RESTAURANT
BUSINESS IN LONDON.
Author: Tony
Introduction.
The
city of London has many restaurants, and they vary in terms of their
aesthetics, service models, interior décor, offerings and their main cuisines. London
has more top-quality restaurants as compared to other cities in continental
Europe. For instance, a comparison of the restaurant industry in London and the
one in Paris (France) will show that the hygiene standards, the range and the
quality of food in London restaurants is far more superior than their
equivalents in the Paris restaurant industry (Harries 2012). In most London restaurants, the meals and
drinks are served and thereafter consumed within the premises, or, the meals
are served as takeaways, but some restaurants also offer food delivery services
(Verena 2011).
The
multicultural and pluralistic nature of London confers it with a wide range of
top-quality restaurants. As such, London is considered to have some of the most
exemplary gourmets in the globe (“Taste of London” n.d).
The
restaurant industry has had a tremendous impact on several elements of the city
of London, such as gastronomic tourism, environment, social life, investment
potential and the capital economy of the city
(Brotherton 2012). Currently, the restaurant
industry is coping with the economic crisis affecting the economy of London,
and Britain as a whole (Verena 2011). The global recession has caused the
industry to experience a downturn (Freeman 2011). Sequentially, the industry
has been forced to refocus on its priorities in order to ensure that there is tradability
and sustainability within its market niche (Applebaum 2011).
Methodology.
The
subsequent research is a literature review. The research will
utilize information that is extracted from articles, national statistics, academics
books, journals publications and entries, business reports and internet
databases.
Design
has a significant impact on the dining experience. The importance of design to
the ambience of the restaurant is exemplified by the fact that investors do
readily commit significant financial resources in the design of their
restaurants (Baraban & Durocher 2010). For instance, the owners of Yauatcha invested more than US $ 6.8
million in the construction of a Tokyo-style kitchen with an open L’ Atelier (Yau
n.d).
The
design of restaurants affects the mood of both the customers and employees.
Design has two main aspects. One of the aspects is the color and manner of
lighting. The other aspect is the color and scents of fabrics, drinks and meals
(Baraban & Durocher 2010). McDonalds is an example of a restaurant that has used these two
aspects of design to improve sales and discourage lingering within its
premises. The Fat Duck restaurant prioritizes on the color of its food to
improve sales (“Taste of London” n.d). An exemplary design would increase the
volume of sales while concurrently increasing worker productivity and output.
This is due to the fact that a comfortable ambience heartens and emboldens the
customers to spend more time and cash in the restaurant (Roberto et al
2010). The design of Cha Cha Moon and Sake-no
Hana restaurants feature
comfortable sitting, bright lighting and, a cool and soothing ambience (Yau,
n.d).
The
restaurants in London exhibit countless types of designs. Some designs do
resemble real artifacts, for instance, the amalgamated artistic sketches which
incorporate ornate egg-shaped toilettes (Verena 2011). Metrogusto is a restaurant that has avant-garde
dining rooms which affords the customers a gallery-like ambience due to its
surreal paintings on the walls. The Gastro pub has been designed to project an
ambience of sharp distress (“Taste of London” n.d).
Wealthy
restaurant establishments that target high-net worth individuals are renowned
for their construction of multi-million dollar restaurants that feature
multiple amenities, and, an exquisite, exotic and post-modern design (Lashley & Morrison 2000).
The
menu design is an important aspect of the public image, and, the overall design
of a restaurant (Brotherton 2012). To deal with the current recession, most restaurants
have eliminated the sign of the pound “£” from their menu prices. Research has
shown that this strategy encourages customers to spend more as they are not
reminded that they are spending money (Bar-Hillel
& Dayan
2011). Also,
“staggering prices” is another aspect of most menu designs. Usually in this
menu design, the most profitable meals are placed at the top and the bottom of
the menu (Beardsworth & Keil 1997).
The
design psychology is based on the precept that reflective appraisal influences
most of the decisions that a person makes. Recollection of pleasant memories
can be elicited by familiar smells, sights and sounds. Hence, comfort foods would enable such a
person to virtually relive his past pleasant experiences (Baraban & Durocher 2010).
