Bargaining power of of suppliers in Fast Food industry
Fast food restaurants depend on their suppliers for items such as food products, packaging, napkins and restroom supplies. If the number of suppliers in one area is limited or if restaurants significantly outnumbers suppliers, it will often result in powerful suppliers, which means that the suppliers have big bargaining power. Furthermore, bigger bargaining power will usually end up with higher prices of the products. However, if the situation is reversed that the suppliers significantly outnumber restaurants, suppliers will be more likely to give in to a buyer’s demands.
To conclude, if one wants to open a new restaurant in one area, he/she must first investigate how powerful the local suppliers are. More specifically, what is the number of suitable suppliers and what is the number competing restaurants. If there are clearly more suppliers, than one should expect lower prices from the suppliers, or expect higher prices if there are clearly more restaurants.
link:
http://smallbusiness.chron.com/fast-food-industry-bargaining-power-suppliers-78188.html