Impact of Market Competition on Profit Margin for Restaurants
VerifiedAdded on 2023/04/20
|18
|2175
|185
Presentation
AI Summary
This presentation explores the impact of market competition on the profit margin for restaurants, with a focus on Bennelong. It discusses the issues faced by the restaurant industry, the factors contributing to market competition, and the actions taken by Bennelong to address the challenges. The research project aims to identify the relationship between profit margin and market competition, analyze the factors creating competition in the Sydney restaurant sector, and propose ways for Bennelong to increase revenue growth without compromising profitability.
Contribute Materials
Your contribution can guide someone’s learning journey. Share your
documents today.
Huge competition from an ever-growing
restaurant market is affecting the profit
margin for restaurants
Bennelong
restaurant market is affecting the profit
margin for restaurants
Bennelong
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
Table of Contents (TOC)
1.1 Research Context
1.1.1 Issue
1.1.2 How the issue was discovered?
1.1.3 The impact and its magnitude to the Company’s Operations
1.2 Broad Problem Area and Generic Business Decision to be made
1.2.1 Discussing the issue in a descriptive way
1.2.2 Ascertaining the importance, magnitude and priority of the issue
1.2.3 Actions being taken so far
1.2.4 The generic business decision
1.3 List of the information that will be sought
1.4 Research Objectives
References
1.1 Research Context
1.1.1 Issue
1.1.2 How the issue was discovered?
1.1.3 The impact and its magnitude to the Company’s Operations
1.2 Broad Problem Area and Generic Business Decision to be made
1.2.1 Discussing the issue in a descriptive way
1.2.2 Ascertaining the importance, magnitude and priority of the issue
1.2.3 Actions being taken so far
1.2.4 The generic business decision
1.3 List of the information that will be sought
1.4 Research Objectives
References
1.1 Research Context
1.1.1 Issue
Rising market competition has
impacted the profitability of
restaurant market (Leonidou,
Christodoulides, Kyrgidou &
Palihawadana, 2017)
The changing social trends have
driven revenue growth in last few
years (Ibisworld.com.au, 2019). This
has encouraged the restaurants to
boost their competency in terms of
menus and pricing
Bennelong despite being a flagship
restaurant of the Sydney Opera
House can be affected from the
current trend and the decreasing
profitability of the industry
(Traveller, 2019)
This is why Bennelong seems like
quite concerned with its food menu
and the pricing (Dibrell, Fairclough &
Davis, 2015)
1.1.1 Issue
Rising market competition has
impacted the profitability of
restaurant market (Leonidou,
Christodoulides, Kyrgidou &
Palihawadana, 2017)
The changing social trends have
driven revenue growth in last few
years (Ibisworld.com.au, 2019). This
has encouraged the restaurants to
boost their competency in terms of
menus and pricing
Bennelong despite being a flagship
restaurant of the Sydney Opera
House can be affected from the
current trend and the decreasing
profitability of the industry
(Traveller, 2019)
This is why Bennelong seems like
quite concerned with its food menu
and the pricing (Dibrell, Fairclough &
Davis, 2015)
1.1.2 How the issue was discovered?
According to a report published in IBISWorld of January 2019 edition, incrementing competition and
rent costs are eating into profitability (Ibisworld.com.au, 2019). This means restaurant brands are
forced to reduce the products’ pricing to firmly compete with their competitors. This is problematic
considering that despite incrementing rent costs there will be no adjustments made to food pricing.
Indeed, there was the need to make adjustments with the food pricing to counter the adverse impact
of incrementing rent costs on the overall profitability.
According to IBISWorld, effective cost controls is one of the key success factors for restaurants these
days (Ibisworld.com.au, 2019). Now, Bennelong will be tested for its effective cost control strategy
that will help the company retain the competitive advantage and avoid reduction in profits. This is to
be noted that low product cost coupled with increased rent costs have negative influence on the
profit margin (Ramayah, Ling, Taghizadeh & Rahman, 2016)
According to the Australian Bureau of Statistics, the population of Australia exceeds 22 million
(Traveller, 2019). This implies that consumer base for restaurant market will also increase. This is the
one positive trend that Bennelong can utilise to its advantage by offering diversified foods at
changed rates and thereby changing the food menu. The change will be made to attain feasible rates
for foods and drinks.
According to a report published in IBISWorld of January 2019 edition, incrementing competition and
rent costs are eating into profitability (Ibisworld.com.au, 2019). This means restaurant brands are
forced to reduce the products’ pricing to firmly compete with their competitors. This is problematic
considering that despite incrementing rent costs there will be no adjustments made to food pricing.