Since
the global recession began, most restaurants have resorted to mass issuing of
discount coupons and promotion vouchers which offer discounts (Blumenthal n.d). Usually, this marketing strategy
has been used by restaurant chains such as Strada and Prezzo (“Taste of London”
n.d). This strategy of offering discounts has been necessitated by the fact
that most (potential) customers in London have been hit with the recession, and
as such they are seeking for products that offer value for their money (Verena 2011).
Moreover,
the distribution of coupons and vouchers is a cheaper mode of advertisement as
compared to advertisements through the mass media (Corrigan 1997). Michelinster
restaurants use this strategy, as it offers a 50% discount in a two course
lunch (“Taste of London” n.d).
Currently,
customers are sensitive to environmental-cleanliness and the hygiene standards
of a restaurant (Ungku 2011). Moreover, the FSA (Food Standard Agency) has carried out regular
hygiene inspections of restaurants in London, and thereafter issued them with
their certified results. These results have been posted on the windows of
restaurants by their respective managements (Hickman 2007). On the
environmental side, restaurants in London have been instructed to provide their
customers with tap water (Blumenthal
n.d). Also, seasonal or local fresh
foods have been promoted by hygienists and dieticians as environmentally-sound
and healthy for the body (FSA n.d). This has caused restaurants to market
themselves as eating establishments that offer meals that have been prepared
from seasonal or local fresh foods.
Most
restaurants have used the mass media as an avenue of advertisement. Moreover,
prominent media personalities, celebrities and icons have been used to market
products of certain restaurants (Ernst & Young 2012). The use of these
media personalities has the effect of influencing the choices and tastes of the
market to the advantage of a particular restaurant. In London, media validates
the reality and as such chefs of several restaurants have been able to market
themselves (into prominence) to the public through appearances in the mass
media (Hoynes, Croteau &
Milan 2011). Heston Blumenthal is one
such chef, and he has been able to market his all his meals to the audience
(Blumenthal n.d).
Changing
consumer trends have led to the emergence of restaurants that specialize in
only one ingredient, meal or drinks (Lashley &
Morrison 2000). Examples include Moonstruck and
Teaplace (“Taste of London” n.d). This specialization has led to the production
of high-quality meals and drinks, and this has changed the tastes of customers,
with most customers preferring meals or drinks made by these specialized
restaurants as compared to the conventional restaurants (Freeman 2011). Culture
also determines the preferences of the customer. It is quite apparent that the
restaurant industry in London has been shaped by the cultural diversity of the
city. This diversity has provided the
industry with a strong assets base from which customers can select their most
appropriate restaurant or meal. Moreover, this cultural diversity has
contributed significantly to the lavish, exotic and exquisite designs that
characterize the restaurant scenery in London (Lashley & Morrison
2000).
Currently,
most diners in London are sensitive to hygiene and environmental preservation
(Blumenthal n.d). Thus, they tend to seek out organic meals prepared from local
natural foods and seasoned with natural flavors (Verena 2011).
Tapas-style
restaurants that offer exquisite high-quality foods are thriving despite the
economic recession (Verena 2011). Examples of such establishments include The
Salisbury Pub and Moro. Steakhouses are also thriving. Examples of such
steakhouses include the Buen Ayre which offers Argentinean-flavored
parilla-prepared meals, and the American steakhouses: Goodman Restaurant and
The Palm (“Taste of London” n.d). This explains why the locations of these
eateries, East London and Canary, are the most popular eating destinations (Yau
n.d). Research has shown that the favorite cuisines of London diners are (in
order of decreasing popularity) Italian, Modern European, Thai Busaba Ethai,
Japanese Wagamama, Chinese Hakassan, Gastropubs and French cuisines (Verena
2011).
The
economic recession led to the emergence of pop-up restaurants set up by individuals
with gastronomic passions (Freeman 2011). Likewise, temporary restaurants have
been set up in chic locations by celebrity chefs in order for them to cater for
their wealthy clientele (Verena 2011). Examples of such establishments include The Summerhouse and Koffman’s
pop-up restaurant (“Taste of London” n.d).
Ethnic cuisine.
