SG7001 Strategic Approach of Leon Restaurants Assessment 1 Answer
Analysis of the factors contributing to competitive advantage in Leon’s Restaurants
The study highlights the strategic approach of Leon restaurants. In this context, the company tends to produce healthy as well as tasty fast foods. The external environment in regards to political and economic scenario are not too much in favour of the company. However, the company can boast of its resource and capabilities along with its alignment of the mega trends. The operations of the company are sustainable and works in perfect tandem with the company vision.
The main purpose of the report is to highlight the factors that provide competitive advantage to Leon restaurant. he Leon restaurant was established in 2004 in United Kingdom by Henry Dimbleby, Allegra McEvedy and John Vincent. Initially, the restaurant was opened in Carnaby streets, and in years it expanded to 60 outlets worldwide. The vision of the restaurant is to serve food that is sustainable and puts less burden on the environment. Along with the research team, the management of Leon designed green menu that is more seasonal vegetables and decreased the usage of plastics.
The study will delve into the business environmental elements and situation of the country to evaluate opportunities and threats present for the organization. Furthermore, the rising trends in hotel industry will be assessed for better scopes of upgradation. The strategy of the restaurant will be critically scrutinized to identify about the resources and capabilities of the company. The operational stratagem of Leon will be investigated to understand the success factor of the firm.
2.0 Critical evaluation of the environment of the industry in which the Leon’s Restaurant operates
2.1 PESTLE analysis
PESTLE analysis will highlight about the external environmental factors that have significant impact on Leon Restaurant. Refer to Appendix 1 for interpretation of PESTLE analysis
From the above table it could be understood that negotiations over Brexit affair has disturbed both political stability and economic development of the country. On one hand, prices of the houses are falling and on the other hand the inflation rate is rising. Due to slow increase in income rates, the citizens will have lesser amount of disposable income at hand, thereby tendency of spending less on frugal comforts. This is going to affect the restaurant business adversely. Nonetheless, high class social status individuals are greatly concerned about their health aspects and will prefer fresh and natural menus of the Leon restaurant. Upgrading of the restaurant technologically will be encouraged by the tech-savvy citizens. Nevertheless, the organization has to keep strict vigil over the waste products in order to comply by the ecological enactments.
2.2 Emerging megatrends and appropriate restaurant trade trends
Restaurant industry is expanding like never before. However, the old concept of the business is changing drastically and emerging trends have been observed. Online ordering services have been increasing since the time it had started. Every 3 out of 5 people order their food online every week. It has been estimated that direct delivery from the restaurants accounted for $32 billion, $13 billion from third party delivery service. With the advent of internet and smartphone applications online ordering has come to the fingertips of the consumers. Another trending concept going round the table is hosting off-beat experiences for the customers, where new exclusive menus are being offered once a while. Due to advanced medical facilities and treatments life span of the citizens are more than the earlier times.
The restaurants have to consider their menu for the ageing population as well. Additionally, the incidents of different diseases such as diabetes type II, obesity, cholesterol and fatty liver are escalating. The number of health-conscious individuals are increasing each passing day. Consequently, the consumers are inclining towards the healthy food options available in the hotels and cafes. Owing to rise in diabetic patients throughout the world, the countries are adopting interventionist approach to reduce sugar consumption. UK, Ireland, European states have already initiated imposing taxes on sugar, thereby compelling the restaurants and food industry to reformulate their menus accordingly. Shaping the food for the future is the new mantra for the restaurant trade.
2.3 Porter’s 5 forces
Refer to Appendix 2 for the Porters/s Five Forces Analysis Table
Porter’s five forces analysis reveals that threat from the new entrants and the buying power of the consumers is high. However, bargaining influence of the suppliers and threat from substitutes is low and Leon faces greater amount of threat from the existing competitors. Therefore, it could be stated that the company should keep innovating its product and service offerings for addressing the changing needs and demands of the consumers. Market skimming will allow the company to keep track regarding the footsteps of rival brands, which is essential for the company to maintain an upper hand.
2.4 Industry Environment
2.4.1 Success factors in the industry
Restaurant industry is expanding with leaps and bound. Large number of people are consuming food outside their homes due to erratic working hours, unsystematic lifestyle, parties, leisure and for tasting different appetites. The success of the industry lies in the fact that the companies are evolving their products and services to meet the change in the needs of the population. Though, UK is facing tough political times, and economic growth is slower, yet the citizens are going out at restaurant. Moreover, rise in health-conscious people aided in the success of fast food chain restaurants serving organic and healthy products to the customers.
2.4.2 Influence of the megatrends on the industry’s environment
One of the megatrends that is influencing restaurant industry is serving food as medicine. As the world is witnessing the rising incidents of chronic ailments such as obesity, hypertension, cholesterol, and diabetes type II, the restaurant business is restructuring their menus accordingly to meet the changing needs of the consumers. With the introduction of healthy organic and pesticide free food in the café, the number of consumers are increasing. Moreover, with the introduction of online ordering system the industry observed huge leap in economic growth of the business.
3.0 Critical evaluation of the strategy of Leon’s Restaurant
3.1 Resources of the organization
3.1.1 Tangible resources
Tangible resources refer to the physical acquisitions of the company in regards to land property, generation of revenues and machineries. The tangible resources of Leon restaurant include the raw materials used for their food, infrastructure in the café, and funds. Leon promotes harvesting of own plants and vegetables without using pesticides and other chemicals. The estimated revenue generation of the company is approximately $30M, comprising of 167 employees approximately. The head Quarter of the company is situated at London, United Kingdom.
