Restaurant Business in London - Essay Example

 This paper is an attempt to understand, access and analyse the economic, social, environmental and investment elements of restaurant business in London and their impact on the city. The analysis is supported by relevant examples from the industry. The Restaurant Industry in London There is a known Chinese curse ‘May you live in interesting times’. Life in London is definitely the same. London has all that you would need as a person. Life is affluent and peaceful. Hardly one fourth of the households do not have cars. There are an ever increasing number of women who earn a living. More than 50% of the houses in the city own a computer. Life expectancy is all time high 80 years for women and 75 years for men. There is nothing more that you can ask for. People in London are cash-rich and time-poor. On an average, people are not present at home or at work for four hours a day. The most prevalent leisure activity is eating out. The population of London has a high frequency of dining out. The love for eating out among the people of the city reflects in the ever increasing number of restaurants. “London’s dining scene now offers a vast array of culinary choices; over 5,000 restaurants prepare the cuisines of more than 60 countries” (Olson, 2010). The number of new restaurants opening every year is somewhere between 130 to140. The cosmopolitan city of London is one of the most culturally diverse cities in the world. More than one fourth of the city population was not born in UK. There is no hesitation in mixing with new culture or trying new food. People love to explore abroad. Increasing number of people is reaching out to global holiday destinations. This exposure to other countries, new culture and food habits shows an effect on the restaurant menu cards and shop shelves. According to the restaurant guide Time out London, the number of cuisines that the population of London love to feast on is thirty. This includes wide range of eating joints from the luxuries restaurants, coffee shops, fast food corners, budget restaurants to take away joints. It serves across all sections of the society. Needless to say, it is one of the top food destinations in the world. (Source: www.timeout.com date accessed 22.07.2010) The rich cultural diversity of London is one of the factors that lead to the flourishing tourism industry. According to the figures of the International Passenger Survey (IPS) the number of overseas leisure visitors to London increased by 7% to around 7 million during 2009 and more than 14 million international residents visited the capital last year. 2009 was an incredibly tough year for the tourism industry in London but the provisional IPS figures reveal, for the first time, that there are signs of recovery. Compared with findings for 2008, leisure visitor spend increased by nearly a quarter to around £4bn while total expenditure grew by 3 per cent to £8bn (Source: bha.org.uk date accessed 22.07.2010). Tourists have been coming to London from the various countries and enjoying the dining experience of all parts of the world. “Today London is particularly well known around the world as a food destination due to its diverse range of people and cultures. In London especially, one can not only experiment with the best of British, but the best of the world as there are many distinct ethnic cuisines to sample, Chinese, Indian, Italian and Greek restaurants are amongst the most popular” (Source: www.learnenglish.de date accessed 22.07.2010). As the world moved in and out of recession, restaurant businesses in the city have seen significant changes. In the last economic slowdown they have seen their sales and profits plummeting. During the recession, one third of the restaurants were offering discounts, value meals and other promotion schemes to increase the foot fall in their outlets. “Many restaurants have responded by lowering their prices and offering fixed-price meals.” (Olson, 2010). However, it was not necessary that they were making sufficient sales and profits even though the footfalls were increasing. This was the only survival strategy that many of the entrepreneurs could think of. Single outlet owners found it difficult to fight the price wars against the chain of outlets. While restaurant owners were feeling the pinch, people of London did enjoy the fruits of increasing competition. Some restaurateurs adopted creative and innovative strategies to increase footfall. According to the restaurant group Little Bay, the promotion ‘Pay as much as you like’ ran throughout February 2009 at its Farringdon outlet, said that within five days of its launch the restaurant was fully booked, with a total of nearly 10,000 diners visiting the restaurant during the four weeks of the promotion. Each customer paid on average £17.25 for their meal, almost 30% more than the average food spend of £13.50 at the restaurant. (Source: Caterersearch.com). “London is now considered one of the food capitals of the world, and its restaurant scene is a volatile one –made even more so by the recent economic downturn, which has forced some restaurants to close their doors.” (Olson, 2010). The lessons learnt from the recession are still being used in the business. “There is a new trend towards less expensive ethnic foods and restaurants that don’t charge exorbitant prices.” (Olson, 2010). It was amidst this recession that food critic Fay Maschler and Simon Davis and the tourism body Visit London ran a fortnight long London Restaurant Festival in October 2009 and then in April 2010. “It is a citywide celebration of dining out designed to raise the profile of restaurants involved and drive footfall.” (Source: Caterersearch.com).”It was