PESTEL ANALYSIS OF RESTAURANT INDUSTRY

Submitted to: Prof.Veni Nair

Submitted by: Sakshi Melwani

PESTEL ANALYSIS
INDUSTRY TYPE : RESTAURANT ( CAF COFFEE DAY)
The competition in the fast food market is extremely high and will remain high considering the fast life, time conveniences, cost of living, changing food habits, etc.

A PEST analysis is a business tool that can help determine the macroeconomic factors that will impact a business. Specifically a PEST analysis measures the political, economic, social and technological factors that impact a business. A PEST analysis of a restaurant can be useful for determining if the environment is appropriate for such a business.
1. Political Factors

Political factors deal with the degree to which the government influences and controls businesses. For a restaurant, the most important factors will be health regulations relating to food preparation. A restaurant will be affected by factors that affect other businesses as well, such as tax rates and labor laws. 2.Economic Factors Economic factors are extremely important to a restaurant. This is because restaurants are a luxury, not a necessity; people must have the disposable income to spend at a restaurant. Economic growth is, therefore, extremely important for restaurants. A restaurant will also be affected by the economic factors that affect most businesses such as the cost of capital and inflation.
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Food Inflation: Over the past decade the world has witnessed a drastic rise in food prices. According to the World Bank, over the past three years alone, global food prices have increased over 80%[.These dramatic increases can be attributed to the convergence of factors that has created the perfect storm for food prices.

3.Social Factors
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Now-a-days consumers are not brand loyal as they were previously, now they can easily switch to another product. Consumer choice for beverages and soft drinks is affected by two major characteristics such as ethnicity and age. Due to health reason, age factor plays very important role when choosing a soft drink or beverage. Some studies have been conducted and found that soft drinks and cola products in general may result health problems specially, kidney stones. In compare to adults, younger consumers specially teens and twenties

have fewer interest spans for products and have a preference of products that seems different and to be fun. Now players in beverages industry changes to non cola products for instance bottled water, sports drinks, tea etc. 4.Technological Factors: In general, the restaurant industry is a low-technology industry. If there are strong technological demands in a market, this may make it difficult to enter the market. In the restaurant industry, specialized equipment is the largest technological factor. For example, if all the pizzerias in a market use specialized ovens to cook their pizzas quickly, then it will likely be necessary to acquire such an oven to compete with these restaurants. Technological advancement in manufacturing and new quality improvement concepts such as JIT, Six Sigma, MRP II etc are the significant providers to improve efficiency of bottling operations and quality products. Advancement in technology also helps to introduce new product lines for example new flavors, sugar-free or diet sweeteners, caffeine free goods facilitates Pepsi and Coke to launch brands that meet changing customer style, preferences and taste. In beverage industry distribution process is a big challenge because process can be able to place the right products at right time. In soft drink industry technology can provide a competitive advantage, if it is applied in area such as logistic products into stores less extravagantly and costs beyond the distribution pipeline while increasing sales information availability.
5. Legal Factors

Food and Drug Administration (FDA) Regulation :

All the food products manufacturers and producers are under the control of FDA. For instance,the food and drug administration certifies and tests new ingredients such as high concentration sweeteners prior to they are permitted to be used in beverages and soft drink production.

Human Rights Issue:

Multinational corporations are facing different human rights issues, rules, regulations, laws and policies of different governments in operating countries.

6. Enviromental Factors

Waste management and public concerns Increasing environmental consciousness is most important to growing legislation. The firms operation is exaggerated by federal legislative applications that concentrate on the four objectives. A) Decrease the quantity of packaging material inflowing the nations solid waste management system B) Diminish the consumption of natural scarce resources C) Increase the reuse and recycling packaging materials D)To shelter the natural environment and human health from undesirable effects related with the dumping of packaging materials. For instance, Connecticut has now passed a law that controls packaging to enlarge its recyclability.