Indeed, there was the need to make adjustments with the food pricing to counter the adverse impact
of incrementing rent costs on the overall profitability.
According to IBISWorld, effective cost controls is one of the key success factors for restaurants these
days (Ibisworld.com.au, 2019). Now, Bennelong will be tested for its effective cost control strategy
that will help the company retain the competitive advantage and avoid reduction in profits. This is to
be noted that low product cost coupled with increased rent costs have negative influence on the
profit margin (Ramayah, Ling, Taghizadeh & Rahman, 2016)
According to the Australian Bureau of Statistics, the population of Australia exceeds 22 million
(Traveller, 2019). This implies that consumer base for restaurant market will also increase. This is the
one positive trend that Bennelong can utilise to its advantage by offering diversified foods at
changed rates and thereby changing the food menu. The change will be made to attain feasible rates
for foods and drinks.
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
1.1.3 The impact and its magnitude to the
Company’s Operations
Bennelong’s vision is to serve the people foods and menu, which are rich in quality
and flavor and are sourced locally
The strategy is to deliver foods and drinks that is more reflecting the beauty scenic
of the Sydney Opera House and Bennelong’s beautiful architecture. Customers like
to have quality foods at competitive price (Aschemann-Witzel, 2018)
It seems as if that this would be difficult now to keep maintaining same touch in
types of foods served to customers. An increased competition might encourage
Bennelong to compromise on its menu. Offering quality foods and drinks at cheaper
rates can be difficult in future (Flammer, 2015). They have not done it yet. The
research project will try to investigate whether Bennelong has also considered
going with the same strategy.
Bennelong faces competition from Aria Restaurant Sydney, Sydney Cove Oyster
Bar, Quay Restaurant, The Dining Room, Café Sydney and many more
(Tripadvisor.in, 2019). It therefore, appears as if Bennelong will come to the
defensive mode and bring adjustments into the food menu to remain unaffected
from increased market competition and the changing market trends.
Company’s Operations
Bennelong’s vision is to serve the people foods and menu, which are rich in quality
and flavor and are sourced locally
The strategy is to deliver foods and drinks that is more reflecting the beauty scenic
of the Sydney Opera House and Bennelong’s beautiful architecture. Customers like
to have quality foods at competitive price (Aschemann-Witzel, 2018)
It seems as if that this would be difficult now to keep maintaining same touch in
types of foods served to customers. An increased competition might encourage
Bennelong to compromise on its menu. Offering quality foods and drinks at cheaper
rates can be difficult in future (Flammer, 2015). They have not done it yet. The
research project will try to investigate whether Bennelong has also considered
going with the same strategy.
Bennelong faces competition from Aria Restaurant Sydney, Sydney Cove Oyster
Bar, Quay Restaurant, The Dining Room, Café Sydney and many more
(Tripadvisor.in, 2019). It therefore, appears as if Bennelong will come to the
defensive mode and bring adjustments into the food menu to remain unaffected
from increased market competition and the changing market trends.
1.2 Broad Problem Area and Generic
Business Decision to be made
1.2.1 Discussing the issue in a descriptive way
Price-based competition is an issue considering that this would cut down the profit margin (Margaretha & Supartika, 2016)
The restaurants will need to offer foods and drinks at competitive price to remain competitive in the market
This will impact the net revenue and so will decrease the profit margin
This state of the business can be problematic to Bennelong
The restaurant position itself being the representative to the Sydney Opera House and would never want losing this reputation in the
hand of an increased market competition
However, the changed circumstances may make things difficult to maintain same quality at reduced rate (Prajogo, 2016)
In the research project, Bennelong’s countering responses to this trend will also be investigated
Business Decision to be made
1.2.1 Discussing the issue in a descriptive way
Price-based competition is an issue considering that this would cut down the profit margin (Margaretha & Supartika, 2016)
The restaurants will need to offer foods and drinks at competitive price to remain competitive in the market
This will impact the net revenue and so will decrease the profit margin
This state of the business can be problematic to Bennelong
The restaurant position itself being the representative to the Sydney Opera House and would never want losing this reputation in the
hand of an increased market competition
However, the changed circumstances may make things difficult to maintain same quality at reduced rate (Prajogo, 2016)
In the research project, Bennelong’s countering responses to this trend will also be investigated
1.2.2 Ascertaining the importance,
magnitude and priority of the issue
This research project concerning the stated issue is important
considering that this will generate some useful information to be
utilised to enhance organisational competency
The magnitude of the issue is so high that this can even force brands
like Bennelong compromising with its food menu that it had never
done before.
