I didn’t know there is a strong relationship between cuisine and culture until I did my work experience at a restaurant.
External/industry environment analysis:
The Hibiscus Tree is a Chinese restaurant in Chinatown, Adelaide CBD. More specifically, it is a Sichuan restaurant which promotes the cuisine and culture of Sichuan Province, the People’s Republic of China.
According to Porter’s Five Forces model, the following analysis is provided below.
In the first place, there is indeed a threat of new entrants. More exactly, there have been more Sichuan restaurants in Chinatown recently, as a growing number of business owners have realized that Sichuan cuisine is able to attract loyal customers due to its unique flavor and fascinating style that cannot be found in other restaurants. Fortunately, barriers to entry are not low, as it is not easy to offer truly authentic Sichuan cuisine in Australia – a lot of the ingredients cannot even be purchased in Adelaide, e.g., chilies used in The Hibiscus Tree are directly sent to the restaurant from Chengdu City, Sichuan Province, China, for the business owner of The Hibiscus Tree has very good connections in the industry in Sichuan Province, China.
In contrast, our competitors in Adelaide generally cannot find / buy authentic Sichuan chilies in Australia; consequently, the quality and the authenticity of the competitors’ offerings could be compromised to some extent. Further, usually loyal customers have a profound understanding of Sichuan cuisine and culture; hence, they can quickly and easily tell whether the food is authentic or not. Therefore, although there are some new Sichuan restaurants in Adelaide, those are not really very powerful competitors.
In the second place, when it comes to the threat of substitutes, The Hibiscus Tree does not face this type of threat, because it is almost impossible for a restaurant to use a different approach in order to meet the same needs in the market. Further examination shows that other cuisines and Sichuan cuisine are dramatically different, so loyal customers will still prefer genuine Sichuan cuisine which is highly addictive. Running an authentic Sichuan restaurant in Australia requires real expertise as well as attention to detail; thus, the threat of substitutes is basically non-existent in Adelaide.
Thirdly, the bargaining power of customers is reasonably low as The Hibiscus Tree has a loyalty program, i.e., a customer can receive a membership card which allows them to get a discount when they purchase products from the restaurant over time. This initiative limits customers’ choices; as a result, many customers would not consider alternatives and / or competitors whenever they would like to buy Sichuan food in Adelaide.
Next, the bargaining power of suppliers is also low, because apart from key ingredients such as Sichuan chilies, other ingredients can be purchased in Adelaide easily and there are many options in the local area.
As to key ingredients that need to be directly bought from China, the business owner of The Hibiscus Tree has extremely good connections in Chengdu City, Sichuan Province, China.
Further analysis reveals that the business owner and those suppliers who are based in China have already built mutually beneficial relationships over so many years. Therefore, the bargaining power of suppliers is not high, which is good for the organization’s business development in 2021 and beyond.
Last but not least, in terms of competitive rivalry, The Hibiscus Tree has some existing competitors that are quite strong in Adelaide CBD. For example, Shu Tang Chinese Restaurant is a reputable Sichuan restaurant on Grote Street, Adelaide City, although it does not offer 100% authentic Sichuan cuisine. Shu Tang Chinese Restaurant has much more space because their investors have spent a large amount of money on this business.
In this way, Shu Tang Chinese Restaurant is able to host big dinner parties for individuals as well as companies. By contrast, The Hibiscus Tree is relatively small; consequently, it is quite unlikely for The Hibiscus Tree to host big dinner parties. Having said that, The Hibiscus Tree is able to efficiently provide food delivery services for individuals and organizations, thereby helping individuals and organizations to organize their own dinner parties elsewhere. Since the business owner of The Hibiscus Tree is always aware of competitors’ pricing, marketing strategies and unique selling points, The Hibiscus Tree has always maintained its leading and pioneering position when most people think of truly authentic Sichuan cuisine in Adelaide CBD.
As for the PEST analysis, the following details have been observed:
First of all, due to the current conflict between Australia and China caused by COVID-19 & international disagreements, political stability is challenged to some degree. That has led to a range of issues, e.g., the cost of sending key ingredients from China to Australia has increased significantly since 2020. Consequently, the pricing on the menu of The Hibiscus Tree has increased accordingly.
Secondly, because of the current exchange rate, the cost of buying key ingredients from China is also higher. As a consequence, another increase in pricing on the menu is to be expected later this year. This may put off some customers, especially when the local economy in South Australia is not thriving at the moment.
Furthermore, since the population growth rate in South Australia is pretty low right now, social factors are not supporting the business growth of The Hibiscus Tree. Due to COVID-19, overseas tourists, international students and immigrants from China are unable to come to Australia currently. Thus, it is hard for The Hibiscus Tree to find more customers who are already interested in Sichuan cuisine and culture. Meanwhile, trying to convince people from different cultural backgrounds to become loyal fans of Sichuan food is more difficult because those individuals are not converted yet or are unaware of Sichuan cuisine and culture in the first place.
Finally, modern-day technological shifts have helped The Hibiscus Tree tremendously in many ways. To be more exact, instead of hiring a traditional bookkeeper, the reliable bookkeeping and accounting software Xero has automated the business’s financial management. In addition, there are several popular mobile apps that allow customers to order food on the smartphone – food delivery is very convenient in Adelaide right now. This approach is absolutely essential during the current pandemic.
“It seems that there is a strong link between cuisine and culture.”