Entradas and bandeiras*: the inland-bound strategy of fast food chains
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Abstract
The present study analyses the strategy of fast food industry firms to enter new markets. We investigate the attributes of cities that attract firms in this industry, and how firms from different chains interact with regard to their entry decisions. We found that firms adopt a me-too strategy: once a firm has entered an unexplored market, the others tend to also enter this market. The hypothesis of this paper is that there is some uncertainty regarding a certain market’s potential, and the entry of one firm signals to others that this potential is high. Gains from discovering and entering a new, high-potential market fade quickly with the entry of the following firms, which gives a temporary advantage to the pioneer firm.
* TN: Entradas and Bandeiras are the names of the first Portuguese inland-bound expeditions started in the 15th century to explore the South-American territory that currently forms Brazil.
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