Parador Rojo engages in a Focused Differentiation Strategy within an industry segment. It seeks to differentiate itself from the competition by providing: Better Colombian Food and a Faster Service. Parador Rojo is not only a restaurant but also a bakery. It provides a wide range of food for breakfast, lunch, and dinner; like seafood, bandeja paisa, empanadas and deserts, etc. Ordering out is also available for customers but Parador Rojo mostly focuses on providing a dine-in service with a welcoming feel and traditional music in the background.
The restaurant's main customers are of Hispanic background so they mostly target this population. To market and sell more of its food it takes part in most of the yearly festivals in the surrounding area, where it has booths with their delicious food ready to serve and hopefully bring in new customers. It also partners up with some of the local lounges to cater for special events, and has a well developed web page with info, good ratings, and menus. The owner (Orlando Alzate) is also very active within the community which provides good attention to his restaurant. Also, to help out low income families back in Colombia the restaurant raises money yearly through several events to donate to a program called Colombianos Sin Fronteras.
Other ways Parador Rojo differentiates itself is that it buys fresh produce, keeps the menu traditional, and makes sure their cooks are well trained with a lot of experience. Internships are also given to fit candidates to see if they may develop into beneficial employees, this helps build a strong work force. It's POS system is also very updated which makes the procedures simple for employees and tracks the restaurants performance.
Five forces
- Threat of new entrants- High, Low startup costs and easy access to market. New restaurants are always opening, however with all the competition it's hard to be successful. So new restaurants may open, but the rate of success they may acquire is low.
- Bargaining power of customers- High, Customers have a lot of options. Not only are there many Hispanic places to get food there's also many fast food areas.
- Threat of substitute products or services- Medium, Not a lot of substitutes for food. However, the service could be substituted. Ready meals, home cooking, and fast food services are all considered substitutes. If the economy suffers people may choose cheaper options or even cooking at home.
- Bargaining power of suppliers- Low, There are a lot of suppliers to choose from. The company not only has specific suppliers they also shop at local food markets for their products, so they decide what price they want to settle for.
- Intensity of competitive rivalry- High, There are around 20 other Hispanic restaurants within the local area. All the restaurants are fighting to win the large Hispanic population. La Fogata, La Cantera, Brisas Colombianas, Rincon Paisa, Margarita Gomez, Tequilas Grill are some of Parador Rojo's main competitors.
Value Chain:
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