PDI and consumer expenditure trends show that incomes are raising faster than consumer expenditure over these years.
This has led to the creation of very value-conscious consumer. Within eating out market consumer is becoming more and more demanding. This would give our new venture a great possibility for potential growth. With raising income people would be more willing to go out and such a unique place as Traditional Russian Restaurant would satisfy increased demand by providing excellent quality food and friendly atmosphere.There is great potential for growth as Russian restaurant will be in the category of Theme Restaurants. According to 2000 Mintel Report “consumers are dedicated a greater proportion of their personal disposable income to eating out and between 1995 and 2000 the value of this total “theme” market increased by 28%. Major economic technological and social forces that govern competition and inter-firm rivalry within the industry and how that might change into the future.
Competition and inter-firm rivalry is very intense in this sector of the market.With competition not only from restaurants, fast food chains and pubs but also from supermarkets and other shops which now provide not only ready to eat meals but also meals for special occasions and different cuisine’s. Technological and social forces control competition. Technology will have less effect on competition than social forces in the restaurant industry; however, with the age of computers and Internet they can bring competitive advantage to the business. In order to be efficient and gain competitive advantage restaurant should be cost efficient.
This can be achieved by using accounting software in order to control, monitor and budget costs. Our restaurant will provide best quality, fresh food. Therefore sock control is essential in order to gain good customer loyalty and competitive advantage.
Internet can be used as a distribution channel and orders could be made through it. This is time saving and cost efficient. Internet is also one of the best communication channels. By having our own web site we could expand people awareness of Russian restaurant and attract potential customers.It is also essential to supply information about the restaurant to all major restaurant guides both internet and books in order to provide easy and cheap access for customers. Social forces also influence competition. Mintel report claims that eating out is more popular now than it was ten years ago.
Use of restaurants in the evening remains the most popular with 62%, but visiting restaurants during the day has increased more significantly with 51%. This reflects the tendency towards eating out on a wider range of occasions.Eating out has become more like every day necessity rather than a luxury. Competition in restaurant market is strongly controlled by society: its habits and preferences. As said above people are more willing to go out and restaurants continue to take the lion’s share of eating out market with 69% share. Without major economic breakdowns these figures might be increasing in the future. However, there are other social factors apart from increase in incomes that influence competition in this industry.
As suggested in Mintel report there is a decline in culinary skills for some adults.Home delivery or going out is a normal practice for some house holds. There is also change in eating habits with more people cutting down on red meat. This trend boosts demand for vegetarian and healthy meals as well as white meat and fish dishes.
In 1990 only 3. 3% of population were vegetarians, now this figures is more than 6. 7%. Competition will be affected by menu selection and availability of healthy food. Important factor affecting competition is eating out preferences. In order to remain competitive restaurants should carefully research what is customer interested in the most.The most important factor when selecting a restaurant with 12% increase was “good quality food”. Reasonable prices are the second factor in 1999, when in 1990 it was first.
Friendly service and “atmosphere I like” are also important. But increasing importance is coming from “easy to get to” factor and “vegetarian options on the menu”. According to Porter’s Five Forces Model competition is less intense if there are more buyers for the product. So in the future with raising incomes vs. decreasing expenditure and decreasing culinary skills eating out habits should increase.
More people are concerned about healthy food and good quality food. This should make competition for restaurants from fast food chains, take away and super markets less intense as the food they are offering is less healthy. McDonalds which is the main supplier of fast food facilities in the UK market closed around 50 stores recently due to decrease of demand.
Prices in the restaurants are usually higher than in other food facilities, however, “reasonable price” factor is decreasing in its importance.These market factors should provide our venture with great possibility to grow and be competitive as it will provide best quality food, good location and friendly atmosphere. Very risky situations for our restaurant can be a result of a number of different internal political and economical affairs in Britain as well as global. Recession would have a major strike on restaurant businesses because would result in unemployment, falling incomes, higher prices, more savings and less expenditure.Clearly this is not a desired environment for the market. Direct link with income puts the demand for the restaurant under threat.
The prices go up and it may be hard and expensive to keep a restaurant. A much talked about threat of terrorism does certainly have an impact already, tourism is falling due to the fear of travelling by air and travelling in general being as much avoided as possible. If something major would happen in United Kingdom particularly or elsewhere the effect on customers would be enormous.
Current affairs such as fire brigade strike produces a temporary problems like reduction in customer numbers. People do not feel safe in public places and prefer not to travel because they know that there would be no back up from firemen. And finally of course such unpredictable factors as new construction works just by the restaurant entrance or a burglary can sometimes create a critical situation on a temporary or permanent basis. It is not possible to examine the UK restaurant market without some reference to the role which tourism has played in shaping it.This is not a factor that affects all restaurants, as it is clearly location-dependent.
The biggest area of impact is London, which has the highest number of restaurants per capita and it is also the region where some of the smaller chains are heavily focused. The experience counts The quality of the dining experience is of major importance to the consumer. While the food plays a key role, restaurant dining is undoubtedly a leisure experience and competes for discretionary expenditure with a multitude of other goods and services.Mintel’s research shows that 65% of consumers surveyed feel that the quality of the service is very important to them with a similar amount saying that they do not like to feel rushed. The customer is, therefore, paying for an experience and not just the food. This is reflected in the numbers who are prepared to travel to go to a restaurant that they like, clearly indicating that the quality of the experience is of some importance. Chains not venue of preference The level of growing sophistication and desire for a good experience would appear to be bad news for the chain operators.
Mintel’s research shows that only 3% of consumers (from a small sample/base) prefer a branded chain restaurant to an independent restaurant. Bar or restaurant or both? The introduction of a bar now provides a secondary income stream and offers a quicker route to profitability. The overriding financial pressures have been seen to dictate the strategy of the group, evidenced by the move by a large proportion of restaurants towards the bar format from fine dining. Market FactorsGrowing affluence Hence the forecast growth in the overall size of the ABC1 groups will have a positive effect on the restaurant market. Figure 3 illustrates the current and forecast changes in the groups. The AB group, which eats out most frequently, is forecast to see a rise of 27% during 1997-2006.
This represents around 2,750,000 extra adults and using Mintel’s consumer research for this report 39% of these or around 1,072,000 adults in this group will dine out at least once a month.