Brewers Fayre: Political and Economic Impact - Case Study Example

Brewers Fayre: Political and Economic Impact of Table of Contents Introduction 3 Political Impact on Businessoperations 3 Political Impact on Brewers Fayre 3 Economic Impact on Business operations 5 Economic Impact on Brewers Fayre 5 Social Impact 6 Technological impact 6 Recommendation of the Brewers Fayre 6 References 8 Introduction Whitbread is a hotel, restaurant and a coffee shop company headquartered in the UK. It is one of the largest hospitality companies in the region. It owns operates through several brands, some of which are Premier Inn, Costa, Brewers Fayre, Table Table, etc. This paper is focused on the political, economic, social and technological impact (PEST) on a business operation, discussed in the light of Brewers Fayre. The PEST analysis highlights the political, economic, social and technological influence on a firm. The Political factor helps the firm to identify the governmental rules and trade regulations that effects the business operations of the country. The Economic factor highlights the financial structure of a particular region, which is reflected in the affordability or disposable income of the customers. The social factor involves the consumption trends and cultural practices of the society that influences the operations of a company. The technological factor suggests the level of technological advancements and its availability that the company can utilize to run its business (Kotler and Keller, 2011) Political Impact on Business operations The political scenario of a country has significant impact on the business operations of a firm. The political risks involve sudden changes in the trade laws that can impact the profitability of a firm (Weisbrod and Weisbrod, 1997). Different countries have different political structure, depending on which the trade regulations are designed. Firms which operate in multiple overseas locations are more prone to get exposed to political risks. In certain countries the taxes levied on a particular business is extremely high which eventually reduces the profitability of the company. However, political effects are not always adverse in nature. In certain situation the government take necessary steps to boost a particular industry so that it can positively influence the economic structure of the country. The governmental intervention often comes as a form of financial support, easing of trade laws, etc (GOV.UK, 2014). The government also ensures that a firm is following ethical practices so as to take care of the interest of the national citizen. The firms need to strictly follow the rules set by the government. Severe penalty or even cessation of the business activities of the firm can cause from any deviation from the rules and regulations set by the government. These rules are designed mostly on the grounds of common long term interest of the citizen and safety measures. However, abiding by these rules and regulations can at times pose an extra hassle for the company and it also increases the operating expenses of the company (Weisbrod and Weisbrod, 1997). Political Impact on Brewers Fayre Since, Brewers Fayre operates only in the UK; it is influenced by the British political scenario only (Whitbread, 2013). In order to enhance the hospitality industry of the country the government has taken certain steps so that it can induce positive impact on the economic structure of the nation. This as a result has uplifted the business operations of Whitbread, the parent company. When it comes to restaurant business the UK government has strict food standard regulations. The restaurant must ensure a certain degree of cleanliness and must follow regulations regarding food safety. Thus the political scenario of the UK largely influences how the business operation of Brewers Fayre is run. The health concerns of the UK population have raised a significant issue in the restaurant business (BBC, 2014). The health concerns regarding the high rate of obesity among the UK population has increased at an alarming rate. The companies have become more concerned about the food ingredients and its effect on the customers’ health. The signs of obesity have been seen in both adults and children alike. It has been predicted that the issue of obesity may become a major health concern by 2030, if it is not curbed immediately (Resource Sheet). Following these concerns the UK government has taken several steps to mitigate the imminent health risk. The obesity has also affected the economic condition of the country. The National Health Society (NHS) has already spent around £5 billion for the treatment of obesity, and this amount increases to £20 billion per year in wider societies. Given the present rate of obesity, the cost of treatment will double the present amount by 2050 (Resource Sheet). Several proactive steps have been taken by the UK government so that the growth rate of obesity can be reduced. In order to do so, the government has decided to introduce sugar tax, so that the amount of sugar in the food can be controlled. Moreover, the government is working with the restaurant industry so that the recipe of certain food products can be changed. The products offered by Brewer Fayre include Mixed grill, burgers, steaks etc (Brewers Fayre, 2014b). These food products are high on fat and contains high calorie. The government has initiated a program, following which the restaurants will have to change