Restaurant Group Plc Company Analysis - Example

Company Analysis Report- Restaurant Group Plc Name: Course: Professor: Date: Table of Contents Executive summary 4 Introduction 4 Analysis of the Company’s position using Porters Five Forces 6 Bargaining Power of the Suppliers 6 Bargaining Power of Buyers 6 Threats of New Entrants 7 Threats of Substitutes 7 Organization’s External Environment 7 PESTLE Analysis 7 Political factors 7 Economic factors 8 Socio-cultural factors 8 Technological factors 9 Environmental Factors 9 Legal Factors 9 Organization’s Internal Environment 10 SWOT Analysis 10 Strengths 10 Weakness 11 Opportunities 11 Threats 12 Company's Strategic Direction 12 Quality of service 13 Quality of product 13 Internal management 13 New product 13 Facility design and equipment 14 Restaurant innovative design for future use 14 Type of restaurant 15 The market 15 Concept development 15 Style of service 15 Speed of service 16 Per customer check average 16 General ambience 16 Management philosophy 16 Budget 16 Restaurant Group Plc annual report 17 Respective responsibilities of directors and auditor 17 Scope of the audit of the financial statements 17 Matters that should be reported by exception 17 Relate party transactions 18 Conclusion 18 Recommendations 18 References 20 Executive summary The Restaurant Group Plc operates four hundred and twenty two restaurants and pub restaurants. Its major trading brands are Benny’s & Frankie, Garfunkel’s & Chiquito and it also operates a pub restaurant business as well as a concessions business that does business on over sixty locations, mainly in United Kingdom airports. This paper is a report on the analysis of the structural operations of Restaurant Group Plc. It begins with a brief snapshot of the company’s background, followed by strategic analysis of macro and micro elements that affect the operations of the company. PESTLE and Porters Five forces business models are used to analyze the external factors while SWOT analysis is used to analyze the strengths and weaknesses facing the company from an internal point of view. Keywords; Macro environment, micro environment Introduction A restaurant is an establishment where food is prepared and served to the customers normally referring to any sort of dine-in. Restaurant Group Plc is a multinational company that operates hotels and pubs across Europe. It offers great variety of dishes and drinks. Normally, restaurants range from simple dining places where food and drinks is catered to nearby people or tourists for reasonable prices. The food is served together with wine depending with the culture of the people and tradition. Restaurants are normally categorized based on the range of menu, the mode of preparation of the food and the pricing (Enz, 2010). The purchasing power of the consumers has always been influenced by the change in economy and income. The consumer behavior and change in lifestyle due to emerging diseases has also reflected in the market preferences affecting restaurants worldwide. Restaurant Group Plc has become customer centric in the past few years due to competition (Pederson, 2007). This has resulted in change in historic serving method whereby the waiter serves food in the table evolving into fast food and take away restaurants. All the branches of the Restaurant Group Plc have one thing in common; they all deliver quality services to the customers very fast compared to typical restaurants. Restaurant Group Plc is one of the biggest chains of restaurants in the world serving nearly forty million customers daily. Frankie and Benny’s combine the Italian and American style with food and drink that always offers great value of money. The restaurant walls are filled with family snapshots and memory showing life on the lower east side of the Big Apple becoming one of the best known casual dining brands in the united kingdom, and does trade in leisure and retail locations, standalone sites and six airports. The Chiquito menu offers a big range of authentic Mexican and Tex-Mex dishes in an enjoyable environment, with fantastic music. The decorations draws inspirations from both Latin and Mexican architectural designs. Analysis of the Company’s position using Porters Five Forces Bargaining Power of the Suppliers The bargaining power of the suppliers reduces with the increase in the number of suppliers of the food and drinks in the hotel and catering industry. For Restaurant Group Plc its bargaining power will decline if its marketing strategy is not growing at the same level as that of the competitors. The company needs to invest more in marketing and promotional activities I order to take advantage over its competitors. Bargaining Power of Buyers It increases with number of players in the industry. Restaurant Group Plc is advantages at this given its dominance and recognition in the international market especially Europe. Given the fact that it operates more than sixty restaurants and pubs in Europe puts it at a better position to attract more buyers. Threats of New Entrants The government is promoting and facilitating the sector on the basis of priorities in that there is high threat of new entrants as the industry is growing rapidly. There is a high capital requirement to set up a hotel chain that spreads evenly to all geographical target markets. Maintaining a steady supply of quality food to the hotel customers has also proved to be a