PESTEL or PESTLE is the abbreviation of political, economic, social, technological, environmental and legal factors. Pestle Analysis is a good technique to find out opportunities and threats in the External environment of a business. Once having a complete picture of the external environment factors that can affect the business, a business owner can take decisions according to the situation.
For example, you are a restaurant business owner, you will have internal environment factors which is controllable, for example, salaries, employees, financials, recipes, furniture. On the other hand, external environment factors are uncontrollable, for example, safety guideline, tax reforms, consumers taste and income, technology, etc.
Pestle Analysis of a Restaurant
Here I will perform an exemplary Restaurant Pestle Analysis.
Political factors can greatly influence the restaurant business anywhere in the world. There are a few examples of political factors like tax reforms or Health and safety guidelines. Once you have determined these regulations that can possibly affect your business, you can take appropriate decisions to minimize the impact of such regulations. From purchasing, cooking and packing to delivery, your restaurant is responsible to take care of the food products.
Health regulations are changing from country to country. The regulations in India and Pakistan will differ if compared to U.A.E and United Kingdom where strict food regulations are implemented.
If the inflation rate increases in the economy where your restaurant is operating, it will affect the prices of the ingredients. As a results menu prices will go up and most of the time people avoid to order food from a restaurant or go outside for shopping.
Consumer disposable income is another economic factor that can affect the food industry. If people have more disposable income, they will hang out with family and friends and typically will order food from restaurants like Starbucks, KFC, Subway, McDonald’s or any local restaurant.
There are several social factors that can affect your restaurant business negatively or positively. Now-a-days people are more health conscious. This means that they will prefer organic food instead of junk food. This social factor might affect your restaurant menu. Generally restaurants cater both type customers i.e. spicy or junk food and organic food lover to increase their customer base.
Another good example is people busy lifestyle and late hours work in the office. Such people are always busy in their routine and have no time for proper food, workout or sleep. They prefer fast food, carbonated drink and coffee in their routine. Example of other social factors include vegetarians, pet loving and transgender customers. Remember it is very difficult to keep all type of customers happy.
Technology is the most dynamic factor of pestle analysis. Rapid technology advancement and change can impact your restaurant business for sure. How to take care of your small restaurant business when you are out of the city? You can have a closer look at your employees and other operations by installing CCTV Cameras control with your mobile phone. There are few businesses who use a manual register to take care of restaurants accounts and other related operations. There are several restaurant management and accounting software for example Toast POS and QuickBooks Online with so many options and processes. If these software are used properly it can increase the flow of increase and profitability.
Both the internal and external environment of your restaurant is very important to consider. You should have place some indoor plants and take care of cleanliness on a regular basis while the external surrounding should be clean and hassle free so that customers can easily reach to your place.
Try to use recycled material and implement a proper food waste management policy. Donate leftover to charity and needy people. Every environmental impact is crucial for business expansion and a loyal customer base.
Legal and local bodies can influence your restaurant business. These regulatory authorities frequently visit the different areas of the restaurant like kitchen and store to check the different food items quality and expiry, staff and other hygiene conditions.