MREmpanada Research Paper Example | Topics and Well Written Essays - 1500 words

MREmpanada - Research Paper Example I. Fragmentation and/or Concentration As a player in the United States restaurant industry, Mr. Empanada is a fast casual industry and not a fast food company as most people take it. The U.S restaurant industry is characterized by countless actors. The industry has already entered the mature stage of the industry life cycle, as growth of the industry slows own. The united states restaurant industry is fragmented into various subsets, the most popular being the fast food, full service restaurants and the fast casual segments. In a fast food setting, food is prepared before being ordered while in a casual setting, food is prepared after the customer has ordered it. There are hundreds of fast food and fast casual joints in United States that offer products that are intractably similar in almost all aspects. Panera Bread Company is the renowned leader in the casual food subset while McDonald’s is the overall industry leader operating in the fast food segment. The yearly anticipate d growth for the restaurant industry is 1.9% from 2013 through 2018 (The University of Tampa, 2). The slow growth rate is attributable to reduction in consumer disposable income due to prolonged recession period in United States. Consumers opt to consume home cooked means or consumer lower priced items when eating out. This is hurting the growth in the various fragments of the restaurant industry. United States restaurant industry sales ($ billions) (Source: The University of Tampa, 1) II. Switching costs Switching costs are the negative costs that buyers incur due to changing products, brands or suppliers. Switching costs are mostly evaluated in terms of money value, but they may also be time-based, effort based and psychological switching costs. Switching costs may be associated to learning, finding alternatives, ambiguity costs, contractual costs and transaction costs. Switching costs is a control mechanism that exists in most markets (Sundelin, para 1). In the case of Mr. Empana da, there are little or no switching costs as substitutes are readily available. Providers of casual foods are such as the chipotle Mexican grill, Panera bread, Skyline Chili, Donatos Pizza, Freebirds among others, which are easy to locate. Customers who wish to change from Mr. Empanada products and consumer rival products do not incur significant costs. For illustration, learning and compatibility cost is almost zero since the Mr. Empanada and its rival’s products are undifferentiated. Therefore, customers do not have to look and learn new information with regard to rival products. As such, consumers easily change from one Mr. Empanada products to its rivals due to insignificant switching costs or no cost at all. III. Buyer inclination to substitute In the United States restaurant industry, competition is so rife and fierce. As stated earlier, most of the industry’s products are undifferentiated. Customers hardly notice the difference between competitors’ produ cts and this extremely heightens buyers’ inclination to substitute (Porter, 28). In regard to Mr. Empanada, buyer inclination to substitutes is indispensably high. The reason is that Mr. Empanada is not known to many people outside its headquarters in Tampa, Florida. In addition to limited popularity, Mr. Empanada offers few types of salads, beverages, sandwiches that