Brace for Veggie Pret - 2491 words - Microsoft Tech Community
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Brace for Veggie Pret 2491 words
Introduction 1Pret a Manger(Pret for short below), an international sandwich chain shop founded in United Kingdom, served customers simple and delicious food by friendly, motivated staff. With the growing trend of eating veggie food, 2the multinational corporation launched its meat-free iteration in 2016 and currently has seven branches located in London and Manchester, catering to health- conscious consumers who prefer plant-based meals over meat. Additionally, Pret decided to buy their rival EAT, a British sandwich and coffee shop chain in 2019 since it may improve the growth of Veggie Pret effectively. During this report, a variety of analysis and management tools would be used to evaluate the current situation of Pret and the viability for Veggie Pret to enter chosen country with specific location. The purpose of addressing viability is to justify convincingly the chosen country and location. Finally, entry strategy would be discussed with some suggestions of CSR activities could be arranged. After investigation of the possible country choice, Auckland, New Zealand.
Main Body
1.Situation Analysis
1.1 SWOT Analysis
3SWOT analysis is an analytical tool which stands for strengths, weaknesses,
opportunities and threats to develop the business strategy when set up a
business or guiding an existing company.(All the points listed in the table
below would be discussed and referenced during discussion)
(a) Strength (b) Weakness
1.Excellent customer services and
1.Rented Property
feedback
2.Less customer loyalty programs compared
2.Healthy and fresh food prepared daily
to competitors
with regular updates
Internal 3.Realtively healthy products but sacrifice
3. Uncompromising social
the flavour
responsibilities
Factors
4.Business model could be easily replicated
4.Consecutive sales growth
5.High prices restrain low-budget customers
5.Efficient store locations (easy for
target customers to access
(c) Opportunity (d) Threat
1.Increasing trend in healthy and 1.Change of customer preferences and
vegetarian diet taste
External 2.Improving social media for marketing 2.Increase cost for fresh ingredients and
employee salaries
Factors 3.Deliverloo and Pret joined together to
meet the higher demand of food delivery 3.Coffee chains start to offer fresh
services sandwich and food-to-go
4.The price of meat products keep 4.More substitutes would be released from
increasing worldwide supermarket
5.International market expansion 5.Technics of automation food product
being improved
Fig.1 SWOT Analysis for Pret
a) Strengths are positive attributes of the business. Pret offers great experiences of having a quick meal, especially with all the staff working in Pret. Employees have the right to offer coffee for friendly customer. Pret insists to make the food everyday with quality ingredients to ensure they are fresh and delicious. Pret always take the leading edge of taking the social responsibilities. 5It started its coffee recycling scheme to over 350 shops in UK and over 90% of the domestic shops now have a recycling point located on the shop level.6Pret managed to achieve a 13.2% increase in revenue throughout 52 weeks in 2017 with 52 new shops opened during the same period. b). Weakness are negative factors affected the company. Most of the Pret stores are rented rather than purchased, leading to extra variable costs compared to other competitors, lowering the profit margin. The food made by Pret is generally healthy than other fast food chains, however, the flavor are not preferred by every consumer with less spices and sauce used. Additionally, the price of Pret would be considerably high for low-budget customer, who may be considered as an alternative selection. c) Opportunities are external factors which may contribute to the success of company. The popularity of veganism shrank in the decade and it is predicted to continue in the future. 7Google search engine prove that in 2009, the word "veganism" had a peak popularity score of only 33 but it had increased to 100 only 10 years later (see Fig.2 in Appendix). Exclusively partnering with Deliveroo makes it easier for loyal customers to enjoy their favourites from the menu, wherever they are. There are now more opportunities for Pret to expand globally, which would be supported by the government both financially and legally .
d) Threats are potential external factors which may occur and can’t be controlled. Since the preferences of consumers are unpredictable, short term sales growth cannot guarantee profit in the long run. What’s more, labour cost and raw cost would increase due to inflation, lowering the profit Pret could obtained. There are a variety of substitutes available at supermarket like Tesco or M&S, these goods tend to reduce the market share of Pret. With the development of technology, the fresh food may be assembled by automation, it reduce the labour and rent cost, increasing food standards
1.2 VRIO Analysis
8A VRIO analysis helps to evaluate how, and to what extent an organization
or a company has its resources and capabilities that are valuable, rare,
inimitable and organized.
Table.1 VRIO Analysis of Pret
Pret Resources Valuable Rare Inimitable Organized Advantage
and Capabilities achieved
Fresh and Healthy YES NO NO YES Competitive
Food Prepared Parity
Daily
Unique Customer Temporary
Service YES YES NO YES Competitive
Advantage
Uncompromising Sustained
Social YES YES YES YES Competitive
Responsibilities Advantage
Efficient Store Temporary
Locations YES YES NO YES Competitive
Advantage
Ø Value: Pret uses its cash flow to expand the chain shop all over the
world, hiring huge amounts of employees to serve their customers efficiently.
