Business Environment Analysis

Anand Fast Food chain

Prepared by:
Aayushi Shah
Krupa Gadhavi
Jayesh Kuril
Nirav Mirchandani
Introduction
Anand Sandwiches was started 2 decades ago. The owner saw an opportunity in the market to
open a food chain in Naranpura area of Ahmedabad as there were hardly food chains of the kind
at that time in the area. He took the first mover advantage and turned out to be a successful quick
service restaurant in the following years.
Currently, it holds a two-fold operation which generates it's revenues; one by providing meals
that can be consumed in the QSR itself and two, packaged food that can be consumed later.
Today, there is huge competition in the market, more than 10 similar kind of fast food chains
have been launched within 100 meters of Anand but none have been able to establish its position
in the market as Anand.
Anand started off by providing a very limited number of items in a space of less than 15 sq ft.
with a foot fall as low as 15 /day on weekdays and around 20 people/ day on weekends. At that
time, Charbhuja was its biggest competitor and a huge hurdle in its growth. Charbhuja, which
also developed at around the same time as Anand and similar amount of space but somehow it
was growing at an immense rate and was growing more and more popular. The turning point
came after a decade when Charbhuja started seeing a huge number of footsteps, so huge that the
place started getting too chaotic during peak time. Anand grabbed this opportunity and lowered
its rates and hence the customers instead of standing in such a long queue started coming to
Anand. As a result, Anand’s best quality service and reasonable price started attracting even the
loyal customers of Charbhuja. Anand, with its accurate decision making skills, is the most
popular QSR of Naranpura today. Unlike Charbhuja, Anand expanded its space without
increasing its prices and maintaining the same quality and taste. Currently, Anand expects
footfall of around 100/day on weekdays and 200/day on weekends.

Key Strengths Pricing advantage, Long-term existence,

Quality and taste

Key Challenges Competitive pricing, other QSRs providing

home-delivery and table services.

Financial Aspect
Capital Procurement
Most entrepreneurs start their companies by investing their own savings. Anand Fast Food chain
was also started with same ideology. The owner started this business by investing his own
savings over the year as he believes that this source of financing can be ideal – if you can afford
it plus it puts you in full control of how much you are going to get. Furthermore, you never have
to justify yourself to investors. This last point is an important benefit. You have the freedom to
operate as you see best. Also, as per the details disclosed by them no government grants or
subsidies of similar kind have been availed by them. Complete financing is done by the owner
itself and does not even wish to indulge into any kind of partnership.

Capital intensity v/s Labor intensity

The food service industry is fairly resistant to the advances of technology and the trends of
Anand fast food are also no different. Part of this may have to do with the homely, traditional
association of eating and mealtimes, and, of course, the fact that the product is perishable. But
more pressingly, the industry itself is at odds with innovation: it’s slow, highly regulated, and
very capital-intensive.
What the industry’s more forward-thinking players are doing is implementing digital change that
has less to do with actual food and more to do with process, whether that’s customer experience
or internal. By and large, at the moment, it’s about mobile and automated ordering. Not only
does this provide valuable customer data with every interaction, but also it improves efficiency
(removing the step of the counter/waiting staff taking the order and relaying it to the kitchen) and
saves money (as fewer staff are needed). Anand fast food also following the industry trends has
gone online but still believes that it's offline sales are much higher than online.

Other Resources and inventory management

Being into fast food business, one of the most crucial operations of Anand fast food is to
maintain its inventory of vegetables, breads and buns, ketchup, chutney and other essential
groceries while ensuring the freshness and edibleness of the same. This proves to be quite a
challenging task as almost all the raw materials used by Anand are perishable in nature.
However, the effective and efficient human capital of Anand makes sure that the required
quantity of all the groceries are maintained as an inventory while also taking care to avoid
overstocking and spoilage of the groceries.

