Starbucks is in the specialty eatery industry, one of the largest disposable income spending industries, food and beverages. This industry is monopolistic competitive, since in 1990’s abundant of new companies entered the sector. This industry is highly profitable since, the US citizens spend almost half of their expendable income on food, mostly for dining out. Changes in lifestyle, trends, and fashions of the food industry have caused changes in the way companies compete in this industry, leading to a much more dynamic marketplace with a great deal of specialization and diversification. As the demand for convenience has made eating out a normal routine for Americans, the demand for specialty food services has increased in recent years. It is the goal of a company like Starbucks to obtain as large a share of this market as possible and to grow and maintain that market share in face of intense competition in order to remain profitable.
Starbucks is in the Specialty Eateries & Catering Services industry of the Leisure sector (Hoover’s Online). This industry is well-grounded and relatively steady with few political influences, a solid economic environment, and little social and technological changes affecting the industry.
2.2 Factors that affect specialty eatery sector:
Demographic changes – The number of buyers affect the quantity of coffee purchased, the bigger the nation, the bigger the demand. Other demographic characteristic such as age also affect coffee consumption, usually the active coffee consumers are between the ages of 18-40.
Political- this means how much the government intervenes in the industry and how the country legal system affects the Company. Therefore countries with low government bureaucracy will be more favorable for new stores openings. Political influences In this industry mainly consist of government-imposed minimum wage fluctuations. Specialty eateries are usually able to train workers to perform required job functions such as serving coffee or preparing food for the customer. In most cases, little previous experience or education is required. This allows companies in the industry to hire workers at the minimum wage or slightly above. Therefore companies in the specialty eatery industry are sensitive to increases in the national minimum wage that would increase labor costs. Also the country legal system, attitude toward foreign and international producers, political stability and money regulations could affect the industry. For example India and China are risky countries to invest in, because of government instability.
Economy environment- the economic environment of specialty eatery is table due to the constant demand for food and beverages. However changes in economy condition such as the crisis in 2008 can affect the consumption and the customer spending for coffee. The crisis in 2008 resulted in coffeehouses closure in US.
Change in Consumer behavior –this industry highly depends on the frequency of...