In order to perform the internal as well as external analysis of the fast food restaurant to be start up in Pakistan, an in-depth knowledge of the same shall be procured. Firstly, SWOT analysis i.e. strengths, weakness, opportunities & threats shall be done to perform the internal analysis. The SWOT analysis shall be done keeping in mind Pakistan’s fast food industry. Whereas, to perform the external analysis porter’s five forces model, PESTEL analysis (political, economic, social, technological and legal) and identification of the key players in Pakistan so as to see what position the fast food restaurant will have in the years to come.
Based upon the fast food industry analysis, McDonalds, Pizza Hut, Domino’s & KFC are the main players operating in Pakistan. These chains have a better edge over the various small fast food chains plying in Pakistan (Rawalpindi).
Internal analysis of Fast Food Company
• Real Estate: Location plays a vital role in capturing more customers. Location matters as it attracts more customers. For example, the best place to start up the fast food company is near the hostel or college or school or hospitals (Saloner, Shepard & Podolny, 2001).
• Strong management: It is the management which marks the success or failure of any food joint. With the help of strong management, the fast food restaurant will be able to reach its potential. Strong management has a strong impact on the functioning of the fast food company. Therefore, more weight shall be put on it.
• Cost advantage has an impact on the smooth functioning of the fast food industry; hence more weight shall be put on it.
• Continuous innovation & product development will help the fast food restaurant to have a competitive edge as compared to its competitors (Saloner, Shepard & Podolny, 2001).
• Professional training of the employees to ensure high quality for all the customers.
• Inefficiency work environment: An inefficient working environment means that, the services are being offered in an effective manner. Work efficiencies have a significant role in the smooth running of the restaurant.
• Lack of online presence results in lost opportunities for fast food restaurant.
• Obsolete technology can also lead to high levels of disasters in case of the fast food industry (Saloner, Shepard & Podolny, 2001).
• Weak Research & development (R&D) will have a long tern negative impact on the fast food restaurant.
• Lack of advertisements will lead to less marketing and hence there will less revenue
• Fast Food restaurant might attract negative press review for selling junk food to the children at reasonable prices.
• High set up cost
• High employee turnover rate
• The fast food restaurant can enter the organic food industry as people are becoming more health conscious (Sadler, 2003).
• Fast food restaurant shall expand its menu by adding more dishes rather than only serve alloo tikki burgers & noodles.
• The fast food restaurant shall sponsor certain events for the kids or adults.
• The fast food restaurants shall cater to various other added services such as internet services. This will act as an added advantage for the fast food restaurant.
• Once the fast food restaurant attains goo response from Pakistan, the next step shall be to expand its outlets and capture the untapped markets (Plunkett, 2013).
• High levels of innovation will help the fast food restaurant produce unique products thereby meet the needs of the customer.
• High health awareness might have a negative impact on the fast food restaurant.
• Negative media can also have a significant impact on the fast food restaurant.
• High levels of competition can also be one of the major threats for fast food restaurant.
• The sales & revenue generated by the company totally depends upon the economic status of the country. Hence, economic stability of the country plays a vital role (Sadler, 2003).
• Change in the government regulations can have a negative impact on the fast food restaurant.
• Threats from the various global competitors such as KFS, Pizza Hut, McDonalds, Dominos, etc.
• One of the major threats for fast food restaurant can be seen in regards to the change in taste of the consumers (Moody’s Investors Services, 2009). The taste of the consumers changes quickly. Therefore, the fast food restaurant shall be aware as to what food items shall be served.
(Source: Parkhe, Smith & Chandran, 1993)
The fives forces porter’s model illustrates how a particular industry performs. The five forces porter’s model helps to have an in depth view of the political social economic environmental and legal aspects of Pakistan’s fast food industry. According to the five force porter’ model, there are five main forces upon which, the entire industry revolves. Each of the factors mentioned above plays an essential role in the competitiveness of the industry.
Threat of new entrants: The threat of new entrants in Pakistan’s fast food industry is extremely high. It has been noticed that, the various foreign brands such as McDonalds, Pizza Hut, Dominos, and KFC have captured more than half population (LuÌˆtke Entrup, 2005). According to the survey, it has been seen that opening a restaurant in Pakistan is an inexpensive tasks these days. Therefore, the budget constraint makes it easy for anyone to come up with a new restaurant.
