Introduction
The case describes how Pret a Manger, a London-based casual restaurant, was influenced by the COVID-19 pandemic. Using the example of Pret, it is possible to talk about the entire field of casual restaurants in the era of the pandemic and after it. The analysis of the attractiveness of this area must be carried out using the PORTER and PESTEL analysis models. The revealed data will allow developing recommendations for the behavior of the sphere in post-COVID time.
The Attractiveness of the Casual Dining Sector
Pret a Manger is a multinational sandwich dining with major expansion plans that have been devastated by the pandemic. COVID-19 continued to significantly restrict movement at Pret stores, which were strategically located near offices. During the coronavirus lockdown, Pret’s bustling atmosphere, limited to takeaways, no longer appealed (Tavassoli and Spungin, 2020). It is obvious that Pret was attractive enough before the pandemic, but more than two years later, this format of establishments is not very profitable.
PORTER Analysis
The main reason why casual dining restaurants are becoming less popular is a change in shopping behavior: more and more people are opting for delivery. Porter’s five forces analysis includes the forces of competition: the threat of substitutes and new entrants, the level of competition, the bargaining power of suppliers, and the bargaining power of consumers (Wood et al., 2021). Pret replacement products do pose a threat, Subway remains a major competitor. The threat of new players is not too significant, since the industry in the post-Covid period is not attractive. As can be seen from Appendix 1, Pret is seriously losing in the competition, since face-to-face visits were the basis of the strategy. Supplier relationships are no longer a major threat as Pret had a well-established supply chain (Tavassoli and Spungin, 2020). The bargaining power of consumers should be a concern as people become less oriented towards this format.
For the industry as a whole, the following conclusions can be drawn: competitors that have gained strength before the pandemic will operate, possibly in the delivery format. After the pandemic, the overall losses of the restaurant sector amounted to at least 20% (Nhamo, Dube and Chikodzi, 2020). The key role will be played by the ability to adapt and use the resources established before the pandemic: the supply chain and customer attractiveness. Casual restaurants will not be as popular as they were before the pandemic, more people have discovered home delivery for themselves (Hastiningsih and Sari, 2020). Restaurants that have gained more customer trust through improved transparency are likely to recover from the pandemic faster, as consumer confidence plays a major role (Yost and Cheng, 2021). Locations near offices and focus on business lunches remain a winning strategy as people continue to go to work in traditional format. However, the industry may be less profitable as many employees continue to work remotely.
PRETEL Analysis
The Pestel analysis is an effective model for evaluating business factors. It is necessary to take into account the political, economic, social, technological and legal aspects (Johnson et al., 2019). According to Appendix 2, one of the main factors influencing the industry will be social. It demonstrates a decrease in consumer interest, a growing desire to use delivery services Mehrolia, Alagarsamy and Solaikutty, 2021). An important role here is played by the technological factor, which makes ordering dishes affordable (Frynas and Mellahi, 2011). At the moment, consumers are interested in sustainability and healthy eating, and places like Pret need to pay attention to this tendency (Petrescu, Vermeir and Petrescu-Mag, 2020). The industry was profitable before the pandemic, but new adaptation strategies are needed. The state and the law protect consumers, restaurants must take all security measures to protect the visitors (Kim et al., 2022). In general, the industry must adapt to changing consumer interest, meeting all safety standards, then it can remain attractive.
The Main Post-COVID Challenges
Even though the worst of the pandemic is over, it continues to pose threats. First of all, this tendency has negative implications because of a seriously changed consumer behavior and a drop in the popularity of visiting restaurants and going out for dinner. A greater number of consumers prefer to limit themselves to home delivery of food during the period of popularization of online delivery services (Jun et al., 2021). People may keep the habit of going to restaurants, but this trend will be observed more on special occasions and will not affect fast food restaurants and cafes. The industry should make significant attempts to attract customers and operate in full compliance with COVID-19 safety requirements.
Improving Profitability
For casual restaurants like Pret, a clear strategy is needed to recover from the effects of the COVID-19 pandemic. The strategy can go in two ways, one of which will be traditional, the second – innovative. Both strategies are high risk and cause major business model changes, but they are essential for restaurants to survive in a time of changing buying interest. The first of the proposed strategies is traditional, focused on maintaining the current format.
There are high chances that the pandemic will be defeated and the world will return to pre-COVID life. However, consumer behavior still remains irrevocably changed, and customers need to be additionally motivated to visit restaurants of the usual format. Motivating buyers through discounts may be unprofitable and ineffective when the drop in demand was caused by another factor (Rumelt, 2011). It is proposed to focus on the development of a concept that will be closer to the modern buyer. For example, it is proposed to expand the line of healthy food, in which people are now becoming more interested. In this case, everyone who comes to the restaurant will have something to eat, which will create a strong reputation and launch a recommendation service among visitors. In addition, it is recommended to focus on business lunches, as fewer people choose restaurants as a place to go out in the evening. During the daytime, advantageous combo sets can be offered, allowing visitors to dine healthy and quickly.
The second proposed path is more adaptive to modern realities and consists in the fact that each restaurant needs to establish a delivery service. Innovativeness in today’s world is a direct path to establishing customers interest (Tidd and Bessant, 2018). However, strategic innovation can only become a business advantage if it is introduced ahead of competitors (Schilling, 2022). If the restaurant has not previously had delivery, a large advertising company is needed to announce the availability of the service. It is also necessary to reorganize the kitchen that will work on such orders. The main competitive advantages should remain the speed of delivery and keeping food warm and fresh.
Theoretical Limitations
For restaurant businesses, the advantageous combination will be the use of both strategies: maintaining attendance and working to deliver food. Any strategy needs timely evaluation of effectiveness (Macintosh and Maclean, 2015). The first difficulty arises in evaluating the effectiveness of the model, since a considerable amount of time must pass to reach the results. Another limitation is the complexity of implementation: launching a delivery requires more employees, retraining, hiring a courier or finding a courier service. Adhering to the traditional format may not be effective, as it depends on the behavior of buyers that is difficult to predict. After the pandemic, the restaurant business suffered significant losses, and accordingly, there may not be enough financial resources to implement new strategies.
Conclusion
The restaurant business has suffered huge losses during the pandemic, from which it can be difficult to recover. Middle-class cafes and restaurants that focus on everyday food and do not have a home delivery option suffered the most. To recover from the crisis, businesses can follow two strategies: traditional and innovative. The traditional model will include measures to attract customers back to the establishments. There is a need for full sanitary protection of visitors, as well as meeting the new expectations of buyers. The innovation strategy will consist of focusing on product delivery, which must be fast in order to provide a competitive advantage. At the moment, there is no reason to expect that buying behavior will change dramatically; a combination of both approaches is most beneficial for businesses. The pandemic has changed business strategies and new measures are needed to maintain profitability.
Reference List
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PORTER Analysis
