External Business Environment from 3 Squares Restaurant Essay

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Environmental Scan of the Restaurant Industry



PEST analysis remains a critical business tool essential in aiding the identification of macroeconomic factors that could affect the business. Specific measures encompassed in this tool are political, economic, social, and technological. Restaurants can improve their decision making processes and timing. PEST analysis is essential in tackling future challenges and highlight opportunities (Ho, 2014). Engaging this tool in analyzing the industry helps dissect the macroeconomic factors that determine the future of 3 Squares Restaurant with the United States and specifically Minnesota where it is headquartered.

Political Factors



Squares Restaurant is affected by factors emerging from the political industry in the restaurant industry. Political factors segment discusses the effects of government intervention on the micro and macroeconomic environments. Significant political factors affecting include:



Public health policies are evolving especially in need to increase awareness towards discouraging the consumption of fast foods. Increased concerns about the calorie content of each food mean the restaurant has to shy away from high-calorie foods.



Employment laws relating to employees safety and rights: The adoption of the Affordable Care Act means that the restaurant will have to provide health benefits to full-time employees; failure to this adoption risks the restaurant a $2,000 fine. Others include EEO, the right to work, wage and hours, and whistleblower laws (Blumenthal & Collins, 2014).



Evolving dietary guidelines implies that the 3 Squares Restaurant will have to modify restaurants and adapt portion sizes consistently. In 2015, for example, the Food and Drug Administration agency created a policy to remove hydrogenated oils used in the preparation of food partially. Items with Trans fats were prohibited meaning the restaurant has to change food preparation ingredients always to comply with the government's regulations.

Economic factors



Government fiscal policies could have an impact in the restaurant industry that 3 Squares Restaurant considers. They are as follows:



Restaurant tax laws: Tax changes could affect 3 Squares business environment. At the end of 2015, for example, Congress passed the 15-years tax depreciation schedule that dictated new constructions and improvements of restaurants. This means that the restaurant has to plow into its revenues regularly to comply with the improvements and new installations when necessary. Tax credits that occur as enhanced tax deduction approaches are meant to deductions for charity and purchases of equipment (Blumenthal & Collins, 2014). Discussions into the federal task code in Congress could also affect the revenue output of the restaurant. Currently, restaurant owners pay individual tax rates. The changes could demand personal and business taxes. Consequently, this could negatively affect the restaurant's revenues.



Food inflation: When inflation is low, the purchasing powers of consumers increase consequently dictating higher spending capacity. On the other hand, the reverse is true. Price increases could cause negative sentiments among consumers. Food inflation could cut on the revenues of 3 Squares Restaurants. Low inflation also implies low interests are thereby enabling the company to borrow and expand the business. Low-interest rates mean consumers could get credit at low costs. On the other hand, higher inflation rates translate to higher costs of credit and borrowing consequently influencing its success (Ho, 2014).



The risky economic markets rising from political uncertainties affect the restaurant.

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President Donald Trump promises on lowering taxes and cutting down on regulations resulted in the sale of risky bonds (Fontaine, 2016). 3 Squares Restaurant also bets on the promises to improve productivity and increase revenues. Lower corporate taxes could result in freeing cash for interest payment. Last year, for example, lots of fear prevailed in the market concerning the outcome of the election. Rapid reduction in the prices of commodities and the slowdown of the Chinese economy created market tensions. Such occurrences also affect the restaurant that fetches produce whose prices rely on the existent market forces. Currently, the strength of the equity market promises economic stability that the restaurant relies on to grow and expand.

Social Factors



The segment focuses on demographic and cultural elements within the restaurant's industry. These issues also affect 3 Squares Restaurant that include:



Real food: consumer increased awareness on food choices have accelerated a preference for clean eating. In this case, customers prefer food made with natural ingredients free of additives and other artificial components. The evolving attitude is directly linked to the demand for fresh food that is healthy. With this in mind, 3 Squares has always to adjust its menu and provide customers with real food. This concept also extends to having authentic food, those having regional and ethnic ingredients. The need for control over flavors means that chefs have to make meals in-house (Blumenthal & Collins, 2014). In-house products made from fresh produce inspire taste that customers prefer. Public health protagonists have consistently raised the alarm concerning fast foods that have been deeply linked with obesity. Such concerns have driven consumers into shifting preferences of fast foods that have traditionally been a liking of many customers.



Micro cuisines: traditionally, quick service has centered on food items such as chicken and burgers. The focus on ethnic foods such as Chinese, Mexican, and Japanese cuisines later emerged. Today, customers expect hyper-regional items to feature in menus. 3 Squares Restaurant has to adjust to reflect the cuisines on demand. Local flavors have become preferable by customers. Extending these small cuisines on a limited or full-time basis could define the success of the restaurant. Emerging trends on cuisines particularly focus on local and regional cuisines.



Mindful dining: macro-trends in this segment have emerged that include reduction of food wastage, sustainability, and humane treatment of animals. Other than enjoying food, consumers want to feel good about themselves. Certain restaurants, for example, source their eggs from a chicken that are not placed in restrictive cages. Such initiatives are an indication of concerns that extend more than just serving food (Ho, 2014). Strategies for managing food wastage and charity donations also remain critical for the restaurant's image.

Technological factors



This segments factors into consideration the impact of technology in driving service delivery in restaurants. Technological advancements including the impact of changes in information technology are of concern to 3 Squares Restaurant. Technological factors influencing the restaurant are:

Increasing delivery options



Food delivery has emerged as an increasingly popular way of getting customers their preferred meals either….....

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References

Blumenthal, D., & Collins, S. R. (2014). Health care coverage under the Affordable Care Act -- a progress report.

Fontaine, R. (2016). How Trump Can Save the Liberal Order. Foreign Affairs.

Ho, J. K. K. (2014). Formulation of a systemic PEST analysis for strategic analysis. European academic research, 2(5), 6478-6492.

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