The fast food industry in South Africa: the microenvironment and its influence.

• Main Author: Oswald Mhlanga
• Format: Article
• Language: English
• Published: AfricaJournals 2018-08-01
• Series: African Journal of Hospitality, Tourism and Leisure
• Subjects: fast food industry; entry barriers; restaurant performances; intense rivalry; South Africa
• Online Access: https://www.ajhtl.com/uploads/7/1/6/3/7163688/article_20_vol_7_4__2018.pdf

The purpose of this study was to determine the influence of the micro-environment on the fast food industry in South Africa. The study was mainly quantitative. Questionnaires were distributed to 227 key restaurant personnel. Factor analysis was used to identify the dimensions of micro-environmental factors influencing restaurants performances. The results indicated that three factors, namely, intense rivalry, the threat of substitute products and the bargaining power of customers significantly influenced (p<0.05) negatively on restaurant performances whilst the threat of new entrants and the bargaining power of suppliers did not have any influence (p<0.05) on restaurant performances. Therefore, the only opportunities for fast food restaurants in South Africa are the low threat of new entrants and the low bargaining power of suppliers, which are not enough to mitigate intense rivalry in the industry. To reduce intense rivalry, the government must restrict competition, through regulation to avoid overcapacity in the industry.