difficult task. Threats of Substitutes The entry of substitute products is very high e.g. canned pineapple and beef. Customers want food that is ready for consumption in order to save time. Restaurant Group Plc should minimize room for entry of such food by optimizing customer satisfaction while at the same time creating comfort for the customers. Prioritizing customer comfort and maintenance of quality and product differentiation reduces the switching cost for customers. Customers are often attracted to low priced food with high quality standards. In most cases, substitutes are having low prices and have good quality to minimize the company should consider adopting reasonable pricing policies. Organization’s External Environment PESTLE Analysis Different factors influences organizations differently, but commonly, organizations are influenced by political, economic, social, technological, environmental and legal factors. The above factors affect the operations of Restaurant Group Plc in the following ways: Political factors Like any other organization that operates within a state, Restaurant Group Plc is heavily influenced by the state policies enforced by the government of the day. As a matter of fact, there are some groups in Europe and United States where this restaurant operates, the health implications of eating fast food has been a major concern to the government. Using research done by experts the government agencies argue that chronic diseases like cancer and obesity are caused by consumption of fast food that are produced and sold by Restaurant Group Plc and other organizations (Pradhan, 2007). There are also other trade restrictions such as tax law, employment law that are politically instigated and are affecting the activities of the Restaurant Group Plc For instance, the tax rate has affected the growth rate of the Restaurant Group Plc The employment restrictions have also forced the organization to employ more staff because workers are given the hours they are supposed to operate by the state law. Some amendments like this have increased the overall cost involved in running the restaurants. Some laws even go very deep to extent of even constraining the content of the food. Economic factors The change in exchange rates as well as change in inflation has over time affected some organizations like Restaurant Group Plc which have worldwide presence. Hence, the restaurant chains could be forced to adapt to the issues and the effects of the economic environment (Mcgahan, 2014). The raw materials from farmers are also affected by the economic factors in that they depend on supply and demand in the market. Inflation is also the other economic factors that influence the organization. The wage rate and cost of living also impact on the organization in that the type of food consumed by the consumers depends with their income. Socio-cultural factors The international strategies of Restaurant Group ply appear to act on various fields to ensure lucrative returns for the company. The Restaurant Group Plc improves on developing a positive mind set from their major consumers. Restaurant Group Plc has understood its customers grounded on their physiognomies. Research indicates that most the customers of the Restaurant Group Plc are individuals below the age of 35 years. Culture determines the kind of food and the way to serve the food within the community (Pradhan & Pradhan, 2009). People differ and the organization has to understand different cultures in order to provide the services accepted by the customers. Technological factors Television advertisement is the company’s key tool for advertising their food products. The management of the value chain and the elements of inventory system of the organization enhance easy payments (Afuah, 2011). The incorporation of technology in the operation of Restaurant Group Plc tends to add value to their products. The supply chain of this organization as well as its improvement of the inventory system has enabled the organization to operate in an international context. Environmental Factors The social responsibility of Restaurant Group Plc on a region is influenced by the operations of the organization in that specific region. As a matter of fact, this involves the accusations of environmental damage. Some of the reasons as to why this organization is accused of such claims are the use of non-biodegradable substances for the plastics and Styrofoam coffers that are offered by the meals. Legal Factors The organization has to take into considerations some legal factors such as tax obligations, quality requirements and employment standards. These are some of the essential factors among others that need to be considered for the smooth running of the organization. The impacts of such external factors on the operations of Restaurant Group Plc are sometimes unpredictable. For example, political instability and economic inflation may find the company unprepared to deal with them. There is need for Restaurant Group Plc management to lay political, economic and social strategies to help reduce the adversity of such factors in the macro environment. Restaurant Group Plc market leadership can be associated to its major growth in the recent years. Over time, the growth of this organization has remained steady despite global economic crisis. This group of restaurants improvement in the buying pattern over the last five years is as a