AUSTTRALIAN RESTAURANT INDUSTRY ANALYSIS (Research Paper Sample)

Restaurant Industry Analysis: Management Case Study Students Name Institution Affiliation Table of Contents TOC \o "1-3" \h \z \u Executive Summary PAGEREF _Toc451099954 \h 3Introduction PAGEREF _Toc451099955 \h 4Restaurant Industry Porter's Five Competitive Forces PAGEREF _Toc451099956 \h 4Industry Rivalry PAGEREF _Toc451099957 \h 6Barriers to Entry PAGEREF _Toc451099958 \h 6Bargaining Power of the Customers PAGEREF _Toc451099959 \h 7Bargaining Power of Suppliers PAGEREF _Toc451099960 \h 8Restaurant Industry Substitutes PAGEREF _Toc451099961 \h 8Strategy Evaluation and Implementation PAGEREF _Toc451099962 \h 9Differentiation Strategy PAGEREF _Toc451099963 \h 9Total Quality Management PAGEREF _Toc451099964 \h 10Conclusion PAGEREF _Toc451099965 \h 10References PAGEREF _Toc451099966 \h 12 Executive Summary The primary goal of this report is to carry out restaurant industry analysis in Australia. The reports commence by using Porter's Five Forces Competitive management model to determine the impact of rivals, barriers to entry, buyers, suppliers, and substitutes to the profitability of the industry. In detail, the report discusses each force about the industry and provides a recommendation the industry should adopt for each force. Alternatively, the reports evaluate the Porter's Five Forces and its implementation in connection with restaurant industry in Australia. Again, the report discusses the differentiation strategy the industry should adopt. The report also examines the Total Quality Management aspect in connection to the industry. Finally, the report concludes by summarizing the content covered in the report and providing the recommendations the industry should adopt. Introduction Firms in the restaurant industry are mainly involved in the provision of food and beverages to both domestic consumers and premises. The restaurant industry in Australia can be divided into three major segments. First, premium dining segment, this offers high quality services, quality food, and ingredients and is very luxurious. This segment usually sells food ta high prices. Secondly, middle-range dining segment, which offers good quality food, fair prices and has a range of taking away options. Lastly, low cost dining segment, which depends on fast services, high table turnover, low-priced food and limited variety of food and specialties. In the recent past, the restaurant industry has been experiencing sluggish growth, but current findings indicate that changing social trends in Australia have facilitated the expansion of restaurant industry over the last five years. Currently, the industry possesses an annual growth of 4.3 percent and a revenue of 12 billion dollars. Busy lifestyles and declining leisure time have led consumers to prefer to restaurants as an alternative. Similarly, restaurants have aligned themselves with the needs of the customers thus allowing customers to integrate dining with leisure. These trends are anticipated to grow through the year, with the prediction of industry revenue to increase by 2.0 percent. The predicted industry revenue growth has been attributed to continued consumer demand for high-quality food and improved dining experience. To further understand this industry analysis, this report uses the porter's five forces as a market research tool. Restaurant Industry Porter's Five Competitive Forces Porter's Five Forces model is a management tool used for carrying out analysis on the present industry profitability and attractiveness. However, the model has received significant criticisms over the years on it relevance in the economy due to increasing impact of globalization and digitalization. Despite that, the Porter's Five Forces cannot be regarded as outdated. Given the fact that each industry is operating in the midst of buyers, suppliers, substitutes, new entrants, and competitors are clear indication that Porter's Forces model is still valid. CITATION Däl14 \p 1 \l 1033 (Dälken, 2014, p. 1). However, according to Mohapatra (2012) it should be noted that the Porter's Forces may have adverse effects in certain industries. This report considers the applicability of Porter's Five Forces in the analysis of restaurant industry in Australia. Source: Industry Rivalry One of the keys to prosperity by the firms is their capability to understand competitors' behavior and marketing strategies. Potter (2008, p.32) the force of rivalry among existing competitors involve several forms such as service improvement, new products introduction, pricing discounts and advertisement campaigns. High intensity competition among existing competitors can set back the company profits. Therefore, even though it is a must for competition to exist in the market, firms should compete in a healthy manner. To compete favorably, the firms should understand the number