 14% in China and by only 5% in the other locales. As a result, Yum! Brands is rapidly increasing the number of restaurants in China.
At present, the golden arches of McDonalds tower over streets in 119 countries. For Yum! Brands, there are KFC, Taco Bell, Pizza Hut and other operations in 120 countries, more than 37,000 units in all. Coca Cola is poured literally everywhere in the world where clearly definable and defensible borders have been established, other than Cuba and North Korea. Surely, there is a movie in there somewhere about that!!!
Actually, there is: Chipotle Mexican Grill (NYSE: CMG) just took the top award in the film and branded division at the Cannes Lions International Festival of Creativity. Chipotle Mexican Grill, working with Creative Arts Agency, won with a short, animated film that featured its use of products from farms implementing sustainable agriculture methods and techniques.
jonathanyates13 has no positions in the stocks mentioned above. The Motley Fool owns shares of Chipotle Mexican Grill, The Coca-Cola Company, and McDonald's. Motley Fool newsletter services recommend Burger King Worldwide, Chipotle Mexican Grill, McDonald's, The Coca-Cola Company, and Yum! Brands. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.