result of the overall increase in the income and the standard of living of the middle class. The consuming class has increased in the last ten years globally in that people have started to find ways to increase their income. This steady increase is what has made the organization to appear very positive in future. Organization’s Internal Environment SWOT Analysis Strengths Innovation and diversification in food production range. Extensive geographical and demographical presence in that it has 422 restaurants. Management and franchise networks support and adaptability to the continuers changing competitive market Its attitude of uncertainty acceptance and its nature of not being complacent Group restaurant Plc is one of the oldest restaurants that offer quality food and drinks globally hence, is one of the most recognized brands in the world. This group of restaurants has enough capital and hence this has enabled them to maintain the quality of food and drinks for a very long period of time. This has enabled them to maintain their customers while winning others from other restaurants like MacDonald’s in that it has no debts (Pradhan, 2007). Restaurant Group Plc is capable of purchasing or opening other new restaurants increasing its dividends yield. Restaurant Group Plc has been regarded as one of the most innovative restaurants in food industry in that it has been adopting new types of preparing food and serving customers very fast compared to other food industries. Weakness The customer behavior and expectation differs massively among different cultures and boundaries. As the organization expands its restaurants to other countries, they meet customers with different expectations and cultures. Some customers like food and wine being served together while others do not like (Pederson, 2007). Some of the customers also like cool music while eating and drinking while others do not and hence some old food industries like McDonalds have taken advantage of this by providing spaces for different customers depending on their preferences thus providing stiff competitions to Restaurant Group Plc Opportunities There is increase in demand for the service oriented sector with increase in population of the consuming class. Unlike before, the number of people consuming food in restaurants has increased greatly in the last ten years. This has enabled the restaurants to sell more food thus making more profit (Mcgahan, 2014). The more profit made leads to expansion of the restaurants resulting in improvement of the services due to development of more space where customers can have leisure. The other opportunity is the increase in the number of applications for franchising. This is a great asset within the organization in that it is the goodwill making the expansion of the organization very possible. Restaurant Group Plc commitment to provide health conscious food has attracted customers across the world. Most of the diseases such as cancer, diabetes and obesity are caused by poor diet (Pederson, 2007). Customers’ realization that Restaurant Group Plc is committed to provide good diet food has enabled them to choose these restaurants to get good food. The innovation in the product range has also kept on accumulating the customer base (Hill & Jones, 2012). Threats There are some legal threats that include law suits against the restaurant due to their advertising, meals, obesity caused by their food, fries, and employment complaints among other things like improper termination of contracts. There are also campaigns against Restaurant Group Plc by some big companies like McDonalds posing a great risk to its marketing strategy. Restaurant Group Plc has problems with fluctuations in operating and net profits which in turn has affected the investor relations (Pradhan, 2007). New investors have failed to invest in this organization because the net and the operating profits have in the past eight years not predictable. The parent groups have strongly opposed this company for attracting the kids by providing them with gifts like toys, hence, soliciting them to unhealthy fast food culture at an earlier age. Most of the governments have also supported these parent groups protecting the organization from advertising to children. Should food be contaminated, it will result in an epidemic in that the raw food is usually handled in mass and distributed to every part of the country where there are restaurants of this organization by centralized distribution center. There is stiff competition from other big companies like McDonalds and Burger king that sell similar products at a lesser price than Restaurant Group Plc Company's Strategic Direction The competition within food industry is very rigorous and hence Restaurant Group Plc constantly deals with this competition. Research done within this organization indicates that there is always the threat of new competitor (Pradhan & Pradhan, 2009). The past internal strength that Restaurant Group Plc had over its competitors was its early entry into the international market. Having old customers enabled it to analyze the needs of the consumers and capitalized on its strength. Restaurant Group Plc strives to survive the competition by positioning itself in ideal position through the strict adherence to the following factors: Quality of service Customer satisfaction was the main mission of the Restaurant Group Plc It continuously looked at improving