INF10003 Introduction to Business Information Systems

Review the industry involved in the chosen data set and provide a brief yet comprehensive overview of that industry sector, including history, current environment and transformations and future scope.
• Business model and environment: Identify the business model best suited to the scenarios as well as identifying their target audience and value proposition. Using the following analysis methods conduct an analysis of the chosen
business.
o SWOT analysis
o Porters 5 forces.

• Create a table with the provided data set and identify appropriate field labels. Provide a brief description justifying your field label choices.
• Using the provided datasets, identify (min 3) trends or insights that a manager can identify to gain a competitive advantage.

Pies’ n Buns is a fast food restaurant that provides various fast food meals. It caters to a wide audience with different tastes. The firm has operated in the fast food industry for several years and has rapidly grown since it was launched. The firm has developed several stores in different locations to expand its presence in the market. It has built a loyal customer base which sustains its sales and profits. The firm seeks to develop an online presence to market its products to a wide local market as well as reach the corporate catering market.

Industry Background

Pies n’ Buns operates in the fast food industry which is rapidly growing. Globally, the industry generates over $600 billion which exceeds the economic value of many countries (Schlosser2012). There are thousands of restaurants in Australia which serve millions of Australians. The industry employs thousands of people and is expected to grow as new restaurants franchises emerge. Consumers of fast food look for taste, price, and quality. Restaurants focus on providing a consistent experience, cost-effective products, and quick services.

Fast food restaurants are part of the segment of the restaurant industry that accounts for the majority of sales in the restaurant sector. Many restaurants are known to have a simple look and aesthetical appearance which is essential to attracting customers. Typically, customers order and pay for food at a counter which is packed for take-out or eat it at the restaurant. Meals are short, and table service is not offered. Menus tend to be same in different restaurants, and consumers enjoy a familiar experience which depends on the quality of service offered. Meal choices are cheap with many meal options costing less than $6. Australia’s fast food market is dominated by fast food restaurants with a wide product selection.

The industry faces various challenges which are likely to affect many fast food joints and restaurants including Pies n’ Buns. Typically, people have a perception that the fast food industry offers unhealthy menus (Terblanche, 2010). Many fast food restaurants have a reputation of unhealthy food which is a major problem for them as consumer tastes in Australia is shifting towards healthier menus.  While this is a risk, the industry is dynamic and is successfully adapting to consumer preferences by offering healthier options. Another challenge that fast food restaurants face is poor working conditions and low wages. These restaurants incur high labor costs due to staff in the kitchen, cleaning, and counter. An increase in wages causes a rise in operation costs which have to be passed on to consumers.

Marketing is a key part of competing in this industry. With thousands of restaurants operating in one city, the level of competition is high at any given time. As such, the restaurants have to advertise their products to spread brand awareness and increase sales (Harris, 2010). Customer loyalty to a brand is high in this industry, but the switching costs are relatively low. Customers tend to be loyal to fast food restaurants that provide a quality product and excellent customer service that satisfied them.  If they are dissatisfied with the services offered, they switch to restaurants that cater to their needs. Thus, restaurants focus on providing a product offering that meets the needs and expectations of the customers.

Business model and environment:

Business Model Type

The business model of Pies n’ Buns involves traditional units that provide dine-in and take away. As a single brand chain, Pies n’ Buns focuses on providing a wide food selection and convenience. Food selection includes menu variety, wide beverage choice, and breakfast expansion. The restaurant tailors its menu to fit the tastes of customers. The business model is also based on limited work hours and low wages to reduce operation costs and maintain the profitability of the restaurant chain.

Target Audience

Pies n’ Buns targets a wide range of consumers. The millennial generation is a key market segment that compromises of millions of young adults born in the ‘80s and ‘90s. They form a substantial part of the target market. On average, consumers in this market segment visit fast food joint 10 or more times in a month and they spend more of their income on food than other generations (Williams 2011). Typically, these consumers tend not to cook and prefer to eat out. This consumer segment is ethnically diverse and is exposed to various cultural influences. The consumers also tend to have a wide selection when shopping and are interested in finding different products and having unique experiences at fast food restaurants.

Mums’ market segment is another target for the restaurant. This market segment has distinct needs in fast food. There are millions of moms in Australia, and their purchasing power is relatively high. Mums tend to the main decision makers on what is consumed by the families. As such, if they like the restaurant chain, the restaurant has a family of diners. When considering fast food options, consumers in this market segment seek to find a balance between value, convenience, and health. Health implies food that appeals to the consumers’ health consciousness and not necessarily low-calorie food. To many consumers in this market segment, convenience involves ease of ordering food, carrying group orders, and speed of service offered. Fast food is a reprieve for these consumers from lives with many responsibilities. Value is a key factor for mums purchasing fast food. These consumers spend their money cautiously due to their economic situation. As such, they make wise purchase decisions to care for their families. These consumers view value to be the benefit of the restaurant visit in relation to the cost. A unique experience in which mums and their families enjoy a meal together is valuable for many.

