Fast food companies like McDonalds, KFC and Popeye’s are all considered corporate companies, whose retail business is in the food/ restaurateur section. Many times, in businesses classes and by clueless business students, is it asked whether fast food is considered retail or not? As a matter of fact, while this subject is under discussion, are restaurants retail? And why is it called the food retail industry? This and more in the passage below.
What businesses like Mickey D’s and The Colonel essentially do is get their product to the end customer. Sure, in comes complex business terminologies like franchising and whatnot, but the basic chain of operation for these companies is that they source the raw material themselves and get the prepared, final product to the end consumer, which is the customer. This is their business model, and is exactly why they can be called retail businesses: because they get the prepared product to the consumer, direct, with no middleman involved.
So, right off the bat, we can say yes to the question: is fast food retail? Fast food companies and businesses are retail businesses, and should someone find themselves in a position where a potential employer asks if they’ve worked in retail, but the resume is full of fast-food companies and Costco, then yes. They can say that they’ve worked in retail, because that’s what fast food businesses are.
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Now, we should probably explain how fast food is considered retail. But before that, what actually is retail? What is it meant when people say ‘I paid full retail for it’ or ‘It was on discount, so I didn’t pay a dime, not even retail on it’? And how does this work out in the food industry, which is highly competitive, churns out billions of dollars a year and has companies introducing new products every day. Since only people attuned to this term know its actual meaning, therefore we’ll be discussing this as well.
What is retail?
Retail refers to a business’ activity of using multiple distribution chains to sell a product to the end consumer (for their personal consumption) for a profit. According to this definition, there are three things that are necessary or a business to qualify as a retail business; using a supply chain (singular or multiple), selling products or services directly to the consumer, and the product is used by the consumer themselves. If all three boxes are ticked, the business can then qualify as a retail business; both for tax purposes and for purposes satisfying the definition of the word ‘retail’.
So, can a fast-food business be considered retail?
By definition, the Chick-Fil-A downtown is considered a retail, and so is every restaurant (fast-food) in the world. Because if you look at the definition, a fast-food restaurant or joint is the exact application of retail; an establishment that deals in ready-to-go goods (food items) meant for the end customer, with the latter utilising it for their own purpose (eating comfort food). So, using this analogy, fast food businesses can be considered retail businesses.
Are restaurants considered retail?
Yes, in the same way a Build-A-Bear shop is a piece of retail infrastructure. Again, comes in the literary definition of retail, and where can we consider restaurants as retail businesses. When you go to a restaurant and the waiter brings out your food, you’re not there to cook it by yourself and then consume.
And neither are you there to take your food and sell it in your establishment for a hefty markup. That just isn’t how the food industry works, but you’re welcome to try the latter for yourself. In the meanwhile, restaurants are considered retail in the same sense that fast-food joints and local establishments are retailers.
Restaurants too take raw materials from a lot of supply chains, turn it into a nice, consumable product and serve it to the end consumer, who does not sell it forward and instead enjoys it in the serene environment provided by the establishment, thus making the restaurant a retailer in the food industry, and not a supplier or a middle-man.
What is the food retail industry in general?
Keeping in mind the definition of retailing, and how both high-end restaurants and your local Arby’s constitute the state’s retailers’ industry, we can now move on to understanding what the food retail industry is in general.
Fast-food is retail, restaurants are retail. So, does this make both a part of the food retail industry. The answer can be given right away, and it is pretty simple; yes. These both are constituents of the food retail industry, which in itself is pretty self-explanatory. But we’ll explain the nuances of food retail industry here anyway.
So, as the name suggests, the food retail industry is the industry that includes all businesses, small or multinational, that deal with prepared food served to customers. The difference here is of supply chains and end consumers; if the company or chain deals with the supply of raw materials and not prepared foodstuff, then it will not be considered a part of food retail industry.
Instead, it will be a part of the supplier side, which supplies raw materials to the retail industry. For instance, if a local produce farmer supplies meat and veggies to a local Pizza Hut and other fast-food chains, even in processed forms, it will not be considered a food retail company since their products are being used by another company as part of their food supply chain to churn out a ready product for the end consumer.
The processed veggies and meat isn’t going straight to the customer; instead it is being utilized as part of a food supply chain, which would make them a supplier.
To clear a common misconception, yes, frozen food and processed food companies that sell directly to Walmart or Target are part of the food retail industry, even if their products are scooped up by local manufacturers or establishments like restaurants or fast-food trucks.
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That is because even if they are used as part of a supply chain, a consumer, like me or you, could go to the local Whole Foods and pick up a five-pound bag of wings or shrimps, normally used by restaurants and small-scale fast-food establishments and use it for your own personal consumption, making it an end-user product which is sold directly to the consumer, which would make companies dealing in such products as part of the food retail industry.
To summarise, you could consider Papa Johns or Domino’s part of the food retail industry, just because of their business method. And to all the companies working in the frozen food section, yes, they too are retail products, and therefore are part of the food retail industry and will be taxed and titled as such.
All restaurants, even the classiest ones, which serve their own locally-sourced items and whatnot, and all fast-food establishments, regardless of its franchise location or anything else really, will both be considered parts of the food retail industry and will be considered retailers of their own specific products; from McChicken to Burger King’s Chicken Fries, everything in between is a retailer product, and their parent companies, retail companies, part of the food retail industry.