An Over View Of The Restaurant Industry Marketing Essay

An Over View Of The Restaurant Industry Marketing Essay A food catering establishment known as a Restaurant offer food and drinks to the customer in return for money. Restaurants also offer take-out and delivery options. There are large variety of restaurants and restaurant chains in the world that specialize on the main chefs cuisines or specific service models. Modern age restaurants were established during the 18th century in Europe where the business is mainly serving of food as per the order given by the customer. The first restaurant was established in France in 1765 by the name Restaurant that offered soups to customers. It was opened by A. Boulanger, a soup vendor. The first luxury restaurant was opened in France by name La Grande Taverne de Londres in 1782. Paris was the cultural and commercial hub during the time of evolution of restaurants. There was demand from customers for individual tables, individual orders and flexible lunching times and payment based on the item ordered. The kind of menus also segmented the restaurant bu siness. The main advantage of restaurant pattern is that the restaurants can serve the customers what they want. Restaurants as we see in the present form have supposed to be originated during the time of French revolution. Both revolutionaries and counter revolutionaries were attracted to the restaurants. Revolutionaries claimed restaurants as a means for breaking the traditional common meals, while counter revolutionaries called restaurant lunching to be an uncivilized way of living. The system of printed menu appeared in 1770. Penalty was levied for guests stealing food from the hosts of the restaurants or hosts stealing food from the guests. The penalty for theft from a restaurant was 8 years of forced labor. The most famous restaurant in Paris during the 19 the century was Cafà © Anglais which served classic dishes like sole Duglere and potage Germiny. Many of the worlds finest chefs were from France including Georges Auguste Escoffier who organized kitchen teams consisting of trained experts. One of the worlds finest restaurants was established during the 20th century called Resturant de la Pyramide in Vienna. French restaurants today are usually in one among the three categories, the bistro and inexpensive establishment, a medium-priced restaurant and the classy and elegant ones. In other European countries, also restaurants emerged during the same time. IN Italy Botteghe originated in the 16 th century for serving coffee. Many Austrians had their own steady restaurants called Stambeissi. The casarda in Hungary limits to meat dishes and fish stews. The Weinstube in Germany had a large wine selection and weinhauss offered food and wine to the customers. The economic reasons for the development of restaurants were those associated with income growth, population and commerce. There are a large number of events throughout the year that can influence the business of the restaurants. Seasonal food and that made from local produce has a big trend in the restaurant business in Europe. Another trend is offering special food on special days for example, Mothers day, Valentines Day, etc. There has been special food offered even during the time of events like Wimbledon, Rugby or school holidays. Sundays are often the busiest days and Mondays and Tuesdays find very low business. There is an increase of 40% annual revenue during Christmas and New Year. Restaurants range from simple lunching spaces to costly establishments serving classy food and beverages served in a formal setting. Usually the orders are taken at the tables by the waiter where the customer sits and when the food is brought to the table when it is ready and customers pay the bill while leaving. There are restaurants which offer specific type of food such as seafood restaurants, vegetarian restaurants, etc. Restaurant guides help to rate the restaurant which provide information on customer opinions on the restaurants. The Michelin series of guides are used for rating the culinary skills of restaurants in Western Europe. A rating of 1 to 3 stars is provided and more the number of stars, higher are the price of the food. Another rating guide is the Gault Millau where the restaurants are ranked based on the quality of food, rather than the dà ©cor and the service. Here the restaurants are rated in a scale of 1 to 20 with 20 being the highest. These days, internet sites are available where the restaurant reviews are put up by customers. Chain restaurants offer a familiar menu and dà ©cor irrespective of its location. Earliest chain restaurants originated in Germany called automats. Restaurant chains account for nearly 14% of UKs total catering expenditures. According to Technonomics 2010, Leading 100 U.K Chain Restaurants report fast casual restaurants are growing at a faster rate than limited service restaurants. Food service industry continues to be growing with revenues on a fast