Although transport is good and Emni is not in the congestion charge area, suppliers may find it hard to deliver their materials to Emni because there is no parking area nearby. Emni is positioned on a red route lane which can only be used by buses; therefore there is a huge distance between parking area and Emni. This could also affect customers dining at Emni during the evening as some customers will find it uncomfortable to walk through streets and alley-ways in the dark. Whereas other customers won’t find it a big issue because they don’t like to drive after they consumed a lot of alcohol and would prefer to travel by public transport.
External factors can enormously affect the success or the failure of a business. Emni considered all external factors before locating its first branch on Upper Street. We know that Emni must have scanned the external environment in the form of SLEPT analysis by the way the managers of Emni dealt with the Social, Legal, Economic, Political, and Technological factors. Businesses do not operate in a vacuum and must be prepared for changes in the external environment. After I analyzed the way the business runs and how Emni considers the external environment, I found that Emni dealt with each of the factors in the following ways:
SOCIAL FACTORS:
Emni targets to provide authentic Indian food for middle-class people and as India is becoming more differentiated, people will be more familiar with Indian culture. The majority of people living there are aged 25-30; they are very highly educated and earn high salaries. The reason why the people living in the area are aged 25-30 is because housing with mortgage in the area is low, as property is really expensive so most of the properties are being rented out to students. This means that local people will be able to afford the food that Emni provides as income in the area is really high.
The percentage of couples with children in the area is a low amount. Emni used this to their advantage because they know that couples with children have more responsibilities and will therefore not have enough money to spend on leisure. On the other hand, it is proven that couples with a high level of education are less likely to have many children as they will like to develop their careers.
Emni is a seasonal business as they make more profit during occasions like Christmas, New Years and Valentines etc. This is part of the external environment so Emni adjusts to this change, for example, during Christmas Emni employ more waiters and order more supplies, because there will be more people going in to the restaurant. Even though Emni doesn’t just serve people who live in the area, but by locating it in Islington, it sets the idea of what kind of people Emni exists to provide for.
LEGAL FCTORS:
Emni Restaurant is a limited company. The management of Emni understands the laws about businesses in operation and their responsibilities. One of the things that the law is cautious about is health and safety. To certify that they act on this law, the manager of Emni restaurant had employed chefs from India who were trained in America and had degrees in health and safety. As Emni’s chefs are from India, the law requires the manager of Emni to provide them with accommodation. If they decide to quit their job, they will have to return back to India. Emni gives their employer’s an equal amount of money so that they are satisfied, and so that they could stay in their jobs. The manager hires, good staff and they don’t judge them by where they are from. This is so that the customers that they get are fulfilled with the service that they get and so that they can come back again.
ECONOMIC FATCORS:
Economic factors include interest rates, exchange rates, competition and price (inflation).
Interest rate is an important economic factor that affects the business environment. Interest rate represents the cost of borrowing. Interest rates have gone up three times in the past five months. This is affecting home owners as mortgage rates have also increased which is affecting their disposable income. Most of Emni’s customers are home owners and due to the current economic trend they are more engaged in paying their mortgage and are not so concerned about their leisure time, which includes eating out at restaurants. The increasing interest rate is stopping customers eating out at emni. Emni’s customers pay via credit card and the rise in interest rate is restricting them from using their credit cards.
After looking at the economic factors, it shows how extremely the external environment has affecting Emni. Although Emni is going through a tough year in making profit, they can stay ahead of these changes if they adapt to them by considering, for example, their prices and what they have to offer.
Businesses need to be careful when it comes to price. Customers are price sensitive; because if there are any changes that Emni makes, it could result in a good or a bad way. Emni needs to avoid extremely lowering their prices; this is because the customers will see this as the restaurant losing its standard or quality in food.
We know that Emni could handle the economic changes well, by the way that they handled the credit crunch. During the time of the credit crunch, customers were not going into Emni as much, and if they did they would order less food. As a result, Emni weren’t making as much profit. By making this better Emni overcame this problem by giving special offers to the customers and by doing this they got more customers. This shows that Emni was pro-active and were ahead of all these changes.
Another problem that emni was facing is the increasing inflation rate, this means that the cost of food has gone up. According to research by office of national statistics, the price of food has increased by 8.3% on average since the beginning of the year. The high cost of food is, by far highly the official rate of inflation.
Materials that Emni use on a regular basis, such as basmati rice, has increased by 42.1%, meat and fish has increased by 22.9% and vegetables have also gone up by 14.7%. On the other hand, ready made meals have gone down since January by 0.4%. This could affect Emni because their customers may want to buy their own food from a local supermarket and eat at home instead of going to a restaurant.
