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The economic downturn is bound to be a continued aberration to what was a persistent rise in the global consumption of meals eaten or prepared outside the home. A series of IFT consumer reports identify a consistent trend throughout the past five years that depicts a more and more pronounced inclination toward eating out (Parker, 2001).
While the reports were primarily interested in American consumer habits, the trends identified have been, to varying extents, mirrored within the burgeoning urban sectors of third world states. In a general sense, restaurants have been modernizing.
This is perhaps most starkly pronounced within the fast food sector, yet even the most traditional haute cuisine establishments have been pressed to cater to a more time-conscious, capital-rich, and kitchen-ignorant customer. This was a progression that was viewed to carry restaurants to a future global golden age, yet its momentum has been abruptly halted.
The recent global pandemic, on its completion in two years, has caused an economic shock, the full consequences of which will only fully manifest in the long term. Globalisation, for long viewed as a persisting unstoppable trend, has faltered and, in many respects, reversed.
At the heart of globalisation lay free trade and movements of capital; the new economic environment has rendered both of these uncertain. If anything, the economic uncertainties confronting the commercial environments of different nations are likely to diverge.The most profound changes are potentially within third world states, many of which have been shunned to the periphery of what was a rather inequitable global condition.
The effect of the pandemic upon many people’s health and immune systems has been severe, and as the digital and knowledge-based economy advances, nations will do well to realize that perhaps one of the most prized global commodities, that of a healthy worker, may be derived in a manner that holds little correlation to global market demand. (Barrett, 2021)(Reardon et al.2021)(Keeble et al.2020)
The impact of technology will probably steadily increase in the restaurant industry in the future. It would range from various aspects of the businesses but could very well be meaningful in helping businesses optimize strategies to be more competitive, increase productivity, and deliver customer satisfaction.
Technology also provides a powerful tool in which the industry could be more sustainable and reduce its impact on the environment. Technology also played a big part in the globalization of the world. People are more connected, and it would be easier than ever to reach new markets.
Restaurants would want to use this technology to search for new markets in the globalization era, sit in new countries, or offer native meals to foreigners. This is where technology could very well be utilized. By finding the right information on what is the right meal for people in certain places and finding the probability of success of the business.
In the future, it could even be possible where there are online systems for new business starters who want to make a restaurant. It will tell them whether the business would be feasible in the desired place or not.
Healthy Menus: It’s no secret that there is an obesity epidemic in America. However, there are more and more people who are trying to eat healthy, and simply having a salad while dining out is not very satisfying. There are many different types of diets and philosophies on what is healthy, but one common trend is the idea of “clean eating”.
People want to eat food that is good for them and minimally processed. There are some restaurant entrepreneurs who have seized this opportunity by opening fast casual restaurants that offer well-balanced meals that are fully customizable to the consumer’s preference. The meals are often comprised of a meat, a vegetable, and a grain. While healthy eating isn’t for everyone, it is certainly a trend that will continue to pick up traction.
More restaurants are also marketing to people with dietary restrictions. These days there are many people who are gluten intolerant or have food allergies. They often feel like there aren’t many dining options for them, so restaurants that can offer gluten-free or allergy-friendly alternatives of popular dishes can capture a market that isn’t currently being well-served.
Locally Grown Produce: More and more, people want to know where their food is coming from. It is no longer acceptable to simply have an answer of “Sysco” or some other food distributor. Customers want to know that their food is fresh and hasn’t been transported across the country before it hits their plate.
Restaurants are beginning to catch on to this. It is becoming trendy to support local agriculture by using locally grown produce. This is often showcased on a special menu that will change regularly, featuring the fresh local produce that is currently in season. Some restaurants have even gone to the extent of growing their own fruits and vegetables.
Restaurant owners and operators are always trying to figure out what could be the “next big thing” to drive more customers to their establishments. Over the last several years, there have been a number of trends in the restaurant industry. Different restaurant concepts often go in and out of style.
It can be tough to keep up with what is hot and what is out. However, it is essential to know what the trends are and where they are going. It can be an essential part of making sure your restaurant is current and a place where people want to go. Below is a compilation of some of the current trends in restaurant concepts and where they may be going.
Over the past decade, the foodservice industry as a whole, and the restaurant segment in particular, has become increasingly aware of the impact that their business has on the environment. This has been driven, in part, by rising fuel and utility costs affecting foodservice outlets, but also by a realization that customers and regulators are beginning to hold businesses accountable for their environmental impact.
At the same time, there has been a groundswell of activity at the individual outlet level to ‘do the right thing’ as chefs, often with a personal passion for sustainability and the environment, seek to reduce the impact of their own businesses. This has manifested in a range of initiatives from both independent restaurants and restaurant chains.
Due to the unsustainability of current levels of global meat consumption, an increasing number of chefs and foodservice professionals are promoting the joys of cooking and eating fruits, vegetables, grains, and legumes. Manifestos such as the ‘vegetable shamanism’ movement in the UK, and Meatless Monday in the USA are both good examples, along with the increased promotion of vegetarian foods in fine dining and popular food media.
Measures such as these have been taken by Chez Panisse chef and slow-food movement pioneer, Alice Waters, who has been known to serve ‘dinners’ of multiple courses of a single type of vegetable as a way of promoting sustainable agriculture and seasonal eating. Another angle of attack on sustainability from chefs comes through their attempt to minimize waste in the kitchen and the resources that they use.
The sustainable seafood movement, effectively a conservation effort in which chefs serve only fish and other sea creatures that are abundant or caught using environmentally friendly techniques, is particularly popular in coastal regions.
Measures such as outsourcing kitchen waste to farmers for use as animal feed, or picking vegetable crops directly from the suppliers’ fields are also examples of foodservice businesses reducing the impact of their consumption of resources.
