SumoSam Foods, Inc. (SFI), is a young company showcasing a group of hip, cosmopolitan and up-and-coming restaurants. It was introduced as flagship restaurant and was successfully captured the trending fusion cuisine popular with the AB market in Shangri-La Mall in December 2005. The company already opened its second branch a year after its operation at the posh Rockwell mall following the phenomenal success of its first venture.
SFI has become the restaurant industry’s new darling with at least four of its restaurants enjoying leadership status in their respective locations in less than four years of operation. With this, opportunities to open new branches in major malls have been unfolding. Major mall operators seek out the group to open new stores with innovative concepts.
PORTER’S FIVE FORCES
THREAT OF NEW ENTRANTS – LOW
High capital investments are one of the factors for barrier to new entry primarily because prospective owners need to consider lease in a huge lot and build a fully furnished restaurant either in mall or places that are very accessible to people. By doing this it primarily required huge amount of money or investment. Hiring and employment are also needed for the business to flourish.
Large established companies with strong brand identities make it more difficult to enter and succeed in the marketplace. The newcomers to the Philippine market are faced with price competition from existing chain restaurants. Also, customers are prone to prone change their preferences. That is why it is necessary for a business to generate more sales for faster return of investment. It is important that they fully satisfy their customers by giving service excellence and high quality of food that gives value for money so that they will be able to gain loyalty from them.
BARGAINING POWER OF BUYERS - HIGH
Consumers do have some bargaining power because they can choose from wide array variety and type restaurant they want to go due to stiff competition. Given the little consumer spending, it is necessary to appeal and attract to more people in this industry in order to be successful. Consumers would not have access to the same equipment and food supplied by the restaurateurs that is why they also opt and are attracted to go to restaurants.
THREAT OF SUBSTITUTES - HIGH
The substitutes could include fastfood, food served in the canteens or on the street and food served at home. This may be a huge threat for the restaurateurs because of the tremendous difference in price. However, casual diners pay for the ambience, quality of food, service which the substitutes do not offer.
To avoid being overtaken by the substitutes, it is necessary to extend their service by putting up additional branches strategically located to their target market in order to keep their market share. Industry player in this business tend to generate more profit by being visible in urban cities such as Metro Manila where they would be able to put outlets that is accessible to them. Financial crisis will trigger for buyers to eat at home rather than eating in a food restaurant.
BARGAINING POWER OF SUPPLIERS – LOW
Bargaining power of suppliers within the food industry would be relatively small, unless the main ingredient of the product is not readily available and calamity had occurred causing prices to increase. Another is due to the high competition for these products. SFI look for their best supplier of raw materials in order to preserve the quality of food.
DETERMINAN OF RIVALRY AMONG – HIGH
The food industry in Philippines is growing rapidly causing strong competition. Intense competition urges player to come up with unique products and promos to capture large market shares. Restaurants have to exert effort in researching or finding the latest trends in order for them to be raise above the...
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