their food preparation in such a way that it does not contain any high calories, high salt content or artificial or saturated fats. Thus as a result, the company is compelled to develop different recipes or make definite changes in the existing ones. The government policies regarding drinking and driving is quite strict in the UK. This as a result reduces the alcohol sales of the restaurant. Moreover, as a gesture of ethical practices, Brewer Fayre does not serve alcohol to individuals below 18 (Brewers Fayre, 2014a). This as a result allows the company to act responsibly to prevent under aged drinking. However, this gesture also reduces the revenue generation of the company. Based on the government policies, the restaurant also provides details of the nutritional values and calorie content on the menus and the company website. This as a result makes the customer conscious about their food ingredients. Although this may be helpful for the customers from the point of view of health concerns, but it can also reduce the consumption of certain food items which as a result may decrease the company’s profitability. Over the years the Muslim population in the UK has increased considerably. This customer segment likes to consume halal meat. However due to government policies which involve animal welfare legislation, restricts the halal process. Therefore Brewers Fayre does not offer any halal meat (Brewers Fayre, 2014a). This as a result repels a lot of Muslim from the restaurant, thereby closing a prospect of catering to a particular customer segment. Moreover, the company also does not promote any religious biasness regarding suitability of food for a particular religious group. The business activities of the restaurants have also been influenced by the rising number of immigrants in London. The immigration growth has increased the population of the UK considerably, which acts as a prospective opportunity for Brewers Fayre (BBC, 2014a). This is as result allows the company to serve a wide customer base thereby increasing its revenue generation. Economic Impact on Business operations The economic structure of a country determines several factors that directly influence the business activities of a firm. The profitability and the revenue generation of the company are also dependent on the economic structure of the region. The economic structure determines the affordability of the customers, depending on which they accept or reject a particular product or service (Weisbrod and Weisbrod, 1997). This affordability of the customers is determined by their disposable income; if the disposable income is low, then the highly priced products are usually rejected. Moreover, when the affordability of the customers is low, they tend to prioritize the necessity products over leisure products. Therefore the economic status of a nation also determines whether a particular product category will flourish or not. In 2008 the global financial crisis had deteriorated the economic structure of several developing as well as developed countries. This as a result had caused severe financial downturn of several major firms (Verick and Islam, 2010). Economic Impact on Brewers Fayre The economic impact on Brewers Fayre has been described under the light of the product category and pricing. The company operates in the restaurant business and offers moderately priced food products. The economic condition may not always have adverse effect on the business activities of the company. However, the European crisis had somehow affected the revenue generation of the company (Verick and Islam, 2010). In 2008, the rise of food prices in the UK, which includes staple foods, breads, meats, fish, etc, has decreased the profitability of the restaurants (BBC, 2008). This as a result has compelled the restaurant companies to increase their food item prices. The restaurant offers its menu items at a reasonable price; therefore the affordability of the customers does not affect the business operations much. Moreover, the economic condition of the UK is strong enough to support a restaurant chain serving buffet meals at £6.5. The GDP of the UK has increased to $2,583.2 billion in 2013 from $2,481.3 in 2012, thereby recording a 4.1% growth. Moreover, the inflation rate as of 2013 has been recorded to be 2.6% which is a 0.2% decrease from 2012 and 1.9% decrease form 2011. These figures suggest that the economic condition of the UK has improved over the past few years which as a result have positively influenced the business activities of the country (Resource Sheet). Moreover, the Brewers Fayre is positioned as a family restaurant serving regular food, so the product offering is categorized among the necessity products. This also suggests that any slight economic down turn will not affect the business operations of the company. Social Impact The social impact on the company is based on the grounds of consumption patterns of the UK population. The reports of Wallop (2012) have suggested that over the years the rate of out of home eating has increased drastically. This is mostly because of the hectic and busy schedule of the people, because of which they can spend very less time for their personal life. A large number of people have their breakfast or lunch outside to save time. This as result has helped the company to increase its sales and revenue generation. Moreover, BBC (2014) has stated that the UK population is increasingly becoming more conscious