growth track. LITERATURE REVIEW. Restaurants in Europe According to the Market Research firm Mintel UK restaurant market is more than  £ 25b a year. Standalone restaurants contribute around  £ 5.4b a year where as the fast-food restaurant sector accounts to  £ 6.7b a year. The U.K restaurant industry employees more than 5, 00,000 staff with over 5, 00,000 restaurants spread across Europe. According to the British Hospitality Association, 70% of the restaurants in Europe are owner operated contributing to a great share in Britains economy. Mc Donalds has the biggest presence in UK market with more than 1250 outlets in Europe. This is followed by Burger King, White Bread, and TGI Fridays. Further players include Garfunkels, Caffe UNO, Frankie Bennies brands. Food sales out-of home has grown to 84% since the last decade. In 2005, the out of home food consumption was 10.6% ahead of 2002 statistics. Statistics show that the leisure spending in eating out is more than in-home grocery bill in U.K. TOP  20 UK RESTAURANT  GROUPS IN  2009  (by number of outlets) Owner 2009 outlets 2008 outlets Selected brands 1   Mitchells   Butlers   775   728   Harvester,  Toby, All  Bar One, Vintage  Inns 2   Gondola 585 575 PizzaExpress, Ask, Zizzi   3 Whitbread 372 398 Beefeater, Brewers  Fayre, Table  Table 4 Punch  Taverns   362 344 (Spirit)   Chef Brewer, Two For One, Millers 5 The  Restaurant Group   350   336   Frankie   Bennys, Garfunkels, Chiquito 6 Tragus   270   267   Cafà ©Ã‚  Rouge, Bella  Italia, Strada 7 Nandos     213   190   Nandos 8   Bay  Restaurant Group 190   381   La  Tasca, Slug   Lettuce, haha  Grill 9 Little  Chef   180   179   Little Chef 10 Famous  Brands     176   178 Wimpy 11 Greene  King 155   238   Hungry  Horse, Loch  Fyne 12   Prezzo 141 135   Prezzo, Ultimate  Burger, iMMO 13 Clapham  House 79     74   Gourmet  Burger  Kitchen, The  Real Greek 14 Paramount  Restaurants 75 75   Chez  Gerard,  Caffà ¨Ã‚  Uno  Ã‚   15 Town  Centre Restaurants 57 58 Auberge, Cafà ©Ã‚  Giardino, Azzurro 16 Wagamama 56 59 Wagamama 17 Ispani Family 55 Pontis, Caffe  Alba 18 Carluccios   42   39   Carluccios 19   YO!  Sushi   41   33   YO! Sushi   20 Orchid  Pubs 40 44   Oriental  Restaurant  Group,   Contemporary  Carvery 21 Individual  Restaurant Group 34 30 Piccolino, Zinc, Bank 22   Regent Inns*   31   Old Orleans Note: UK outlets only. Includes pubs whose food sales exceed 50% of turnover * Regent Inns went into administration in October 2009 Source: Horizon FS Restaurant Brands Branded restaurant chains are now on an increasing demand with more and more people enjoying the experience. The growth of branded food service and restaurant chains have been a significant feature of the growing market. Along with international brand names like subway and Mc Donalds there have been new home grown brands also such as Cafà © Rouge, Wagamama, Nandos, Cafà © Nero, Loch Fyne,La Tasca, etc. All these businesses continue to expand with increase in external funding from both private equity and public markets. According to the Peach Factory research in 2007, casual dining restaurants are top choice in London, where 72% of Londoners visit a casual dining restaurant at least once in every three months and 31% going atleast two times in a month. According to MC Report of February 2010, Pizz Express tops the top 20 brands in UK. The drivers of the brand value are three fold: estimate of the current and future earning of a specific brand, based on publicly available revenue, capital and profit numbers. The remaining top 10 included Frankie Bennys, Wagamama, Zizi, Ask, Bella Italia, Cafà © Rouge and Loch Fyne. Greater consumer demands are putting much pressure on chain restaurants to distinguish their products from others. Restaurant brands have a clear brand strageywhich requires attention, consistency and respect once executed. Brands are usually born from a single persons vision with the only motive to provide new experiences to the customers. For a restaurant brand to succeed its products and services should keep up the promises made through ads and communications. Once the trust of customers has been established existing customers will return to the same brand. Strongest performing restaurants generate more than 70% from repeat business. Restaurant executives use satisfaction and loyalty measures to assess the brand image. Other use brand awareness scores. Another approach is creating a perpetual map of a particular vertical market. The consumers may also be asked the restaurant usage habits like frequency, occasion and brand selection. The may also be asked to evaluate both physical and attitudinal characteristics like lighting, food quality, pricing, etc. It is also important to gather a lot of attributes rather than focusing on very few. The customers should then evaluate the attributes. Consumers can be given an option to choose between two restaurant brands, which is good when the attributes do not capture all aspects. According to Aaker (1997), brand