9Pret purchased EAT to boost its Veggie Pret chain by plaining to convert 90
EAT stores to the new brand. This add to the redundancy, spreading the risk
of changes from market. Pret could respond quickly to the market, either to
continue converting EAT stores to Veggie Pret or keep EAT as original sales
mode.Ø Rarity: Only few sandwich chains made the all their food freshly daily in each store’s kitchen with the employees well to meet the variable demand of customers. Pret obtained some positive results since none of other sandwiches shop have launched veggie branches. Ø Inimitability: The fresh food made daily and the staff training would not be difficult and expensive to replicated and implemented to the sandwich restaurant. Additionally, there are closed substitutes to Veggie Pret, for example, set a vegan session at the corner of each shop would be suitable and cost less than set up a brand new vegetarian branch. Ø Organization: Pret is organized to capture value from its capability. The R&A department keep working with chefs to make the menu updated and have innovations on the recipe of their fresh food. Meanwhile, employees are trained how to serve their customers with better feedback with increasing brand loyalty.
2.Viability Analysis
2.1 PESTLE Analysis
11PESTLE is used as a tool to evaluate the external factors that may influence
the company, it helps us to understand the political, economic, social and
technological, legal, environmental changes that would shape business
environment of Veggie Pret in Auckland.
Figure. 2 PESTLE Analysis
l Economical: 12New Zealand had a positive GDP annual growth over
the 2013-2019 and GDP per capita ranked 23 in the world in 2019. That
indicates that the country is highly developed and citizens have strong
purchasing power with high disposable income. 13Low employment rate (4.7%
in 2017) and increasing exchange rate suggest that individuals live in a
wealthy life, that may encourage them to spend money on veganism food,
which would be expensive than meat diets.
l Social: Due to the effectiveness of social media, it is predicted that most
of the New Zealander would aware Pret and Veggie Pret, they may look
forward to have the chain set in their country. 14New Zealand ranked third in
world for veganism, 1 in 10 New Zealanders is mostly/completely meat-free.
The popularity of vegan-related searches was 11% higher than 2017 and 35%
higher compared to 2016. Moreover, most of New Zealanders are underdecent education, based on the fact that the education expenditure took 6.4% of 2016 GDP of the country, ranked 24 in world with 19 years of school life expectancy. All those factors contribute to higher awareness of the benefits from meat-free diets with greater acceptability of veganism. l Environmental: 15New Zealand’s Ministry of Health has promoted planted-based diet in its last report, which encourage Kiwi to reduce meat and dairy. Producing meat is resource-intensive and has a huge carbon emission.16To some degree, the spread of crops across New Zealand can mitigate extreme weather impacts on vegetable supply. Most places in New Zealand receive over 2000 hours of sunshine a year and the country experiences relatively little air pollution compared to many other countries. All those factors contribute to better growth of horticulture in New Zealand, therefore, the price for fresh ingredients of Veggie Pret would be stable and affordable.
2.2 Porter’s Five Forces Analysis 17Porter’s five forces model is a business tool that use five industry forces (supplier power, buyer power, rivalry, barriers to enter and threat of substitutes) to determine the competition intensity within an industry. ² Rivals (medium level of threat): Almost every cafe and restaurant in New Zealand offers a wealth of vegetarian options. However, people will be struggled to find vegan food since not all menus will have vegan options. Additionally, most accommodations that offer food would provide a vegetarian option if requested, they are also potential rivals for Veggie Pret in New Zealand. For Veggie Pret, they need to closely investigate the local competitors and taste of veganism in Auckland. Then, the innovation team would make some vegan menu differentiated from the existing options in order to earn the preference of local. ² Suppliers Bargaining Power:(medium-high level of threat) New Zealand has a lot of fresh vegetables & fruits wholesalers, meaning that Pret could have many choices of suppliers while have the power to bargain the price for ingredients. However, there are little substitutes for the vegetarian ingredients. 18Additionally, vertical integration may occur from the farm sector but more commonly from food-processing and retailing sector. Food companies in New Zealand rely on their own holdings for up to 10% of supplies. Pret has not much to do to influence supplier power but could try to increase their brand awareness to attract the supplier interests. ² Buyers Bargaining Power:(Low-Medium level of threat) Overall, the quantities of buyers in New Zealand would be comparatively
large, with a figure of 10.3% of Kiwi are on a vegetarian diet. Furthermore, substitutes are relatively to find since vegetarian food is limited in ingredients. Price of vegan food are quite inelastic for those who are vegan, meaning the quantity consumed would not be affected at a large degree when the price of vegan food changes, price is quite elastic for those who have diets of meat. Manager team is suggested to increase brand loyalty of their customers while use pricing competition to earn the market share.
