Rivalry is intensified due to the vast number of players and the ease of switching between them; however the whim of one individual does not have a significant impact on revenues. The greatest threat to cafes and restaurants is the likelihood of buyers essentially achieving 'backwards integration' by purchasing the raw materials cheaply and cooking the meal themselves in their own kitchen.
The degree of rivalry within the sector is moderate. Customers can switch from one player to another with relatively low switching costs (effectively zero) and players themselves can quite easily increase capacity. Consequently, players
mitigate rivalry by competing via brand awareness,
food quality, value pricing and ambiance. Upstream in the sector, the size and
independence of suppliers exerts marginal pressure on players as they feel no
urgency to keep raw material prices low. New entrants are attracted by future
sector growth and low barriers to entry.
Thank you all for an interactive presentation that took place several days ago.
ReplyDeleteI appreciated your skills to make a segmentation part more active and entertaining but several questions went to my mind and i have not received a clear answer. Hence, I would like to ask you once again to have a more detailed feedback:
first of all, it was not clear for me which companies or groups of companies are considered as competitors. according to you later posts an average visitor is going to spend aproximately 2000 rubles per person. so, we are not talking about fast food chains anymore. moreover, i am not sure that we can talk about so-called "premium fast food" when the price is higher due to well-known brand or other services.
secondly, i would like to specify my question regarding the market entry. I understood that Askhat is a nice example of an investor but talking seriously, what is new in current proposal for investors? How have you changed your entry mode since 2009? What were the main reasons of that failure?
Thank you in advance for your answers and enjoy the weekend.
Anna
Thank you for your questions! The points you've mentioned are really crucial.
ReplyDelete1. our main competitors are: TGI Fridays and Hard Rock Cafe (already present in Moscow). McDonalds and alike companies are the possible substitues, not the direct competitors.
According to prices, we have not decided yet what our pricing strategy is going to be. We have a few considerations, but the final decision is not yet present.
But you are right - we are definitely not a fast food chain (we just can provide a fast service if our client is in a hurry). In USA the segment is called "casual dining segment".
2. These are the requirments for franchising, that are relevant now:
•Ability to develop 3-5 restaurants within your territory.
•A restaurant location with at least 100,000-150,000 people within a five mile radius.
•$2 million in liquid assets.
•At least 5 years as a multi-unit restaurant owner / operator.
Initial Investment:
•Franchise fee of US$75,000 U.S. per location.
•Option fee of US$15,000 U.S. for each additional restaurant option within a territory.
•The initial investment is estimated to be US$800,000 to US$1,500,000 for each restaurant.
The company just failed to fing an investor. That might me due to the crisis and unstable political situation. Restaurant businessmen in Russia were more concerned about how to run their own existing business rather than start something new.
Nowadays the economical situation has changed to the best. Moreover, the new alchohol regulations benefit Hooters in Russia (large beer companies, for example, are interested in sidtibuting their product via bars and restaurants, and the ban on strong alcohol drinks retailing during the night might also have a positive effect on investor searh in Russia).
If you have any other questions, please, dont hesitate to ask! Your questions are of a big help for us.