Global restaurant chains enjoy a large portion of the global restaurant industry revenue. Some of the first examples of global restaurant chains include companies like Starbucks and McDonald’s. The balance of global restaurant chain expansion is, however, shifting.
As growing consumer segments in newly developed countries continue to cost-plus the benefits of an industrial society, more multinational restaurant firms are finding new lucrative markets abroad. While this trend is beneficial to global restaurant chains, it is increasingly causing concern for independent restaurant owners and small business owners.
Small business restaurant owners find it increasingly difficult to compete. Many take pride in serving area-specific cuisine or their own culinary creations. As more and more consumers become exposed to a global set of products, from food to electronics, larger companies with the ability to mass-produce products at a lower cost gain an increased advantage.
While the overall impact of global restaurant chains on the world economy is positive, there are negative impacts on the small business owners. An increase in acquisition activity for small businesses and promotion of set concepts occurring from an increase in competition among global restaurant chains is making it difficult for some small business owners to thrive.
The previous section discussed the negative impact of chain restaurants on the global market, and there are some positives that will come out of this for independent restaurants, especially those in the destination sector.
Chain restaurants that are highly marketing focused will begin to suffer. This is an opportunity for independent restaurants to reclaim some lost market share in the local market as consumers become disenchanted with chain restaurants. In the short term, at least, independent restaurants will not have to concern themselves with the price wars of the chains and most likely have an opportunity to charge slightly more for their food, leaving the cost gap between the chains and the independents the smallest it has been for a long time.
This is significant to independents because consumers are now very much value-focused. In the past, many consumers chose independent restaurants for a special occasion or a treat. Now it is very much about getting the best food at a price that is as reasonable as possible.
Numerous consumers of the chains have been forced to trade down in the current recession but still wish to replicate the eating experience that they had at a more expensive restaurant. There is conflicting evidence whether consumers will trade down from the mid to high-range independent restaurants to the destination sector.
As discussed in the previous section, people still want to escape their own home where they have been cooking more. In the PAPA versus Mintel study, it states that people plan to eat out more over the next year and most will do so in their local area. However, it also states that the destination sector is highly dependent upon tourism and tourist numbers are likely to fall.
In many countries, the restaurant industry is heavily regulated. Rules and regulations can vary depending on how big a facility is, where it is located, and what kinds of food it serves. But in general, restaurant industry regulations have to do with all aspects of food handling, service, and preparation.
For instance, restaurant employees typically need to get certified in food safety, which involves taking a class on common food-borne illnesses and how to prevent their spread, and then taking a test. Also, there are laws about things like how hot food needs to be kept, how quickly food needs to be served after preparation, and what kinds of foods can be served raw.
These regulations aim to reduce the risk of customers becoming ill due to poor food handling. The paying public falls ill from food-borne illnesses surprisingly often, so in the long run, better public health means fewer sick days taken and more disposable income spent in restaurants.
These regulations can be a hindrance to restaurant owners who face language barriers or who come from countries where food safety laws are different or are not as strictly enforced.
Also, because of the economic recession, restaurant health inspection services are being cut back in some areas. This can lead to ambiguities in the health code and can mean that even restaurants that are in compliance with code may be cited for various violations as health inspectors become overzealous in order to secure their jobs.
Consumer foodservice is expected to reflect the growing diversity of consumer food habits and increasing globalization of food. The large number of immigrants in western countries will continue to drive ethnic food demand. In non-western countries, globalization has led to increasing exposure to different cuisines.
Meanwhile, international travel by consumers will lead to demands for foods and cuisines they have sampled abroad. In home meal replacement, particularly via supermarkets, is seen to be a threat to consumer foodservice. The continued improvement in ready to eat and ready to heat meals from retailers, as well as its increasing acceptance from consumers, will see them opt to eat at home as opposed to dining out.
Lifestyle changes involving a greater focus on health and wellbeing have also resulted in consumers avoiding certain types of restaurants and foods. This is a challenge for an industry which is heavily reliant on indulgence in eating out.
There are now increasing numbers of single person households. Even in Asia, where family dining at home is still relatively more common than in the West, the increase in single person households is having an impact on the foodservice industry. As more and more people eat alone, there is a greater need for smaller portion sizes, more counter dining and a greater number of take out options.
Counter dining is underdeveloped in countries such as France and China where people are generally more traditional. In these countries, eating is very much a social activity and there is little inclination to dine alone. However, as French and Chinese populations become increasingly time poor, more convenient dining options will be adopted.
Traditional Chinese food habits involve preparing food at home and then taking it to the workplace. With an increase in more complex lifestyles there will be greater demand for on premise eateries.
Restaurant delivery services are expected to experience growth over the forecast period thanks to the increasing availability and diversity of these services and a growing consumer base who are unable to visit foodservice locations.
An increase in delivery services from foodservice establishments would also have a significant impact on the type of food prepared, with more meals being intended to travel and designed to keep their quality. Fast food is expected to continue to hold the largest percentage of the delivery market, although this share is expected to continue decreasing as fast food chains are increasingly seen to be in direct competition with full-service restaurants who can provide higher quality meals in a similar, if not equal, price range.
Full-service restaurants and drinking places only hold a small share of the delivery market and mostly have service available in urban areas and customers at the higher end of the income spectrum. These locations would expect a shift in customer demographics should the restaurants enable delivery of meals, where the loss of revenue from on-premises sales might be offset by increased sales to those who now have access to the service.
Delivery service is expected to have a polarizing effect on full-service restaurant sales; higher-end restaurants would experience a significant decrease in customer numbers as meals can now be delivered from similar quality establishments and eaten in a less expensive, more desirable setting, but advocate that hiring a driver to deliver meals would increase revenue.
