External Analysis of the Fast Casual Restaurant Industry - Essay Example

Analysis of the Fast Casual Restaurant Industry In the recent past, the restaurant industry was one of the fastest growing industries in the United States but has now reached a maturity stage where it is growing at a very slow rate. Though the industry is very big, this means that it is not business as usual not only for the upcoming restaurants but also for well-established restaurants like McDonald’s corporat6ion. This is because competition is very high and consumer patterns are really shifting due to healthy food concerns as well as due to the economic recession in the country. This paper will explore and analyze the fast casual restaurant industry in the USA with considerations on Mr Empanada Franchise Corporation, a fast food casual restaurant, which is headquartered in Tampa Florida. The paper will look into the strategy of Mr Empanada and give recommendations on the same. Primarily, the paper will look into the political and legal environment in the industry and then look into the power of suppliers. Political and Legal Environment Considering the political structure of USA, both the laws of the federal government as well as the laws of the state where the business is operating govern all the businesses. The fast food restaurant in the USA is highly flourishing which is an indication of good policies regarding the restaurant industry. The state of Florida, which is the home of Mr Empanada and other multinational fast casual restaurants such as McDonald’s and Burger King Corporation, is one of the states where the restaurant industry is well established. It is imperative that the restaurants should not only be conversant with the prevailing laws, both federal government and state government laws, but should also ensure that they comply with the laws. Mr Empanada engages in the manufacturing and sale of food substances, which are highly regulated by food laws that seek to protect all US consumers and apply to both USA and foreign corporations operating in the USA (Smith 353). The manufacturing facility is certified by USDA meaning that the facility is usually subjected to a daily inspection to ensure that the corporation upholds the required level of hygiene and practice in handling food for human consumption. The US FDA regulates food, beverages, and dietary supplements that are meant for human consumption or for consumption by other animals in the United States. The FDA regulations are entrenched under the US Bioterrorism Act that requires all corporations dealing with manufacturing, processing, storage or packaging of foodstuffs intended for consumption in the USA be registered. It is important that all fast food restaurants should follow the due process for registration with US FDA. It is also very important that all restaurants should be conversant and compliant with all the national and state laws that govern food, beverages and other dietary supplements. In the state of Florida for instance, the enforcement of legal requirements for fast casual restaurants is very strict to ensure maximum quality and safety of foodstuffs. The Division of Hotels and Restaurants, of the Florida Department of Business and Professional Regulations, deals with the fast casual restaurants to ensure that they uphold quality and professionalism in their operations. The Division of Hotels and Restaurants inspects licenses and permits, and regulates the establishment of food services in the state in accordance with Chapter 509 of the Florida statutes. The H&R division regulates engineered facilities such as escalators, elevators and other vertical installations in hotels and restaurants in accordance with chapter 399 of the statutes of Florida (Florida 1518). It is prudent for restaurants in the casual fast food industry to comply with all the laws and requirements of regulatory bodies to avoid undue lawsuits and liability. Mr Empanada for instance has duly complied with the requirements of USAD and has been certified by USAD to offer its services in Florida. Restaurants are often exposed to many dangers and liability and it is thus a state requirement that every restaurant should be insured. This is also very necessary to avoid undue losses, liability and law suits. Insurance for restaurants include general liability insurance, property insurance, and alcohol liability insurance where they offer alcohol. It is also very important to get worker health insurance and comply with the state’s requirement for worker compensation insurance. Due to the economic hardships that most Americans are experiencing, the fast food restaurant industry is also feeling the heat with low sales and very stiff competition. With Mr Empanada being a Franchising corporation, it is not an exception in feeling the effect of recession and changing consumer habits. These factors are really shifting the market base and competition is greatly increasing. There is also a campaign for more healthy foods and this is making people to change their consumer habits. The restaurant that is going to succeed in the market must not only exemplify creativity and innovativeness but it must also be very dynamic to adjust with consumer needs. The best way to attract investors in a franchising corporation such as Mr Empanada is to ensure that their products are well known and competitive. This can be done through brand improvement and advertisements. It is also very important to ensure compliance with legal requirements for franchising as well as good franchising policies to attract serious investors. Power of Suppliers The power of the suppliers of the key inputs in every business is very important in assessing the strength of that particular business entity. The power of the supplier is an assessment of how easy or feasible it is for the suppliers to increase their prices. When the power of suppliers is high, it is usually very easy for the supplier to increase prices and it is often very expensive for the entity to change their supplier. Mr Empanada has its own manufacturing facility and it does not so much depend on suppliers to supply them with the product of trade. However, Mr Empanada depends heavily on suppliers to get the necessary inputs, such as floor, vegetables, butter, meat to produce their product. The corporation requires these inputs on a daily basis but the good thing is that there are very many suppliers of the inputs in the market. Though the suppliers are many, Mr Empanada deals with a few suppliers whom it has contracted to supply the raw materials due to issues of quality assurance. The big number of suppliers makes it unlikely for suppliers to increase their prices and if they happen to increase their prices, the corporation can easily switch to other suppliers oat low costs. This shows that in this context, the suppliers have very low power over the corporation, which further confers the corporation a competitive advantage. Works Cited Florida. Florida Statutes, Volume 2. Florida: State of Florida, 1995. Print. Smith, Andrew F. The Oxford Companion to American Food and Drink. Oxford: Oxford University Press, 2007. Print. Read More