their product range. The orders of the customers are taken in the drive-thru with the hand held PDAs which speeds the services and at the same time improves the quality of services. Due to this, the idle time of the customer was minimized (Pederson, 2007). Quality of product The quality of product is the other important area of the customer satisfaction and the customer service. As a matter of fact due to past research, the success of any food industry depends greatly with the quality of food. The progress of Restaurant Group Plc in this industry demonstrates its quality. Internal management Internal management within an organization is very important and is mainly controlled by IT systems. The information technology development is massive, in every existing field. Reports, setup, base and forecast are very essential within the food industry development. New product The present scenario of the organization is determined by the innovations of the managers within the organization. The available acquisitions within an industry are seen through different perspectives through innovations. In addition to monetary gains, innovation also enables the organization to expand its scope for the organization to deal with (Afuah, 2011). Entrance of new market is also made possible by the innovation in a faster and deep manner. Innovation is what accelerates the organization to move to the right direction within the required time frame. There are numerous factors that impact the position of restaurant in an environment though this factors experience change with time. Predicting the outcome or the progress of an industry accurately is impossible. However, most restaurants adapt to the changing scenario instead of preempting on the change (Enz, 2010). An organization that develops and builds the culture of innovation and evolving with change is known through research and experience to grow. Failing to innovate within an organization stops the company from changing with change in culture and hence, is on the road to desuetude. The Asian and Indian economy is providing fierce competition to Restaurant Group Plc Ways of overcoming these threats must be discussed by the management team. The pressure from the governments on environmental concerns over waste management have forced Restaurant Group Plc to switch to biodegradable packing and also reducing the company’s greenhouse gas emissions. The future culture will put into considerations the adoption of more recyclable materials used din packing and for serving (Pradhan & Pradhan, 2009). The management of the leftover food should also be properly managed to ensure air is not polluted as well as disposal of plastic leads. Facility design and equipment Restaurant innovative design for future use The design of the restaurant has a critical role in attraction and retaining of customers. On the same note, the design must complement food preparation and service. The needs of the clients, workers and owners of the restaurant must be considered during design of the restaurants font and back of the house operations. The dining experience is very important on designing the restaurant putting into considerations the menu, market and the concept (Pradhan, 2007). The following factors should be considered by Restaurant Group Plc while developing new restaurants. Type of restaurant Restaurant Group Plc serves both food and wine though it aids both take away and eat in customers. In future, this organization should consider expanding takeaway food in that it operates in the airports where individuals carry food that they can eat on their flights. The market A proper market analysis observes at the main four components: competition, potential customers both old and new, location and economic environment. All these factors were discussed in porters’ five forces above. Concept development The population is rising rapidly. The level of food consumption increases with increase in population and hence Restaurant Group Plc should expand their market to reach many people in future (Plunkett, 2008). Meeting the demand depends with the space created by the organization, quick service as well as value added service menu. Style of service The new design does not affect the style of service hence, carried over from the current style. Speed of service The speed of service must be improved in that the expectations of the customers in future will be very high. The most current equipment’s should be adopted by Restaurant Group Plc to ensure that the speed of service is excellent (Mcgahan, 2014). Per customer check average Per customer check average is determined by the nature of the business and it should not be more than $ 60 meaning that the restaurant will have to make huge customer return around to become efficacious. This is based on the inflation rate in the next ten years. General ambience The type of the environment that future managers are throwing into this design set up is eat-in and go form. This will aim at making the services faster Management philosophy The design of the future management is designed to be a central command center instead of having a manager in each restaurant. Doing this will save the cost as well as having a technical command center that is unified with unique target (Plunkett, 2008). All the shop flow activities should be seen in the central computer in the central position where there is a manager. For efficiency, the