Different Types of Businesses in the Food and Beverage Industry

This report discusses the different types of businesses within the food and beverage industry, including hotels, restaurants, event catering, and beverage serving activities. It also explores various rating systems used in the industry and current and future trends affecting food and beverage businesses.

Managing Food &
Beverage Operations
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Table of Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
P1 Different types of businesses within the food and beverage industry...............................3
P2 Different rating systems used for the food and beverage industry nationally and
internationally.........................................................................................................................5
P3 Current and future trends affecting food and beverage businesses...................................6
Task 3...............................................................................................................................................7
P6 Comparison between different digital operational and marketing technology for different
types of food and beverage businesses...................................................................................7
Task 4...............................................................................................................................................9
P7 Factors that influence consumers’ decision of choosing food and beverage outlet..........9
P8 Strategies used in food and beverages outlets to build a loyal customer base................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
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Introduction
Hospitality industry is a wide group of businesses that aims to provide service to customers.
It includes lodging and accommodation services, food and drink services, theme parks, etc. Food
and beverage (F&B) industry includes all the businesses and companies that are involved in
production, processing, packaging, transporting and distributing edible goods – from farm or
factory to fork. It includes restaurants, cafeterias, fast-food joints, pubs, delis, caterers, food
transportation services, etc. (Bresciani, 2017) This report is aimed at discussing businesses in
F&B industry and analysing factors impacting them. Analysis and profiling of different types of
businesses within food and beverage industry is discussed in this report. Also, discussed below
are different rating systems used to assess food and beverage industry and current and future
trends which affect businesses in the industry in meeting their business objectives. Marketing
plays a very important in enhancing business performance and in present times, digital marketing
technology plays a critical role in operational and marketing strategies. Discussed below are the
influence of digital marketing tools over businesses and consumer buying behaviour. In the final
part of the report are discussed strategies that used in food and beverages outlets to build a loyal
customer base and their effectiveness in various businesses.
Task 1
P1 Different types of businesses within the food and beverage industry
Food and beverages services form a substantial part of hospitality industry and the scale
has now grown so much that it is considered a separate industry known as food and beverage or
F&B industry (Tardivo and et. al., 2017). It includes both types of outlets which are
independently owned or are operating units of large corporations managing global brands. In
UK, different types of businesses are grouped together and classified by government under
Standard Industrial Classification (SIC) (Condensed SIC list in CSV format, 2018). Food and
beverage division of SIC includes activities that provide complete meals or drinks which are fit
for immediate consumption. These services are to be provided in either traditional restaurants or
concept restaurants such as self-service or take-away restaurants. These places can be of both
the types, permanent stands or temporary stands, with or sans seats. Facility that can offer meals
fit for immediate consumption is deciding factor to be included in F&B industry as all other
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facilities like wholesale and retail trade of packaged food products are excluded from this
category of industry. SIC for F&B industry includes below mentioned groups:
 Hotels and others accommodation – It include foods and beverages services provided
in hotels, resorts, motels, holiday homes, homestays, camping grounds, etc. (Cleave,
2020) For example, food services provided at Hotel Marriott to its staying customers or
dining-in customers at its restaurants.
 Restaurants and mobile food services activities – It includes two sub categories – first
category is where services are provided to customers either when they are seated or they
serve themselves from a displayed menu. It includes restaurants, cafeterias and fast-food
restaurants, either licensed which are allowed to serve meals and alcoholic drinks like
Melissa’s Kitchen, London or unlicensed which are allowed to serve meals but only
non-alcoholic drinks. These places usually offer BYO for drinks like Adams Café,
London. Second category is take-away food shops and mobile food stands. These
facilities provide food services for customers as take-away or delivered to them. It
includes take-out eating places, mobile food carts, ice-cream vans, etc. For example,
Mister Creamy Ice Cream Van Hire, London.
 Event catering and other food service activities – This includes catering of food
services for a single event or for a definite time. It generally includes services provided
on the basis of the contractual agreements with the clients. It includes providing services
at some specific location or for a specific event. It excludes manufacture and retail sale
of perishable food items for resale. For example, services provided by The Hill Food
Company across London. Other food service activities include class of service providers
like industrial catering i.e. providing food services on the basis of contractual
agreements with client for specified period of time. For example, services provide by the
ABM Catering Solutions across UK.
 Beverage serving activities – This group includes businesses that prepare and serve
beverages for immediate consumption at the premise only (Boix and De Propris, 2015).
It includes alcoholic licensed clubs like night clubs and social clubs but excludes
reselling packaged beverages. For example, Corsica Studios Nightclub, London. Other
than clubs, this group includes bars, taverns, cocktail lounges, licensed discotheques,
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beer parlours, etc. For example, The Berkeley Bar and Terrace and Blue Bar at The
Berkeley hotel in London.