Delivery from lower-end full-service establishments would increase sales by a moderate amount, with an expectation of increased tipping revenue in the case that the tipping of the driver is done separately from the cost of the meal. In general, independent food preparation locations such as homes and central commissaries would experience a significant increase in meal production for off-premises consumption compared to the minimal increase in previous years.
Delivery of alcoholic beverages would be made legal in certain states over the forecast period but still would not be a significant revenue generator for alcohol sales at restaurants and drinking places. This is in contrast to the significant percentage of revenue gained from alcohol sales in general, an expected issue for restaurants in deciding if delivery would result in an increase or decrease in total sales and revenue.
Overall, the net effect of increasing delivery services would be negative for restaurants in terms of total sales and would contribute to an ongoing trend of an increased association between at-home meal consumption and food prepared away from home.
The future workforce for the foodservice industry will grow more diverse. In many countries, changing demographics, with different patterns of immigration and differential birth rates, will mean the workforce will have smaller proportions of traditional high school and college students.
Concurrently, demand for foodservice and hospitality employees is projected to increase. In the United States, for example, according to the National Restaurant Association 2009 Restaurant Industry Factbook, the industry is the largest employer outside of the public sector, adding nearly 2 million more jobs to the 12.8 million who are already employed, and the industry is set to add even more jobs in the earlier part of this decade.
However, an increase in the quantity and quality of healthcare, social and community services jobs could create competition for workers from the foodservice industry. Finally, “in developing countries, the industry will continue to absorb higher proportions of youth, women, migrants and in the case of the United States, minorities” (Harding, J, 2007).
Economic and social barriers elsewhere in the job market often make foodservice the only viable source of employment or a stepping stone to further opportunities. For both developing and developed nations, overall trends aside, the foodservice industry has historically attracted workers from the fringes of society and, comparative to other industries, has employed higher proportions of disadvantaged workers.
The world economy and growing automation have a major impact on workforce and labor issues, and the restaurant industry is not immune from it. Having a greater understanding of the current and future workforce will allow for improved planning and better coping with change. Global labor issues and demographics are likely to lead to an end to the almost limitless supply of labor that many nations in recent decades have virtually taken for granted.
The workforces in the advanced economies are aging as the baby boom generation moves into retirement. This creates new and different labor shortages and problems of recruitment and retention that could raise labor costs for an industry that has grown so large in some countries as to be a major source of employment.
With restaurants finding it hard to attract customers and even harder to keep them, right now may not seem like the ideal time to open a restaurant. Don’t tell that to Wayne Homschek, chairman and CEO of Manhattan-based restaurant consultancy.
“It’s actually the perfect time to open a new restaurant if it’s the right concept and the right marketing strategy,” says Homschek. “In this economy, there is less competition for sites and qualified labor; restaurants can negotiate better deals on just about everything and savvy, cost-effective marketing can make almost any concept successful.”
Just as important as cooking great food is letting people know about what your restaurant does. If you are failing at this stage, your potential customers may not know about the food they are missing out on! Marketing is essential for all businesses and restaurants are no different.
This is particularly relevant in the current global economic climate as consumers become increasingly cash strapped and more likely to stay and eat at home. Because of this, restaurants need to be more proactive in luring customers to them and ensuring that once a customer has eaten there, they will want to come back.
One of the key issues in the global restaurant industry is health and safety. The public and the employees are vulnerable and need to be protected. Employees are subjected to hazardous working conditions such as slips, trips, falls hazards, lifting/carrying injuries, burning, cutting, and back injuries.
To attract staff and the public and to reduce the burden of injury and ill health, it has been necessary to develop and implement a health and safety management system for restaurants. A legal requirement is to have a policy on health and safety. This is a plan showing how to protect the health and safety of people who are present in the workplace or who may be affected by the work.
Policies should contain a clear intention of doing things. They do not have long-winded explanations and are not set in a rigid structure. To improve health and safety long term in restaurant work, a culture of prevention is needed. This has to be led and implemented by management. This will also help with the direct and indirect costs of injuries.
Information is essential to health and safety. People require up-to-date and correct information on health and safety issues and the ability to understand and interpret this information. This would be essential for employees who are working alone and do carry some risk work. Clarity and understanding in health and safety issues have to be promoted at all levels because misunderstandings can mean the difference between health and safety and an accident.
By training and involving employees, it will develop their skills, resources, and competence in health and safety. This includes on-the-job training, instruction, and supervision. Crisis management has to be prepared for. It is impossible to prevent every incident. Plans for dealing with emergencies should be in place. Fire safety is a large risk in restaurant work.
Proper fire safety in building design and the use of fire safety equipment can eliminate and contain risks. Measures such as these will ensure the management and prevention of health and safety risks at work. A formal system of health and safety management requires the integration of health and safety into an organization.
This involves the setup and implementation of a management system that supports health and safety. This management system is controlled via a systematic series of steps often comprising policy, organizing, planning and implementation, measuring performance, and audit and review.
Finally, assessment of risk is an essential strategy for managing health and safety. This is the process of looking at the work that could cause harm to employees and others and deciding whether or not enough precautions have been taken.
Marketing a menu trial without the risk of costly reprints has seen the birth of innovative new methods of display. The use of blackboards listing daily specials is a method as old as time, though in this modern age handheld tablet computers are being used as dynamic digital menus.
Adoption is being led by fine dining establishments where the ability to provide customers with visuals in a portable format is seen as a luxury worth the investment. A money saver in the long run through decreased printing costs and wastage, it is predicted that this format will eventually filter down to mid-level dining.
Many operators are putting increased effort into menu design and ergonomics, recognizing that it is an often-underestimated sales tool. Attachment of pictures and wine suggestions, for example, are methods used to lead diners into spending more.
Key to an efficient menu is the description of the dishes, with the use of terms such as organic, homemade, and sustainable seeing significant real estate. Moving beyond traditional text, icons are being used as a tool of cross-language communication to enable easier reading for non-native speakers.
