Situation Analysis of Sandwich Shop in Canberra - Case Study Example

Situation Analysis Name: University: Date: Situation Analysis This Situation Analysis is about a new sandwich shop in Canberra Situation Analysis This situation analysis analyses a new Australian market for a new sandwich shop and seeks to address crucial factors in the marketing environment associated with opening the sandwich shop in Canberra. The sandwich shop will be quick service restaurant in Canberra. The owner of the shop is Brad, was previously working in a Subway. The objective of opening the sandwich shop is to provide healthy sandwich options to people of Canberra. Basically, Canberra has a number of QSRs which have some substantial market share in the city, but the shop will bring new choices to the market. Industry Overview The QSR industry has been experiencing a rapid growth in the last few years, largely because of the increasing awareness amongst the customers regarding the benefits of consuming healthy foods. Furthermore, people’s lifestyles have become busier; thus, increasing the demand for quick meal options. As observed by Research and Markets (2015) the revenue in the industry will reach $1.7 billion by 2017, and it is projected to increase by almost 2.6 per cent in every five years. Still, it was projected the industry revenue would decline by 2.4 per cent in 2015 since the external competition that the industry was facing from other food establishments was very intense. A number of restaurants across have started offering convenient as well as healthy meal options. Research and Markets (2015) further observed that the Sandwich Shops industry sell pre-made or made-to-order sandwiches and is expected to experience some growth in the future. In Australia, the sandwich industry has employed hundreds-of-thousands Australians and make billions of dollars every year. According to Euromonitor report, as cited by Westcott (2014), the Australian fast food sector growth has declined, but the takeaway food sector experienced a 2 per cent growth. In Australia, an average of 26 sandwiches is sold every day in the retail outlets. Therefore, it is clear that sandwiches are top-of-mind for the majority of Australians (Mccormack, 2012). IBISWorld (2016) reported that the participation in the industry is growing; therefore, the premium products demand has increased, and it is projected that the revenue will grow by 3.0 per cent over 2016-17. According to Euromonitor (2016), McDonald’s (both franchised as well as owned) is still the industry leader, and then it is followed by the Subway Systems Australia. These two companies collectively hold a 32 per cent of total sales in the industry as well as 46 per cent of chained fast food’s value sales. PESTEL Analysis Political Factors One of the factors that could influence the opening of the new sandwich shop is the labelling of foods that are genetically modified. There are new rules associated with the labelling of genetically modified foods. Therefore, companies in the QSR industry are required to inform their customers if the sandwiches contain genetically modified ingredients. Besides that, the political surrounding could enormously influence the decisions made in the market. The introduction of Goods & Service Tax could influence the business since it leads to prices changes in the sandwich shops, but still, other food items’ prices remain unchanged. For this reason, sandwich industry focuses more on service instead of product arguing that the customer cannot get improved service in their homes like the one offered at these outlets. Economic Factors As mentioned by Welch, Benito, and Petersen (2008), setting-up a sandwich shop is not expensive as compared to the cost of setting up a fast food restaurant. For this reason, it is much easier to enter the market. Furthermore, franchising provides an additional benefit since it facilitates in setting up an improved reputation as well as brand image. Given that the market is growing, this would be beneficial to the sandwich industry since they will be able to make returns. During the recession and other economic crises, the sandwich shops normally perform better as compared to other expensive restaurants given that the price factor is crucial at these moments. Since sandwiches are cheaper, the companies are less inclined to be affected even when people reduce their expenses when their disposable income becomes less. Social Factors In Australia, the QSR industry focuses more on their efforts on the needs and preferences of the Australian society. The Australian people have busy lifestyles and because the QSR restaurants are widely recognised for convenient as well as quick service; therefore, sandwich shops have become a crucial part of the Australians lifestyle. Given that most Australians have become more health conscious; therefore, they have espoused healthy eating considering that obesity has become a widespread problem in Australia. Technological Factors According to Vardy (2012), since the QSR industry is growing, technology plays a crucial role in the current success experienced by companies like MacDonald’s. Therefore, the sandwich industry should move towards the changing technology in order to remain competitive. For instance, the sandwich shops can install Electronic Funds Transfer at Point of Sale that enables the customer to pay using their credit or debit cards. In addition, social media networking and online marketing have been espoused by fast food giants like KFC and MacDonald’s to promote their home delivery service. Therefore, the sandwich shops can use online tools to market themselves. Environmental Factors A number of companies like Burger King, McDonalds and KFC that sell sandwiches are widely recognised for using meat to make sandwiches. Therefore, a problem could arise from animal rights campaigns with regard to animals’ mistreatment in the slaughter houses (Moodie, 2016). In addition, oil and coal prices are increasing; therefore, the cost of making a sandwich have increased due to high transportation costs leading to increased product prices. When a company is environmentally friendly, its image and reputation improve. Therefore, packaging in the sandwich shop should be changed into a packaging that is more environmentally friendly. Using a ‘green’ packaging could positively influence the consumers knowing that the sandwiches are not affecting the environment. Legal Factors Akin to other companies in the industry, the sandwich shop must implement the existing Health and Safety guidelines. Failure