Value Proposition

Pies n’ Buns provides high-quality fast food meals. The meals have unique tastes and are delivered fresh to the consumers. They are provided to the consumers at the counter which is the point of sale. The restaurant’s location has start-of-the-art facilities that comply with health regulations and create an ambient atmosphere where customers can take a meal without disruptions. The restaurant's unique menus are supplemented by a great customer service which focuses on enhancing customer experience and improving customer satisfaction.

SWOT Analysis

Strengths

Pies n’ Buns have a strong product that is supported by menu variety that focuses on quality and competitively priced meals coupled with quick service. The restaurant is a strong brand that has emphasized on building a brand culture in all its branches. Existing market conditions are favorable with the restaurant offering new product niches to attract more customers in the static fast food market. Product development risk is relatively low as the menu products currently exist. The restaurant has a flexible business model which gives it the flexibility to capitalize on its brand and product concept to expand to other market segments. It has low management risk due to an experience and knowledge team that has diverse skills and expertise to enable the fast food chain to operate competitively. The restaurant also has high gross margins for meals sold which can be optimized via bulk purchase agreements with suppliers.

Pies n’ Buns’ meal products cannot be patented hence can be easily be copied by other restaurants. This has to be addressed by developing brand awareness and copyright on the quality system. Emphasis has to be placed on security the best sites in target markets and rapid growth of the restaurant’s operations. The restaurant’s restocking logistics may face challenges due to the distributed nature of its operations which may hinder restocking and affect inventory levels. The products may be vulnerable which can reduce their appeal. This can be reduced by innovating new products and diversification.

Pies n’ Buns has the opportunity to monopolize niche fast food market by developing strong brand awareness and fast food culture via remaining vigilant to business opportunities. The location of its branches implies access to a diverse customer group. The restaurant should capitalize on venue available and market segments to promote its products and expand its operations to different markets.

The local government has regulations in relation to fast food restaurants which affects business operations. Business permits provided have a minimum period and incur high costs to secure. Its products can be easily by competitors who seek to compete on the basis of product quality to gain market share and increase sales. Seasonal demands for the restaurant’s products implies inconsistent revenue. This can be minimized by increase product selection.

Porter’s Five Forces

Competitive Rivalry

Pie n’ Buns faces stiff competition as the fast food market is saturated. The level of competition is influenced by a high number of fast food restaurants, aggressiveness of the restaurants, and low switching costs (Porter 2008). The industry has many restaurants of different sizes such as global fast food chains such as McDonald’s and local fast food restaurants. Medium and large restaurants aggressively market their product offering to gain market share. In addition, Pie n’ Buns’ customers have low switching costs which imply that they can switch to other restaurants.

Bargaining Power of Customers

Pie n’ Buns has to address the power held by customers. This element shows that demands of consumers influence the restaurant’s operations. The restaurant’s customers have strong bargaining power due to low switching costs, many restaurants, and availability of substitutes. Since customers can easily shift from one restaurant to another, they can impose their demands on Pie n’ Buns. Due to market saturation, customers can select a fast food restaurant other than McDonald’s. Additionally, there are many substitutes to Pies n’ Buns. Some of the substitutes include bakeries and food outlets. Pie n’ Buns has to develop strategies to attract and retain more customers.

Bargaining Power of Suppliers

Suppliers can affect Pie n’ Buns’ operations, but they have a low bargaining power. Their weak bargaining power is influenced by the availability of many suppliers, high overall supply, and low forward vertical integration. The high number of suppliers affect the bargaining power of suppliers on Pie n’ Buns. Many of Pie n’ Buns’ are not vertically integrated which implies that they have no control over Pie n’ Buns’ distribution network. The abundance of products such as meat and flour diminishes supplier’s bargaining power. Thus, suppliers have a minimal influence on Pie n’ Buns’ suppliers.

Threat of Substitutes

Substitutes are a threat to Pie n’ Buns. The influence of substitutes on the restaurant is determined low switching costs, availability of many substitutes, and high performance-to-cost ratio (Thomadsen, 2007). There are many substitutes to Pie n’ Buns’ products which make it easy for customers to shift from the restaurant. Additionally, the substitutes have high quality which makes them competitive. Pie n’ Buns has to focus on improving the quality of its products to tackle this threat.

Threat of New Entrants

New entrants to the fast food industry can affect Pie n’ Buns’ market share and revenue. The threat of new entrants is influenced by low switching costs, high costs of building a brand, and average startup costs. Since switching costs are low, consumers can shift from Pie n’ Buns to new fast food joints. Startup costs for establishing a new fast food restaurant are moderate which make it easy for restaurants to enter the market. However, the cost of developing a strong brand is high.