Notably, the Australian eating out industry is competitive, dynamic
and continually evolving. This is of vital importance for restaurant
leaders to constantly look for changes to stay ahead in the market
competition
Changes in leadership, offers and infrastructure is a priority now
magnitude and priority of the issue
This research project concerning the stated issue is important
considering that this will generate some useful information to be
utilised to enhance organisational competency
The magnitude of the issue is so high that this can even force brands
like Bennelong compromising with its food menu that it had never
done before.
Notably, the Australian eating out industry is competitive, dynamic
and continually evolving. This is of vital importance for restaurant
leaders to constantly look for changes to stay ahead in the market
competition
Changes in leadership, offers and infrastructure is a priority now
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
1.2.3 Actions being taken so far
Bennelong continues to
grow. Effective measures
to support the growth are
also being adopted
For example, Bennelong is
expanding its marketing
capability. This is
evidenced in a fact that
Hannah Pietsch has been
appointed as the new
Communications Manager
(Bennelongfunds.com,
2019)
The research project will
further investigate whether
Bennelong has considered
taking actions to improve
the other areas of
operations such as
changing its food menu.
These are human resource
management, IT
management, finance
management and others
Bennelong continues to
grow. Effective measures
to support the growth are
also being adopted
For example, Bennelong is
expanding its marketing
capability. This is
evidenced in a fact that
Hannah Pietsch has been
appointed as the new
Communications Manager
(Bennelongfunds.com,
2019)
The research project will
further investigate whether
Bennelong has considered
taking actions to improve
the other areas of
operations such as
changing its food menu.
These are human resource
management, IT
management, finance
management and others
1.2.4 The generic business decision
The information produced from the research
project can be used by Bennelong in several
ways
The piece of information will shed lights on
the current trends in the restaurants industry
This will also encourage Bennelong to conduct
an organisation-wide audit as to be able to
know the areas to put into the change process
Moreover, Bennelong will use the findings of
the research project to enhance its
competency level
Bennelong can also follow the “Generic
Framework of Business Organisation” to
facilitate an effective flow of information thus
obtained from the research project from lower-
level management to the top level (Kim & Min,
2015)
The information produced from the research
project can be used by Bennelong in several
ways
The piece of information will shed lights on
the current trends in the restaurants industry
This will also encourage Bennelong to conduct
an organisation-wide audit as to be able to
know the areas to put into the change process
Moreover, Bennelong will use the findings of
the research project to enhance its
competency level
Bennelong can also follow the “Generic
Framework of Business Organisation” to
facilitate an effective flow of information thus
obtained from the research project from lower-
level management to the top level (Kim & Min,
2015)
1.3 List of the information that will
be sought
1.3.1 (Research Question 1)
What is the relationship between organizational profit margin and market competition?
With this question the research project will try to investigate the kind of correlation that exists between
organizational profit margin and market competition. It is being found in the earlier sections of this
presentation that incrementing competition has fuelled the price-based competition. The price-based
competition can have an impact on the profit margin.
be sought
1.3.1 (Research Question 1)
What is the relationship between organizational profit margin and market competition?
With this question the research project will try to investigate the kind of correlation that exists between
organizational profit margin and market competition. It is being found in the earlier sections of this
presentation that incrementing competition has fuelled the price-based competition. The price-based
competition can have an impact on the profit margin.
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
1.3.2 (Research Question 2)
What are the factors responsible for creating market competition in
the Sydney restaurant sector?
With the help of this question the research project will examine the
factors creating market competition. It is being found earlier that
Australian customers are increasingly inclining towards eating-out foods.
This has produced huge potentials for revenue growth. Revenue growth
is one of the factors to have fuelled the market competition. The
research will further investigate the factors creating market competition.
What are the factors responsible for creating market competition in
the Sydney restaurant sector?
With the help of this question the research project will examine the
factors creating market competition. It is being found earlier that
Australian customers are increasingly inclining towards eating-out foods.
This has produced huge potentials for revenue growth. Revenue growth
is one of the factors to have fuelled the market competition. The
research will further investigate the factors creating market competition.
1.3.3 (Research Question 3)
What are causes for which restaurants in Sydney are facing issues
related to sustainability?