More
than 105 nationalities and ethnic groups live in the UK, with the majority of
those populations residing in London as the pie chart below shows. The main language spoken in London is British
English. Other major languages spoken are French, German, Spanish, Arabic,
Urdu, Cantonese Chinese, Punjabi, Saraiki, Bengali, Sylheti, Greek, Malayam,
Russian, Gujarati, Polish, Tamil, Kashmiri and Southwestern Caribbean Creole
(“National Statistics” n.d).
London
is a multilingual multicultural city which has enabled various cultures to
exist harmoniously. Syncretism among culture has diversified the London
restaurant industry, especially due to the wide range of ethnic cuisines that
are offered in popular restaurants (Novelli 2012).
Ethnic
restaurants are an integral component of the London restaurant industry. The
most popular restaurants that offer ethnic cuisine are the Asian restaurants
which offer Asian-fusion meals (Brotherton 2012). Also, nutritionists have popularized Asian-fusion
meals by stating that they are organic, and as such they prevent several
lifestyle diseases (Verena 2011).
Currently,
the degree of eco-friendliness of a restaurant is one of the main determinants
that influence the choices of a customer. Studies have shown that most London
diners rely on the restaurant’s labeling when discerning the contribution of
the restaurant to environmental sustainability (Hoynes, Croteau & Milan
2011). Hence, most
restaurants use inappropriate (or faux) eco-tourism labeling to improve their
competitive edge in the restaurant industry (Nielsen 2002).
The
global recession has negatively impacted the London restaurant industry. It has
concurrently created more unemployment, and it has also driven up inflation
(including food inflation), and this has had the effect of reducing the net
disposable income of most Londoners (Ernst &
Young 2012). Restaurants have thus been forced
to utilize innovative ideas to increase their margins of profit while ensuring
that their customers neither spend parsimoniously nor extravagantly. Hence,
most restaurants offer discounts and loyalty cards. Also, some restaurants have
been compelled to adopt cost-cutting measures, such as lay-offs, which have
affected their quality of service delivery. Also some restaurants were forced
to close down, for instance Wiz
and Woz and Metro. It is
estimated that more than 800 restaurants have closed since 2009 (Zagat 2012).
However,
the restaurant industry did not experience the recession for a long time as
most Londoners and international tourists do enjoy and value the pleasure
offered by the restaurants, and as such by 2010, the industry had started to
show signs of recovery. The
table below depicts this economic trend of the restaurant industry
(“National Statistics” n.d).
Year
|
Percentage
change, quarter on corresponding quarter of previous year
|
|||
First quarter
|
Second quarter
|
Third quarter
|
Fourth quarter
|
|
2009
|
-4.3
|
-6.6
|
-4.8
|
-2.2
|
2010
|
2.2
|
9.9
|
8.9
|
9.4
|
2011
|
7.1
|
3.9
|
5.0
|
3.9
|
2012
|
3.9
|
3.4
|
||
Table 1: Economic trend of the restaurant industry
(2009-2012).
The
London 2012 summer Olympics provided a much needed relieve for the London
restaurant industry, as many visitors flocked to London thus increasing the
client base for the industry. Moreover, Londoners increased their leisurely
spending in restaurants (average expenditure was about £ 200). Restaurants
located on east London received more customers than the restaurants located on
the west end. This is due to the fact that the Olympic Games were taking place
on east London, and thus a majority of the people was located there (“National Statistics” n.d).
The
restaurant industry has created jobs for the local population. The capital
share of the restaurant industry is relations to employment are about 3.9% (“National Statistics” n.d).
Social impact.
Most
Londoners have experienced the transition from modernism to postmodernism. They
thus define themselves using various descriptors, including the foods they
consume
(Hoynes, Croteau & Milan 2011). Currently, most Londoners prepare their sandwiches at home due to the
economic recession, work patterns, and, the need to take care of their aging
parents and relatives. Also, most families eat at home as opposed to eating in
a restaurant (Zagat 2012). However, the dynamic social life of the unmarried
Londoners (including college students and interns) assure the restaurant
industry of a bright future as most of them tend to have most of their meals in
restaurants (Freeman 2011). Convenience still matters to Londoners, and as
such, people who unable to prepare their meals take their meals in restaurants.