personality can be defined as the set of human characteristics associated with a brand. Branding helps in creating a difference. It differentiates the product from just being one commodity against many identical commodities. People are generally willing to pay more for a branded product than for a largely unbranded product. It helps in creating a connection with people. Brand Challenges for 2010 Discount Vouchers: there will be an increase of 50% in the use of promotional vouchers by diners. This can affect the brand equity and pricing resulting in a lower shareholder value. Inconsistent Delivery: Rapid growth of brands has caused inconsistent delivery. National Local: Brands need to adapt to the local demands Healthy tasty: The consumers are more health conscious which forces brands to create healthy foods. Characteristics of Leading U.K. brands Following are the characteristics of the leading brands that contribute to the current and Future Success. Embedded strategy: A clearly defined strategy, well communicated, understood and performed by all employees, partners, suppliers and investors with main motive being the customer benefit. Consistency throughout all operations: 70% of the profit is contributed through repeat customers. This can be ensured by ensuring the promised services. Culture: A unique and strong organizational culture that holds all the stakeholders together and work towards a common goal Commitment to innovation: Consistently offering new services and products motivates the customer for more purchase. True people organization: An organization which takes care of the employees always gains customer satisfaction and loyalty Ongoing measurement: Measuring the performance through a balanced scorecard approach help analyze the drawbacks and make improvements Changing consumer interests Travelling and eating out are going to be the two leisure-spending activities by the British. Richest 20% spend significantly by eating out. The biggest spenders in eating out are adults in no children households. There is increased consumer emphasis on health, freshness, provenness, authencity and environmental friendly products. Food retailing and out of home market are definitely to benefit. Over half of the Britons want locally produced food and 53% feel that there should be more UK production. There has been a rise in New Puritans interested in health and lifestyle who advise others what to be done and what not to be done. Consumers want better quality, better service and less expensive items which has been reflected in UK casual dining scenario. People under 24 are the heaviest users of casual dining restaurants. The change in the demographics, economic growth, have-it-all society and experience economy all influence the casual dining out market. According to Peach factory repo rt 66% of the adults felt that the restaurants should be doing more to improve eating out experience. The quality of food, the type of service, food and the value for money are the main factors influencing the eating-out market. Women feel healthier eating options are more important. Food, service and value remain the key market drivers to the demanding consumers. Consumers say that most of them want cleaner restaurants efficient service, low prices and friendlier service. Younger customers are more interested in lower prices. Healthy food options and environmental concerns though not vital, but cannot be ignored. Public generally likes and understands branded chains General Classification of Restaurants Bistros -Bistros are relaxed and informal restaurants with 60 seats or less offering French food. Brasseries- These are large bustling restaurants with flexible dining experience. They often serve French food. Chinese food- In Chinese restaurants one can get dishes such as Beijing duck, Shanghai noodles, Sichuan soup and Guangdong dumplings. Country House hotels- Restaurants in British country side where ancestral homes are converted to restaurants. Fine Dining-restaurants with fine luxurious surroundings with linen covered tables and high quality tableware. Gastropubs- Restaurants in public house or coaching inn. They display huge British accent to the menu, but will also serve French cuisine Greek restaurants- Food is prepared using olive oil, grains and bread, wine fish and various meats. These are all complemented by wines or anise flavored liquors. Indian restaurant- Here food is characterized by herbs, spices and vegetables from India. International restaurant- Serves a wide variety of dishes representing different cultures. Italian restaurants -Serves Italian cuisine Japanese cuisines- The Japanese food is recognized as worlds healthiest food, low in cholesterol fat and high in fibre Malaysian Restaurants- Offer culinary diversity with fresh aromatic herbs and roots, lemon grass, ginger, garlic, shallots, kaffirlime and chilies. Modern British- Services quality dishes using local produce. Modern European- Seasonal style of cooking incorporating Mediterranean