The Broadway Café- Porter's Analysis
1. The Broadway Café History
The café, I inherited from my grandfather is located Downtown Raleigh, NC on the Fayetteville Street. The café offers many different kinds of specialized coffees, teas, a full service bakery, and homemade sandwiches, soups, and salads. My grandfather first opened the Broadway Cafe in 1952 and it has been a local hotspot for many years. Unfortunately the business has been declining for the last five years and inevitably is going to hit the wall soon if some staple measurements using business techniques and technology aren’t taken.
It is also worth noting that Fayetteville Street, where the café is located, is now undergoing magnificent cityscape projects valued over $2 billion dollars, which will bring more crowds to downtown. So every attempt to recover the business to yield success will have a high payback.
2. Porter’s Five Forces Analysis
Rivalry: High
The first force Michel Porter describes is the current Rivalry among existing companies.
The coffee shop business is mainly framed in 2 mainstreams. First group is the major players like Starbucks, Seattle's Best Coffee, Dietrich, Brewsters, New World, Gloria Gears, which can be denoted as Specialty Brands. Second group contains One-Store coffee shops like The Broadway Café. These are generally local, small businesses.
The coffee shop industry possesses a very high intensified competition on all players: both Specialty Brand and One-Store Coffee Shops. The main reasons that contribute to the high competition are
• The number of shops is huge (hoovers.com)
• Competitors are selling same or similar products, including specialty coffees as well as high quality foods.
• The fixed cost portion constitutes a high portion of the cost structure. Companies should sell more products to cover these costs, which increases competition.
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