Bennelong Restaurant: Analyzing Market Competition and Profit Margin

This report investigates the impact of increasing market competition on Bennelong Restaurant, a flagship establishment of the Sydney Opera House. The research explores the challenges posed by rising competition, changing social trends, and the need for effective cost control. It examines the issue of price-based competition, its effect on profit margins, and the importance of maintaining quality while remaining competitive. The report delves into the actions Bennelong has taken, such as expanding its marketing capabilities, and proposes further areas for investigation, including adjustments to the food menu and other operational strategies. The research utilizes research questions to analyze the relationship between profit margins and market competition, the factors creating competition in the Sydney restaurant sector, the sustainability issues faced by restaurants, and ways for Bennelong to increase revenue and maintain market share. The objectives include identifying the impact of competition, analyzing competitive factors, and validating strategies for future sustainability. The report provides valuable insights into the challenges and opportunities facing Bennelong Restaurant in a dynamic market environment.

Huge competition from an ever-growing
restaurant market is affecting the profit
margin for restaurants
Bennelong

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
 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.

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.

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

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

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

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)

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.

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.

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.