Topics: Fast casual restaurant, Fast food restaurant, Types of restaurants Pages: 8 (1699 words) Published: October 4, 2014
1.  Discuss the distinguishing features (Market size, Market growth rate, Industry strength, etc.) of the industry. The world foodservice industry is expected to reach almost $992 billion in 2014, according to Datamonitor (2010), with a volume of over 586 billion transactions. This represents more than 18% growth in five years. Cafés and restaurants represent the leading market segment at over 50% of overall industry value. Regionally, Asia-Pacific holds almost 43% of the world foodservice industry market share. The learning and experience curve for the restaurant industry was low. “Just over 7 out of 10 eating and drinking places in the United States were independent single-unit establishments with fewer than 20 employees.” Because 70 % of competitors were restaurants who could open and close at any time, new entrants did not need large corporate backing and were free to open anywhere. The ability of so many small competitors to enter and compete in the industry indicated a steep learning curve. The steep learning curve and low capital requirement was threat to the industry because of the ease of rivals to enter the industry. The Bakery Cafes industry is a big part of the restaurants industry. The Bakery Cafes industry is heating up as consumers warm to the idea of moderately priced, high quality menu offerings. Bakery cafes specialize in serving flour-based baked goods and complementary food items such as sandwiches, salads and soups for immediate consumption. The industry has surged ahead since the recession and outperformed the overall food service sector, driven largely by changing consumer preferences. Consumers are increasingly demanding healthy, gourmet and custom-made cuisine at an affordable price. Based on these trends, industry revenue is expected to grow at an impressive rate of 6.5% per year on average over the five years to 2013. As operators add more stores in 2013 and consumer awareness of this relatively new segment increases within the food sector, industry revenue is expected to jump 7.2% in 2013 to $7.1 billion. According to IBISWorld Industry Analyst Andy Brennan (2013), “The industry has undergone heavy consolidation over the past five years as major chains such as Panera Bread, Einstein Bros. Bagels and Tim Hortons have expanded rapidly." The franchise model most of the major players operate under has accommodated the rapid growth in establishments as operators require less capital and take on lower risk while growing market share. A number of small, independent bakery cafes which have traditionally serviced local markets have been pushed out of the industry, unable to compete with the geographic reach and marketing spend of the major chains. However, many savvy independents have made profitable businesses with niche, high-end offerings such as cupcakes or macaroons. The Bakery Cafes industry is expected to continue on a growth trajectory over the next five years as many of the same trends that have influenced the industry continue. Economic fundamentals such as consumer spending and disposable income are anticipated to perform strongly over the outlook period, creating a favorable operating environment for bakery cafes. “To avoid price-based competition and protect profit margins, operators are expected to target markets with greater potential for growth, such as the breakfast crowd,” says Brennan. The breakfast market has traditionally been less competitive, and bakery cafes are expected to bolster sales by offering a greater range of breakfast sandwiches, bagels and coffee. The Bakery Cafes industry exhibits a medium level of market share concentration. As the largest industry operators continue to expand their market presence, smaller operators are expected to be forced out of the market place. The emergence of “fast-casual” dining poses a threat to Bakery Cafes. Small local bakery cafes are expected to struggle the most in this industry, and IBISWorld expects that they will continue to fend...
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