influences and ingredients Modern Scottish- Has both traditional and Scottish dishes along with international food. Seafood restaurants- Restaurants servicing fish and sea food Thai- the cuisine is spicy and served with strong aromatic ingredients Vegetarian restaurants- Food served without meat and fish Some of the brands in U.K are classified based on the brands owned by celebrity chefs and brands that propagate certain ideas. Jamies Italian by Chef Jamie Oliver, Rick Steins Padstow, Delia Smiths Delias Restaurant and Bar, Chef Heston Blumenthals Fat Duck, Antony Worall Thompsons The Grey Hound, Gordon Ramsay Holdings, Gary Rhodes W1 restaurant are some of the restaurant brands opened by celebrity chefs. Gordon Ramsay Brand Gordon Ramsay brands are one of the most celebrated restaurant brands throughout the globe. Most of the Gordon Ramsay brands are in United Kingdom, a few in America, Tokyo and Dubai. Gordon Ramsays restaurants are well known for its services and the great food. His restaurants have been awarded 3 Michelin stars and he himself has been awarded 10 Michelin stars. The Gordon Ramsay restaurants in U.K are Restaurant Gordon Ramsay, Petrus, Gordon Ramsay at Claridges, Angella Hartnet at the Connaught, The Savoy grill, Banquet, Boxwood cafà ©, Maze, La Noisette. Gordon Ramsay restaurants offer a mix of French, European, American and Asian cuisines. In 1998 Ramsay quit Aubergine restaurant which he co-owned with A-Z restaurants. He won Aubergine restaurant three Michelin stars. In 1991 he opened the Petrus restaurant in London which later won a Michelin star. Amaryllis in Glasgows One Devonshire Gardens hotel was opened by Gordon Ramsay Holdings in April 2001, which was awarded a Michelin star in January 2002. In October 2001 the group opened Gordon Ramsay at Claridge and won a Michlen star in 2001 for London restaurant. In October 2002, the food and beverages operation at Londons Connaught hotel was taken over by Gordon Ramsay Holdings. In May 2003, Wareing took over Savoy Grill. Ramsay opened the Boxwood Cafà © in Berkeley Hotel. In December 2003 Wareing moves Petrus into the Berkeley. In December 2003, Wareing opened theBaquette above Savoy Grill. In May 2005, Gordon Ramsay Holding has opened Maze at the London Mariott Hotel Grosvenor Square in London. The total number of staff in Gordon Holdings is more than 900. Tragus Holdings Tragus Holdings is one of UKs largest independent restaurant operators. It serves more than 12 million meals each year with 160 mid- market restaurants. The company was formed in 2002, through the  £25m acquisition of the Pelican Group and Bright Reasons Group from Whitbread. The key brands are Cafà © Rouge, Strada and Bella Italia. Other brands include Mama Amalfi, Amalfi, Abbaye, Oriel, Leadenhall Wine and Tapas bar. The company rolled out Huxleys Bar and Kitchen at Heathrow. The company is backed by Blackstone Group private firm. In May 2010, the group opened 15 new sites across three key brands and plans to open around 20 new sites in the current financial year. The group considers the expansion of the brands as the key to profitability. Tragus wants to ensure the quality of the sites to ensure its brand image. Tragus found the recession period challenging due to the poor economic conditions and the poor consumer spend. There have been a strong promotional activity along with the quality of service which contributed to the growth of the brand. Tragus employs 7300 people and has an equal opportunities policy. Tragus invests a considerable amount in training and they have their own in-house training department. Trags encourages feedback on the menus from customers as well as from nutrition experts. The organization promotes healthy eating habits in joint with other industry players which cover procurement kitchen practices, menu planning and information. They provide nutritional information including calorific content to the customers. Trends A key trend for restaurateurs is the availability of external funding in the shape of venture capital firms resulting in large number of mergers and acquisitions, but at the same time there are plenty of opportunities for independent operators. The industry has to satisfy the increasing demand due to dual income households, increased number of working women, rise in the number of old consumers. London, Manchester, Birmingham, Bristol are the some of the hubs of the UK market scene. Future Prospects The restaurateurs are forced at increasing the levels of service, especially outside London. There is a prospect for increased market segmentation because of mergers and acquisitions. The main challenges going forward will be satisfying the changing consumer tastes and expectations. Consumers want cleaner restaurants, efficient and friendlier service, and low prices. Women opt for cleaner restaurants than men do. For the UK restaurant industry, understanding what the consumer wants and then delivering it is the biggest challenge with more attraction