Evaluate the impact that competition will have on Pizza Express.                  [15]

Competition is likely to have a big impact on Pizza Express especially if their main competitors have a cheaper price point this is because customers might be swayed by the more competitive price. For example, if Pizza Hut run special deals which make their pizzas cheaper customers may decide to go to their restaurant rather than Pizza Express. This could, in turn, lead to Pizza Hut gaining market share and Pizza express losing some which could consequently mean that Pizza Express witness lower Revenue from the in-store sales. Lower Revenue could lead to lower profit which may mean that shareholders see investing in Pizza express as a riskier option. This is likely to result in a fall in Pizza Express’ share price which may make raising funds through share capital more difficult. Therefore competition is likely to have a significant impact as it may result in Pizza Express losing sales and thus profit. Then again, it all depends upon the strength of Pizza Express’s brand. This is because if Pizza Express have a good reputation for tasty pizzas, pasta and garlic bread then customers may decide not to be swayed by price but instead by product and quality. Consequently, as Pizza Express is well founded they may benefit from brand loyalty and repeat purchase which may mean that although they are not as competitive on price their offering is better and customers appreciate the quality of food. This may mean that competition has little impact on Pizza Express. In addition to this if the customer service which Pizza Express offer is superior to that of a competitor then customers may decide to continue going to Pizza express over a pizza restaurant rival. This may allow Pizza Express to maintain market share and high turnover. So, on balance, the impact that competition might have on Pizza Express is negligible if they maintain high standards of quality of food and service. Then again, it depends upon the threat of new entrants which appears in Porters Five Forces as a source of competition which could have a significant impact on Pizza Express. If the new entrant is well-funded, possibly through a venture capitalist or crowdfunding website, then they may be able to offer higher salaries to their chefs. This may mean that some of the chefs working for Pizza Express move to the new entrant in order to get a better salary. McGregor’s leadership theory X would add weight to this idea as he believed that employees were mostly motivated by money. In turn, this may mean that Pizza Express see a higher staff turnover rate which might mean costs rise due to expensive recruitment drives and new chef induction and training. In turn, this could mean that competition does have a big effect on Pizza Express, even more so if the new chefs are not as good as the ones lost to the new entrant because this may mean that the Pizzas quality offered by Express fall. This could lead to a poorer reputation and consequently lower sales for Pizza Express which could result in lower profits.