The question will try to investigate the factors that pose threats to
sustainability. Notably, attaining and retaining sustainability in an
increased competitive environment is challenging.
What are causes for which restaurants in Sydney are facing issues
related to sustainability?
The question will try to investigate the factors that pose threats to
sustainability. Notably, attaining and retaining sustainability in an
increased competitive environment is challenging.
1.3.4 (Research Question 4)
What are the ways through which Bellelong can increase its revenue
growth without hampering profitability?
This question will deal with one of the most important areas of
investigation for this research project. This is the cost of foods, which
have impacted the profit margin. Relying on price cut to remain
competitive is not at all a solution to decreasing profitability of the
business.
What are the ways through which Bellelong can increase its revenue
growth without hampering profitability?
This question will deal with one of the most important areas of
investigation for this research project. This is the cost of foods, which
have impacted the profit margin. Relying on price cut to remain
competitive is not at all a solution to decreasing profitability of the
business.
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
1.3.5 (Research Question 5)
What are the ways through which Bellelong can maintain its market
share to 5%?
This question will investigate ways through which Bellelong would be
able to maintain its market shares to 5% while not hampering the profit
margin. Reducing the prices on foods will not help to attain the purpose.
What are the ways through which Bellelong can maintain its market
share to 5%?
This question will investigate ways through which Bellelong would be
able to maintain its market shares to 5% while not hampering the profit
margin. Reducing the prices on foods will not help to attain the purpose.
1.3.6 (Research Question 6)
What are the other responsible factors for Bellelong that will help in
maintaining its sustainability for future?
This question will investigate the factors Bellelong need to maintain its
sustainability for future. As being found in this presentation, price cut on
foods is not a sustainable solution and will result in reduced profit
margin for Bellelong and for other restaurants.
What are the other responsible factors for Bellelong that will help in
maintaining its sustainability for future?
This question will investigate the factors Bellelong need to maintain its
sustainability for future. As being found in this presentation, price cut on
foods is not a sustainable solution and will result in reduced profit
margin for Bellelong and for other restaurants.
1.4 Research Objectives
To identify the impact of market competition on organizational profit margin
To analyze the factors that create market competition in the Sydney restaurant sector
To identify the causes that are responsible for creating organizational sustainability issues for
Sydney restaurants
To analyze the ways that can help Bellelong to increase its revenue growth
To endorse the possible ways through which Bellelong can maintain its market share
To validate other factors responsible for Bellelong's future sustainability
To identify the impact of market competition on organizational profit margin
To analyze the factors that create market competition in the Sydney restaurant sector
To identify the causes that are responsible for creating organizational sustainability issues for
Sydney restaurants
To analyze the ways that can help Bellelong to increase its revenue growth
To endorse the possible ways through which Bellelong can maintain its market share
To validate other factors responsible for Bellelong's future sustainability
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
References
Aschemann-Witzel, J. (2018). Consumer perception and preference for suboptimal food under the emerging practice of expiration date based pricing in supermarkets.
Food Quality and Preference, 63, 119-128. [DOI: 10.1016/j.foodqual.2017.08.007]
Bennelongfunds.com. (2019). New appointments position Bennelong for future growth // Bennelong. Retrieved from https://www.bennelongfunds.com/news/179/new-
appointments-position-bennelong
Dibrell, C., Fairclough, S., & Davis, P. S. (2015). The impact of external and internal entrainment on firm innovativeness: A test of moderation. Journal of Business
Research, 68(1), 19-26. [DOI: 10.1016/j.jbusres.2014.05.012]
Flammer, C. (2015). Does product market competition foster corporate social responsibility? Evidence from trade liberalization. Strategic Management Journal,
36(10), 1469-1485. [DOI: 10.1002/smj.2307]
