3. The Market
3.2. PEST analysis
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After careful evaluation of the market we conclude that we will be competing in a monopolistic competitive environment.
We offer to our customers something unique and different. Though there are so many substitutes to it but no major direct competition yet.
3.2. PEST analysis
3.2.1. PoliticalThe government of India does not recognise restaurant industry as a separate industry and is clubbed with Hotel industry. The current government rules are more appropriate for hotels than restaurant business. The regulatory authority of hospitality industry in India requires any restaurant chain to ensure no-usage of any harmful chemicals, proper processing of raw materials, ensuring the quality of materials used etc.
Advantages:
The restaurant industry historically and still is largely unorganized so issues around compliance etc. are not enforced as strictly as in the case of hotels.
Disadvantages:
The current rules and regulations are more appropriate for hotels than restaurants.
Since hotel industry is large and dominated by big players, voice of restaurant industry is not heard. E.g. Alcohol is not allowed to be served in restaurants.
Getting access to financing options becomes difficult for restaurant business as the metrics used by the financial organizations are similar to that for hotels.
Note: The NRAI (National Restaurant Association of India) is working on trying to get
"Industry" status.
3.2.2. Economic
With one of the fastest growing economies in the world, clocked at a growth rate of 8.3% in 2010, the India is fast on its way to becoming a large and globally important consumer economy. The Indian middle class is estimated to be 250 million by McKinsey & Company. It will reach 600 million by 2030.According to Deutsche Research the estimates are nearly 300
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million people for all Middle Class. If current trends continue, Indian per capita purchasing power parity will significantly increase from 4.7 to 6.1 percent of the world share by 2015. In 2006, 22 percent of Indians lived under the poverty line. India aims to eradicate poverty by 2020.7
With this rising middle class, India is also facing uncontrolled inflation. Organizations in the fast food industry are not excused from any disputes and troubles. Specifically, they do have their individual concerns involving economic factors. Due to sharp rise in the prices of meat, vegetables, milk and pulses, inflation has reached 7.23% in April 2012.The value was 9.74%
in April 2011.8 Advantages:
Rising middle class means rising number of customers for restaurant industry.
Disadvantages:
The high inflation and increasing price of commodities is not good news. Rents have increased significantly in the urban areas where we plan to open our shops.
3.2.3. Socio-Cultural Factors
The direct socio-cultural factors related to restaurant industry are frowned upon consumption of meat products (beef and pork), and the will to try different kind of cuisines and beverages.
India apparently is a much closed culture and has been known to keep alive its traditions and cultural values even in modern days.
Fast food consumption is generally done in order to change the taste or for recreation purposes. Indian society by large prefer to cook food at home unlike Taiwan, but with both increase in working class and number of women going to office, these patterns are seeing a sharp decline in urban areas. With mushrooming of various shopping malls across the big
7 http://www.economist.com/node/17147648?story_id=17147648&fsrc=rss
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fast food and beverages comes in handy.9Advantages:
More outwardly life style and shopping malls has increased the trend of fast food consumption from past 15 years, which is on the rise continuously.
Disadvantages:
This kind of life style is still restricted to urban areas and people with wealth are not widespread across the nation. Care has to be taken while deciding location and customer segments.
3.2.4. Technological Factors
The rate of technological advancements in India is still far behind as compared to China and Taiwan. Partly due to availability of cheap labor and partly because of scarce awareness of technological advancements in restaurant industry.
Internet penetration rate and smart phone usage is lacking far behind from China and Taiwan but satellite TV industry (TV viewing) is largest on earth as per the TAM Annual Universe Update – 2010. India now has over 134 million households (out of 223 million) with television sets, of which over 103 million have access to Cable TV or Satellite TV, including 20 million households which are DTH subscribers. In Urban India, 85% of all households have a TV and over 70% of all households have access to Satellite, Cable or DTH services. 10 India is a known importer of technology and machines from far east and not known for manufacturing technology in house.
Advantages:
Our business model is very technology related and this kind of technology is unheard in Indian sub-continent.
9 http://timesofindia.indiatimes.com/business/india-business/Eating-out-Indians-cook-up-48-billion-food-business/articleshow/20321889.cms?intenttarget=no
10 http://www.livemint.com/Consumer/ToSZL7ieZOMaWIvJAPSYpI/TV-viewing-habits-see-a-slow-shift.html
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TV and newspaper can be successful mode of direct marketing.
Disadvantages:
It will be expensive to import equipment and machinery.
Labor cost in India is relatively cheap and would have to calculate the ROI for technology investment.
It will be expensive to use TV and movie related marketing.
3.2.5. Environmental
Northern part of India receives all four seasons with very hot summer and cold winter, whereas down south the weather remains mostly tropical throughout the year. Working conditions go tough and sweaty if the air conditioning is not provided. Frequent power cuts are a problem in smaller cities. India is one of the highly polluted countries but consumers are unaware of the pollution and Government authorities do not care much either because of lack of awareness and conditioning or lack of resources.
Advantages:
Hot weather makes it an ideal place to sell cold beverages to the thirsty and sweaty people for the most of the year.
Disadvantages:
To keep working conditions and technology working, we might have to supply external electricity sources, which is generally not required in established malls.
3.2.6. Legal Factors
India on the whole is not a litigate society and legal help is only taken when things go out of hand.
The Shops and Establishments Act, 195311 was enacted to provide statutory obligation and rights to employees and employers in the unorganized sector of employment, i.e. shops and
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http://books.google.com.tw/books?id=6lBKowR6ReoC&pg=PA528&lpg=PA528&dq=Shops+and+Es
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establishments. It is applicable to all persons employed in an establishment with or without wages, except the members of the employer's family. It is a State legislation and each State has framed its own rules for the Act. The State Government can exempt, either permanently or for a specified period, any establishments from all or any provisions of this Act. The Act provides for compulsory registration of shop/ establishment within thirty days of commencement of work and all communications of closure of an establishment within 15 days from its closing. It also lays down the hours of work per day and week as well as the guidelines for spread-over, rest interval, opening and closing hours, closed days, national and religious holidays, overtime work, etc.
Advantages: Business dealings are done mostly on relationship basis and not very strict laws are to be abided.
Disadvantages: Corruption is wide spread and getting things are not that easy some times and bribery is common in government departments.
M&hl=en&sa=X&ei=GcepUaveIMWAkQXQ_oHIAQ&ved=0CDUQ6AEwAg#v=onepage&q=Shop s%20and%20Establishments%20Act%2C%201953&f=false
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