Moreover, soap operas have influenced and shaped the social life and the
restaurant industry as most young (unmarried) women currently prefer to have
their meals with a group of friends in an open-air restaurant (Baraban & Durocher 2010).
Technological
impact.
Technological
innovations and inventions have impacted on the restaurant industry. This is
exemplified by the increasing use of online reservations, social online
advertisement platforms, and novel payment methods using plastic money (credit
cards) and online payments. Also, patrons can use Ipads to place orders. In the
kitchen, technology has seen the increased use of automated cookers, heaters and
mixers. However, these technological advantages have led to a reduced human
interaction, thereby reducing the intrinsic value of the restaurant experience
(Dixon, Kimes & Vernma 2009).
Gastronomic
tourism is the leisurely travel in search of exotic meals and drinks. It is
thus related to gastronomy (Novelli 2012). It is estimated that the UK receives
over a million gastronomic tourists annually, with over 70% of these tourists
dining in London (“National Statistics” n.d). This can be compared to Paris, whereby it is
estimated that it received about 700, 000 gastronomic tourist annually
(Brotherton 2012). Currently, gastronomy is
focused on nourishing food, and hence, well-being menu that portend to offer
tonic foods are an integral part of the gastronomic culture of London (Novelli
2012). Also, restaurants do act as avenues that are used to publicize London
food festivals, such as Taste of London 2012; and as such they attract
gastronomic tourists, thereby increasing the level of gastronomic tourism
(“Taste of London” n.d).
The
global economic recession provided an apposite set of parameters that could be
used to the measure and assess the strengths, weakness and the sustainability
of the London restaurant industry (Freeman 2011). Studies have shown that the
overall sales in the London restaurant industry have increased steadily in the
past three years. This has been attributed to the fact that most Londoners
prefer to eat out, and this has enabled the restaurant industry to cope with
the recession (“National Statistics” n.d). This trend of eating out has led to the blossoming (despite the global
crunch) of fast food restaurants such as Domino, McDonalds and KFC (Brotherton
2012).
The
best investment potential in the restaurant industry is offered by the
establishment of eateries that offer cheap fast foods (Brotherton 2012). This
is due to the fact that the middle-class and the high-end restaurant markets
are relatively saturated and as such any attempt to penetrate this market is
difficult (Zagat 2012). However, due to the ever-changing social life, there is
an increasing demand for cheap fast foods (Brotherton 2012).
Unfortunately,
the credit crunch dried up cash inflows, and this has led to several restaurants
insolvencies (“National Statistics” n.d). For instance, Worrall Thompson was forced to close down four
restaurants However, EFGP (Enterprise Finance Guarantee Project), EIB (European
Investment Bank) and CEF (Capital for Enterprise Fund) have averted the
financial collapse of numerous small restaurant establishments, through the
provision of soft credits (OECD 2012).
Currently,
there is consensus among shareholders in the restaurant industry that the lack
of credit facilities has impeded the growth and expansion of the industry
(Zagat 2012). However, most investors in the industry are actively seeking out
other channels of credit to finance the growth of their businesses (Brotherton
2012). The table below depicts future prospects for the restaurant industry (Ernst & Young 2012).
Year
|
Gross Domestic Product.
|
Domestic demand
|
Consumer spending
|
2008
|
-1.1
|
-1.4
|
-1.5
|
2009
|
-4.4
|
-4.4
|
-3.5
|
2010
|
2.1
|
1.6
|
1.2
|
2011
|
0.7
|
-0.9
|
-1.2
|
2012
|
0.4
|
0.3
|
0.8
|
2013
|
1.5
|
1.0
|
1.1
|
2014
|
2.6
|
2.0
|
2.1
|
Source: Statistics
from the Ernst & Young ITEM CLUB, Spring 2012 (Ernst & Young 2012).
Conclusion.
Most London restaurants serve meals
and drinks that are consumed within the premises or, the meals are served as
takeaways. This rich diversity of restaurants has made London an exemplary
gourmet in the globe. Restaurant design impacts the profitability of the
business. Thus, an exemplary design would increase the volume of sales while
concurrently increasing the employee productivity and output. Currently, most
investors in the restaurant industry have credit problems.
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