about their food consumption. This is mostly because of the rise in obesity in the nation. This as a result can reduce the consumption of the meat based food products of the company. Technological impact The technological impact is dependent on how the company utilized the technological availability of the nation to improve its business. It utilized equipments which are the latest in the food technology to offer high quality food products and services. Brewers Fayre also uses latest technology to ensure the safety of their restaurants and their employees (Brewers Fayre. (2014b). Moreover, the advent of social media and increased usage of the internet has allowed the company to increase its brand awareness and create better communication with the customers. Recommendation of the Brewers Fayre The economic and political impact on the business activities of Brewers Fayre is both positive and negative. However, with proper strategic recommendation, the company can reduce the negative impacts and leverage the positive impacts. The company operates only in the United Kingdom and given its current economic structure of the company, it can expand to other European countries by leveraging the regulation of the European Trade Union. The European Trade Union law suggest that a firm can easily shift its business to other European countries without much hassle and with reduced overseas trade taxes (ETUI, 2015). The high brand awareness of the company will help it to expand its business to overseas locations and gain brand preference. Since the food habits of almost all the European countries are standardized, so it will be easier for the company to sell its products in those regions. The company can introduce new product line targeted at the up market consumers. The current economic condition of the country can be used in favour of the company to improve its business activities. This as a result will increase the customer base and improve the revenue generation of Brewers Fayre Brewers Fayre can use the government regulations in favour of its business activities. The growing concerns for food consumption and regulations imposed by the NHS should be addressed in order to maintain a good brand image of the company (GOV.UK, 2014). It can introduce new recipes and menu items that comply with the low calorie consumption. This as a result will increase the consumer preference and attract the population that is extremely health conscious and likes to consume low calorie food. The company can launch a health campaign that will highlight its initiative regarding its fight against obesity. This as a result will increase its brand equity and attract new customers who belong to the overly health conscious category. Brewers Fayre can also introduce certain healthy items like fruit juice drinks that will also help to attract a lot of customers. Several strategic actions can be employed to mitigate political risk involved in business operations. Firms often get involved in political disputes by involving in unethical activities to meet short term goals. The company should have a strict regulation for its employees that they should not involve the company to any political activities and all the regulations laid down by the local government must be followed strictly in order to ensure long term sustainable growth. Following the health concerns of the government, the company can also take initiatives to sponsor certain health campaign of the company. This will not only advertise the brand name of the company but it will also improve the relationship of the company with the local government. Keeping a good relationship with the government will help the company to receive certain privileges and support, thereby strengthening its competitive positioning. References BBC. (2008). UK food prices show 8.3% increase. Retrieved from http://news.bbc.co.uk/2/hi/business/7597703.stm BBC. (2014). Obesity quadruples to nearly one billion in developing world. Retrieved from http://www.bbc.com/news/health-25576400 BBC. (2014a). Net migration into UK up by more than 38% to 243,000. Retrieved from http://www.bbc.com/news/uk-28964323 Brewers Fayre. (2014b). About us. Retrieved from https://www.brewersfayre.co.uk/Generic-pages/About-us.html Brewers Fayre. (2014a). Frequently Asked Questions. Retrieved from https://www.brewersfayre.co.uk/Generic-pages/Frequently-Asked-Questions.html ETUI. (2015). EU intervention in national welfare state reforms. Retrieved from http://www.etui.org/ European Commission. (2009). Economic Crisis in Europe: Causes, Consequences and Responses. Economic and Financial Affairs. 7. GOV.UK. (2014). £2 million boost to help low-paid retail and hospitality staff. Retrieved from https://www.gov.uk/government/news/2-million-boost-to-help-low-paid-retail-and-hospitality-staff Kotler, P & Keller, K.L. (2011). Marketing Management. New Jersey: Prentice Hall. Verick, S., & Islam, I. (2010). The Great Recession of 2008-2009: Causes, Consequences and Policy Responses. Institute for the Study of Labor. May. Weisbrod, G., & Weisbrod, B. (1997). Measuring Economic Impacts of Projects And Programs. Economic Development Research Group, April. Whitbread. (2013). Brewers Fayre. Retrieved from https://www.whitbread.co.uk/our-brands/brewers-fayre.html Wallop, H. (2012) Fast food becomes the UKs meal of choice. Retrieved from http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9016251/Fast-food-becomes-the-UKs-meal-of-choice.html Read More