and the ability of rivals and the products and services they offer. In Australia, there are many competitors of restaurant industry offering almost the similar products and services. Restaurateurs face stiff competition from other hospitality providers such as cafes, pubs, fast-food retailers and prepared meals from the supermarket. For the restaurants to maintain the costs down and realize high-profit margins, they need to be diligent and focusing on efficiency operations as well as consumer lifestyle trends. For example, cafes and coffee shops industry have been posting a huge competition to the restaurant industry in for the last five years. Recent market research provides that the coffee shop industry has grown sharply over the last five years, attributing much of its success to consumers love of high-quality coffee and lively coffee culture. Barriers to Entry The availability of entry barriers limits the number of companies to enter the industry and thus increase the competition among the existing rivals. The robust barriers for an industry they bare good because they reduce the number of new entrants who would affect competitive advantages. Dälken, (2014) notes that the extra supply as a way of meeting demand reduces the revenue of the industry participants. The restaurant industry in Australia has enjoyed non-new entrance threat for a significant period of time. This is because of the robust barriers, which exist between the participants and the new entrants. There have been several berries, which have shielded the industry from the external investors. First, the location of the restaurants is concentrated in specific areas with a high number of people such as Thomas Street, Haymarket, and NSW. The location itself makes it hard for new entrants to enter the industry unless they establish their business in those regions, which are already flooded. Secondly, the industry has a lot of competitors that might make it very difficult for a new competitor to win new customers. Thirdly, regulatory obstacles of Australia of food service require adhering to strict health requirements. According to RESTAURANT & CATERING AUSTRALIA (2014) firms must meet average standards before they enter the industry. This and other adherence regulatory constraints may make it hard for new restaurant entrants. Bargaining Power of the Customers According to Porter (2008) as cited by Dälken (2014) if the customers possess the high market power they negatively influence the profitability of the industry as they can push the prices downwards, influence expansion of services or force for better quality. The impact of the bargaining power of the customers will be high if the number of buyers is large. In Australia, restaurant industry buyers power has been contributed by the following three factors: * A large number of providers. * Low switching costs. * High availability of substitutes. As a result of market saturation and concentration, consumers have a choice to buy from other convinient industries. Similarly, because of the low switching costs from one industry to another, customers can opt to consume products of other industries. Again, there are many substitutes to resturant industry. These alternatives include café and coffee shops, fast-food ratailers and prepared food in supermarkets aming many others. Based on Porter's model marketers in restaurant industry should develop strategies to improve customers loyalty. Bargaining Power of Suppliers Bargaining power of suppliers describes the risk that supplier threatens to the industry with increasing prices of products. Powerful suppliers threaten the profitability of the industry because monopoly kind of power they possess that makes them price setters. Slater & Olson (2002) as cited by Dälken (2014) the baragining power of the supplier is influenced by the number of suppliers and the availability of altetrnative customers. Suppliers have influenced restaurant industry in Australia positively. Large number of suppliers have wekened the effect of individual suppliers to the industry. The industry has both regional and global suppliers and thus nonalliance among those suppliers has been of an advantage to the industry. On the Basis on Five Forces analysis supplier bargaining power has had a little effect on the restaurant industry. Restaurant Industry Substitutes Dälken (2014) notes that all the industries within a market compete with industries that produce close substitutes. Substitute products reduce the potential profit of the-the industry. According to Hubbard and Beamish (2011) as cited by Dälken, (2014) industries should carry out research to identify products in the market that satisfy the same need as theirs. The restaurant industry in Australia is highly threatened by substitutes especially during long holidays when customers reduce. There are a relatively huge number of the i...