the application of the five forces on restaurant industry is discussed as below: setting up a new restaurant requires moderate level of investment, making it an easy to enter industry. besides the new entrants, the bargaining power of buyers is another important factor to consider. since the buyers hold the power to influence the pricing decisions of a company, the restaurant industry is also affected by the buyer’s choice and switching behavior (adhikari & rao, 2013). based on this analysis, it can be concluded that buyers have a moderate bargaining power in the restaurant industry. the size of a restaurant is also a determining factor when it comes to the bargaining power of suppliers.
the ease of switching from one restaurant to another, in case if the experience is not according to customer expectations makes this industry having a high threat of substitute products. therefore, the restaurant industry has high threat of rivalry, which makes it hard to maintain high profitability for smaller restaurants. the fast food giants having greater budget of marketing and product innovation are able to maintain an edge over their smaller counterparts. it induction in the food service industry. entrepreneurship and small business management in the hospitality industry. only the customer gets to decide what matters in customer service and customer experience.
therefore, it is necessary for the restaurant industry to understand applications of porter’s five forces in their business. as a result, a number of restaurants have gone out of business or joined chains of franchises in the us. customers in the hospitality industry are demanding and hard to please. being and sustaining a competitive edge in the restaurant industry is a challenging task. this requires restaurants to implement their customers’ suggestions in terms of quality and service improvements. this may affect the operation of restaurants in relation to supply of products, services, and employees.
however, oligopoly that exists with regard to other products and services in the restaurant industry presents threats to profitability of the industry. however, many restaurants prefer to specialize on the cuisine, entrée and other types of foods. all these are elements of services available within the hospitality industry demonstrating interconnection and dependence in the industry. retrieved from /essays/porters-five-factor-model-in-hospitality-restaurants/ “porter’s five factor model in hospitality (restaurants).” “porter’s five factor model in hospitality (restaurants).” the database is updated daily, so anyone can easily find a relevant essay example.
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