Bargaining power of buyers: The bargaining of buyers is opposite the bargaining power of the suppliers. The bargaining powers of the customers play an important role in setting the price of the commodity (Mcguire & Linde, 2006). It shall be seen that, when the bargaining power of the buyers is high, they have the capacity to fix the price of the same. It has been seen that, the people who come to fast food restaurant tends to demand high quality food with an overwhelming dining experience at a reasonable price attached to it. It shall be seen by the fast food chain owners that, the price attached to it shall be less or at par with the fast food chains. If the fast food chains raise their prices, the customers would switch to a big or a global brand restaurant. The fast food chain shall be able to maintain reasonable prices only then; they will be able to gain reasonable growth in the fast food market (Jeffs, 2008). In order to be in the market, fast food restaurant shall use various differentiated offer just like McDonalds – “happy meals” (catering to children as their target group), “Two for Tuesday” – Dominos (buy 1 get one), Drive way thru – McDonalds (provides buyers with the convenience to eat while they drive through their office r workplace).
Bargaining power of suppliers: The bargaining power of the suppliers is weak, but still it has a major impact on the functioning of the industry. It has been seen that, most of the restaurant get food from various different sources (Hosseinzadeh, 2014). For example, most restaurants offer meat. There are many options available with the organization as to what do they choose. Another example is the supply of soft drink. In all the major restaurants, soft drink is dominated by Coco Cola & Pepsi due to its well managed supply chain. Moreover, Pepsi & Coco Cola provides its users with refrigerators & dispensers to pour the drink. This helps the company to market about their product.
Competitive rivalry: Competition amongst the firms is high in Pakistan’s fast food industry. It is seen that, companies can try to attain competitive advantage from its rivals by either changing its prices or by improving the product or by using a different channel of distribution or lastly, by exploiting the relations with the suppliers.
Threat of substitutes: The threat of substitutes in Pakistan food industry is moderate. Substitutes are easily available. It is seen that, food can be purchased from anywhere ranging from a thellewala to a branded food chain or from a retail food store (Grunert & Wills, 2007). However, the convenience attached with the same is the value adding component along with the service which reduces the threat of substitutes. People can cook at home cheaply, but it lacks convenience which is the need of the hour these days. One of the main source of threat is the Pakistani cuisine. The prices charged by the ready to cook meals are somewhat same compared to the price charged by the fast food restaurant (Key Note, 2009). There are many options available in front of the customers and they tend to pick as per their choice & pocket.
Political Analysis: The political stability of any country plays a very important role in the smooth functioning of the food industry. Some of the factors such as type of government, government policies, trade policies & internal business conditions play a vital role in development of the food industry. Lastly, the Restaurant Act 1976 will be applicable on the fast food restaurant. The political stability of Pakistan makes it easy for the food joint owners to come up with their ventures.
It has been seen that, the economic factors are closely related to the performance of the Pakistan’s fast food industry. The performance of the Pakistan’s fast food industry is positively correlated to the environment in which it is being operated (Choe & Min, 2007). It shall be taken into consideration that, while setting up the fast food restaurant in Pakistan choice of location will play an important role in capturing the target audience. The location for fast food restaurant shall be set up at a place which is dominated by the youth. For example, the apt place for setting up the fast food restaurant will be nearby the hostels or colleges or schools (Garber & Rustig, 2011). The fast food restaurant shall provide various deals or offers so that a better response is picked up from the initial stage itself.
The socio-cultural analysis also plays a vital role in improving the overall efficiency of the fast food industry. The efficiency of the fast food industry is improved with increased civilization people as some of them prefer home deliveries & some prefer to enjoy their life by going out & have some snack shack. When catering to the population of Pakistan, it is taken more as an amusement activity (Choe & Min, 2007). While keeping in mind this factor, some of the other factors which shall be catered to be increasing health awareness, change in the eating habits of the population, increasing awareness towards health living & media attention.
In today’s dynamic and ever changing environment, technology plays a vital role in the overall efficiency of the fast food industry. Use of technology has satisfactory & satisfying results on the growth of the market. The use of internet or technology helps in attracting customers as well as grabbing their attention (Chaffey, 2009). With the help of various modern technologies, the fast food restaurant in Pakistan will be able to market about it & publicize amongst its target audience. In the initial stages of development, fast food restaurant shall give various offers and packages to its customers so as to increase its sales volume.
While opening a fast food chain in Pakistan, it shall be noticed that restaurants should comply with the specific rules & regulations. Some of the rules and regulations which shall be followed by the restaurant owners are opening hours, taxation reforms, employment regulations, etc. In most of the cases, restaurant owners are required to match with the food standards such as Food & Drug Administration (FDA). Moreover, authorities have taken various steps to avoid obesity amongst children (as they are the main target audience).
Fast Food industry in Pakistan has been referred to as one of the highly competitive and dynamic industries. Therefore, to have a competitive edge in depth market research should be done by fast food restaurant (Byars, Rue & Zahra, 1996). Fast food restaurant in Pakistan should know its target audience, what they want & develop the marketing strategies according their taste & preferences. Some of the marketing strategies which shall be adopted by fast food restaurant have been discussed as follows:
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