Introduction
In today's competitive world companies need to continuously manage their operations and strategies so that they are able to satisfy customers and gain a competitive advantage. Partnership management is important so that opportunities in new markets can be captured by sharing their intellectual properties and infrastructure (Ayers and Odegaard, 2017). For this report Leon restaurants are taken which is a fast food restaurants chain based in London, UK. Their first outlet was established in 2004 on Carnaby Street. Leon was founded by John Vincent and Henry Dimbleby with chef Allegra McEvedy. The vision of the restaurant is to provide fast food that is healthy and tasty. The purpose of this report is to study the impact of environment on the restaurant industry along with the strategies that are followed by Leon restaurants. This report will cover in detail the PESTLE and Porter's five forces model so that business operations and strategies can be well managed.
Critical evaluation of environment for Leon restaurants
PEST analysis
For understanding the impact of external environmental factors on business operations and functions PEST analysis plays an important role in framing appropriate strategies and policies so it is easy to deal with the negative factors of the business environment.
Political factors-
Political factors for Restaurant industry are rigid and non flexible because of health consciousness of people. Leon’s Restaurant have to consider government norms because there are different legal and authentic policies such as quality measurement which has to be followed. If political policies such as pest control, quality measures, etc. are not considered by managers of Leon’s Restaurant, then there are possibilities that excessive government interference is possible which affects brand image of Leon’s Restaurant (Bustinza and et. al., 2019).
Economic factor-
As economy of UK is stable, so economic factors does not hamper the business growth and development of restaurant industry. In case of inflation and change in tax rate, price of product served by Leon’s Restaurant gets affected accordingly.. This might affect satisfaction of consumers and profit margin for Restaurant if the changes are not favourable for this sector.
Social factor-
As there is difference in demand of consumers and Restaurant industry cannot satisfy all the requirements, so health and social care factor also negatively affects growth rate of organisations dealing in restaurant industry . As people focus on herbal and organic products, which is costly approach for Leon’s Restaurant, hence social factors does not assist in easy conducting of operations. (Clott and Hartman, 2016).
Technological factor-
Technological development gives positive impact on organisational growth of Restaurant industry through which is updated technology, and machinery for production. Managers of Leon’s Restaurant use new and latest technique for communicating with people. There is use of latest and technical machines through which consumer' s waiting time gets reduced, so satisfactory level among them gets improved.
Emerging mega trends and identify those that apply to the restaurant trade
In current market, there is difference in demand of consumers because of analysing and evaluating trends and difference in demographical basis. People want organic and herbal products, this affects the restaurant sector majorly because managers of Leon’s Restaurant have to evaluate different resources for availing raw material. Role of political parties is improved and active, so they do the quality check of material used by management of Leon’s Restaurant (Gibson and Parkman, 2018).
Strength of Porter’s 5 forces
Strength of Porter's Five force model is that it provides information about competition and bargaining power of suppliers and consumers through which management of restaurant industry can plan their best way to operate.
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Competitive rivalry or competition |
Strong force because there are many organisations dealing in similar sector and it affects operations of each other because consumer do close comparisons. |
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Bargaining power of buyers or customers |
High because they have many other options through which they can avail better services. Hence this affects operations of Leon’s Restaurant while they are operating in restaurant industry. |
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Bargaining power of suppliers |
There are many suppliers available in restaurant industry, hence suppliers have weak bargaining power. |
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Threat of substitutes or substitution |
Threat of substitute is high because many substitutes which gets replaced with fast food are there such as herbal food products, packed foods, etc. |
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Threat of new entrants or new entry |
It has moderate risk of new entrance because there are many legal policies which has to be fulfilled by people. |
Identify what it takes to succeed in the industry
Leon’s Restaurant is successful because they have proper understanding about rules and regulations which has to be followed. They have proper contracts with suppliers which are proper time bound and legally registered. Proper research and development department which communicates about new and innovative approaches which can be implemented.
Identify how the industry’s environment is likely to change in the future given the influence of the megatrends you identified
Customers wants new and innovative products or services these days, if Leon’s Restaurant serves then it attracts consumers. Hence this factor has to be considered by managers of Leon’s Restaurant to maintain sustainability (Moxen and Strachan, 2017). These days, there are many changes taking place in external market such as political policies, technological changes, etc. which has to be adopted by Leon’s Restaurant through which they can sustain in industry for longer time.
Critical evaluation of the strategy of Leon’s Restaurant
Identify the resources of the organisation
From the study, it is evaluated that there are some resources with the help of which managers of Leon's Restaurant are able to get growth in industry. As they get back to back growth in sales of 10.1%, so they have strong financial background which they can ascertain in their growth and development (Leon restaurants reports its financial results for 2017, 2019). Managers of Leon's restaurant is using ingredients for making their recipe from local resource. As good quality ingredients will provide organisation with competitive advantage because of high food quality offered to consumers in comparison to competitors. With food quality, there is variety of food items available for consumers. They have different menu for children and as per change in season, so this is strategy with which they can attract consumers and get competitive advantage over other associations (LEON RESTAURANTS, 2019).
Identify the capabilities of the organisation
Leon's restaurant is non-substitutable because there is no such other organisation which can legally have same brand. Along with this, resulting brand-based competitive edge is unique for Leon's restaurant as well as its value chain. Moreover, portfolio of popular trademarks offers sustainable competitive advantages to company because of its non-substitutable feature. Leon's Restaurant utilise trademark for effectual promotion of their products as well as optimise its value chain for delivering their offerings saturated food service markets worldwide. Thus, such capabilities provide assistance to Leon's restaurant in gaining competitive advantages as well as long term sustainability (Rezaei, Ortt and Trott, 2015).