Increased sophistication and diversity in consumer demand have brought about the need to menu the menu, so to speak. Taking menus to the next level is what many operators are attempting to do, be it through improved design, descriptive dish analysis, or innovative new formats such as portable tablet computers.
The need to create a point of difference and decrease wastage is dictating that chef/owners design menus that are more in tune with their target market. The continued focus on health is seeing nutrition information and an increase in lighter dishes, while the rise in high-quality casual establishments has resulted in more sharing plates being offered.
One of the most important aspects of a restaurant, the design process is the point at which the restaurant’s concept begins to take shape. This would involve essentially creating the look and feel of the restaurant, that would form the customer’s experience.
The first step in the design process is to define a concept, which will be the driving force behind every design decision. Once the concept has been defined, it is important for a restaurant to pick a design theme that is in line with their concept. All design choices should be made in an effort to express and enhance the concept that has been defined and should aim to tell a story to the customer.
An effective way to do this is through creating a storyboard of the customer’s experience, from the point of entry to the end of their visit. Another fundamental part of the design process is the layout phase. This is something which is underestimated in its importance in the success of a restaurant. It involves using space planning techniques to achieve the best use of an area, in order to create a smooth and efficient flow from the kitchen to the dining area.
A well-planned layout will not only increase the comfort and enjoyment of a customer’s dining experience but can also increase the work efficiency of the restaurant’s staff. With a rise in popularity of open-style kitchens, it is important to consider the visual aspect of the kitchen from the dining area. Kitchen design is just as important as other elements, as it is essentially the soul of the restaurant. Failure of any of these design elements promises a change in the whole concept of the restaurant.
In the past, well-known restaurants could be characterized by grand interior designs. This included the use of valuable materials and ornaments, along with spectacular architecture. A restaurant housed in a cave in Italy is one such example. It was initially a winery and was converted by the owner. Using stone from excavation on site and taking advantage of local Tuscan style, he was able to create a unique dining experience through creating a special dining area. It was not only well known for good food but an unforgettable ambiance.
Now it is not to say that every restaurant should go hire a designer and be faced with an enormous budget. Any memorable dining experience can be enhanced by good use of restaurant design. A well-designed restaurant is profitable in the long term. This is because a well-designed restaurant has the ability to affect the customer’s eating experience by their views. So remember to consider the visual and how it will affect the customer’s experience when it comes to making a dining area.
In 2003, the financial performance of restaurants in most parts of the world was negatively affected by the Global Economic Situation (GEC). This situation was characterized by a general slowdown in the world economy and a lower rate of growth in many industrialized countries.
By late 2003, it was clear that the GEC would have significant negative implications for the global restaurant industry and that there would be impacts on all market segments and all types of restaurants. Changes in consumers’ disposable income and consumer confidence have major implications for the restaurant industry.
Income elasticity of demand for restaurant meals is high, meaning that the expenditure on restaurant meals in real terms is likely to increase, even in a period of economic downturn, albeit at a reducing rate.
Partnership can come in many forms such as co-investment in a new venture to trading of knowledge and sharing of resources. However, the ultimate aim should be to create synergy that will benefit both parties.
For the Japanese looking to expand into Spain, setting up a joint venture with a local Spanish seafood restaurant to open a third outlet specializing in fusion cuisine will allow for the Japanese to tap the connections of the Spanish restaurant in the local F&B industry and to procure the freshest local produce for their menu. At the same time, the Spanish restaurant stands to learn new techniques in food preparation and possibly gain a new clientele from the Japanese’s existing customer base.
An example of knowledge sharing would be the partnership of two Chinese restaurant chains, Din Tai Fung and Crystal Jade in an MOU organized by EDB which resulted in both chains gaining valuable insights on entering the other’s core market.
The MOU saw Din Tai Fung setting up shop in Shanghai whereas Crystal Jade opened a branch in Taiwan. This collaboration has proven to be a win-win situation as both parties have managed to capture market share in traditional Chinese dining of which had been dominated by local operators.
A restaurant, just like any business, cannot operate in isolation. In order to succeed and grow, it is important that a restaurant is able to form strategic partnerships and beneficial collaborations with other businesses. With the easing of travel restrictions and loosening of border control, there has been an increase in globalization and that has opened up plenty of opportunities for regional restaurants.
While restaurant chains will have a head start when it comes to global expansion, it is not impossible for regional players to make their mark on the world stage. Forge (n.d.) argues that the best way to execute expansion will be to form partnerships or alliances with foreign brands of similar concept or with enterprising entrepreneurs who are receptive to innovative ideas.
However, a franchise system is not simply a way for a company to gain easy money. It requires the right business concept, and with it in-depth planning and operational excellence. Failure to perform these tasks can result in a tarnished brand and actually hinder a company’s long-term growth and profitability.
This can be seen in a company’s Item 19 Financial Performance Representations which shows how profitable a franchisee can expect to be and can be a huge determining factor in whether they choose to invest. With the necessary tools and the right concept, franchising can be the catalyst to opening new units and establishing a profitable global brand.
Franchising can be a more effective way to generate the necessary cash with less of a long-term financial commitment. Franchising at its core is an agreement in which one company, the franchisor, allows another, the franchisee, to use the brand and often offer assistance in how to operate the business.
The franchisor will usually receive an upfront fee from the franchisee and/or a percentage of sales, as well as ongoing fees. Often the most beneficial aspect of franchising is that the franchisee will use their own capital to open the new unit, sparing the franchisor from having to invest large sums of their own company money. This is generally attractive to restaurant owners, as it is less risky and can avoid debt financing.
In recent years, many casual family and dining restaurant companies have tried to obtain this necessary cash through public ownership as a way to finance new units. The most notable concept in doing this has been Darden Restaurants, owner of Olive Garden and Red Lobster. Darden’s former CEO, Clarence Otis, was a big fan of opening new units to drive company revenue.
