Hong Kong-style fast food is either served in fast-casual restaurants such as Café de Coral, Maxim's and Fairwood or in food courts typically attached to malls or supermarkets such as CitySuper. The food offered is a mix of Canto-Western cuisine, Cantonese fares, and increasingly Asian food from outside China.
Fast food industry faces a challenging and volatile environment. Food is a fast-moving consumer products and companies must be swift and agile to compete globally. The sector is highly vulnerable to changes in consumer demand and commodity price shifts.
Porter's five forces analysis is a framework for industry analysis and business strategy development. The followings are the factors of Porter’s five forces:
1) Threat of New Entrants
Economies of Scale Large chains do see some advantages of economies of scale which new entrants are not easy to obtain. For example, Café de Carol has adopted centralize kitchen and large-scale advertising program (Appendix 1).
Product Differentiation While differentiation is a large and necessary expense for the large fast food chains in the industry, it is not difficult for private startups to overcome and thus not a significant barrier to market entry.
Capital requirements will quell the formation of new, national competitors, but is not a significant barrier to private startups.
Cost disadvantages stem from the fact that established companies already have product technology, access to raw materials, favorable sites, advantages in the form of government subsidies, and experience (referenceforbusiness, 2012). The similarity in product offering makes convenient locations essential for quick service restaurants large and small. This is a significant barrier to entry.
Large established brand companies such as Café de Coral and McDonald’s do make it more difficult to enter and succeed within the marketplace. The…...