External Business Environment from 3 Squares Restaurant

PEST analysis remains a critical business tool essential in aiding the identification of macroeconomic factors that could affect the business. Specific measures encompassed in this tool are political, economic, social, and technological. Restaurants can improve their decision making processes and timing. PEST analysis is essential in tackling future challenges and highlight opportunities (Ho, 2014). Engaging this tool in analyzing the industry helps dissect the macroeconomic factors that determine the future of 3 Squares Restaurant with the United States and specifically Minnesota where it is headquartered.

Squares Restaurant is affected by factors emerging from the political industry in the restaurant industry. Political factors segment discusses the effects of government intervention on the micro and macroeconomic environments. Significant political factors affecting include:

Public health policies are evolving especially in need to increase awareness towards discouraging the consumption of fast foods. Increased concerns about the calorie content of each food mean the restaurant has to shy away from high-calorie foods.

Employment laws relating to employees safety and rights: The adoption of the Affordable Care Act means that the restaurant will have to provide health benefits to full-time employees; failure to this adoption risks the restaurant a $2,000 fine. Others include EEO, the right to work, wage and hours, and whistleblower laws (Blumenthal & Collins, 2014).

Evolving dietary guidelines implies that the 3 Squares Restaurant will have to modify restaurants and adapt portion sizes consistently. In 2015, for example, the Food and Drug Administration agency created a policy to remove hydrogenated oils used in the preparation of food partially. Items with Trans fats were prohibited meaning the restaurant has to change food preparation ingredients always to comply with the government's regulations.

Government fiscal policies could have an impact in the restaurant industry that 3 Squares Restaurant considers. They are as follows:

Restaurant tax laws: Tax changes could affect 3 Squares business environment. At the end of 2015, for example, Congress passed the 15-years tax depreciation schedule that dictated new constructions and improvements of restaurants. This means that the restaurant has to plow into its revenues regularly to comply with the improvements and new installations when necessary. Tax credits that occur as enhanced tax deduction approaches are meant to deductions for charity and purchases of equipment (Blumenthal & Collins, 2014). Discussions into the federal task code in Congress could also affect the revenue output of the restaurant. Currently, restaurant owners pay individual tax rates. The changes could demand personal and business taxes. Consequently, this could negatively affect the restaurant's revenues.

Food inflation: When inflation is low, the purchasing powers of consumers increase consequently dictating higher spending capacity. On the other hand, the reverse is true. Price increases could cause negative sentiments among consumers. Food inflation could cut on the revenues of 3 Squares Restaurants. Low inflation also implies low interests are thereby enabling the company to borrow and expand the business. Low-interest rates mean consumers could get credit at low costs. On the other hand, higher inflation rates translate to higher costs of credit and borrowing consequently influencing its success (Ho, 2014).

The risky economic markets rising from political uncertainties affect the restaurant. President Donald Trump promises on lowering taxes and cutting down on regulations resulted in the sale of risky bonds (Fontaine, 2016). 3 Squares Restaurant also bets on the promises to improve productivity and increase revenues. Lower corporate taxes could result in freeing cash for interest payment. Last year, for example, lots of fear prevailed in the market concerning the outcome of the election. Rapid reduction in the prices of commodities and the slowdown of the Chinese economy created market tensions. Such occurrences also affect the restaurant that fetches produce whose prices rely on the existent market forces. Currently, the strength of the equity market promises economic stability that the restaurant relies on to grow and expand.

The segment focuses on demographic and cultural elements within the restaurant's industry. These issues also affect 3 Squares Restaurant that include:

Real food: consumer increased awareness on food choices have accelerated a preference for clean eating. In this case, customers prefer food made with natural ingredients free of additives and other artificial components. The evolving attitude is directly linked to the demand for fresh food that is healthy. With this in mind, 3 Squares has always to adjust its menu and provide customers with real food. This concept also extends to having authentic food, those having regional and ethnic ingredients. The need for control over flavors means that chefs have to make meals in-house (Blumenthal & Collins, 2014). In-house products made from fresh produce inspire taste that customers prefer. Public health protagonists have consistently raised the alarm concerning fast foods that have been deeply linked with obesity. Such concerns have driven consumers into shifting preferences of fast foods that have traditionally been a liking of many customers.

Micro cuisines: traditionally, quick service has centered on food items such as chicken and burgers. The focus on ethnic foods such as Chinese, Mexican, and Japanese cuisines later emerged. Today, customers expect hyper-regional items to feature in menus. 3 Squares Restaurant has to adjust to reflect the cuisines on demand. Local flavors have become preferable by customers. Extending these small cuisines on a limited or full-time basis could define the success of the restaurant. Emerging trends on cuisines particularly focus on local and regional cuisines.

Mindful dining: macro-trends in this segment have emerged that include reduction of food wastage, sustainability, and humane treatment of animals. Other than enjoying food, consumers want to feel good about themselves. Certain restaurants, for example, source their eggs from a chicken that are not placed in restrictive cages. Such initiatives are an indication of concerns that extend more than just serving food (Ho, 2014). Strategies for managing food wastage and charity donations also remain critical for the restaurant's image.

This segments factors into consideration the impact of technology in driving service delivery in restaurants. Technological advancements including the impact of changes in information technology are of concern to 3 Squares Restaurant. Technological factors influencing the restaurant are:

Food delivery has emerged as an increasingly popular way of getting customers their preferred meals either at home or work. Other than typical menu items of Chinese food and pizza, restaurants are continuously taking advantage of delivering hot and fresh meals. Online ordering platforms facilitate the realization of this aspect. Customers have the opportunity to order their meal specifics. Such information is critical for the restaurant in efforts to promote accuracy and efficiency. Consequently, the restaurant saves time, an aspect that translates to better customer service.