Although it can be an effective means of generating cash, public stock ownership requires a company to become more transparent with their financials and face possible backlash from cutthroat investors.
The decision to pursue franchising can be a difficult one. It certainly does not fit every concept. However, franchising has been the vehicle for the growth of many successful mid-tier and upscale-dining concepts in the past decade and should be considered a viable option for some restaurateurs.
Traditional casual and family dining concepts continue to be the most common type of restaurant in the industry. These concepts are in direct competition with one another, varying in food styles and quality. Most concepts in this segment compete on price and value, offering similar types of promotional deals to lure customers.
This can lead to a dilution of food and labor costs. As a result, many restaurant companies find it difficult to grow profits, failing to generate enough cash to open new units.
There is a risk that an absence of one established system for product sourcing could, in the future, leave consumers confused and not knowing exactly what the term ‘quality product’ means to different suppliers. This may be a long-term issue and a subject for further research.
Chefs, by the nature of their profession, are very picky consumers claiming they want the perfect ingredient every time. We spoke to chefs about their approaches to sourcing products for restaurants when left to their own devices. Most agreed that they would use local specialist suppliers and small quality outlets to ensure they got exactly what they wanted.
Local produce and meat were another common theme, using farmers markets and local farms to procure fresh ingredients. Pricing is less of an issue for chefs who choose to source their products; essentially, they want the best they can get, so they will pay extra for a premium product.
Chain restaurants explained that their sourcing was heavily reliant on scale and standardization of products, as some groups used as little as one supplier to source products for all their outlets. These operators have to balance demands for volumes of product across national or international supply, and the emphasis on price is prevalent.
Significant numbers of suppliers suggested that price was the most important factor when they supplied products to restaurants. This has led to national and regional supply contracts, with larger suppliers undercutting local suppliers to ensure a guaranteed market share of the product.
A common modern form of a customer loyalty program involves giving points to the customer based on the amount of money spent. Airlines were one of the first to use this system, giving the customer “frequent flier miles” for their flights that they could redeem for future flights.
Some more economically driven programs give the consumer a discount on the item(s) purchased every time a certain amount is reached. The latest form of this is to have a coalition loyalty program, which is a diverse customer loyalty program in which a company forms a scheme with two or more parties – typically in different industries – to offer a combined customer reward.
An example of this is the Air Miles program in Canada. Consumers collect air miles on everyday purchases with Air Miles sponsors. These miles can then be redeemed for various prizes. This program has been proven to be very successful.
Most independent and chain restaurants have some form of customer loyalty program. A loyalty program is a marketing strategy designed to encourage customers to continue to shop at or use the services of a business associated with the program.
Today, these programs have taken on many forms ranging from discounts to high-value prize sweepstakes. One of the more unique and interesting loyalty programs is found at Tim Hortons. When purchasing certain items, customers will receive game pieces which they can collect and stick on a board.
The board is similar to that of a board game and features multiple prizes ranging from a cup of coffee to a 2009 Toyota Camry. Tim Hortons has been very successful with this program, and it has greatly contributed to higher revenues.
Thus, reading customer reviews provides a simple means of risk aversion for consumers. Reading reviews can help consumers gain a clear picture of which restaurants are worth spending their money on, especially if the restaurant in question is in a high price bracket.
High ratings and positive reviews create a reputation for a restaurant as being worth the money, which is one of the most important factors in consumer choice of restaurant.
The importance of customer review websites to the average consumer is undeniable. The same study found that, on average, consumers visit customer review websites more than twice a month and spend around four minutes reading each review, meaning that the reader is spending a notable amount of time and effort absorbing the information contained within.
Furthermore, since the recent global recession, a similar study found that people are being more selective with regards to leisure spending of disposable income and are subsequently eating out less. This means that when people do choose to eat out, they are much less willing to risk a bad meal in their choice of venue and are looking to spend their precious discretionary income in the best way possible.
Restaurant customer reviews are no doubt one of the most valuable resources for restaurant customer feedback available to the modern consumer. Before choosing a restaurant, many consumers will read through customer reviews and ratings on one of the many popular restaurant review websites. A recent study revealed that more than two-thirds of Britons have used customer review websites when deciding where to eat.
A committed decision to expand means total teaching of either a proactive or reactive decision by management to increase the company’s volume of sales or production by expanding the scale of operations at the present or a new location. Disagreement exists as to what business expansion actually is. Penrose defines it as a process of growth in the firm’s efficiency at engaging resources in producing valued market output.
Steindl suggested there are different types of company strategy in regards to expansion, namely market-steering and market-driven. Usually, lower managed expansion is often seen as firms attempt to increase efficiency.
Ansoff’s work might be used to explain expansion through increased output as a type of market development. Expansion to the restaurant company will involve attempting to move into the next level.
This might be a new independent restaurant/traditional expansion or varying degrees of company chain. Step one to expansion is identifying an advancement move. Identification will insist with SWOT analysis that it is a possibility or one that can benefit the company from an escape strategy.
Simulation strategic theory can direct at the correct route of expansion. If success moved from a moisture state than that is the desired outcome. Changes in company internal attitudes and objectives will all be symptoms of company advancement. Succession will involve learning transfer into the next state, i.e. expanded company must already have necessary management expertise.
The expansion, regardless of size, will increase company complexity when there is the discovery of greater potential income. Internal restructure will be unpredictable and may need to be managed through a period of abnormal income. It is said the more complex a steady system, the greater tendency to vary very away from it.
Uncertainty in company future and knowledge that certain factors are still variable will lead to various trial and error strategies. The moment the expansion decision is acted on, there is a change to the previous steady state and it can be said the restaurant company could be using various methods of dynamic strategy to steer them into a new one.