Future opportunities
According to a report, Indian fast food market is expected to grow at a CAGR (compound annual
growth rate) of 18% by 2020 due to changing consumer behavior and demography. It is expected
to be worth US$ 27.57 billion by 2020. Vegetarian fast food constitutes of around 45% of the
whole fast food market in India and is expected to grow at a CAGR of 18% by 2020.Anand fast
food can take the chance to gain advantage from this expected market growth. With the
increasing growth in the fast food market in India they can expect increase in footfalls and thus
the sales of their food products. Also they can make the most of this opportunity by opening
more food joints in the city where they have no presence yet. The report further discovered that
there is large scope for the fast food companies to expand their operations in Tier 2 and 3 towns.
ANAND FAST FOOD can maximize on this scope on expansion by growing its presence in the
nearby towns by opening their food joints in these places. Millions of people eat ethnic fast food
every-day from pani-puri to vadapav to dosa. Ethnic fast food market in India is projected to
grow at a CAGR of 31.95% by 2019-20. By including more ethnic fast food dishes, they can
attract more people and thus expect higher sales. Fast food in India continued to record healthy
growth in the previous years, thanks largely to a rising number of millennials, with the median
age in the country being 27. Anand fast food can target this young crowd by reaching out to
these millennials by opening their joints nearby their workplace, study-place or whatever place
they spend most of their time. Online food ordering has exponentially increased over the last few
years with newer food delivery service companies coming in every now and then. They can
subscribe and tie-up with these companies so that their food can reach out to those as well who
don’t or can’t come up to their food joints. Latin American fast food continued to record positive
growth in the previous years. One of the main reasons behind the channel’s growing popularity
in India is the closeness of this cuisine to Indian food in terms of flavor and spiciness. Inclusion
of such dishes on their menus can benefit them in raising their sales. Fast food in India in 2018
was not just limited to quick service restaurants serving American or European food. The
channel continued to be dominated by Asian fast food, primarily Chinese. To capitalize on this
one, they can either include Chinese cuisine to their menus or they can have dedicated food
joints with particularly Asian and/or Chinese food on their menus. Anand fast food can also
register themselves as a food company and open up on franchisee options for their further
expansion. After registering themselves as a company, they can by providing additional services,
venture into the fast food casual dining restaurants (CDRs) as the market of such restaurants in
organized fast food sector in India is projected to grow at a CAGR of 27% by 2019-20.

HR Policies
Being a fast food chain under unorganized food sector, ANAND FAST FOOD has no formal HR
policy or HR functionaries. But they do follow some rules and regulations set by themselves
when it comes to managing HR activities in their food chain.

● They strictly disallow child labor in the food joints under their chain. They refuse to
declare valid the working of children to earn money.
● They maintain timely payment of wages to the people working in their food joints.
● Utmost effort is displayed by them to retain their hardworking and efficient employees.
 ● They allow 8 hours shift for their workers and avoid their exploitation by not allowing
them to exhaust with too much work.
● They prefer having chefs with expertise and experience in making variety of dishes of a
particular cuisine. They take care of keeping them employed under their food joints by
providing them enough wages to not leave and join other food joints.

Analysis
PEST Analysis
Political Factors
Trends affect the food industry. Fast food restaurants are adding “healthier options” on their
menus as public health policies are pushing for foods with lower sodium and sugar intakes.
Current policies push for the public to be more conscious when buying foods. For example, as
part of the Health Menu Choices Act, food services with over 20 locations in Ontario, Canada,
must now post the number of calories for food and drinks openly. A change like this could affect
purchases of foods for their country. Taxation, inflation and evolving health policies affect the
working. Saying about anand, there is an increase in the cost because of the GST.

Economic Factors
The state of the country and unemployment rates can affect the food industry. Healthier
alternatives to foods are pricier compared to fast food or easy-to-make meals.
Here the prices are minimal and so the economic factors are not so relevant for the Anand Fast
food.

Social Factors
Fast food trends shift based on what consumers want. As mentioned throughout this analysis,
healthiness is the focus in many countries. This is not only pushed by governmental authorities,
but by consumers, as well.
What we’re seeing is a rise in organic and whole foods as diets and lifestyle changes come into
play. Vegetarian, vegan and pescetarian eating are becoming less of a fad and more of a lifestyle
choice — particularly with the younger generation. How these foods appeal to people is based on
their branding look.
As a result, fast food chains are implementing their own branding makeovers.
Talking about Anand fast food, it provides Jain food according to the society and also during the
festive season they provide the food accordingly. Example- In the month of shravan they provide
Farali food. Also, if they want to expand the outlets out of the state, then they need to start up
with the non-vegetarian because in Gujarat there are less numbers of non vegetarian and so the
vegetarian outlets will work. But talking about outside of the Gujarat they need to start with both
the vegetarian and also the non vegetarian. Example-Bangalore, Mumbai, etc.

Legal Factors:
Technology can give a competitive edge. Technology is necessary to create packaging, food
labels, and the production of food. Newer corporations may be lacking in technology power
compared to veteran food-based companies.With technology advancing, it helps food
corporations reach consumers in new and easier methods. We even have online groceries which
deliver fresh produce to customers quickly.