towards branded chains. Methodology The two brands Gordon Ramsay and Tragus have been considered for our analysis here. A questionnaire was created to estimate the brand awareness, the brand personality affecting the customer perception, major factors affecting the brand personality and the impact of these brands as a marketing tool for business. A simple random sample of customers of both brands was selected to whom the questionnaire was circulated. The various factors have been discussed in the analysis given below. ANALYSIS. (The below analysis of the comparison of the Gordon Ramsay brand and the Tragus group based on customer feedback. The questions and the feedback of the customers are discussed below.) What is the main problem you faced at a) Gordon Ramsay b) Tragus? For Gordon Ramsay Holdings 45% of the respondents mentioned, other problems that they faced while using the services. 43% of the respondents found no problems with the service of Tragus. Which area do you think needs most improvement? The responses are as shown above. Majority of the customers have demanded for more variety for Gordon Ramsay brand. For Tragus, most customers demanded for low prices. What do you think the Unique selling Proposition of a) Gordon Ramsay b) Tragus? 26% of the respondents chose food as the Unique selling Proposition of Tragus Brand and for Gordon Ramsay; majority has chosen others, which is the chef himself as the brand image. How do you compare the services at Gordon Ramsay with Tragus? The respondents were asked to compare the services at Tragus and Gordon Ramsay. It can be seen that quality of food almost tops for both the groups. What in Gordon Ramsay brand attracts you more? The respondents were asked to choose the service that attracted more in the Gordon Ramsay brand. 6Which brand of Tragus attracts you more? The respondents were asked to choose the popular brands within the Tragus brand. It was found that Bella Italia was most popular among the customers. Do you think Gordon Ramsays personality has an impact on Gordon Ramsay restaurant brand? 68% of the respondents feel that the chef Gordon Ramsay has a direct influence on the brands image. Do you think brand name prompts you to go to Tragus? 54% of the respondents feel that the name Tragus prompts them to go to the restaurant. It is evident that the brand name has a direct impact on the minds of people. DISCUSSION Gordon Ramsay- The brand value Chef Gordon Ramsay is the force behind the 28 restaurants belonging to Gordon Ramsay Holdings. The Gordon Ramsay Holdings reported a pre-tax loss of  £4.3 million in 2008. He has published a vast array of cookery books and owns a catering school. Though the company has suffered in the recession hit economic climate and by the negative publicity about Ramsays public affairs Gordon Ramsay Holdings appear to be resilient and has reinforced a successful risk mitigation strategy. GRH had diversified the risk and helped to secure income streams through the opening of three pubs and several mid-priced maze grills. The organization forged strong partnership with a private equity firm in the global hotel and catering industry called Blackstone group. The critical element of GRHs internationalization is Ramsays television career since 2004 that has popularized the chef and the brand throughout the world. The passionate and aggressive leadership style in these shows gives the Gordon Ramsay br and a competitive advantage which represents the over all DNA of the group. Ramsay has been quick to find and nurture talent throughout his shows and this skill has proved to be the core capability of GRH. The sense of teambuilding and promoting from within has fostered a high level of loyalty among the staff. 85% of the staff from 1993 is still employed in the business. He has been able to inspire and engage with his tough but lovable approach to management. GRH recognizes the dream of its ambitious chefs by allowing them to open subsidiaries. The company lost  £850,000 when it closed the pengelley restaurant in Londons Knight bridge in 2005. The failure was aggravated when he employed a executive chef from outside GRH. In 2006, the GRHs London Hotel in New York suffered late opening due to delays, it received poor reviews and the head chef had to be replaced. Soon it was transformed and gained two Michlen stars. In 2008, Ramsay opened his first Parisian restaurant, Versailles at the Trianon Palace Hotel but suffered a loss of of  £1.78 million and was soon closed down. Ramsay is the face of the organization without doubt, and his actions in restaurant and televisions have impacted GRH. There has been nothing like Brand Ramsay in the world of cooking before. Ramsays position rest on two bases, the restaurant and as a media person. Tragus The brand value Tragus adopts a strategy of organic growth by opening new restaurants. It also aims at continually improving the existing brands through menu development and more investment into the group. It sees improved