3.Entry Strategy Shared ownership with differentiation is suggested to be the recommended entry strategy for Veggie Pret to enter New Zealand. Pret could gain the control of international operations and firm’s ownership. Porter’s Generic Strategy Porter’s Generic Strategy is the approach to gain competitive advantage for the firm. There are three main strategies: Cost Leadership, Differentiation and Focus, which is subdivided into two parts: “Cost Focus” and “Differentiation Focus” Figure 4 Porter’s Generic Strategies ( available from mind tools.com) Cost leadership involves being the leader in terms of cost in the industry. However, it would be easy for competitors to undercut the price by other low- cost producers, thus, they will forbid the way to earn more market share. For Veggie Pret in New Zealand, it tends to be easy to take the cost-leadership advantage because that there are no much chain veggie restaurants operating in the country. Therefore, Veggie Pret could access to the capital
(fresh ingredients and labours at a low cost) in order to elaborate the advantage of ‘fast casual dining’ and offer budget began meals experience. Differentiation involves making the products or services unique and more attractive than those of competitors. For Veggie Pret, the concept of ‘fast casual dining’ would be unique already, not much vegan restaurants offer that service in New Zealand (often in the form of formal dining). Pret could use effective marketing on the products and the easy accessibility of fresh vegan food to the target customers. Companies that used Focus Strategy concentrates on the niche market and developed specified goods for the targets. Because of the 20massive demand of vegan food in Auckland, Veggie Pret’s target market could not be niche and focused. Veggie Pret should choose shared ownership as a mode of entry to Auckland. Pret could get the control over the firm’s resources and generates immediate revenues. One of the reasons is that Veggie Pret does not have the experience of operating outside of UK, therefore, Pret would take all the risks and responsibilities if it enter the Auckland market on its own. It would be beneficial to share the owner ship with other business within the field like Coffee Club (popular coffee chain store within Auckland21). The risks and knowledge, with expertise would be shared which benefits Veggie Pret growth. Additionally, the risks of Veggie Pret is relatively high since this would be the first vegan fast food chain opened in Auckland. 22However, the risk of the project failing and having a negative impact on profitability would be lower and split by each owner because the costs associated with the project are distributed among each of the participating companies. One of the CSR activity for Veggie Pret could giving away the unsold food or stock to the neighborhood or the homeless people at the end of each day for each store. Additionally, invite social workers such as street cleaner and constructer to have a private dining regularly to elevate the brand image
among the area. Additionally, Veggie Pret would launch the ‘no plastic’ program to reduce the waste of plastic being dumped, instead, using paper meal box and only offer disposable tableware when the customer ask for, encouraging them to bring their own folks or eat at home.
4.Conclusion
Forced-Field Analysis
Driving Forces Forced Field Analysis-Veggie Pret
Restraining Forces
Demand for vegan food is high High labor and rent cost
in Auckland. 5 4
Expand Veggie
Easy to get access to fresh Risk of changing preference in
ingredients 4 Pret to Auckland 3 the future
vegan restaurant
industry
Less competition power due Risk of entering a brand new
to the differentiation of Veggie country, unpredictable factors
Pret 4 3
0=Neutral Impact
5-Strong Impact
To summarize, the factors that drive and restrain the Veggie Pret international expansion should
be evaluated and noted for future reference. Veggie Pret in Auckland should take the
advantages of the larger demand for vegan food and the access to the fresh ingredients,
elaborate the unique fast casual dining services to the target customers while do not need to
worry too much on the rivals, but to monitor the trend within the industry. At the same time, try to
reduce the variable cost, which is increased by high labour and renting cost. Management team
need to investigate and infer the customers’ changing preference and implement them to the