Evaluate the resources and capabilities (VRIN)
This framework was introduced in 1991 by Jay Barney who was American Professor in strategic management. Here, VRIN stands value, rareness, imitability and non-substituable. Explanation of these in relation of Leon's Restaurant are as follows :-
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Leon restaurant organizational resources & capabilities |
V |
R |
I |
N |
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Globally recognized iconic Leon's restaurant brand |
✔ |
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|
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Local resources of ingredients |
✔ |
✔ |
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Expansive Supply chain |
✔ |
✔ |
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Moderate uniqueness of food products based on Leon's restaurant specific recipes |
✔ |
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|
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Leon's restaurant sustained competitive advantages/core competencies: |
V |
R |
I |
N |
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Strong Financial background |
✔ |
✔ |
✔ |
✔ |
|||||
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Variety of menu |
✔ |
✔ |
✔ |
✔ |
|||||
All these resources provide assistance to company is enhancing their capabilities as they are using trademark which help them in protecting their unique product and services. Thus, in simple term it can be said that these two are interrelated with each other as there is no resources it will difficult for company to get capable and fulfil customers requirement within effective manner. In addition to this, they have some other resources also such as high brand value within they area respective restaurant is serving along with this respective restaurant is serving in several areas which help in their maximum utilisation and result in gaining sustainability competitive advantages within food industry (Ross, 2017).
Compare sustainable resources and capabilities with the industry success factors
Mega trends within Food industry is that customers want easy way of offering food as well as with some unique recipes. This become one of the major source for long term sustainability of organization. In relation of Leon's restaurant they have these resources which help them in gaining long term sustainability. Along with this, their recipes give them capabilities of using trade mark for protecting these in effective manner. Thus, mega trends, sustainable resources as well as capabilities of an organization are interrelated with each other. In addition to this, working of these three together result in gaining competitive advantages over several other organizations (Thaler Priest and Fuchs, 2016).
Critical evaluation of the operation of Leon’s Restaurant.
Operation of Leon Restaurant
In restaurant industry, there are many operations which has to be conducted through which satisfactory services can be provided to consumers. There are several type of operations which Leon's restaurant conduct on daily basis for satisfying their customers in effective manner. Explanation of these are as follows :-
- Customer service– It is one of the major operation which Leon's restaurant conduct on daily basis. Because effective services are the only way through which company will be able to gain competitive advantages as well as loyal customers.
- Preparation of food– In kitchen of restaurant food is prepare on daily basis for serving customers and it cook on the basis of guest demand, taste and preferences. Restaurant in based on serving food to their customers thus, preparation of food is primary operation of Leon's restaurant.
With the help of above mentioned operations, it is clear that these are two main operations of organisation which assist in understanding and evaluating changes in different manner. For getting growth in industry, it is essential that operations of Leon's restaurant has to be performed in appropriate and relevant manner.
Refer briefly to the vision of Leon Restaurant
Leon restaurant was started because they want to prove that it is possible to serve food which is good in both taste and quality. Along with this, they want to make it easy for people to eat well on the go and they want to do this in major cities at global level (Thompson, Strickland and Gamble, 2015). Apart from this, menu of Leon's restaurant is inspired through flavors, variety and natural healthiness of Mediterranean cooking.
Critically assess the extent to which the operation supports
the delivery of the vision
Operations of Leon’s Restaurant is to prepare food and consumer service and then vision is to provide best quality products to consumers . Management of Leon’s Restaurant is performing operations through which they can ascertain external market and perform operations in lieu to serve timely services. So operations are performed for achieving vision as no comparison with the quality and of raw material is done and it is ensured by the production department that they produce such food which is fit for health (Uhl and Gollenia, 2016).
Evaluate the extent to which the operation is sustainable
Operations of Leon’s Restaurant are suitable and best for consumers because they are operating with best and provide quality services to consumers with understanding proper quality check. Most of the business operations are valid and suitable as per external market policies, so growth prospects for Leon’s Restaurant is more (Warner and Sullivan, 2017). when organisational operations are performed in order to improve quality of product with variety of food items, then growth prospects and sustainability can be achieved. As there many competitors in restaurant industry for Leon’s Restaurant, so with evaluating their strategies and improvise it while operating, then operations are sustainable and relevant in context of external market.
Conclusion
From the above discussion, it is clear that there is requirement of proper understanding about external market through which operations of organisation get an specified pathway for achieving success. In restaurant industry, there is more government interference regarding maintaining quality of food, use of standardise product, etc. Porter five force analysis shows that there is high risk from competitors and bargaining power of buyers, so it is important to consider these two factors. With the help of VRIN model, resources and capabilities of association are organisation are evaluated and strategies are framed to proper utilise it. Best resources available with restaurant organisation is variety of menu and strong financial background which assist in achieving competitive advantage. Operations of organisation are as per vision, so this assist in achieving their targets and goals.
References
- Ayers, J. B. and Odegaard, M. A., 2017. Retail supply chain management. CRC Press.
- Bustinza, O. F. and et. al., 2019. Product–service innovation and performance: the role of collaborative partnerships and R&D intensity. R&D Management. 49(1). pp.33-45.
- Clott, C. and Hartman, B. C., 2016. Supply chain integration, landside operations and port accessibility in metropolitan Chicago. Journal of Transport Geography. 51. pp.130-139.
- Gibson, P. and Parkman, R., 2018. Cruise operations management: Hospitality perspectives. Routledge.
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