P2 Different rating systems used for the food and beverage industry nationally and
internationally
All the businesses try their best to perform and set quality standards but to evaluate them
on the basis of some uniform standards across industry are known as rating systems (Xia and et.
al., 2019). Few national and international rating systems applicable to F&B industry are:
 Michelin Stars – It is an international rating system provided to restaurants. It is awarded
by Michelin guides. Restaurants are provided zero to three Michelin Stars based on five
criteria of the food quality – quality of ingredients used, cooking techniques and mastery
in flavours, how much personality of chef is reflected in cuisine, value for money and
consistency between visits (Stars and Covers, 2020). Michelin stars are only based on
food quality and does not look at interior of the place providing the food. However,
interior décor, table setting and service quality are indicated as ‘covers’ and are
represented by the fork and spoon symbol.
 AA Rosettes Ratings – These standard ratings are applicable to hospitality concerns
across British Isles. These standards have been developed by Automobiles Association
Developments Limited in association with UK tourist authorities Visit Britain, Visit
Scotland and Visit Wales. Hotels, guest accommodation, self-catering and serviced
accommodation are given star ratings while caravan, camping and glamping sites are
given pennant ratings. Restaurants have been provided Rosettes awards for culinary
experience annually on scale of one to five with five being highest (AA HOTEL AND
HOSPITALITY SERVICES - Ratings and awards, 2020). Rosettes are awarded on the
basis of visits by an AA inspector and is beneficial to restaurants in increasing their sales
and revenue, staff retention and serves as factor for pride and motivation to them. Since,
these awards are according to food quality, they are subjected to awarded chef and as
soon as chef changes the place, award is suspended. However, award does not follow
chef either.
 Scores on the doors – This is a uniform grading system chosen by Food Standards
Agency board known as 6-tiers Food Hygiene Rating Scheme (FHRS) for England,
Wales and Northern Ireland and a 2-tier Food Hygiene Information Scheme (FHIS) for
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Scotland (Food Hygiene Ratings, 2020). It is a standard for hygiene in all places where
customers consume ready to consumer food like restaurants, pubs, cafes, take-aways,
hotels, etc. and is a guide to safety for customers especially in tough times when safety
and hygiene is paramount (Mohsin, Rodrigues and Brochado, 2019). It is a guide about
maintenance of hygiene in the establishment providing food and is not a guide to food
quality.
P3 Current and future trends affecting food and beverage businesses
Food and beverages industry is directly subjected to changes in the consumer behaviour,
taste, preferences, buying habits, etc. as well as changes in business environment, market, etc.
For example, coronavirus pandemic situation brought lots of changes in economic condition as
well as lifestyle. Many people lost their jobs and had to change their dietary habits while others
learned the importance of maintaining immunity and healthy lifestyle. This increased the demand
of healthy foods and recipe among the customers (Dai and Luca, 2020). This is just one example,
industry faces such trends regularly according to which manufactures and services providers
have to introduce new recipes, new drinks, new product labels, etc. every time to adapt to
changing situation and keep their business growing while some businesses prefer setting the
trends to lead the consumer behaviour in their direction and generate competitive advantages for
their businesses. Below mentioned are some trends that are capable of affecting food and
beverage business in near future:
 Preferences for take-away or delivery – With lock-down and restrictions becoming new
normal, people would prefer taking home-deliveries or take-away to satiate their hunger.
Therefore, take-aways and restaurants who offer contactless delivery options are
expected to have an upper hand in near future. This also presents good opportunity to
grow for food delivery businesses like HungryPanda and concepts like ghost kitchens
which operates completely on delivery concept, home-delivered customised meal kits
businesses, etc. These concepts can be acquired by presents businesses as well to adapt
their operations with new demand forms and also, to avoid new competitors. Digital
media will play a deciding role and therefore, must be used fully by businesses.
 Preferences for healthy or sustainable food options – Coronavirus scare has brought
immunity-boosting foods at the forefront of customers’ mind (Özbük and Coşkun, 2020).
Therefore, trends are expected that demand for plant-based meats in the form of burgers
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and chicken nuggets, CBD-infused foods, dairy milk and substitutes like almond milk,
coconut milk, etc. will rise. Recipes with low sodium and less sugar will have an upper
hand among customers. Alternative diets such as gluten-free, Paleo, Keto, soups, sauces,
meal replacement bars, protein supplements, legumes, algae, seaweed, etc. are expected
to see a surge in their demand. Also, appearance of the dishes to be Instagram-worthy is a
must.