restaurant.Reference 1. Pret A Manger. 2019. Pret A Manger A Potted History of Pret [online]. London. Available from https://www.pret.co.uk/en-gb/about-pret. [Accessed 22 February 2020] 2. Josh Barrie. 20 January 2020. Veggie Pret menu: Chain launches 15 vegan dishes ahead of new store openings in 2020 [online]. Europe. Available from https://inews.co.uk/news/consumer/veggie-pret-menu-new- vegan-dishes-2020-stores-opening-1370550. [Accessed 22 February 2020] 3. Noah Parsons. 5 April 2018. What is SWOT analysis, and how to do it right [online]. Europe. Available from https://www.liveplan.com/blog/what- is-a-swot-analysis-and-how-to-do-it-right-with-examples/. [Accessed 22 February] 4. Clare Clough. 29 April 2019. More about Pret’s new Spring menu[online].UK. Available from https://www.pret.co.uk/en-gb/more-about- prets-new-spring-menu. [Accessed 22 February] 5. Community, Staff Reporter. 1 October 2019. UK. Pret A Manger rolls out coffee cup recycling cup scheme to 350-plus shops[online]. Available from https://qsrmedia.co.uk/community/news/pret-manger-rolls-out-coffee-cup- recycling-scheme-350-plus-shops. [Accessed 22 February] 6. MCA. 4 September. Bread winner: Pret A Manger reports 34th consecutive quarterly sales growth.[online]. UK. Available from https://www.bighospitality.co.uk/Article/2018/09/04/Bread-winner-Pret-A- Manger-reports-34th-consecutive-quarterly-sales-growth. [Accessed 23 February] 7. Lora Jones. 2 January 2020. Veganism: Why are vegan diets on the rise ?.[online] . UK. Available from https://www.bbc.co.uk/news/business- 4448805. [Accessed 24 February]
8. A VRIO analysis thus helps to evaluate if…(iii) inimitable and (iv) supported by organization. ( Gerry Johnson Fundamentals of Strategy 4.4.1.2017) 9. BBC. 22 May 2019. Pret to buy EAT in vegan deal[online]. UK. Available from https://www.bbc.co.uk/news/business-48366324. [Accessed 24 February] 10. Rachel Smith. Explaining the VRIO Framework (with a real-life example). U. Available from https://www.clearpointstrategy.com/vrio-framework/. [Accessed 25 February] 11. Rashin Perera. 19 September 2017. The PESTLE Analysis [online]. Available from https://books.google.co.uk/books?id=ZWpLDwAAQBAJ&printsec=frontcov er&hl=zh-CN#v=onepage&q&f=false. [Accessed 26 February] 12. Ruvani Ratanyake. 18 December 2019. Gross domestic product: September 2019 quarter[online]. Available from https://www.stats.govt.nz/information-releases/gross-domestic-product- september-2019-quarter. [Accessed 26 February] 13. CIA. 7 February 2020. The World Factbook of New Zealand[online]. Available form https://www.cia.gov/library/publications/resources/the- world-factbook/geos/print_nz.html. [Accessed 26 February] 14. Nzherald. 14 January 2019. New Zealand ranks third in the world for veganism[online]. UK. Available from https://www.nzherald.co.nz/lifestyle/news/article.cfm?c_id=6&objectid=121 89925. [Accessed 26 February]
15. Liam Gilliver. 1 August 2019. New Zealand’s Ministry of Health Promotes Plant-Based Diet in New Sustainability Report[online]. New Zealand. Available from https://www.plantbasednews.org/lifestyle/new-zealand- promotes-plant-based-diet. [Accessed 26 February] 16. Hortnzco.nz. 2017. New Zealand domestic vegetable production: the growing story[online]. New Zealand. Available from https://www.hortnz.co.nz/assets/Media-Release-Photos/HortNZ-Report- Final-A4-Single-Pages.pdf. [Accessed 26 February] 17. Ovidijus Jurevicius. 27 May 2013. Porter’s Five Forces[online]. Available from https://strategicmanagementinsight.com/tools/porters-five- forces.html. [Accessed 27 February] 18. Lan R Bowler. 2014. The Geography of Agriculture in Developed Market Economies[online]. London. Available from https://books.google.co.uk/books?id=UmquBAAAQBAJ&pg=PA194&lpg=P A194&dq=new+zealand+vegetable+supplier+forward+integration&source= bl&ots=wmwwRTH8aS&sig=ACfU3U1QELGciLCv0ckP6uy5Qiluv7UKEA& hl=zh-CN&sa=X&ved=2ahUKEwi8ya72-- _nAhWFIqYKHYSzBcEQ6AEwAHoECAgQAQ#v=onepage&q=new%20ze aland%20vegetable%20supplier%20forward%20integration&f=false. [Accessed 27 February] 19. Nadia Murray-Ragg. 8 October 2017. New Zealand’s Demand For Vegan Products So High Supplier Can’t Keep Up[online]. Wellington New Zealand. Available from https://www.livekindly.co/new-zealand-vegan- products-suppliers-cant-keep-up/. [Accessed 27 February]
20. GreekReporter. 22 August 2010. Greek-Australian “Coffe Experts” are
looking to enter the Greek market[online]. Greek. Available from
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21. Mary Hall. 9 December 2019. What are the primary advantages of forming
a joint venture[online]. UK. Available from
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Appendix
Figure 3 Google Search for ‘Veganism’Figure 4 GDP of New Zealand quarterly and annual growth rates over March 2013- March 2019
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