Russian Restaurant in the UK Macro Environment | Free Essay Example

Russian Restaurant in the UK Macro Environment

Words: 1972
Topic: Business & Economics

Macro Environment Analysis for the Restaurant Industry

The macro-environment analysis studies external forces that affect the performance of the restaurant industry in general and the proposed Russian restaurant in particular.

Economic factors

Economic factors

UK offers an economically sound environment that is good for business activity. The country has a high living standard. The World Bank acknowledged the UK as a rich country in 2014 when the country’s GDP hit the £2.433trillion from £2.131 trillion in 2012. The economy’s growth has been rated at 3.6% per annum with one of the highest Purchasing Power Parity (PPP) in the world. In 2014, The UK’s PPP was recorded at £26,700. The country has very low inflation and interest rates with one of the best infrastructures in the world. The World Health Organization certifies the UK’s crime rates to be low in the whole world. Unemployment has remained a single-digit percent. The global recession of 2009, however, affected the country’s economy negatively mainly because the country highly depends on international trends. The financial crunch pushed unemployment rates among the youth to very high figures of 7.7% in June 2011.

UK’s stable economy with the high living standards of her population portends a lucrative market for the restaurant’s business performance. More nationals have a high purchasing power due to the country’s high per capita income and very low unemployment levels. UK is on the recovery path of her economy following bad economic times between 2008 and 2011. With the recovery plans on course, the economy of this country is projected to experience stable growth in the foreseeable future. This implies that the country’s living standards are set to improve in the short and long term period as the problem of unemployment is tackled. UK’s Purchasing Power Parity is also comparatively high and an improved living standard for the entire population will prove substantial for the overall performance of the restaurant (Blythe 2006).

Political environment

The closer economic relations in the UK will provide the restaurant with the chance to operate in the enlarged economy following the UK government’s policy of opening trade barriers. This is a good assurance for shareholders that their investment is safe and it is an incentive to them to add even more in the company. The 2013 IMD world competitiveness yearbook ranked UK in positions 7 which is a good indicator that its economy offers a perfect environment for business activity (Cone 2011). With continued political stability, the proposed restaurant is poised to grow and expand as many investors are assured of safety if they decide to put their money into the venture. There are no fears of political wars and uprisings that can affect the company’s business performance in the UK.

Socio-cultural factors

The proposed restaurant will have a unique lifestyle culture as a sustainability strategy. More consumers are conscious of their lifestyle and would love to purchase and patronize items and goods that declare status association. The company further addresses the individual needs of its customers by providing efficient and customized restaurant services to the UK market interested in the Russian menus (Wickham 2006).

Technological factors

The restaurant will continue to invest heavily in information communication technology as it aims at improving service delivery and customer satisfaction. The automated payment and menu filling initiative will be used by the restaurant due to its convenience on the side of the customer and business. The Service-Oriented Architecture is yet another technological initiative by the restaurant, which will enable the management to monitor general trends in performance at a glance and spot out any existing bottlenecks that could be slowing down business. The speed with which this happens will help the management to put corrective measures into place that eventually averts losses or negative growth. These technological advances will attract more customers to the company due to the improved efficiency with customers are served (Blythe 2006).

Summary of the restaurant industry indicators

Restaurant sales in the last 30 years is summarised in the table below. Apparently, the trend has been rising and is projected to remain the same in the foreseeable future.

Restaurant Industry Sales

The market value of the restaurant industry in the UK is summarised below. The value has been on an upward trend from the year 2009 and is projected to maintain the momentum in the foreseeable future as summarised below.

The market value of the restaurant industry in the UK

The restaurant usage in the UK is summarised in the table below. The trend is estimated to steadily rise in the foreseeable future.

The restaurant usage in the UK


As analyzed above, the restaurant will embrace the significance of the PEST approach to tackle market forces in a business environment. The restaurant will be in a position to swing these forces and manipulate them to its advantage through offering competitive prices, expansion, diversification, and cutting a market niche. The main competitors are Pizza Union and Japanese Canteen. The indirect competitors are companies such as Sainsbury and other businesses retailing Russian foods (Wright 2007).

The main benefits that the restaurant will offer to its customers are the customized Russian menus and free cuisine advice for every menu, affordable, and healthy meals. Besides, customers will be treated to quick services and enjoy the free mobile message alerts on different cuisines of Russian origin. These benefits will be aligned to the customers’ requirements such as affordable services, reliability, and professionalism (Barringer & Ireland 2012). Besides, the customers will be accorded individualized attention which meets their expectations especially in customized Russian menus (Mullins 2011).

The restaurant will opt for diversification and expansion of branches in order to gain from economies of scale as the overall turnover grows. Through the adoption of scientific human resource management, the restaurant will be in a position to track redundancy and monitor employee performance and evaluations done based on the contract. As a result, issues of underperformance has been minimized substantially. The restaurant will introduce a series of efficiency monitoring systems such as performance valuation, efficiency in operations, target management, and electronic ordering, which will improve on its sustainability (Dagnino & Rocco 2009).

