Question 1 (30 MARKS)

Read the extract below and answer the questions that follow.

In 2019, we counted 5,287 stores, including the more 'vague' tallies such as Chicken Licken's "over 200 stores" and Roman's Pizza's "over 220 stores". We also included smaller shops likeSausage Saloon and King Pie for the first time.When it comes to fast food, Kentucky FriedChicken (KFC) is by some margin the most prolific brand in the country, with 771 stores spread across the land.In its latest annual report, KFC parent company, Yum Foods, listed 771 KFC outlets in SouthAfrica, the group's biggest market in the developing world, behind only China (which is also KFC's biggest market, globally). South Africa's love for fried chicken is not-so-closely followed by a love for burgers, with local burger take-away, Steers, in second place.

According to Famous Brands' 2014 annual report, the group's largest fast food franchise isSteers, with509 stores across the country, followed by the family-friendly Wimpy franchise at under 500 stores, and its Debonairspizza chain following with 382 stores. Nando's, largely considered to be South Africa's most successful food franchise,has over 1,000 stores in 30 countries across the globe, but is only the sixth biggest in its home country.

The chicken franchise has around 350 stores in the UK, where it is growing in popularity, and over 300 stores locally. Another popular fried chicken franchise, Chicken Licken, operates over 240 stores, according to thecompany'smost recent reporting. The SA-born fried chicken company is the eighthlargest fast food chain, behind another local favourite, Gold Brand's Chesa Nyama, which has 251listed stores. According to Chesa Nyama founder and MD, Stelio Nathanael, the chain is targeting 500 storesby2017.Domino'spizzaisthelatestfastfoodentrantintoSouthAfricaandcurrentlyhas15 stores in Joburg, Cape Town and Durban, with 2 more stores opening soon. However, brand owner, Taste Holdings has expressed its intention to completely transform two of its pizza brands- St Elmo's and Scooters Pizza-into Dominos Pizza over time.

"Scooters Pizza and St Elmo's will be converted to Domino's Pizza outlets in due course creating a platformofover125outletstowhichnewDomino'sPizzastoreswillbeadded,"thegroupsaid. "Whilefranchisee applications will be processed for new Domino's stores, no further Scooters or St Elmo's storeswillbeopened."EvenwithbrandssuchasDomino's,ScootersandtherecentlyacquiredZebo's Chicken chain, Taste Holdings' most prolific fast food brand is The Fish & Chips Co., which has over 330 stores across the country- the fifth biggest chain in SA.

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Biggest fast food chains in South Africa

https://businesstech.co.za/news/trending/86376/biggest -fast-food-chains-in-south-africa/

In light of the information presented above, identify and discuss the characteristics of the market structure that fits the fast food industry in South Africa. Using diagrams, explain the short and long run profit maximization of this particular market structure. (30)