Step into the new steady state is more often than not a push between two equilibriums and there is expectancy the new state is a more profitable one and one that satisfies company objectives.
Back-end inventory systems are increasing in complexity, with options to program automatic restocking of critical items, food cost tracking, and potential sales loss from 86’d (items or dishes removed from the menu) items. Recipe viewing and scalability function is useful for kitchen staff, however still too complex for some non-English speaking employees to use effectively.
Newer systems will offer picture-based recipe viewing and attempt to assimilate a standardized recipe from the various methods used by kitchen staff. The newest inventory features are attempting to track food cost real-time and create alerts when an item is over a determined cost percentage. With theft and spoilage being a frequent issue, better tracking item accountability can isolate potential issues for management follow-up.
The restaurant sector has received more attention to the tech solutions that can facilitate its daily operational tasks and platforms, increase cost and time savings, and maximize overall efficiency. Many of these solutions are integrated apps or POS systems that can streamline multiple functions into one platform.
Online ordering, while not new, has expanded into a broader range of formats, linking to social media and restaurant webpages through embedded apps or buttons. High-end systems can link into the restaurant’s POS system and transmit the order directly to the kitchen for production, bypassing the need for a front counter employee to take the order.
New services like Grubhub or UberEats provide a simpler method for restaurants to get involved with minimal cost, simply taking a revenue percentage for the orders placed through their app. Now tablet-based POS systems are gaining popularity, particularly with food trucks or other mobile food vendor operations.
These offer an affordable and mobile POS system with no need for internet access, since many run off cellular connections. Staff can even take these tableside for payment, cutting steps out of the order-taking process.
Every item on a menu has a certain value or utility to the customer called the “reservation price.” It is what a customer is willing to pay for an item, usually related to what he or she paid for it the last time.
There is no direct way of knowing it, but menu engineers play with these reservation prices using various tactics. For instance, a customer might not be willing to pay $15 for an entrée because he or she considers it an informal food item.
Changing the name to a more formal description and increasing its price would make it palatable to the customer. In more advanced economic cultures, the receipt of an item sometimes changes its reservation price relative to the customer.
As people work and earn more money, the value of eating out increases since they could be doing something more beneficial to them than cooking at home. Next, the Engel curve of an item is also related to its reservation price. As a product becomes more of a luxury good, the demand becomes more income elastic for relatively wealthy customers and less for relatively poor customers.
Menu engineers can increase the reservation price of an item by altering its perception to the customer into a more luxury good. However, a restaurant might incur reputational damage by increasing prices on its most income elastic items due to angry wealthy customers and the loss of relatively poor customers.
This can cause a shift in the demand curve left and the revenue gained might not counteract the revenue lost due to the price increase. One last way of increasing the reservation price of an item is increasing its quality.
Since the price of an item relative the perception of quality is subjective, this is the riskiest proposition for a restaurant. We assume that the customer bases the price he or she is willing to pay for a food item on the cost of the ingredients and/or the cost of preparation.
The price of an item must exceed both costs in order to be profitable for the restaurant. If the price exceeds the cost and the customer considers it low quality, he or she will not pay that price again. However, if the customer perceives the price of the item to be met with high quality, this increases the reservation price of that item and it will be more profitable for the increase in cost.
High quality perception items also experience a higher income elasticity of demand. Now the reservation price of food items at a restaurant are not necessarily the cost of the item plus some markup by the restaurant. Sometimes restaurants will set the price of items higher or lower than the reservation price in order to affect an ulterior motive.
For instance, it is common for a restaurant to have high markup on low priced wines in order to discourage buying the cheapest wine. This is due to the fact that some customers will base the quality of wine at a restaurant to the price of the cheapest wine offered.
A customer with a reservation price of $20 for a bottle of wine might still purchase the $35 bottle if the price is $5 more than the $20 bottle instead of purchasing the $20 bottle if the price were the same. Item pricing can also be used to cross subsidize and manipulate the demand of two items.
The new millennium has witnessed major changes in the gastronomic habits of people in many countries. The ‘globalization’ of eating styles, changes in food production, food preparation, and preservation, and the increasing popularity of eating ‘out of home’ have dramatic implications for public health.
In the last decade or so, the restaurant industry has seen a major boom and increased immensely in its volume of operation and net worth. With the rapid increase in consumer base and cutthroat market competition, restaurateurs have been prompted to innovate and increase variety in their food sales.
This has resulted in a kaleidoscope of food variety available at restaurants. Taking the US as an example, the number of food items available in one restaurant in 2000 has been shown to have increased by over 60% compared with 1975. This shows the diversity and variety of food that is now available to many consumers.
Traditional restaurants (especially in cosmopolitan urban areas) serve a bewildering variety of traditional ethnic foods, as well as ‘fusion’ or ‘hybridized’ cuisines. High-income groups especially are increasingly likely to eat types of foods that previously were only available in the home country of the foreign language-speaking household staff.
The fast food market is also brimming with variety. A recent scan conducted of all fast food items available in Australia found items representing over 56 ethnic cuisines. With the recent development of online food delivery apps, the variety in food sold at restaurants is said to still escalate in the coming years.
This pattern of change in the variety of cuisine is not defined to just first-world or high-income countries. Studies in Taiwan and Thailand have shown a significant decrease in traditional (native) food consumption and an increase in food diversity consumed outside the home.
With the changes in restaurant food variety being pervasive and global, it is imperative that we take a closer look at public health issues involving diverse cuisine.
With the global integration of markets and efforts to increase mutual exchange between countries, the world has witnessed cultural convergence across various domains, among which the food sector holds a significant place.
People have always been attracted to tantalizing food, and with the globalization of food production, the range and variety of foodstuffs available has expanded immensely. As a result, food consumption habits have undergone a profound transformation.