Micro Analysis

Consumer Analysis

The proposed restaurant’s products target male and female clients across the UK interested in the Russian menus. Even though the market for Russian menus has been in existence for a long time, there are very few companies that offer customized menus that satisfy the demands of this class of clients. In order to diversify market operations, the restaurant intends to create multiple products from the same product with different colorations, sizes, and customization. This will create an environment of own competition and block other competitors from encroaching into the company’s customized Russian menus market. These sub-products are differentiated by features, prices, and difference in quality (Burns 2010). As forecasted in the market research, this strategy has been successful towards dominance as it offers a variety of options to consumers, while at the same time, maximizing benefits of economies of scale.

Market research

The recent economic boom in the UK has resulted in many smaller businesses grow up due to increased demand for products and services. The disposable income has increased considerably and most businesses are transacted. Therefore, improved economic situations will greatly the growth and development of the proposed restaurant.


Questionnaire Survey

Gender: Female

  • Age:
    • 15-25
    • 25-35
    • 35 and above
  • Do you visit Russian menus restaurant?
    • YES
    • NO
  • How often do you go?
    • Weekly
    • Monthly
    • Quarterly Annually
    • Other _______________
  • What services do you purchase?
    • Salad
    • Cuisines
    • Main meals
    • Drinks
    • Any other
  • Are there any services that you wish could be improved at the restaurant you visit you?
    • Location
    • Customer service duration
    • Pricing
    • Other _________________
  • How much do you often spend in the restaurants?
    • 20-50
    • 20-70
    • 20-100


Age/How Often customers who often require customised food menus

The market research on product preference revealed that customers demand for salad, cuisines, main meals, and drinks. The survey findings are summarized in the graph below.

What services do you often need?



According to the survey results, we found that our target market consists of youthful customers from the age of 25 to 50 years. Most of the customers are visiting the restaurants weekly to get services. This means that the proposed business will have a good demand for its services. According to our survey result, we found that the services customers are looking for in the Russian restaurants were salad, cuisines, main meals, and drinks. The customers will be targeted by offering quick and high-quality services that customize the demands of the customers into quality outcomes.

The service that got a high score was the main meal. To draw an average charge, the researcher drew a three price average blocks from which the customers were expected to pick an average. The findings show that most of the customers prefer to pay a price between 20 and 50 pounds for any services they will get at the Russian restaurants. Therefore, this data will enable the proposed restaurant to set prices that fall within this category, with few exceptions.

From the above analysis, the proposed restaurant is well-positioned to gain maximum benefits of the current and future free-market opportunities in the restaurant sector in the UK. Besides, the company intends to have an active presence in all the regions and offers very competitive prices for its high-quality products to ensure that it is well-positioned to survive the demand related swings in the currently oligopolistic market. As a strategy for maintaining dominance above other oligopolistic competitors, the company will introduce the above products as multiple services that are customized to meet the demand of each client (Rae 2009). Despite competition from other brands, the above analysis indicates that the proposed restaurant has potential for further growth and expansion in the UK market.

Review of the restaurant

The restaurant will establish a brand image that enables it to attract customers with less effort as opposed to most of its less established rivals. The entrants have to invest heavily in promotion and advertising for them to attract new customers and maintain their customers. The established brand image will enable the company to cut on its cost and get increased levels of profitability. Strong commitment to quality and product innovation will enable the company to get the right experience for their customers. This will be possible through the recruitment of employees with the right skills and knowledge (Ira 2009). These employees will be further trained to understand the company production strategies. Moreover, the company will conduct more market research to ascertain customer thoughts and changing demands.

The stable and management team comprising of three directors is instrumental towards providing necessary support and guidance in the provision of restaurant services to customers. Besides, the business has the Unique Selling Point (USP) (Cheverton 2004). Thus, the company has an advantage in its product on competitors. Lebanese Flower Restaurant has a solid understanding of the market because of its well-established business plan. Besides, it is the first of its kind in the region of London. Thus, the restaurant is a position to reap maximum benefits through the first-mover strategy.

The restaurant is a start-up business so it has a higher chance of failing because of the difficulties in start-up businesses. Furthermore, the lack of variety in products might also be a factor for the business to fail. In addition, the business may not pick within the first six months since the target clients form the Russian descent are not many in the region (Cone 2011).

The business has an opportunity to expand since it will be working with the corporate organizations and health clubs within the London region. Therefore, the restaurant has experienced customers and referral marketers. Besides, the business is projected to benefit from the intended market expansion strategy since its services are the first of their kind within the restaurant industry of the London region. In addition, the business has the opportunity of establishing a strong sustainability network through the health clubs and the corporate organization (Blythe 2006).

Reference List

Barringer, B & Ireland, R 2012, Entrepreneurship: Successfully launching new ventures, Pearson, Harlow.

Blythe, J 2006, Essentials of marketing communications, FT/Prentice Hall, New York.

Burns, J 2010, Entrepreneurship and small business, Palgrave MacMillan, London.

Cheverton, P 2004, Key marketing skills: strategies, tools, and techniques for marketing success, Sterling, Kogan Page, London.

Cone, S 2011, Steal these ideas: Marketing secrets that will make you a star, John Wiley & Sons, New York.

Dagnino, G & Rocco, E 2009, Competition strategy: theory, experiments and cases, Rutledge, New York.

Ira, K 2009, Marketing: What went wrong and how to do it right, K&A Press, Los Angeles.

Mullins, J 2011, The new business road test, Prentice Hall, London.

Rae, D 2009, Entrepreneurship: From opportunity to action, Palgrave MacMillan, London.

Wickham, P 2006, Strategic entrepreneurship, FT Prentice Hall, London.