Porters Five Forces Analysis
Kababish Restaurant
Author: Nida Waseem
TABLE OF CONTENTS
CONTENTS PAGE NO
CHAPTER 1 1
1.1 INTRODUCTION 1
CHAPTER 2 2
2.1 PORTER`S FIVE FORCES FRAMEWORK 2
2.2 THREAT OF SUBSTITUTE PRODUCTS 3
2.2.1 LARGE RETAIL STORES PRODUCTS 3
2.2.2 RESTAURANTS AND FAST FOOD SHOPS OFFERING VARITIES 4
2.3 THREAT OF SUPPLIERS 4
2.4 THREAT OF BUYERS 5
2.4.1 LOCATION 5
2.4.2 PRICE FACTOR 5
2.5 THREAT OF NEW ENTRANTS 6
2.5.1 INITIAL SET UP COSTS 6
2.5.2 MARKET DOMINATED BY MAJOR PLAYERS 6
2.5.3 GOVERNMENT RULES AND REGULATIONS 6
2.6 INTENSITY OF RIVALRY 6
CHAPTER 3 8
3.1 FUTURE ASSUMPTIONS OF PORTERS FIVE FORCES
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These can be obtained from the shop shelf which saves time. The prices of these meals are also comparatively low which attracts customers considerably. People look for varieties of respective quality fast food which is also cheaper. These stores are also offering a range of food-to-order service where the food is ordered viewing their catalogue which provides pictures, quantity description and prices of the food. The food is then delivered to the place of the customer. People try to get social with the minimum time they have with low costs.
2 RESTAURANTS AND FAST FOOD SHOPS OFFERING VARITIES
Most restaurants try to offer as many variety of food as possible such as Chinese, fast food etc. Thus customers are able to get different varieties of food from one food shop which makes the market more competitive and more options for substitutes.
The other substitute is the fast-food restaurants which can hand people food in their cars which they can consume in the car or take it out.
Socializing has become a substitute for dining out at restaurants. This refers people socializing with each other outdoor or at friends’ places or making bar-b-qs at home. Restaurants have online and telephone ordering available where food is delivered at home in minutes.
4 THREAT OF SUPPLIERS
Threat of suppliers is where the supplier has a bargaining power over the buyer.
Price; quality; and quantity; those are the three main components one should look for in a decent place to eat. In today’s economy, with the amount of money we pay for food, we want enough to satisfy us and be worth the money. Quality is a high standard in today’s food industry. Customers want to know if the food they are consuming is made from fresh and natural ingredients rather than preservatives. Quantity is a must as people want a good amount of product for what they pay for. Consumers don’t want food that will only fill them for an hour; they want food that is a meal. The only fast food place that comes to mind that fits these qualifications is Panda Express. Let’s see how it
This essay will use the Porter’s five forces to analyse the supermarket industry in the US, and I will make a decision on whether the US supermarket industry is attractiveness based on its overall profitability level.
With the fast pace of Americans, they do not have to travel far to find a fast food restaurants. While families are working double shift jobs and less time to cook and take care of other family duties. The speed of fast food can provide convenience in
Competition in the industry: Competitors include local small pubs/ bars, family restaurants, other food outlets, etc. There is a lot of competition in this industry from domestic as well as foreign companies.
•They are the most famous and one of the few outlets available in area and footfalls are generally heavy due to these•The places are usually visited very frequently by local people, students, etcPromotion•The joints rely on word of mouth publicity•There is no promotion done through ads for these joints. The promotion at maximum is limited to local newspaperSUGGESTIONS•McDonalds could increase the number of items served on its menu. Currently there are only 6 vegetarian and 6 non-vegetarian items served on the menu. It is also evident from the survey that many people feel that the variety of menu available is average and could be improved. Some of the customers prefer something new every time they visit. These potential customers could be targeted by increasing the number of items in the menu.
Fast food is not only found at the drive-thru diners with the golden arches or the giant burgers in front of their buildings although they are the most common thing we think of when we hear the term “fast food“. Fast food is any food that is quick, convenient, and inexpensive for the most part. It can be bought just about anywhere that sells food and snacks. Vending machines play a huge part in bad food choices. They are found in most offices and schools for people on the go to grab a quick bite. Twenty-four hour convenience stores are probably the most common places to find fast food but we don’t usually think of it as fast food because it isn’t sold threw a drive-thru restaurant. These foods are so popular because for under five dollars you can usually get a meal that may not be the healthiest choice but will fill you up. However, although fast food is inexpensive it is only that way because it is made with cheaper ingredients.