Global ‘food culture’ has become unlinked from traditional ‘food procurement’ culture and has significantly increased the variety of food available to people in each country as well as to individuals of specific cultural groups. World cuisines have now acculturated into new forms.
Traditional ethnic foods have been commercialized and packaged for mass consumption. Fast food restaurants, whose impact on globalization is profound, serve as an intermediary medium for cross-cultural fusion, providing mass-produced, internationalized versions of ethnic foods.
The training environment, however, is not the same worldwide. Based on a survey of 154 restaurant managers in Singapore, Ronnie Kang and Christina Chau highlight the differences in training investment and approach between small and large businesses.
Large restaurants are able to invest more in training with dedicated training managers and structured programs. They tend to train full-time staff and focus on internal promotion. In contrast, smaller businesses do not invest as much in training due to financial constraints and prefer to hire staff with prior experience, thus neglecting the development of those without.
These findings are consistent with the situation in New Zealand where it was found that training commonly occurred during quiet periods in small businesses, whereas larger establishments were more likely to send staff on external courses.
In contrast to Australasia, an investigation into training in the UK revealed that there has been a shift of training responsibility away from the employer to the employee, as businesses are less willing to make time and financial investment in staff development.
Training and development in the hospitality industry has traditionally been casual and seldom focused on career development. Since 2008, the industry has seen a trend towards structured on-the-job training and a realization of the need to retain good staff, as highlighted by the success of the “Appetite for Success” program in New Zealand.
However, the industry is plagued by a lack of incentives to undertake training and high staff turnover, which works against any long-term training investment. This matter is further complicated by the high number of small businesses in the industry and the often poor working conditions in some sectors.
There has been a big shift in reservation systems at high-end restaurants in recent years. More and more are using online systems. Some no longer take reservations over the phone.
Using a system like OpenTable.com, a restaurant can allow customers to make reservations 24/7 without calling the restaurant. These systems are great and save the restaurant time and money. However, it is still important to be qualifying the guest.
Sometimes OpenTable customers have proven to be less desirable due to the fact that anyone can make a reservation with an email address. Email addresses can easily be falsified and there is no relation with the guest. OpenTable does have a feature where the reservation can say “Accepts all reservations.”
This allows the restaurant to have a group of customers a manager can manually input. Newer systems like Tock and Resy have been popular. These are prepaid reservation systems that allow tickets to events. Tickets cannot be refunded or transferred. These systems ensure the guest shows up for their reservation or loses money.
This cuts down on no-shows dramatically. Tock and Resy are ticketing systems that also allow for tiered pricing for special events or busy nights. An event like a wine dinner or a NYE dinner is a prime example of something like this. This increase in price can be integrated into the reservations and there is no need to explain an upcharge to customers.
According to the National Food Safety Database, there are several reasons why all establishments must provide a higher degree of food safety to their customers. The current cost of foodborne illness in the United States is estimated at $10-$83 billion in medical costs and lost productivity.
With today’s globalization of food production and distribution, foodborne illness has become a common problem. Illnesses caused by harmful microorganisms and bacteria from food can result in long-term hospitalization, or even death.
High-risk groups that are more susceptible to foodborne illness include infants, young children, pregnant women, adults aged 65 and older, and people with weakened immune systems.
When the demand for higher quality, wholesomeness, and safety in food is considered, it is crucial that restaurants take responsibility for ensuring the safety of their food. This will require a higher degree of supervision and training among the food service staff. Studies have shown that the proper application of food safety in food service establishments can prevent nearly all foodborne illness.
In the future, the standard for food safety will be based on a HACCP (Hazard Analysis and Critical Control Points) approach, something many food industry sectors are beginning to adopt. This approach will allow a safer, more rigorous application of conventionally safe practices, and will enable regulatory authorities to put more emphasis on the prevention of foodborne illness.
A basic HACCP system consists of the following procedures: Conduct a hazard analysis. Plan, (develop a HACCP plan) Determine the CCPs (Critical Control Points) Establish critical limits for each CCP, Establish CCP monitoring requirements, Establish corrective actions, Establish verification procedures, Establish record-keeping and documentation procedures.
This system will require all food service supervisors to be certified in food safety, and to be qualified to develop a written premise specific HACCP plan.
1. The most ideal pricing method is demand-oriented pricing, which determines the value of the product to the customer and charges that amount. This would be ideal, but it’s simply not realistic for most restaurants.
2. Variable cost pricing is effective in covering costs, as long as sales are consistent. However, should sales fall, the price will have to be raised to cover expenses. This may result in a loss of customers to competitors with lower-priced products.
3. A firm might use pricing to achieve a target return on investment, contributions towards fixed costs, or cost recovery.
4. Cost-plus pricing is when a predetermined % is added to the total cost of the item. This is the simplest and widely used method of pricing, but it is not practical for helping to cover expenses such as rent, labor, utilities, and debt. High-end restaurants and nightclubs generally price items with a high markup that they get away with due to the prestige of their establishment.
There are various methods of pricing items to ultimately affect the image of your restaurant. According to a reference guide from Restaurant Owner, the top 5 ways to price a menu item are:
As we discussed previously, food costs and labor should all be considered when determining menu prices, but they shouldn’t be the only factors. A successful menu will price items according to the perceived value.
Whether through relative pricing (making the most expensive item seem extravagant and the cheapest seem like a good deal) or through price lining (dropping the price on an item to appeal to a wider range of people), the goal is always to draw in more customers through a more appealing price.
In the future, it is anticipated that ordering food online will be the main method of customer purchase. If we compare restaurant food to supermarket food – the disadvantages of buying and taking food home from a restaurant are eating cold food while being costly and inconvenient compared to the quality of the restaurant and having to find a parking spot and wait for a table, ordering food to eat at home is far more desirable.