initiated as recognition and magnification of London’s immense diversity and liveliness when it comes to eating out.” (Source: Caterersearch.com date accessed 22.07.2010). The city will again be celebrating the London restaurant festival in the month of October 2010. The Food lovers, the restaurants and the tourism industry, all are going to be benefitted out of it. The restaurant industry in London has a big impact on the overall economy. According to a report, the restaurant business in London is generating around £1.6bn in a year, an amount that no economy can dismiss. Going by the words of Peter Backman, managing director, Horizons’, the market is expected to be growing in the coming 18 months. He said, “Despite uncertainty about the economy and the election outcome, consumers are still eating out” (Source: www.eatoutmagazine.co.uk date accessed 22.7.2010) In January 2009, the frequency of eating out had decreased in the city while the average expenditure per meal had increased. Quoting Peter Backman on this ‘“We are seeing a flight to quality with people eating out less but spending more. Spend per head at £12.46 is the highest ever recorded, demonstrating this new ‘save-it for something special’ approach. ” (Source: Caterersearch.com date accessed 22.07.2010).The eating out market was “polarising” and sliding away from coffee bars, sandwich shops and fast food takeaways where spend is less than £5, as well as the value sector where spend is £5-£11”. (Source: Caterersearch.com). Amidst the decrease in frequency of dining out, people were also hunting for promotional offers run by bigger restaurants to get value for money deal. “Whilst consumers do not seem to be spending less when they go out, they are going out less frequently. This in turn is driving people to branded outlets where there is a guarantee of consistency in the value and quality of food. Additionally, consumers are taking advantage of the many promotions that the big brand restaurants are offering.” (Source: deloitte.com) Over the past 12 months the average cost of a starter has risen 8% to £5.27, a main course has increased 1.4% to £8.98 and the price of a dessert has gone up 11.9% to £4.53. Since January 2009 the price of a three-course pub meal has risen 6% from £14.85 to £15.74, a restaurant meal is up 5.1% from £19.48 to £20.47, while the average cost of a hotel meal has risen 6.6% over the past 12 months, from £26.45 to £28.20. In some restaurants the price of optional service charge has been raised from 10% to 12.5% (Source: eatoutmagazine.co.uk date accessed 22.07.2010). This clearly shows that the people are ready to spend money in eating out even when the cost of the meals has gone up. “It seems that people are not prepared to give up dining out” (Source: www.telegraph.co.uk accessed 22.7.2010). Another positive indication from the industry in the year 2009 was that more number of restaurants started than the ones that closed. Restaurant opened by Celebrity chefs like Gordon Ramsay was also one among the new ventures. “Notable openings of the past year include Murano, by Gordon Ramsay’s protégée Angela Hartnett and the St Pancras Grand.” (www.telegraph.co.uk date accessed 22.7.2010) “London's restaurant industry is in line to receive a major boost this year with the opening of a number of eateries headed by Michelin-starred chefs. Raymond Blanc - chef and founder of the Brasserie Blanc chain - unveiled his eighth restaurant in the UK at the end of March, which forms part of an office development in Threadneedle Street. Bruno Loubet has launched the new Bistrot Bruno Loubet eatery in Clerkenwell, while Joel Antunes has been appointed to lead the signature restaurant at the £350m Park Plaza Westminster Bridge London hotel. Daniel Boulud will open his first UK restaurant at the Mandarin Oriental Hyde Park in the coming weeks, which is designed as a French-inspired bistro and bar. Fellow chef Heston Blumenthal is also in line to open his first London restaurant at the property” (www.bha.org.uk accessed 02.05.2010). “To be trendy and talked about, a London restaurant must have a celebrity owner, a celebrity chef, a solid reputation, a great view, a chic location, and/or an unmistakable ambience-and, of course, memorable food helps, too”. (Olson, 2010). Heston Blumenthal’s restaurant ‘The Fat Duck’ was ranked #3 in the annual list of the "World's 50 Best Restaurants 2010” (Source: www.eater.com accessed 22.07.2010). The consumers of London are increasingly demanding for creativity, innovation, experimentation, uniqueness and surprise in the food served in the restaurants of the city. Affluence and boredom have led them to seek new excitements from the dinning outs. “Multicultural London is always in the midst of culinary evolution. There is a big interest in fusion food, too; mixing and matching the foods, and cooking techniques of different countries”. (Olson, 2010) Celebrity chefs, like Gordon Ramsay and Heston Blumenthal are, thus in to bridge the gap of demand for new excitements in food and the supply through their own restaurants. Celebrity chefs have influenced the choices of the people regarding what they want to eat. According to Colin Spencer, the author of British Food: An Extraordinary Thousand Years of History, “Where celebrity chefs have an influence, such as Jamie Oliver's drive to get people eating healthier home-cooked food, they need to have already fertile ground. For them to exist, society has to be receptive. Society is currently more health conscious." (Source: News.bbc.co.uk date accessed 22.07.2010) Health problems have given rise to low calorie and vegetarian food. Diseases like saars and bird flu have also led to increase in vegetarianism. “Consumption