As a result of these increases and the economic trend, the cost of production for Emni has gone up. It had also resulted in a lower profit margin than Emni originally forecasted. The implication of the current economic trend has channeled Emni into putting their expansion project on hold. It would not make economic sense for Emni to continue with the expansion project because a falling profit means that Emni is back into the business. Emni needs to strengthen what it already has which is the Emni Upper Street branch before expanding into Camden.
The other outcome of Emni’s falling profit includes not opening the restaurant during lunch. As cost of production has gone up, Emni cannot make profit as quickly as intended. To even out the costs towards production, Emni can only serve enough food for the evening and not the afternoon.
POLITICAL FACTORS:
Political Factors being a partnership business, Emni must have considered political issues such as tax. Another political factor which affects Emni is the fact that they are not allowed to recycle. Emni claims that they could recycle more in a week than what an average sized family can recycle in a year. The government wants businesses, including restaurants, to pay for the amount of rubbish they make by buying bin bags which will then contain the restaurants rubbish. If Emni fails to do so, they have broken the Law and could risk going to court and paying the fine or losing their business. The money that the governments make out of this scheme goes towards the country’s welfare. This is very controversial as it is obvious that recycling waste material can benefit the world more than putting money towards the country’s welfare.
Emni is planning to expand to Camden, to do this there are many political factors that need to be considered, for example, Emni needs to obtain planning permission from the council, and without this it is impossible for Emni to expand. Expanding includes other costs as well, this cover the costs of: 1. furniture- Emni’s new branch must have a similar theme to the branch on Upper Street as it will help them become more recognized. Emni’s ambience and decorations bring about more customers and they need to maintain this in their new branch. 2. Cost of architecture- Emni needs to put costs towards hiring an architect to structure the new branch. The new branch needs to be structured in a way that makes the building look attractive and will adjust to the comfort of all the people working for Emni, for example, it is necessary for the chefs and waiters to have easy access to the kitchen and dining area as it will make it easier for the waiters to serve customers. To ensure that this job is done quickly and efficiently, Emni have no other potion but to hire an architect.
TECHNOLOGICAL FACTORS:
Technology can make improvements to service. Businesses need to be conscious of the latest and most beneficial technology. Emni makes the most out of technology. Examples of technology which is crucial to Emni’s day-to-day activity are the EPOS System, electronic notebook and payment machine. Emni have other technological advantages such as phone reservation, internet reservation and the privilege for customers to use credit cards as a form of payment.
After looking at the way Emni has dealt with each of these factors, I can see that Emni is a pro-active business as they were quick to react to changes and had other quality skills that a pro-active business has such as:
- Good management
- Knowledge of the environment
- Realistic planning
- Anticipation
- Think of good strategies
- To adjust any situations
Competition
Emni, like all businesses, will be affected by what’s going on in the external environment and if change takes place, it is important how the business prepares itself for these changes. An external factor which affects all businesses is competitors. Emni does not operate in a vacuum there are many other restaurants on Upper Street:
- Thai Square Restaurant
- Masala Zone
- Fredericks
- Yo Sushi
- Mucho Mas
- Gufaa Indian Restaurant
- Rooburoo
- Regina Margherita
Emni is on top of all these restaurants. I think this because there are not much restaurants in Upper Street apart from Masala Zone, Gufaa Indian restaurant and Rooburoo. All these Indian restaurants serve different customers to Emni. The average cost for them is £10 which everyone will be able to afford on a night out whereas Emni serves food for middle-class and affluent people and the average cost for them is £40 per head. Gufaa restaurant has had very bad reviews about their food and service whereas Rooburoo and Masala Zone have had mixed feedback.
Fredericks could be seen as hard competition for Emni. This is because they serve the same type of customers but what gives Emni a competitive advantage is that they serve Indian food whereas Fredericks serves modern European food. Indian food is becoming more popular which will make customers want to choose Emni over Fredericks because European food can be found anywhere but restaurants like Emni are unique. Fredericks have been serving customers for 38 year: this means that they have a high level of brand awareness and customer loyalty which Emni lacks since they have only been open for 2 years. The rest of the restaurants serve people earning average income to go out and eat.
Not only is Emni unique for its business strategy but its attractiveness and ambience reflects the though that has gone into customer satisfaction. Emni is different from other restaurants as it has culture and healthy food both combined together. It is one of a kind on Upper Street, which is a competitive advantage, and can successfully progress into Camden once the economic trend is in favor of them. In conclusion I think that location for Emni is good because it is the only restaurant on Upper Street that is serving high quality food, which is great to try, if you haven’t already. There is no alternative for customers to choose from, and also Emni’s serves a great range of food, which will keep the taste on the tip of your mouth. Anyone who goes into Emni restaurant, I assure that they will like the food.
By Wahida Begum 11T