This isn’t a phenomenon restricted to just the younger generation. When the baby boomer generation becomes elderly and technology-savvy, there will be a mass market for online food ordering. As online food ordering becomes a popular way to obtain meals from restaurants, platforms providing and delivering food from restaurants will be in even higher demand than present.
At this time, it is predicted that 3rd party online food ordering and delivery platforms will become a necessity for restaurants to bend the sales trend upwards – even lower-end eateries will need to consider making a takeaway version to stay competitive in a food market where the alternative is convenient and high-quality meals at home.
There are more and more online food ordering platforms emerging in the market that can be partnered with your restaurant – UberEATS, Foodora, MenuLog, Eat Now, and Deliveroo are just a few.
The trend trajectory is going up. These companies are not only providing a third-party platform to order your food online from a computer or smartphone, they are also investing in food delivery from top restaurants that don’t even offer a takeaway service. This service is usually higher end and pays better commission compared to the typical quick pizza delivery job and bridges the gap between restaurant quality food and eating in.
Quality assurance is the prevention of incidents impacting the quality of the service or product. This should not be confused with quality control, which is the detection of problems and the fixing thereof. With quality assurance, all involved in the work strive to keep the product at a high level.
This can be related to the HACCP plan in that the product is ensured to be of a good standard. This is often seen by restaurants or fast food outlets claiming that they use fresh produce. To meet quality standards, it is likely that the company is using the essential part of quality assurance, quality control, but the aim should still be to implement a system whereby procedures followed result in minimal loss of quality.
High quality is widely recognized as a good marketing technique to increase sales and customer base. This relates to the importance of quality to the customer and requires a study of customer needs and expectations. High quality is also important because it affects the cost and productivity of the company and subsequently the competitiveness of the company.
Customer service in the restaurant industry has grown over the years and has become a very complex phenomenon. It is imperative that an organization delivers maximum value to their customers, but the value is determined by the customer’s perception of the service.
If the customer’s perception of the service exceeds their initial expectations, then they will be satisfied; but if the service does not meet their expectations, the customer will be dissatisfied. In today’s world, customer satisfaction is the key to a business’s success, and positive word-of-mouth from satisfied customers is the most effective tool to acquire new customers.
According to the journal article “An investigation of self-control and the service performance-customer satisfaction link” by Kirsten Robertson, there is a close relationship between employee service performance and customer satisfaction, but identifying the moderating variables between the two is vital. This identifies that without customer service excellence, a business cannot achieve customer satisfaction, and employee performance is the key to achieving customer service excellence.
High-quality service delivered by employees results in a customer’s high perceptions of the service, which will then satisfy the customer and result in positive feedback. But in order to achieve high-quality service, the employee must portray organizational citizenship behavior and exercise self-control.
Self-control is described as suppressing one’s feelings and exhibiting desirable behavior. This can be very difficult to execute in a customer service context, where the employee is dealing with a rude or difficult customer.
The employee must understand the negative consequences of expressing negative emotions and the benefits of exercising self-control. Through training and supervision, an employee can develop self-control and improve their service performance.
An organization could also engage in employee job redesign, as employees who are overworked and stressed are more likely to succumb to expressing negative emotions. This topic is relevant to customer service and the restaurant industry is facing a global labor shortage. Job redesign employing tactics such as job enrichment or reducing an employee’s work hours could considerably improve an employee’s service performance.
Unfortunately, in 2024, restaurants exist in a complicated time. Few restaurants have established relative stability. However, even fewer restaurants are experiencing growth. Those that are growing are doing so in a time of caution. Restaurants are being constructed with intentionally low initial capital investment. Expansion is slow and deliberate.
The age of rapid expansion is over. There is a prevailing wait and see attitude. No one is sure what is around the next corner. This attitude is pervasive among both the large multi-unit operators and the single unit owner/operators. No one is confident their concept is recession-proof.
Now that the U.S. economy has been in a recession for two and a half years, restaurant operators feel it will be another one and a half to two years before it comes out. People still need to eat when times are tough, so restaurants have survived. They have, however, taken everyone’s business to some extent.
One operator in San Francisco likened it to “the restaurant version of trench warfare.” Everyone is hunkered down just trying to hold on to what they’ve got. The prediction is that there will be increased casualties over the next years. All aspects of the restaurant industry are most definitely slow growth markets.
One might be bold enough to suggest that home meal replacement from high-end take-out and delivery sources might be the single fastest-growing segment of the industry. Full-service restaurants are feeling pressure from this sort of dining.
Consumers are increasingly becoming more for a meal. The lines between upscale and fast casual are beginning to become very blurry. Full-service restaurants now feel increasing heat as the price points for decently prepared packaged meals move their way on.
The rise of the internet has given way to a new type of publicity for eateries. Online user reviews are the modern-day version of word of mouth. Anyone with access to the internet is sure to check ZAGAT ratings before trying a new restaurant. Zagat and Yelp reviews are available in seconds with a quick Google search.
A negative review from anyone, even an entry-level fine dining, can have very acute adverse effects. Relying on proven tradition in today’s climate more than ever is a recipe for obsolescence. New concepts are what’s happening. High-fat, low-nourishment fast food is the only market type marginal.
But even here, fast food behemoths are looking for ways to provide propositions following the experience of consuming higher quality food. Any human living sector will feel the effects of a globally aging population. In 2024, the baby boomer population is reaching the sixty-year mark. This means less intensive food preparation and increased consumption of high-quality take-out meal options. This trend will continue with increased global life expectancy into the foreseeable future.
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Keeble, M., Adams, J., Sacks, G., Vanderlee, L., White, C.M., Hammond, D. and Burgoine, T., 2020. Use of online food delivery services to order food prepared away-from-home and associated sociodemographic characteristics: a cross-sectional, multi-country analysis. International journal of environmental research and public health, 17(14), p.5190. mdpi.com