to follow the food safety guidelines as it can affect the industry to a great extent. The Australia’s food safety standards require all businesses that sell food to produce safe food that is suitable for consumption. The sandwich shop is expected to produce safe food, or it could risk attracting lawsuits and penalty. Besides that, the customers expect the food business’s products to be safe. More importantly, the business has to verify the quality as well as the safety of their products. Competitor analysis The sandwich shop will likely face competitive pressures from other companies offering the same product, such as McDonald's, KFC and others. Without a doubt, McDonald’s will be the main competitor since it has many fast food outlets in Canberra and also offers competitive prices. As cited by King (2014), a number of reports have demonstrated that McDonald’s is Australia’s most popular food outlet, even despite the fact that Subway has 480 more than McDonald’s in Australia. A survey by Roy Morgan Research as cited by King (2014) established that over 55% of Australians visit fast food outlets at least once in a month. Furthermore, 29.5% of Australians prefer McDonald’s than the other competitors. Other competitors would include KFC, Domino’s Pizza, Hungry Jack’s, as well as Subway with. Australians can also access sandwich products from Red Rooster as well as Pizza Hut, which were once the dominating forces in the market. The market is also packed with fastest growing chains such as Nando’s, Oporto, as well as Eagle Boys Pizza (King, 2014). Customer/Client analysis According to Consumer Reports (2014), demographics have recently been shifting to non-traditional households from the traditional households; therefore, many adults rely on QSRs because they have become busy. Many customers depend on QSRs in order to get free time. The majority of customers at QSRs in Australia as mentioned by AFN (2014) are from Generation Y. AFN (2014) mentions that most adults in Australia prefer Red Rooster, Hungry Jacks and KFC. The majority of customers are young people who prefer buying ready food rather than cooking and also adults who are very busy to cook for their family or themselves. Baby Boomers according to QSR (2012) are moving into the retirement ages; therefore, they are moving into a budget-conscious attitude, and the amount they spend on QSR will drastically decline. According to Gitman and McDaniel (2007), market segmentation is very important since it enables companies to survive and be able to meet the specific wants and needs of the consumers. To effectively segment the market, the business owner must closely examine the motivations and needs of different consumers in the QSR marketplace. The sandwich shop can segment its market into demographic factors (children, young people, and families. The sandwich shop can be a place where customers meet, and families are taken for a treat. SWOT analysis Strengths Weaknesses High level of food customisation Provide healthy sandwich options (Dauvergne, 2010) Low start-up costs Social media provide free marketing platform Different from fast food restaurants (Ingram, 2012) The sandwich shop interior design appear cheap Stiff government food safety regulations Inconsistency from one store to another (Schlosser, 2012) High employee turnover Opportunities Threats The demand for healthier food is increasing Home delivery services Introducing drive-thru The habit of the customers is changing, and new customer groups are emerging Increasing competition Shift towards healthy foods Emerging local restaurants that provide that provide local foods Lawsuits for infringing food regulations Reference list AFN. (2014, January 6th). Australian fast food market survey shows up demographic differences. Retrieved from Australian Food News: http://www.ausfoodnews.com.au/2014/01/06/australian-fast-food-market-survey-shows-up-demographic-differences.html Consumer Reports. (2014, July). Best and worst fast-food restaurants in America. Retrieved from Consumer Reports: http://www.consumerreports.org/cro/magazine/2014/08/best-and-worst-fast-food-restaurants-in-america/index.htm Dauvergne, P. (2010). The Shadows of Consumption: Consequences for the Global Environment. Cambridge, Massachusetts: MIT Press. Euromonitor. (2016, July). Fast Food in Australia. Retrieved from Euromonitor International: http://www.euromonitor.com/fast-food-in-australia/report Gitman, L., & McDaniel, C. (2007). market segmentation for fast food benefit segmentation approach. New York: Cengage Learning. IBISWorld. (2016, July). Fast Food Services in Australia: Market Research Report. Retrieved from IBISWorld: http://www.ibisworld.com.au/industry/default.aspx?indid=2005 Ingram, D. (2012). Costs Associated With a Subway Franchise. Retrieved from Small Business: http://smallbusiness.chron.com/costs-associated-subway-franchise-11985.html King, M. (2014, April 4). Australia’s Top Ten fast food franchises. Retrieved from Fool Australia: http://www.fool.com.au/2014/04/04/australias-top-ten-fast-food-franchises/ Mccormack, G. (2012, August 19). State of the Nation: The Australian Sandwich Industry. Retrieved from Cafe Culture: http://www.cafeculture.com/general-interest/state-of-the-nation-the-australian-sandwich-industry Moodie, A. (2016, September 20). Burger King and KFC called out for lagging behind on antibiotic-free meat . Retrieved from The Guardian: https://www.theguardian.com/sustainable-business/2016/sep/20/burger-king-kfc-mcdonalds-antibiotic-free-meat QSR. (2012, November ). Meet Your Consumer. Retrieved from QSR: https://www.qsrmagazine.com/consumer-trends/meet-your-consumer Research and Markets. (2015). Sandwich Shops in Australia. Retrieved from http://www.researchandmarkets.com/reports/3005889/sandwich-shops-in-australia Schlosser, E. (2012). Fast Food Nation: The Dark Side of the All-American Meal. Boston, Massachusetts: Houghton Mifflin Harcourt. Vardy, M. (2012, September 22). Resistant to the inevitable: How technology is changing the restaurant industry. Retrieved from The Next Web : http://thenextweb.com/insider/2012/09/22/how-technology-changing-restaurant-industry/ Welch, L. S., Benito, G. R., & Petersen, B. (2008). Foreign Operation Methods: Theory, Analysis, Strategy. Northampton, Massachusetts: Edward Elgar Publishing. Westcott, B. (2014, June 8). Australia's fast-food market is getting smaller, healthier and more diverse. Retrieved from http://www.canberratimes.com.au/act-news/australias-fastfood-market-is-getting-smaller-healthier-and-more-diverse-20140501-zr2j7.html Read More