Political Requirement:

Actions taken in political arenas near and far results in regulations that affect your menu, payroll,
customer satisfaction and profits. Restaurant organizations and individual owners monitor the
government's rule-making process to find out which way elected and appointed representatives
are leaning. They support political candidates who will provide them with a voice in negotiating
issues that affect the industry, including nutritional labeling, obesity-fighting programs,
minimum wage hikes, affordable health care and immigration reform.
Structural problems in the power sector are addressed
Domestic terrorism
Tax Laws
Legislations
Unemployment Rate:

Economic Factors:
Economic Conditions:
Pakistan is facing Economic challenges. It shows that our country is in the list of under
developed countries. In this article we will discuss about the Economic Condition of Pakistan. In
the last budget, the government gained 4.3 per cent economic growth but with gas and load
shedding problems they didnt achieve the targets. So due to lake of experience and knowledge
they came in the figure of 2.2 per cent growth which shows almost no growth in the current year.
The major problem in Pakistan is increase in population which is directly effecting our
economic growth. Of course, due to higher rate of population, we should increase our
investments but due to less financial reserves this investment is not possible. This low economic
growth rate has led to low foreign and the government has also not been able to support the
industry since the reserves are low.
Another challenge is inflation 8.53%. Inflation means increase in the prices of commodity. It
badly affects the salary based groups. This also shows our higher rate of taxes because tax is part
of the inflation. When inflation rate high in our country then it generates the public debts, which
is about 70 percent of the Gross Domestic Product. This problem is increasing day by day.
Inflation also affects the prices of the commodities and since the prices are going up the
purchasing power of the consumer is going down. This decrease in spendable income is affecting
a lot of industries including the fan industry. Commodity Prices
Consumer Spending
The major problem is immediate change in the situation of regional and international market.
Utilities such as gas, electricity, water is another cause of a problems because IMF forced the
under develop countries to enhance their rates which is effecting the common man or salary
based groups. They dont save much in fact they just fulfill their basic needs. These gas and
electricity outages are adversely affecting the fan industry. Many factories had to be closed down
and the level of production has dropped significantly.
Social Factors:
Sociocultural forces that include attitude of the society, families lifestyles and change in values
impact the industry over the time. Shift in preferences is obvious: people are looking for healthy
and freshly prepared food, leaning towards premium products and value. Another trend is that
people prefer to eat home to going out, which was the consequence of the economic downturn.
The NDP group defined two different mindsets when it comes to spending: people that spend
free and those who cannot. It is clear that dichotomy between these two groups shapes the
restaurant segment of upscale dining. The agency defined that 24 percent are optimists and 76
percent are controlling their spending.
Technological Factors:
Going mobile and moving faster is the technology trend in the restaurant industry that shapes all
the segments through different innovations. Use of a smartphone and ability to access restaurant
booking system from anywhere decreased the number of phone calls for reservation as well as
allowed the restaurant operators to gather certain data for marketing purposes. Another trend is
check in services like Foursquare that represents context-aware type of advertising and
attracts the customer with its sophistication. Mobile payment system like GOOGLE wallet that
stores all the credit cards and loyalty cards as well as enables redeeming of promotional offers
will speed up the payment process and secure the customer information (Packaged Facts,2012).
Legal Requirements
Laws Dealing with Food Safety in Pakistan
There exist a large number of food laws in Pakistan. However, most of them deal with control of
production, distribution and supply of food, in addition to dealing with profiteering and hoarding.
There are four laws that specifically deal with food safety. Three of these laws directly focus
issues related to food safety, while the fourth one namely Pakistan Standards and Quality Control
Authority Act, are indirectly relevant to food safety. The Pure Food Ordinance, 1960
consolidates and amends the law in relation to the preparation and the sale of foods. All
provinces and some northern areas have adopted this law with certain amendments. Its aim is to
ensure purity of food being supplied to people in the market and, therefore, provides for
preventing adulteration. The law prohibits any person to mix, color, stain or powder any food, if
the mixing involves violation of prescribed rules or is likely to make the food injurious for
health. There are four criterion adopted by the law to ensure purity of food: a) it prohibits
manufacturing/preparation or processing of such food, which is likely to be unsafe for human
consumption, e.g. any food which can cause food poisoning; b) it prohibits import, export or sale
of unsafe food; c) sets out certain hygiene standards; d) provides for inspection and laboratory
analysis of food samples according to a set criterion. Local authority, which is designated by
the government, is responsible for enforcing the Ordinance within its jurisdiction. The law is not
uniform in all areas. Even penalties of the same offence vary in provinces. Furthermore, the law
is silent about award of compensation or damages to consumers. The Pure Food Ordinance 1960
does not apply to cantonment areas. There is separate law for cantonments called The
Cantonment Pure Food Act, 1966. There is no substantial difference between the Pure Food
Ordinance 1960 and The Cantonment Pure Food Act. Even the rules of operation are very much
similar.
The Pakistan Hotels and Restaurant Acts Act 1976 is the law which requires the owners of all
types of restaurants to register and obtain a license with the government. The restaurant owner is
required to apply to the controller for registration of the restaurant.
Application for registration and determination of fair rates shall be made to the controller in
Form G together with a certificate of medical fitness in Form I from a registered medical
officer of the civil hospital in respect of the staff of the restaurant.
For registration of a restaurant, the owner of the restaurant is required to conform to the standard
of health, hygiene and comfort which standards have been set out in Schedule II of the act. On
receipt of application, the controller will carry out inspection of the aforementioned premises and
once satisfied will initiate the registration process. Once registered the owner of the restaurant
will apply to the controller for license as per the Act which needs to be renewed on a yearly basis
for the prescribed fee.