Modern technologies in restaurants focus on capturing crucial data including customer preferences and order. Such information is critical in enabling the businesses better understand the target market. Analysis of these data provides restaurants with customer insights allowing the business develop loyalty programs that are personalized to meet client needs (Ho, 2014). In marketing, 3 Squares also stay to benefit from automated platforms that are designed to provide an in-depth perspective of customer preferences. Quick overviews of the sale specifics are revealed through these systems.

Restaurants have realized the significance of having better networks to streamline service operations. Wireless Internet and POS systems have become critical in running of this business other than the traditional focus on new cooking devices. Better networks could eliminate frustration including Internet breakages. Redefined customer experiences have included the inclusion of free Wi-Fi services that should be fast and reliable. Business quality networks could facilitate efficient running of the different process in the restaurant (Blumenthal & Collins, 2014). Engaging technologies contributes to creating positive experiences that promote customers returning and referrals. Such improvements are directly linked with increasing revenues generated.

Prioritized List

In the political factors segment, employment laws concerning the safety of the rights of employees emerge as a critical issue for the company. The enactment of the Affordable Care Act demands the provision of written notices to employees concerning the government-run health care changes. The new laws translate to increased costs for the restaurant in catering for the health insurance costs for the employees. In protest efforts, some restaurants have cut down working hours for employees to reduce the number of those who will be eligible for such benefits. This implies that 3 Squares has to adjust its working force accordingly to reduce health insurance costs (Blumenthal & Collins, 2014). However, some individuals may be locked out of work for the business's cost-cutting efforts. However, the implementation of these laws varies from one state to another.

In the economic markets segment, a good outlook on risky economic markets presents an opportunity for 3 Squares. The realization of President Donald Trump's promises concerning lowering taxes and cutting down on regulations guarantees a conducive business environment for the restaurant (Ho, 2014). The current strength and stability of equity markets encourage the attainment of the business's objectives. A stable economic promise remains critical for 3 Squares in expanding and growing the brand.

In the social factors segment, adoption of real food menus remains decisive in adapting to the new trends in customer experiences. Increased public awareness concerning the health impacts of fast foods particularly obesity has dominated discussions. As a result, consumers have shifted preferences to natural and additive-free foods. Foods that exhibit local and regional tastes have also become prominent. 3 Squares stand to capitalize on this trend by quickly adopting cuisines that are natural and reflect on local menus. For example, various analysts have observed Hawaiian food to emerge as a trending cuisine.

In the technological factors segment, utilization of data analysis remains a strategic opportunity 3 Squares stands to exploit. Capturing of data concerning customer preferences and orders gives the restaurant a chance to understand the target market clearly. Data analysis tools have become crucial in expanding businesses. Realizing efficient customer experience gives 3 Squares an opportunity to achieve the set goals (Ho, 2014). Additionally, 3 Squares could engage the data in marketing programs that would become fine-tuned to meet the company's demands. Marketing analytic tools such as laser-focused content analysis and AdWords performance graders are critical for monitoring user interaction with the restaurant's site. Such functionalities drive the company's promotional strategies.

Readiness

The assessment of 3 Squares Restaurant' readiness to competing in the industry basing on the external factors gives critical insights of success. In the political factors segment, the evolving public health policies that favor real food presents a platform for 3 Squares to provide consumers a rich menu of local and regional cuisines. The restaurant was not founded on selling fast foods, which mean they would not make significant changes in adjusting to the new customer preferences. Fetching local cuisines and using natural ingredients free from additives rests within the company's strength of envisaging a robust business plan that has included delivery of food to senior citizens. The restaurant also depicts a rich skill set of individuals to execute the plan that includes meeting evolving customer preferences to real foods.

On economic factors, the restaurant can succeed as it can comply with the restaurant tax laws that demand improvements and new constructions when necessary. As a future business, 3 Squares has an opportunity to comply with the new regulations immediately. Undoubtedly, the tax deductions would influence the restaurant's revenues as a startup (Ho, 2014). Additionally, the unknowingness of the brand means it would have to work hard to get the brand known translating to more customers to increase revenues generated and cater for the new restaurant laws comfortably.

The social factors regarding the restaurant industry show that 3 Squares stands to benefit from the evolving social trends that are focused on real food, micro-cuisines, and mindful dining. The engagement of a highly skilled staff means the restaurant would have the capacity to reflect the changes in the business. For mindful dining, for example, the restaurant will ensure they source animal produce from farmers who are aware of the welfare of their birds and animals.

With technology, the restaurant is capable of infusing the changes into the business. The financial backing of the business from the onset alludes to their capability of putting into place the necessary technological infrastructure. An increment of delivery options particularly to the seniors market would be actualized (Blumenthal & Collins, 2014). The restaurant can enact these changes to meet specific customer requirements. For success, utilizing data analytic tools is unavoidable. It is crucial that they put into place such tools to listen and respond to different customer needs. In this regard, they can determine customer preferences and modifications of the menu to suit their needs if necessary.

Conclusion

PEST analysis helps business dissect the external factors that influence business operations. Understanding the effect arising from these aspects remains required for the restaurant industry. As depicted in this paper, these factors play out differently in determining the direction 3 Squares restaurant would take in adjusting their strategies to realize their goals.

References

Blumenthal, D., & Collins, S. R. (2014). Health care coverage under the Affordable Care Act -- a progress report.

Fontaine, R. (2016). How Trump Can Save the Liberal Order. Foreign Affairs.

Ho, J. K. K. (2014). Formulation of a systemic PEST analysis for strategic analysis. European academic research, 2(5), 6478-6492.