 Unusual flavour combinations – Even though business situations are returning to
normalcy, supply chains are still disrupted which might result in unavailability of some
ingredients to manufacturers or chefs. This provide them an opportunity to experiment
and innovate by creating some new recipes and set some new trends in the food industry
that are both fresh in taste and encourage waste minimisation of resources (Nhamo, Dube
and Chikodzi, 2020). For example, combining savoury dishes with sweet flavoured
products. They can also experiment with healthy foods like seeds, grains, protein, etc. and
combine them classic comfort foods. This way they will be able to attract customers who
are waiting to taste something new, after having repeated food in lock-down.
 Mergers and acquisitions - With markets not yet opened completely and accrual of fixed
costs, it will get increasingly difficult for small businesses in the industry to survive the
rising cost and increased uncertainty. This will leave them with no other options then
either to wind up their business or get merged with a larger brand. Larger brands can use
this opportunity to diversify their operations and increase their customer reach in a newer
segment while it will give small businesses a new lease to life.
Task 3
P6 Comparison between different digital operational and marketing technology for different
types of food and beverage businesses
Digital technology enhances the level of creativity and distribution of information, which
eases the process of operations. However, complexities in operations arises out of scale or size of
the business (Akpan, Udoh and Adebisi, 2020). With increasing demand for touchless services
due to coronavirus scare, digital technology has provided new ways to revamp F&B businesses,
to ease out their operations and attract more customers with their latest technologies. For
example, Point-of-sale (POS) integration in off-premise operations like online ordering and
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delivery. Most of the restaurants today provide online order and delivery services. Big
restaurants provide delivery services on own while small restaurants like Adam’s Café and
Melissa’s Kitchen take services of third-party marketplaces like HungryPanda to increase their
customer reach and operational level among all the users of such third-party delivery services.
However, since Marriott is a hotel and provide F&B services to its guests and dining-in
customers only, it does not utilise third party digital delivery services provider. Improved digital
technologies are used in internal operations like inventory management solutions, human
resources management, customer relationship management, supply chain management, etc. in all
types of businesses be it hotel, restaurant, pubs, clubs or caterers, in accordance to their needs
and complexities in operations (Hsu, Zhang and Lawrence, 2020). For example, Marriott is a big
hotel and therefore, most complex of all. It would require to manage all processes and digital
technology would make that easier. However, The Hill Food Company is a comparatively
smaller business and doesn’t require to apply all the digital solutions for they might be costly for
the company to manage. Likewise, The Berkeley Bar and Terrace and Blue Bar are the part of
The Berkeley hotel and all the digital technologies that the hotel would apply for its operations
will be used for bars as well.
One more application of digital technology is in usage for marketing. Internet has brought
the world closer and provides better opportunities for businesses to reach maximum people in
minimum cost. Businesses use social media marketing, SMS and email marketing, Google
listing, own websites, review websites, search engine optimisation, big data analytics, etc. for
digital marketing. Be it Hotel Marriott or Adam’s café or ABM caterers connecting with their
customers become easier through various social media platforms like Facebook, Twitter,
Instagram, etc. For example, creating new recipes and posting pictures and videos of them
regularly on Instagram can attract more customers for Melissa’s Kitchen, Adam’s café and
Mister Creamy Ice Cream Van Hire. Businesses can also run contests, campaigns and review
modelling to increase their visibility online (Heinze and et. al., 2020). For example, check-in
campaigns are good to promote small businesses among friends and circle of their customers like
check-in and fun videos made inside Corsica Studios will attract all those who will watch that
post. Word-of-mouth is most effective and cost-efficient method promotions. Businesses also
pay for publishing their advertisements on geo-targeted basis on various digital media platforms.
These are few similar practises of marketing that are observed by businesses today. However,
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their scale differentiates according to their level of operations. For example, an advertisement of
Marriott is as relevant in London as it is in Liverpool but not of Mister Creamy Ice Cream Van
Hire. Difference in their marketing budget is also in comparison to their revenue differences.
Task 4
P7 Factors that influence consumers’ decision of choosing food and beverage outlet
Food and beverage service providers are directly dependent on customers for their
operational and business growth. It is very important for restaurants, cafes, bars, etc. to
understand buying behaviour of their consumers so that they can understand their customers and
influence them to promote their products and services and earn their loyalty, with an aim to grow
and develop their business sustainably (O'sullivan, 2016). There are various factors that affect
consumer’s choice such as affordability, food taste and quality, service quality, ambience of the
place, brand connect, word of mouth reviews, etc. Today is digital age and businesses
increasingly use digital operational and marketing tools to assess factors that customer
satisfaction, perceived value and loyalty, all of which forms the basis of buying behaviour.
All the businesses today use digital tools like accounting software, operational process
solutions and marketing tools, etc. and analyse data obtained from them along with market
analysis to understand buying behaviour of their customers and potential and target customers.