3.1.2 Intangible resources
The intangible resources of the company include its brand image, credibility, goodwill, patents and expertise of the employees. Leon initiated the practice of serving healthy fast food to its clients, earning huge amount of goodwill and credibility among the consumers. Furthermore, their sustainable journey towards development established their brand image and made the restaurant as the market leader.
3.2 Capabilities of the organization
Capabilities of the company is defined by its ability to gain competitive leverage over the rivals. Leon restaurant promotes healthier and fair work culture, whereby it treats both males and females equally. Moreover, for the fitness of the employees it had created center of yoga and wing tsun. Additionally, the founders of the restaurant modified the existing food plan followed in the schools. It encourages use of reusable products and decreased usage of plastic materials. Owing to these capabilities, the firm is recognized as a brand. Furthermore, owing to its healthy quotient of foods and services, the company has gained huge public faith and goodwill over the years which indeed helped the company in gaining impetus. Once the company has its existence in London, UK, it started spreading its wings globally and owing to its environmentally sustainable products, it immediately gained acceptance amongst the population.
3.3 VRIN framework of resource and capabilities.
|Aspects ||Valuable ||Rare||Imitable ||Non- substitutable |
|Goodwill ||The good will which the company has gained over the years is one of the valuable aspects which helps them get an edge over the competitor brands.||It is rare as some of the fast food chains are being subjected to use of artificial preservatives in their food products. However, Leon restaurants always probe for producing healthy fast food which serves both the interest and health aspects of the consumers. ||It is imitable as other companies may also start focusing on this aspect of food producing in both healthy and tasty way as consumers are becoming more health conscious these days. ||However, rival brands cannot substitute the goodwill earned by the company over the years. It is due to consumer trust which assisted the company to get competitive edge. |
|Brand recognition ||The company has gained considerable amount of brand recognition owing to its positive work culture and effective service delivery to consumers ||It is not rare as several competitor brands also focus on work culture and service deliver for attracting consumers ||It is imitable as in a hospitality sector consumer service and employee training are the ultimate aspects for any company ||However, it cannot be substituted as Leon has the confidence of its consumer base and its dedicated employees. |
|Healthy production of foods||It is a valuable aspect that the fast food chain products healthy foods, which are tasty as well ||It is rare because not only does the company produces fast food, it also it also does its production in a healthy manner by emphasising on environmental sustainability.||It is difficult to imitate as most other companies who sell organic or healthy foods rarely produce the raw materials on their own ||The healthy production of vegetables and fishes by Leon has been happening for quite some years and therefore, right now it cant be substituted as this is the ultimate way of producing healthy foods. |
3.4 Comparing resources and capabilities with Megatrends
In this context, it could be stated that the company has made rapid expansion over the years and has been in tandem with the mega trends of the hospitality sector. The company produces its own vegetables and fishes in a sustainable manner which is immune from any use of pesticides. Considering the trend of intaking foods as medicines aligns with the concept as the company is dedicated to online production of foods. The company also probes for streamlined online ordering for proving easy assistance to the consumers. Another trend suggests that consumers are becoming more health conscious these days and owing to their busy schedule they cannot compromise their intaking of fast food either. The intaking of healthy as well as tasty foods definitely attains the consumer interest effectively.
4.0 Critical Evaluation of Operation of Leon Restaurant
4.1 Operations at Leon Restaurant
The company is very keen in handling the operations department. For abiding with the production of healthy foods, some of the raw materials are produced by the company itself. However, some of the products are outsourced from the suppliers considering the fact it is quality checked so that food quality is not hampered. Likewise, the ingredients are properly washed and then cooked. Food quality analyst checks the quality and finally it is delivered to end consumer. In regards to delivery, the packaging is dealt with utmost care.
4.2 Referring to the Vision of Leon Restaurant
While aligning to the vision of the Leon restaurant, it could be stated that most of the companies produce tasty food but ultimately, they are not healthy. In this context, the company aims to deliver healthy as well as tasty foods to the consumers. The production of healthy vegetables and fishes on their own are justified with the company vision.
4.3 Supporting the Delivery of Vision
While supporting their visionary ideas, the company takes active participation in serving more vegetables and better form of meat. The sourcing of the products is also being done responsibly as the fishes they use in their dishes is being farmed by hand only. Furthermore, the company also produces quite a few plant oriented dishes which could add to the health quotient of the target consumers. The pork which is used by the company is certified by RSCPA which ensures premium quality of products. The chicken farms are visited at regular intervals for checking their health and therefore it could be stated that the company is totally dedicated to attain the visionary aspects
4.4 Sustainability of operations
All the operational aspects of the restaurant is been powered by Green energy totally suggesting a combination of solar, anaerobic, wind and hydro digestions. The operational department also take active participation in reducing the usage of plastics for attaining a sustainable approach. The company prefers fresh ordering of foods and judge menu depending on weather forecast which again reflects upon its aspect of sustainable operations.
While concluding, it could be stated that the Leon restaurants has gained the confidence of the consumers over the years owing to its healthy production of foods. The concept of selling tasty as well as healthy foods has worked wonders in terms of enhanced brand recognition and company good will. However, the political and economic aspects of UK are not quite in favour of Leon restaurants. The company needs to consider this aspect while continuing with their business operations. Apart from that the company can also boast for its resource and capabilities along with a streamlined value chain which will help them surpass several competitors over the years.