Porter’s 5 forces model is a model that identifies and analyses 5 competitive forces that shape every industry, and helps determine an industry's weaknesses and strengths in order to know the attractiveness of any business. Attractiveness in this context refers to the overall industry profitability. The strongest competitive forces determine the profitability of the industry and become the most important to strategic formulation. Thus, it is essential for managers to understand and apply this useful strategic tool in industry analysis.
Threats of New Entrants 4/5
• Restaurant and catering service/business has low barriers to entry
• Overhead costs not too large/ however food trucks bring higher overhead costs
• Most restaurants are similar north American comfort food low scale small companies
• Easy to enter market/ small amount of education that you need
• Easy to access materials for cooking, however fresh materials are limited due to season
• High regulations on restaurant industry (cleanliness of work, food quality)
Threat of Substitutes 2/5
• Low people don’t have the knowledge to cook international styles of food
• University students are usually too lazy to cook however they are still concerned about the health (Generation Y provides healthy and cheap international cuisine)
• Easy and cheap to buy pre-made microwaveable food however it has low nutritional content and typically is North American Style food
Degree of Rivalry 3.5/5
• There is a lack of diversity in Antigonish not very international
• A lot of different restaurants around the city (despite them being different kinds of foods we still have to compete with them
• Switching costs are high
• Many of the restaurants in Antigonish are large powerful players (MacDonald’s, Tim Horton’s, A&W, Subway)