Environmental Analysis of New Restaurant Essays

Environmental Analysis of New Restaurant Essays Environmental Analysis of New Restaurant Paper Environmental Analysis of New Restaurant Paper Restaurant Industry Analysis With an increasing number of people working in office environments and growing amply households with two parents in the workforce, time to prepare food at home is limited. Consumers under time constraints are opting to eat outside in cafes and restaurants, with price-conscious consumers often turning to fast-food options such as mobile trucks and street stalls. Restaurant industry has four general segments according to the service customers receive: full service, quick service, eating and drinking place and retail host. Full service dining locations do not require any food preparation by customer as well as service of food. Fast-food chains that offer buffets and aka-out service represent quick service locations. Eating and drinking place sector includes caterers and refreshment stand vendors. And the retail host is located within the gas stations and retail-host restaurants. Fine dining restaurants are full-service restaurants with an upscale menu and extensive beverage offerings. The restaurants generally have a more sophisticated dcore and ambiance, the wait staff is usually highly trained and often wears more formal attire, and there is often a dress code for patrons. The most important factors that customers expect from the upscale dining establishment are food quality, service and VII treatment. The profit of fine dining establishments depends for the most part on business entertaining, and the volume of the business people that charge their dinners on expense accounts declined dramatically after the recession. As a result, the upscale dining segment is reconsidering their offerings very carefully in order to be able to compete in the market and attract customers. Since the consumers are still watching their spending a majority of upscale dining restaurants went in the direction of new pricing strategies and innovations as well as creating casual dining environments. Trends Of casual fine dining have led to the implementation Of two different concepts within one establishment: casual bar areas with small-plate offerings and formal dining spaces for the whole experience. Key trends that help the restaurant industry to keep the balance and improve the sales are mergers and acquisitions, driven by private equity firms with greater access to the capital markets; open credit markets with improved rates, terms and required equity contributions and the focus on the local sourcing, sustainability, and nutrition that top menu trends. The environment that a company operates in goes far ended the industry and even farther than the industry segment where company has business. That environment is defined as companys macro- environment and is composed of seven components that have the potential to affect the company and its competitive environment: trends of technology, demographics, economic conditions, political and regulatory factors, social forces and global factors. These entire factors can influence the company in different ways and to different degrees. External drivers of the upscale dining segment in the restaurant industry are per capita disposable income, employment status, healthy eating index, nonuser spending and consumer sentiment index. Per capita disposable income determines the ability of the population to spend money on goods and services. Wealthy populations will be influenced by the tax rate and rising prices on the high end and luxury goods that could slow down the real income growth in 2013-2017. Employment status is positively correlated with the dining out and choice fewer and how often. Rising national unemployment rate can negatively affect the restaurant traffic, the upscale segment specifically. Healthy eating index is the percentage of a recommended diet that an average American consumes. The overall trend towards eating vegetables drove up the vegetable prices as well as produce prices. Another trend is low carbohydrate and high protein diets that will increase meat consumption. Consumer spending is defined as amounts spent by the population on services and goods inside the country and abroad. A brighter outlook of the economic recovery and higher employment drive the increase in consumer spending rather than savings. Consumer sentiment index was affected by growing corporate profits in the last two years and ability of businesses to keep wage costs down. All of that stimulated the customer sentiment. In April 201 2 consumer sentiment index reaches its highest for the last year that will be reflected hopefully later in the increase Of restaurants visits. Technology Factors Going mobile and moving faster is the technology trend in the restaurant industry that shapes all the segments through different innovations. The use of a smart phone and ability to access restaurant booking system from mobile platforms decreased the number of phone calls for reservations as well as allowed the restaurant operators to gather data for marketing purposes. Another trend is check in services like Foursquare that presents context-aware type of advertising and attracts the customer with its sophistication. Mobile payment systems like GOOGLE wallet that stores your credit cards and loyalty cards as well as promotional offers will speed up the payment process and secure customer information. Demographic Factors In June 2011 persons aged from 24-35 were the most frequent visitor to the fine dining establishments. This age group represents 31 percent of the population visiting fine dining restaurants. In regards to household income, those who earn one hundred thousand dollars or more are the most frequent visitors to fine dining establishments. That is great insight for the marketing department of the fine dining segment to study the preferences and address them as well as it is a clear target for customer attraction. Economic Factors The economic situation should improve cautiously through 2014 with positive outcome for all the industries as well as fine dining sector of food service. The industry still shows low measures of consumer sentiment and cautiousness of firms about full-speed operations. There is also the presence of weak labor market conditions and slight gains in manufacturing production as well as elevated risk premiums. All these factors result in the slow process of economic upturn. Political Factors There are many policies and regulations that can affect the upscale segment of the restaurant industry, many of them related to the health and food issues, jobs and career as well as profitability of the business. If final regulations that are related to nutrition disclosure issues will be published in 201 2, when the law takes effect, restaurants with 20 or more locations will be required to provide caloric information on menus. There are two bills still pending in Congress to make the 1 5-year restaurant appreciation schedule permanent, which will allow restaurants to write off, or depreciate, the cost of improvements and new construction over 15 years, rather than 39 years. This uncertainty is holding many companies from capital expenditures since it reduces the cash flow by approximately four thousand a year. Business meal deduction from DID percent to 50 percent in 1992 decreased the profitability of restaurants and affected the upscale segment that is heavily relies on conference room business. A proposed 80 percent business meal deduction could Increase business meal sales by 7 billion dollars. Socio-cultural Factors Socio-cultural forces that include attitude of the society, families lifestyles and change in values impact the industry over time. Shift in preferences is obvious: people are looking for healthy and freshly prepared food, leaning towards premium products and value.