However, large businesses like Marriott have more big data in comparison to ABM Catering
Solutions and others. Also, they attract global customers which help them understand behaviour
of varied customers. They have better resources at their disposal to hire professionals and experts
that can analyse those data in a better form and suggest company to form and employ more
effective marketing tools and promotional campaigns. For example, Marriott advertisements are
displayed all over UK and they are able to tweak their prices, offers, services and facilities in
much more controlled and relaxed manner than a small business which needs to look into so
many operations in a restricted financial figure. But the best thing about digital solutions are their
manner of applications (Coşkun and Özbük, 2020). Smaller businesses might not have large
amount of big data or huge funds to influence customers but they can develop creative use of
digital technologies to influence buying behaviour. For example, all the businesses now use
social media handles to connect and attract customers. They should regularly update their
customers with newer developments in their café, restaurants, club, etc. through series of pictures
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or videos. Like Adam’s Café and The Melissa’s Kitchen can give sneak peak videos of their
recipes, attractive pictures of their recipes, different presentations of their dishes or interiors of
their place to attract customers. Bars and clubs can also do this for their cocktails and mocktails
mixes and clubs can also post lucrative videos of their dance floor and grooving DJ party. They
can also track reviews of their customers and influence them to spread positive word-of-mouth
(Hultman and et. al., 2020).
However, looking at the prospects of values that digital technology offers to businesses,
large companies with more funds like Marriott and The Berkeley Hotel are better placed in
having made the most out of using multimedia platforms and operational technology to enhance
the quality of customer service, for they are not restricted in financial capabilities to hire experts
and applying their suggestions. They are able to provide more variety of solutions to satisfy
customers to maximise their perceived value. For example, if a customer is not impressed with
food taste of continental food in restaurant of Marriott, manager can persuade them to try
different cuisine but Adam’s café or The Melissa’s kitchen won’t be able to.
P8 Strategies used in food and beverages outlets to build a loyal customer base
Every business devise strategy to build a loyal customer base as loyal customers not only
offer repeat business but also act as vocal brand ambassadors of the business spreading positive
word-of-mouth about the business (Castillo and et. al., 2020). To improve connectivity with the
customers and build a loyal customer base, Adams Café follows three steps process –
maintaining quality in their food and customer service, maintain regular connect with customers
through social media and improve through experience. Café offers African, Moroccan, Tunisian
and Mediterranean cuisines and provides special vegetarian friendly and gluten free options and
places special emphasis on providing value to its customers through its taste, service and
ambience. It regularly connects with its customers on social media and review websites. It has
made quality in customer service as its strategy and post witnessing reviews about café on
TripAdvisor, it can be definitely said that it is successful in developing regular, repeated and
loyal customer base (Adams Café, 2020). It is a good strategy for café to operate at this level but
from growth point of view, café needs to be little more aggressive in marketing to make itself
more visible to attract new and diverse local and tourists customers.
Corsica Studios has made prioritising quality of their music programming as their strategy as
they believe that drinks and dance make the best combination. They have all types of drinks
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available in their menu and play host to a wide range of event genres and club nights from
weekend techno and night-long dance parties to live alternative rock and art installations. Club
has relatively cheap tickets, superb sound, brilliant programming and appealing dance floors
(Corsica Studios: Everything you need to know about the club, 2020). With all the positive
reviews and word-of-mouth at its credit, club has definitely been effective in implementing
strategy. Good thing about their strategy is their openness and flexibility in operations but
looking at digital media marketing of company, strategy seems to be missing out something.
They host unique entertainment but they need to focus more on selling it further and attracting
more visitors by using tools like location marketing, local pop-ups, unique contests and
complementary offers on one day of week, etc.
The Hill Food Company has made creation of innovative and exciting menus and
exceptional events as their strategy. They provide catering and event management services in
wedding, baby showers, birthday parties, corporate events, press days, etc. Effectiveness of their
strategy is evident in the fact that they have made their unique mark in the event and catering
business in London within such a short span (The Hill Food Company, 2020). Best thing about
their strategy is their commitment to innovation and creation which has developed a unique
identity for them but this promise of innovation in food and event delivery can also lead to
expectations beyond achievement for the customers and this will definitely not be good for the
company business. It is also not so effective and aggressive in digital media promotions.
Conclusion
Above report had been prepared to throw light on various types of business, rating systems
and trends in food and beverage industry. It can be concluded above that different types of F&B
businesses are classified according to SIC in UK and maintains different types of rating system
on the basis of their classification. It was also concluded that trends in the industry keep on
changing and businesses have to adjust their operational and marketing strategies accordingly.
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References
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