of meat has fallen and there is more emphasis on fine, fresh ingredients in the better restaurants” (Source: www.learnenglish.de accessed 22.07.2010). “A new crop of vegetarian restaurants is springing up, catering to rising demand for meat-free dining options. Even established restaurateurs, such as Aldo Zilli, are jumping on the bandwagon: Zilli is considering axing meat from one of his London eateries to cash in on the new trend. He is even mulling rechristening one of them Zilli Green. And other chefs, including Oliver Peyton, are increasing the number of meat-free choices on their existing menus. “(Source: www.independent.co.uk date accessed 22.07.2010) Health consciousness is not limited to low calorie food or vegetarian meals. The liking for organically grown food products is on the rise. People are ready to pay an extra amount if they are assured that the meal that they are relishing is prepared from organic plants. London is conscious about the problem of global warming and loves to go green. Arthur Potts Dawson, a chef- restaurateur and the co-founder of the first eco-friendly restaurant of London, Acorn House says, “Our food is centred around the key elements of health, training, community and environment. We hope that Acorn House will be a pioneering force in new restaurant management, which will benefit both the local population and those further afield. By sharing our beliefs with a young, local workforce, we are hoping to spread that message far and wide.”(Source: Caterersearch.com date accessed 22.7.2010). “The food - which reflects the cultural diversity of the London scene – focuses on seasonal, locally-sourced, organic produce that favours bio-diesel and boat transport over air-freighted goods. This restaurant uses organic food only. It recycles all of its kitchen and packaging waste. Water purification is done onsite. Electric lighting is restricted for the evenings and sunlight is used for illumination during the daytime.” (Source: Caterersearch.com date accessed 22.7.2010). As green issues are on the rise, a new rating system was launched by Sustainable Restaurant Association (SRA). It rates the restaurants on the basis of how green and sustainable they are. “The SRA offers its members a range of services to become more sustainable including an audit where a gold, silver and bronze accreditation is awarded.” (Source: Caterersearch.com date accessed 22.7.2010). “The rating system will be judged on a restaurant's sustainability principles: buying locally, changing menu ingredients with the seasons and relationships with farm producers and suppliers. Restaurants have to carry out new activities like covering sourcing local ingredients, impacting the local community and staff relations, changing their effect on the environment through energy saving, recycling and waste management” (Source: www.sidewaysnews.com date accessed 22.07.2010). SRA claims that “Restaurants can make a huge difference on issues such as climate change, animal welfare and food waste” (Source: www.sidewaysnews.com date accessed 22.07.2010). Affirming the increase in consciousness among the people of the city for getting green and sustainable, Simon Heppner, managing director of SRA said, “This survey shows that they can’t ignore these demands if they want to satisfy existing customers and win new business,” (Source: Caterersearch.com date accessed 22.7.2010) The restaurant industry in London is flexible to the changes in the society and consumer expectation and will continue to grow in the same manner as it has been growing. There is no slowing down for this industry. Conclusion: The industry has sailed successfully through the recession making London more attractive destination for the pleasure seeking foodies of the world. Trusting the words of the experts, the industry is to show a growth in the current year and in future as well. It has the potential to grow further due to richness of various cultures and their culinary expertise which has given the city an edge over other food destinations of the world. In addition to that, the celebrity chefs have made this industry more creative, innovative and experimenting than ever before. The industry is in fact a trend setter in food habits for the citizens of London as well as the tourists from round the globe. Vegetarianism and preference for organic food is on the rise and the industry is responding to the change through SRA rating systems etc. Restaurants with celebrity owner are enjoying business advantage over others. Restaurants without such an owner will continue to innovate different menus as well as marketing strategies of discounting and business promotion. “Alain Ducasse, France’s most famous chef, declares London the gastronomic capital of the globe. There has been a revolution in London in the last 10 years, he says. The restaurant scene is very interesting. London is the most important city in the world for restaurants” (www.telegraph.co.uk accessed 22.07.2010). Events like London restaurant festival have brought excitement in the industry and the same is expected from Olympic Games 2012. As per Peter Backman, the Horizons' managing director, “The Olympic Games in 2012 could bring an additional £145m in revenue to the hospitality sector” (Source: eatoutmagazine.co.uk date accessed 22.07.2010). Several new restaurants are expected to come up during the Olympic Games. The restaurant industry has had a positive impact on London and it is mature enough to continue playing the same role in future as well. London will continue to be the food capital of the world. Word Count: 2688 References http://www.martinpeacock.org/ date accessed 27.04.2010 Olson, D. 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