Ibisworld.com.au. (2019). Restaurants – Australia Industry Research Reports | IBISWorld. Retrieved from https://www.ibisworld.com.au/industry-trends/market-
research-reports/accommodation-food-services/restaurants.html
Kim, S. K., & Min, S. (2015). Business model innovation performance: when does adding a new business model benefit an incumbent?. Strategic Entrepreneurship
Journal, 9(1), 34-57. [DOI: 10.1002/sej.1193]
Leonidou, L. C., Christodoulides, P., Kyrgidou, L. P., & Palihawadana, D. (2017). Internal drivers and performance consequences of small firm green business strategy:
The moderating role of external forces. Journal of business ethics, 140(3), 585-606. [DOI: 10.1007/s10551-015-2670-9]
Margaretha, F., & Supartika, N. (2016). Factors affecting profitability of small medium enterprises (SMEs) firm listed in Indonesia Stock Exchange. Journal of
Economics, Business and Management, 4(2), 132-137. [DOI: 10.7763/JOEBM.2016.V4.379]
Prajogo, D. I. (2016). The strategic fit between innovation strategies and business environment in delivering business performance. International Journal of Production
Economics, 171, 241-249. [DOI: 10.1016/j.ijpe.2015.07.037]
Ramayah, T., Ling, N. S., Taghizadeh, S. K., & Rahman, S. A. (2016). Factors influencing SMEs website continuance intention in Malaysia. Telematics and Informatics,
33(1), 150-164. [DOI: 10.1016/j.tele.2015.06.007]
Traveller. (2019). Bennelong's $6 business lunches: How dining at the Opera House has changed. Retrieved from http://www.traveller.com.au/dining-at-sydney-opera-
house-bennelongs-6-lunches-and-taste-tours-new-menu-h197t9
Tripadvisor.in. (2019). The 10 Best Restaurants Near Sydney Opera House - TripAdvisor. Retrieved from https://www.tripadvisor.in/RestaurantsNear-g255060-d257278-
Sydney_Opera_House-Sydney_New_South_Wales.html
Aschemann-Witzel, J. (2018). Consumer perception and preference for suboptimal food under the emerging practice of expiration date based pricing in supermarkets.
Food Quality and Preference, 63, 119-128. [DOI: 10.1016/j.foodqual.2017.08.007]
Bennelongfunds.com. (2019). New appointments position Bennelong for future growth // Bennelong. Retrieved from https://www.bennelongfunds.com/news/179/new-
appointments-position-bennelong
Dibrell, C., Fairclough, S., & Davis, P. S. (2015). The impact of external and internal entrainment on firm innovativeness: A test of moderation. Journal of Business
Research, 68(1), 19-26. [DOI: 10.1016/j.jbusres.2014.05.012]
Flammer, C. (2015). Does product market competition foster corporate social responsibility? Evidence from trade liberalization. Strategic Management Journal,
36(10), 1469-1485. [DOI: 10.1002/smj.2307]
Ibisworld.com.au. (2019). Restaurants – Australia Industry Research Reports | IBISWorld. Retrieved from https://www.ibisworld.com.au/industry-trends/market-
research-reports/accommodation-food-services/restaurants.html
Kim, S. K., & Min, S. (2015). Business model innovation performance: when does adding a new business model benefit an incumbent?. Strategic Entrepreneurship
Journal, 9(1), 34-57. [DOI: 10.1002/sej.1193]
Leonidou, L. C., Christodoulides, P., Kyrgidou, L. P., & Palihawadana, D. (2017). Internal drivers and performance consequences of small firm green business strategy:
The moderating role of external forces. Journal of business ethics, 140(3), 585-606. [DOI: 10.1007/s10551-015-2670-9]
Margaretha, F., & Supartika, N. (2016). Factors affecting profitability of small medium enterprises (SMEs) firm listed in Indonesia Stock Exchange. Journal of
Economics, Business and Management, 4(2), 132-137. [DOI: 10.7763/JOEBM.2016.V4.379]
Prajogo, D. I. (2016). The strategic fit between innovation strategies and business environment in delivering business performance. International Journal of Production
Economics, 171, 241-249. [DOI: 10.1016/j.ijpe.2015.07.037]
Ramayah, T., Ling, N. S., Taghizadeh, S. K., & Rahman, S. A. (2016). Factors influencing SMEs website continuance intention in Malaysia. Telematics and Informatics,
33(1), 150-164. [DOI: 10.1016/j.tele.2015.06.007]
Traveller. (2019). Bennelong's $6 business lunches: How dining at the Opera House has changed. Retrieved from http://www.traveller.com.au/dining-at-sydney-opera-
house-bennelongs-6-lunches-and-taste-tours-new-menu-h197t9
Tripadvisor.in. (2019). The 10 Best Restaurants Near Sydney Opera House - TripAdvisor. Retrieved from https://www.tripadvisor.in/RestaurantsNear-g255060-d257278-
Sydney_Opera_House-Sydney_New_South_Wales.html
1 out of 18
Your All-in-One AI-Powered Toolkit for Academic Success.
+13062052269
info@desklib.com
Available 24*7 on WhatsApp / Email
Unlock your academic potential
© 2024 | Zucol Services PVT LTD | All rights reserved.