SWOT Analysis
STRENGTH
The main strength of any fast food centre lies in this pricing which Anand has maintained in
these 20 years. The Quantity which they serve in a dish is way much better when contrasted with
its competitors in term of cost. The quality of food they serve is also maintained and their menu
has a wide range of availability of items. It has a really good service management. There is
dependably a surge however the staff figures out how to serve them all without influencing them
to sit tight for quite a while. They have a renowned name in Ankur, Naranpura. It is an official
landmark to guide someone for directions.

WEAKNESS
The main weakness of Anand is that they do not have a proper seating arrangement. individuals
cannot come with their family to have anything over there on the grounds that there is
dependably a surge and the space is extremely little to suit such a large number of individuals in
the meantime. Anand’s infrastructure is not good in anyway. It is an open food joint and it
doesn’t even provide home delivery. They are open only for restricted hours amid the day and
not for entire day long.

OPPORTUNITIES
Indian fast food market is growing at the rate of 30 to 35% per annum so Anand ought to extend
its business and take full favourable position of this developing business sector. There is an
increasing youth spending on fast food however the present youth likes to go to places having a
decent infrastructure alongside great nourishment so Anand should buckle down in enhancing its
infrastructure to pull in an ever increasing number of young people. They ought to grow its
branch in different areas too. As the generation is becoming techno savvy, Anand can widen
their market share by providing services through online platforms such as Zomato and Swiggy.

THREAT
Fast food industry is becoming increasingly price competitive and saturated so Anand has to
work hard in maintaining its price along with its quantity. Reputational damage by adverse press
releases against unhealthy foods. So Anand has to maintain its food quality as today’s youth is
health freak.
Five forces Analysis

1)Competitive rivalry:
Firms compete for market share in a saturated market. Growth, particularly in fast food chains,
is very slow so the customer base is not growing as fast as the industry. This leads to high
rivalry among firms.
- Jay bhavani
- Karnavati dabeli
- Shreeji Fast food
- Kachhi King

2) Threat of new entrants:

Economies of Scale:
The firms in the limited-service restaurant class do see some advantages to economies of scale,
but these advantages are undermined by the ease of creating a quick service restaurant. The
saturation of the industry is also a huge limiter of how much an advantage can be attained by
economies of scale.
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.
Government Regulation:
Government regulation is more intense for the larger firms which have to deal with franchising
regulations. Smaller establishments are subject to the standard array of government regulations
including: zoning, health, safety, sanitation, and building. These are standard for almost any new
business and thus do not pose large threat to newcomers.
Cost Disadvantages:
These disadvantages stem form the fact that “established companies already have product
technology, access to raw materials, favorable sites, advantages in the form of government
subsidies, and experience” The extreme saturation and similarity in product offering make
convenient locations essential for quick service restaurants large and small. This is a significant
barrier to entry.
Capital Requirements:
Capital requirements will quell the formation of new, national competitors, but is not a
significant barrier to private startups.
Distribution Channels:
Speedy and reliable channels are essential among all firms in the industry; they are difficult for
any startups as they are not aware how their food chain is going to work. It will not be a threat
for ongoing fast food centre.
Government Regulation:
Government regulation is more intense for the larger firms which have to deal with franchising
regulations. Smaller establishments are subject to the standard array of government regulations
including: zoning, health, safety, sanitation, and building. These are standard for almost any new
business and thus do not pose large threat to newcomers.

3) Threat of Substitutes
With so many firms in the quick service/burger industry, low switching costs, similar products,
and healthier options, the threat of substitutes is very high. The biggest substitute of anand is Jay
Bhavani.

4) Buyers bargaining power:

The bargaining power of the buyers is low because the buyers of the fast food industry are
individual customers. The prices are also minimal as it is in a fast food centre and so there is no
bargain from the customer side.

5) Suppliers bargaining power:

Fast food chains thousands of suppliers to choose from and select theirs through a competitive
bid process. They can switch suppliers easily and tend to make up a large portion of the
supplier’s revenue. This severely limits the bargaining power of suppliers.

Conclusion
 Through the report many facts and factors affecting the survival of a fast food restaurant
in the industry came in the light.
● We can very well conclude that even though Anand saw a very slow growth in the initial
phase, by using its decision making skills and competitive strategy it became one of the
most popular QSR of Ahmedabad in no time.
● Though due to various sales promotion tools applied by the competitors on their products,
Anand here has an edge over the competitors due to its presence in the market since two
decades which have earned them a strong goodwill and reputation.
● If Anand which is already quite successful today adds the bunch of suggestions provided
earlier to its administration, it is very sure that it can lead the fast food industry and stand
robust in the future with its flexibility in implementing changes with changing time.