Trends and competitive advantage

Technology is growing at a rapid pace, and many businesses including fast food restaurants are adopting it to enhance their competitiveness. Many restaurants are leveraging technology to improve workflow and business processes such as food ordering. Pie n’ Buns should adopt emerging technology such as mobile apps to enhance the efficiency of its operations and reduce operation costs.

Food delivery has become a major trend that has shaken the food industry. In contrast to the past, more restaurants are delivering food to their customers (Johnston 2008). Many food delivery companies have emerged to capture this opportunity. It is essential for Pie n’ Buns to develop food delivery program to improve convenience and gain a competitive edge over its rivals.

Globalization has not only brought cultures together but also taste for food. Many restaurants have adopted different meals to cater to their ethnically diverse audience. Pie n’ Buns can provide hybrid menu items to cater to the tastes of different customers as well as develop unique menu items that attract customers.

Design Review and Justification

The web design has a highly intuitive structure that is simple to understand and improves usability. The user interface (UI) is self-explanatory, and the navigation is quite simple which makes it more engaging and reduce cognitive load. The design follows visual hierarchy which allows users to view the website in a sequence. Content is placed in blocks that can be easily perceived by users as they view the website, For example, the menu is at the top of the page, the content is in the middle of the page, and the footer is located at the bottom.

The web design incorporates accessibility by making the website and its content visible to the users. The text on the UI is legible, the background has less content, and the colors are bright which ensures visibility. The design incorporates images relevant to Pies n’ Buns’ operations to ensure users understand what the restaurant is offering. The design considers Hick’s law which focuses on the options available. The menu has five navigation links which eliminate distraction and provide a better user experience. The design structures the content appropriately making it easy to communicate to users clearly. The information is compelling and is supplemented by images which enhance its appeal.

Customer Engagement Techniques

To improve competitive advantage, the website should provide testimonials feature, rating features, and should be responsive. A testimonial feature that allows customers to provide feedback on the restaurant’s products and experience can be essential in determining the effectiveness of Pies n’ Buns in satisfying its customers. Displaying these testimonials on the website can attract potential customers and increase sales. A rating feature that allows users to rate menu items provided can be appropriate in determining customer’s tastes and preferences. With such a feature, users can rate foods they like, and the restaurant can personalize their services to meet the customers’ needs hence improve its competitive advantage. Responsive design is essential to ensure that the website can be fit in different screens. By incorporating a responsive design, users can have the same experience when viewing Pies n’ Buns’ websites on different devices. This is a core competency that can enable the restaurant to gain a competitive edge over its rivals (Kim 2013).

As a firm operating in the fast food industry, Pies n’ Buns faces various challenges which can undermine its effectiveness in spreading brand awareness to the target audience. The industry is saturated and has low entry barriers which implies that competition is stiff. For Pies n’ Buns to effectively compete in this market, it has to stand out from the competition. This involves making its brand unique to increase its visibility to potential consumers. The restaurant has to leverage its core competencies to offer a unique product offering that aligns with customers’ needs and preferences. This will enable the firm to not only attract more customers but also build a loyal customer base to sustain its sales and revenue.

The restaurant should also focus on establishing an online presence to improve its effectiveness in reaching out a wider audience. By developing a firm-branded website, Pies n’ Buns can engage the online target audience and market its products. A website will enable the company to reach a wide audience including Millennials who are active on various internet platforms. A usable website encompassing all the design principles can provide the same user experience and give the restaurant a competitive advantage in attracting more customers.  

References

Harris, J.L., Schwartz, M.B. and Brownell, K.D., 2010. Evaluating fast food nutrition and marketing to youth. New Haven, CT: Yale Rudd Center for Food Policy & Obesity.

Johnston, R., & Clark, G. (2008). Service operations management: improving service delivery. Pearson Education.

Kim, B., 2013. Responsive web design, discoverability, and mobile challenge. Library technology reports, 49(6), pp.29-39.

Porter, M.E., 2008. The five competitive forces that shape strategy. Harvard business review, 86(1), pp.25-40.

Schlosser, E. (2012). Fast food nation: The dark side of the all-American meal. Houghton Mifflin Harcourt.

Terblanche, N. S., & Boshoff, C. (2010). Quality, value, satisfaction and loyalty amongst race groups: A study of customers in the South African fast food industry. South African journal of business management, 41(1), 1-9.

Thomadsen, R. (2007). Product positioning and competition: The role of location in the fast food industry. Marketing Science, 26(6), 792-804.

Williams, K. C., & Page, R. A. (2011). Marketing to the generations. Journal of Behavioral Studies in Business, 3, 1.