The fast food industry has been growing dramatically during the last few years. For this reason, we should try to find out what are the several factors why fast food consumption keeps growing among young people and adults. Therefore, as we have seen, the popularity of fast food is spreading rapidly among many people due to the following three main reasons: good taste, convenient time, and price. Personally, working for a fast food restaurant for a brief moment in my life, I can attest to this. Marketing also plays a big part to more people eating fast food. It’s in our culture in America to expect fast food companies to market and strategize their ways to make us, the consumers, to buy more food and consume more food so they can make more profit. Especially now with commercials and social media. The fast food industry has thrived in the modern era. It’s thriving so much, the industry is growing faster than the U.S economy, at
As of now in the United States there are 22 fast food franchises. McDonalds was the first franchise to open in 1940 and since then they have been the leading and most successful franchise in America (“The Raw Prawn” n.p.). Other franchises include: Burger King, KFC, Wendy’s, Arby’s, and Taco Bell. Each of which target young students and children. Most of them have a value menu where items to purchase are cheap and tasty but very unhealthy. Some fast food restaurants provide a toy for children with their meal which attract them to come again and again ( “Eating Yourself to Death” n.p.). In addition, some restaurants contain an indoor play ground which attracts small children even more. The fast food industry mainly brings customers for their tasty food and simple convenience, they attach a drive thru to their building making it faster for customers to purchase and collect their food which is also less time consuming. Recently in the past few years, fast food franchises have begun to change their restaurant and attempt to become healthier as a whole, in some fast food restaurants they have a nutritional menu to choose from which generally contain healthier food compared to the regular menu (“The Raw Prawn” n.p.).
To provide quality product, extensive menu of delicious foods, ensure customer awareness and loyalty and also have good publicity.
Notably, with technology advances, everything has become so easy and fast such that we all want every other aspect of our lives to assume a similar concept, and fortunately, the fast food restaurants provide a suitable means of satisfying our hungry stomachs as fast and easy as possible. Surprisingly, most people have adapted a lifestyle that incorporates fast food chains as an important element. For instance, instead of making coffee at home in the morning, I buy coffee on my way to college, for lunch, I buy a sandwich or hamburger from a food truck, and in the evening after a tiring exhaustive day, I order pizza for supper from Pizza Hut. Arguably, food take-outs are part my daily routine, which serves the purpose efficiently but barely sufficiently.
to penetrate into the dinner market without risking its existing business model for fast food while benefiting
• Risk of new entry by potential competitors: the risk is very high in the restaurant industry because of the low capital investments required to enter. Outback Steakhouse competes not only with the casual diners but as well as with fast food chains, and even supper markets. Many of the high-end grocery stores offer variety of complete meals. It costs the customer absolutely nothing to switch to a different restaurant; therefore companies in this industry cannot depend on locking in the customers. However, by establishing a brand loyalty customers will return. Established restaurants such as Outback Steakhouse have an advantage with the economies of scale in advertising and purchasing.
This paper addresses the use of Porter’s Five Forces model and how it can benefit Broadway Cafe by identifying and analyzing the effect of these forces on its business. The benefits include improved decision making, faster time to market, better productivity, improved competitive advantage, more profits and greater customer satisfaction. It also helps in achieving operational excellence.
Porter’s five forces are used to determine the competitive intensity and attractiveness of a market. These are close forces that affect a company’s ability to make a profit and serve customers. If any of these forces change, a company must reassess its marketplace. The five forces include: the threat of substitute products, the threat of the entry of new competitors, the intensity of competitive rivalry, the bargaining power of customers and the bargaining power of suppliers.
The paper presents an analysis of the different factors influencing the restaurant industry and how these factors increase or decrease the demand for such services. The hypothesis that will be examined is that the performance of restaurants is mostly based on the type of food chosen by customers when they decide to go out for dinner, lunch, breakfast, or simply for a snack. What type of food refers mainly the nationality or concept of the food, (traditional American, Italian, Indian, Latin, or from any other type of culture). This factor is important because when customers go out to for dinner; they decide what to eat before deciding where to eat. That is why this factor is considerably important according to the hypothesis.