computer should constantly monitor the sales, stocks and cooking time with the required amendments done by the robots through the computer command. Budget The design would be implemented as a pilot project with enough budgets to set up a new design restaurants based on future demands. Restaurant Group Plc annual report Respective responsibilities of directors and auditor The directors are responsible for the development of the parent company annual financial statements and they should be satisfied that they give a well-documented fair view. All the activities should be carried according to the law and international standards on auditing and express the opinion on the parent company financial statements (Plunkett, 2008). The law stipulates that the standards demand the directors to comply with the auditing practices boards ethical standards for auditors. Scope of the audit of the financial statements The purpose of the audit is to provide evidence that the amount of the disclosed profits in the financial statements is accurate sufficient to give evidence that the statements are free from misstatements caused by fraud or error. This included giving evidence that the parent company have correct policies as stipulated by the law and have been adequately disclosed. The overall auditing should be reasonable and accepted by all the directors in the company (Mcgahan, 2014). The implications for the report should identify material inconsistencies with the audited financial statements. Matters that should be reported by exception The adequate accounting records should be reported if they have not been kept by the parent company or the returns for the audit have not been received by all the branches. If the financial statement of the mother company and directors remuneration have not been audited and are not in agreement with the accounting records then it should be reported (Enz, 2010). If the disclosure of the directors as require by law of the company are not made in time, then this must be reported for directors to order for an audit. If the information required by the directors from the auditors have not been received then must also be reported. Relate party transactions Living ventures restaurants group limited is one of the related party to the Restaurant Group Plc through the groups thirty eight percent holding. This company has a mandate to borrow lone with the support of Restaurant Group Plc provided it is from a subsidiary of living ventures restaurant limited which attracts interests at an accepted rate (John, 2013). The outstanding balance should not be more than 30 % at the closure of the financial year even if the company is a related party. Conclusion The success of an organization depends on the macro and micro factors that affect its operations. Where macro factors are in most cases beyond the control of the organization, micro factors are from within the organization and can be easily controlled by the management. Therefore, it is upon the organization’s strategic management unit to capitalize on the strengths and take advantage of the unexplored opportunities in compete favorably in the market. Recommendations With the increase of population across the world, the future of Restaurant Group Plc could be a robot making to reduce the manpower and increase the speed of service. As a matter of fact, technology is future. The use of robots to support man power will be common in future and food industry is no exception. Complex problems can be used by use of technology like preparing and serving food in the most efficient manner can boost food industry (Pederson, 2007). Introduction of robots to food industry will reduce manpower. The production cost of a robot will be higher in the first years but will reduce in the subsequent years. The speed of service for the introduction of technology will increase (Pradhan & Pradhan, 2009). The laws of industries may vary from state to state but when it counts to food hygiene the laws worldwide are similar not only to the government but even the public are very sensitive on this. As a matter of fact, the needed hygiene can be met with the implementation of technology. References Afuah, A. (2011). Strategic innovation: new game strategies for competitive advantage. New York, Routledge. Enz, C. A. (2010). Hospitality strategic management: concepts and cases. Hoboken, N.J., John Wiley & Sons. Hill, L., & Jones, R. (2012). Strategic Management. Cengage Learning. John Kew, J. (2013). Human Resource Management in a Business Context. Wimbledon, Chartered Institute of Personnel & Development. MCGAHAN, A. M. (2014). How industries evolve: principles for achieving and sustaining superior performance. Boston, Mass, Harvard Business School Press. Pederson, J., (2007). International directory of company histories. Volume 83 Volume 83. Detroit, Mich, St. James Press. Plunkett, J. (2008). Plunkett's real estate & construction industry almanac 2008: the only comprehensive guide to the real estate & construction industry. Houston, Tex, Plunkett Research Ltd. Plunkett, J. (2009). Plunkett's airline, hotel & travel industry almanac. Houston, Tex, Plunkett Research. http://site.ebrary.com/id/10350185. Pradhan, S. (2007). Retailing management: text and cases. New Delhi, Tata McGraw- Hill. Pradhan, S., & Pradhan, S. (2009). Retailing management: text and cases. New Delhi, India, Tata McGraw-Hill Education Pvt. Ltd. Read More