First, the location of the restaurants is concentrated in specific areas with a high number of people such as Thomas Street, Haymarket, and NSW. There have been several berries, which have shielded the industry from the external investors. This is because of the robust barriers, which exist between the participants and the new entrants. The restaurant industry in Australia has enjoyed non-new entrant threat for a significant period. Dälken, (2014) notes that the extra supply as a way of meeting demand reduces the revenue of the industry participants. The sound barriers for an industry are good because they reduce the number of new entrants who would affect competitive advantages for existing players. The availability of entry barriers limits the number of companies to enter the industry and thus increase the competition among the existing rivals. For the restaurants to maintain the costs down and realize high-profit margins, they need to be diligent and focus on efficiency operations as well as consumer lifestyle trends.
Recent market research provides that the coffee shop industry has grown sharply over the last five years, attributing much of its success to consumers love of high-quality coffee and lively coffee culture. For example, cafes and coffee shops industry have been posting a huge competition to the restaurant industry in for the last five years. Restaurateurs face stiff competition from other hospitality providers such as cafes, pubs, fast-food retailers and prepared meals from the supermarket. In Australia restaurant industry is dominated by many competitors offering almost similar products and services. To compete favorably, the firms should understand the number and the ability of rivals and the products and services they offer. Therefore, even though it is necessary for competition to exist in the market, firms should compete in a healthy manner. High-intensity competition among existing competitors can set back the company profits.
Potter (2008, p.32) judged that the force of rivalry among existing competitors involve several forms such as service improvement, new products introduction, pricing discounts and advertisement campaigns. One of the key ways to prosperity by the firms is their capability to understand competitors’ behavior and marketing strategies. Given the fact that each industry is operating in the midst of buyers, suppliers, substitutes, new entrants, and competitors are clear indication that Porter’s Forces model is still valid. Despite that, the Porter’s Five Forces cannot be regarded as outdated. However, the model has received significant criticisms over the years on it relevance in the economy due to increasing impact of globalization and digitization. Porter’s Five Forces model is a management tool used for carrying out analysis on the industry’s present profitability and attractiveness. Restaurant Industry Porter’s Five Competitive Forces Australian Restaurant Industry analysis can be understood further the lenses of porter’s five forces as a market research tool. The predicted industry revenue growth has been attributed to continued consumer demand for high-quality food and improved dining experience. These trends are anticipated to grow through the year, with the prediction of industry revenue to increase by 2.0 percent. Similarly, restaurants have aligned themselves with the needs of the customers thus allowing customers to integrate dining with leisure. Busy lifestyles and declining leisure time have led consumers to prefer to restaurants as alternatives. Currently, the industry possesses an annual growth of 4.3 percent and a revenue of 12 billion dollars.
In the recent past, the restaurant industry has been experiencing sluggish growth, but current findings indicate that changing social trends in Australia have facilitated the expansion of restaurant industry over the last five years. Lastly, low-cost dining segment, which depends on fast services, high table turnover, low-priced food and limited variety of food and specialties.
Middle-range dining is the second segment, and offers high quality food, fair prices and has a range of take away options. The premium segment usually sells food at high prices. First, premium dining segment this offers high quality services, quality food, and ingredients and is very luxurious. The restaurant industry in Australia can be divided into three major segments. Australian Restaurant Industry Analysis Case Study