profitability through disciplined management and use of technology in its business. Tragus aims at providing more training and development programmes to its people and excellent customer service. It aims at acquiring groups of sites, which can enhance the portfolio. It looks at new opportunities and style of eating. The menu content has been regularly reviewed and has controlled the cost increases through regular retendering of the contracts. The company had adopted a good labour management system that can leverage the efficiencies. A new commercial and marketing structure was implemented in 2010 to improve the marketing activities of the group. The group also focuses on investing in the estate so that the best standards of presentation are meet. They have focused more on the Strada brand to maintain the contemporary image and the best quality of food. The group finds the brands, the pricing points and the value for money offerings as their competitive advantage. The group sees a growth potential for all the three brands Bella Italia, Strata and Cafà © Rouge. Tragus considers its people as the most important ingredient to its success. Tragus considers its corporate social responsibility as a priority. The group in relation with its suppliers tries to reduce the impact on the environment. They have promoted initiatives in mainly three areas -waste and recycling, energy saving, and food and drink. The company tries to find additional ways of recycling. The company has a central distribution center giving a single drop-off point for recyclable material. The trucks, which deliver food and drinks, while returning collect, used cooking oil, plastics and cardboard. The company tries to reduce their dependency on paper by using voice recognition technology. The company is working on a 100% recycling scheme for their restaurants. The company aims at energy saving by reducing the electricity use by 10% in the restaurants. All the Tragus brands run smart meters to view accurate usage of electricity. The company has undertaken multi disciplinary project to review the energy consumption across all the restaurants. The company supplies filtered tap water to all customers at Strada. The company uses Belu, UKs first carbon neutral water. The company also has served the community by working with organizations like Great Ormond street, Marie curie, children in need, etc. The company sees a brand risk through food scarce or a slow decline in a brands appeal to its customers, which can be met through efficient operations. The risk on the brands appeal can be met through continuous menu innovation, marketing campaigns and brand development. The company finds the market to be highly competitive especially in service offering, product quality and price. The marketing teams monitor the market offering and pricing on an ongoing basis. The group undertakes a regular mystery diner visits to all restaurants to ensure that the standards of the menu and customer service are met. There is a rolling renovation programme to all the present estates. Tragus has laid out the following aims as a part of its Brand building Creating a standout differentiation Establishing and delivering a compelling idea Focus and direction A clear proposition Tone of voice Compelling brand levers Defining customer segments Tragus wants its customers to keep dining, repeat business, try new dishes and menu items, trade up, and spread the message to others. Tragus wants to know more about consumers, wants to convert them to customers, Drive brand loyalty, not just voucher loyalty. Tragus believes that Brand development gives conversation rationale, but service execution is all. RECOMMENDATIONS Based on the analysis and the market study done for the both the brands of restaurants, the following suggestions can be recommended. Looking to the future the GRHs focus should be survival and selective growth due to the economic slowdown. Both Gordon Ramsay and Tragus groups should focus on the standard of goods supplied by third parties. Any suppliers who do not satisfy the minimum standards should be delisted. Both companies should try to retain the best talent at both restaurant and head office level The organizations should keep a check on the price of key raw materials and wages There should be strong financial and operational review and financial reviews There should be essential funding available for the operational purposes hence essential contracts needs to be maintained. The organizations should be careful about the risk of fraud existing in the misappropriation of assets, including cash banking. This should be mitigated through management structure, regular financial review and extensive use of business reviews. There should be regular financial audits carried out in the organizations There should be continuous monitoring of the marketing, brand strategies and pricing. The groups should regularly review the products and involve the customers in improving the value for money offering me