Pakistan Hotels and Restaurant Act, 1976 applies to all hotels and restaurants in Pakistan and
seeks to control and regulate the rates and standard of service(s) by hotels and restaurants. In
addition to other provisions, under section 22(2), the sale of food or beverages that are
contaminated, not prepared hygienically or served in utensils that are not hygienic or clean is an
offense.
The Pakistan Standards and Quality Control Authority Act, 1996 is a relevant law; although it is
not classified as a food law. This Act provides for the establishment of Pakistan Standards and
Quality Control Authority (PSQCA), which is the apex body to formulate standards or adopt
international standards. It is also responsible for enforcement of standards in the whole of
Pakistan and has the mandate to inspect and test products and services, including food items, for
their quality, specification and characteristics during use, and for import and export purposes.

Porters Five forces Model:
Rivalry:
The upscale segment in restaurant industry is highly competitive because of slowly growing
buyers demand, no cost of choosing another restaurant to dine, substantial amount of
restaurants. Customers are expecting great value of food and quality of service with respect to
price and promotions. Revenues of the restaurants depend on customer traffic that can be
influenced by strong and aggressive marketing. Competitive advantage can be also obtained
through changing prices and differentiating strategies.

Threat of new entrants:
The threat of the new entrants is extremely high because of low entry barriers. Buyers demand
is in the stage of growing after the economic downturn and promises to be steady. Product
differentiation is relatively weak because all the upscale restaurants are offering the highest
quality product and striving to provide quality service.
Capital requirements to start a new business are relatively low. Another factor is franchise
component of the industry that allows new business owners obtain equipment, premises,
furniture from the owner, which lowers initial cost of a start-up.
Threat of Suppliers:
Suppliers bargaining power in upscale segment of the restaurant industry is very weak, since
each company in the segment accounts for the big fraction of the suppliers sales. The reason
behind it is maintaining consistent quality throughout all the restaurants in the chain. The cost of
switching to a different supplier is relatively low as well as there are good substitutes for
suppliers product.
Threat of Buyers:
Buyers bargaining power is very strong due to absence of switching costs when choosing
different restaurant to dine. Customers are very well informed about the pricing and quality of
the product that upscale segment offers as well as there is an option existent of postponing the
visit to the fine dining establishment. In todays slowly reviving economy buyer is very price-
sensitive, which puts upscale segment on the spot of reconsidering their price point and offering
the alternative.
Substitutes:
Competitive pressure from the sellers that offer substitute products goes both ways: if there is a
substitute of equal quality available there is almost no difference to switch over and customers
loyalty comes in to play as well, but if guest is looking for quality food with less focus on the
overall experience and atmosphere that fine dining offers they switch to lower cost provider,
casual dining.