But here's a real potential change in the industry that a combination of burgers, chicken, and doughnuts would never have predicted: the entry of Ikea. Yes, the iconic Swedish furniture brand is exploring an entry into the restaurant business, a story broken by Fast Company.
That is, Ikea is looking at expanding what it already does through standalone location. The company already sells cured salmon, cakes, and Swedish meatballs aplenty. Back in 2007, I spoke with the former president of Ikea US East, who oversaw the expansion of the brand into this country. In its first six months in the U.S. they sold 2 million meatballs. Food is a big business and Ikea does $1.5 billion annually already in that area. To put things into perspective, Yum Brands, which is the second largest fast food company according to Franchise Direct, had $6.4 billion in annual revenue last year. Of that, $2.2 billion was from franchise fees and income. In other words, Ikea is already a major global player and it's almost not even been trying hard.
The furniture company has deep expertise, not only offering hot dogs and drinks in what it calls its bistros, but a fuller menu with such dishes as those meatballs served with mashed potatoes, shrimp sandwiches, and salmon lasagna, so more a cross between fast food and casual dining. If you don't want to sit down (or stand up), take frozen food with you to have at home. Plus, from what I remember in my last trip through an Ikea, the prices are extremely reasonable compared to many tradition QSRs (quick serve restaurants).
The prices point to an important competitive strength. Ikea understands mad efficiency and can generate revenue while remaining comparatively cheap, an important feature for many consumers. Moving across borders can offer it some surprising advantages. For example, when the company started serving food in the U.S., our penchant for ice in drinks meant they saw a margin on selling soda almost double that in Europe. In test locations, Ikea has already cut food waste by 30 percent and the chain understands how to tailor menus for specific geographic locations. Close to a third of the food customers show up at one of the furniture stores just to eat.
Add greater distribution, more convenient locations for foot traffic, and marketing, and the company could quickly become an even bigger player in casual dining and fast food. Just as long as you don't get your meatballs in DIY containers, they'll likely do fine.