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Recession on Restaurant Trade in London Assignment
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Added on 2019-12-03
Recession on Restaurant Trade in London Assignment
Added on 2019-12-03
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THE INFLUENCEOF RECESSIONON RESTAURANT TRADEIN LONDONCHAPTER 1 – INTRODUCTION1.1 IntroductionRecession in UK has made survival tough for many industries but therestaurants sector is reported to be the worst hit. In comparison to the other parts ofthe hospitality sector, restaurant trade has suffered the most and this has accountedfor 45% of the insolvencies in the industry in the year 2009 (Thomas, 2009). A largenumber of studies that were conducted revealed that when UK consumers wereasked about the activities which they would target in order to reduce theirexpenditures, a majority of them revealed that they would cut their spending on takeaways, fast food and eating out (Millward, 2006). There is a necessity for therestaurants to provide value for money and a unique dining experience if they wish tocontinue in business for long (Stickler, 2011). The restaurant owners and managersneed to work hard in order to attract more and more customers when the situation isthat that people are mindful of their expenditures in terms of eating out.1.2 Literature ReviewIt has been observed in the context of UK that restaurant owners andmanagers are finding it difficult to sustain themselves in the market. The industryexperts have quite often stated that London has high quality food at all levels whichare not to be seen in other cities of the world (Ruddick, 2012). The restaurantindustry of UK was constantly growing over the years when it was observed that thespending on eating out reached a level of £30 billion in the year 2007. But with thecreeping in of the financial crisis which took Britain into the most dangerous financialcrisis ever, the restaurant owners are faced with the challenge of sustaining theirbusiness when the demands are the lowest (Millward, 2006).As Britain has still not been able to recover from the effects of the financialturmoil, there is a constant increase in the overheads such as cost of staff,compliance cost, rise in the food prices and so on which is exerting an everincreasing pressure on the margins of the restaurant owners because the demandside of the market is still not strong. The consumers have reduced their overall1
expenditure on eating out by choosing lower end restaurants and cutting their perhead expenditure by the type of outlet that they visit (Ruddick, 2012). People nowprefer to do home cooking as even home deliveries are becoming costly as a resultof increase in fuel prices. However, the big events that happened in UK like theQueen’s Diamond Jubilee and London Olympics, 2012 gave London an opportunityto showcase itself to the world including its restaurant sector (Thompson, 2012).The hospitality industry experts still have a pessimistic view about the overallposition of the sector. Factors such as weakening of the household budgets,unemployment and financial crisis have deeply affected the restaurant business inLondon (Paskin, 2009). It has also been observed in terms of post- recession period,that big retail chains have been able to snatch the business from restaurants byproviding cheaper options to the customers and also providing an array of additionalservices which are not generally available in a restaurant. The restaurants in UK arebattling on two different fronts as on one hand they have to deal with the constantdecline in demand and on the other hand they have to fight the price war where theirmargins are constantly declining because of the rise in prices of raw material and thepressure on restaurant owners to have cheap offerings on the menu for thecustomers in order to attract them.1.3 Research Aims and ObjectivesThe aim of the research is to study the influence of recession on therestaurant trade in London. Certain objectives will help the researcher to achieve theabove stated aims and are as follows:To analyse the impact of recession that has lead to a change in the needsand preferences of consumers.To study the changes in the trade practices followed by the restaurants as aresult of recession.To study the comparative effect of recession on restaurant trade and othersectors of the hospitality industry.1.4 Research MethodologyResearch methodology can be termed as a systematic process by which aresearch problem is being solved (Taylor and et. al., 2006). In the present study,2
both primary and secondary data collection methods will be used. The informationwill be collected through various articles, books, journals and consumer forums. It isalso important to use the primary information as it will give a firsthand experienceabout the current thoughts and ideas of the customers and will help in understandingthe current situation and present trends. It will also be ensured that the study iscompleted within the time limit specified and the ethical issues will be taken care of.The information that will be collected will be kept confidential and it will be ensuredthat it is used for the research purpose only and not for any other use or the personaluse of the researcher. 1.5 Research QuestionIt is very important to form research questions in any study as it gives adirection to the research and helps in keeping the research on the right track. Theresearch questions will assist the researcher by helping him to channelize hisresources and time in an appropriate direction. For the present study, following mainquestions will be addressed which are:How has the restaurant owners in London and UK managed to cope up withthe decline in demand after recession?Have the restaurant owners made any changes in their offerings which canhelp them to survive in the tough economic times?Has the business scenario for restaurants improved or declined sincerecession?1.6 Research RationaleA research is basically a value addition to the existing knowledge base and anobjective investigation of the facts in relation to a particular problem. The presentstudy aims to analyse the effects of recession on the restaurant trade in London asrestaurant operators in London are facing a major challenge to cope with a decline indemand and constant rising of the costs. The research is of great significance in thepresent context as the restaurant sector of London needs to revive back and thisreport will try to explore the areas working on which can be very beneficial for therestaurant operators. The report will analyse as to what opportunities are available3
for the restaurants and what strategies they can implement in order to survive and tofurther bring about a sustainable development. 1.7 Structure of the researchIn order to ensure that the research study is conducted in a proper manner, itshould be ensured that a proper chronological order is followed. The research reportshould also be prepared in an appropriate format so that it facilitates a clearunderstanding for the reader. The order of chapters for this report will be as follows:Chapter 1: Introduction – This chapter explains the subject of the research and alsoprovides a background in which the entire study can be conducted. This chapterprovides a brief about methodology which is being used in the research, researchrationale and also provides an overview about the entire structure of the report(Ogbonna and Harris, 2002). Chapter 2: Literature Review – This is the second part of the research report and itexplores all the theories related to the problem statement and also discusses theliterature of the previous research done on the problem. In this report, this chapterwill explain the situation before and after the recession and will try to explore thecurrent situation of restaurants in London UK. It will also study the future prospectsof this sector and will try to analyse if there are any growth opportunities available forthis sector. Chapter 3: Research Methodology – This is the third chapter of the report andexplains the various techniques and tool used by the researcher to conduct thestudy. It is an important chapter as appropriate methods selected at this stage willmake the entire study more valid and reliable (Blessing and Chakrabarti, 2009). Itshould be kept in mind that every study requires a different methodology and thischapter will provide an idea as to what is the logic behind choosing a particularmethodology for this research and how will it help in getting accurate and reliableresults. Chapter 4: Findings and Analysis – This chapter of the report provides a brief aboutthe findings which have been obtained after careful processing of the informationthat is obtained from the primary sources of information. For the present report,thematic analysis will be done where themes will be prepared for the data collectedand the related information will be clubbed under the themes and interpretations and4
inferences will be drawn. The findings that have been discussed will be furtherevaluated in this section and a link would be established between the informationthat is obtained from the literature review and the findings that have been obtainedfrom the primary research. Chapter 5: Conclusion and Recommendations – The last chapter of the report willconclude the entire study done so far and will try to provide recommendations on thebasis of these conclusions. This section also sometimes contains the suggestions forfuture research.1.8 ConclusionThe restaurant industry of London is facing challenges in order to sustain inbusiness as the needs and preferences of people has changed due to the financialcrisis that shook the economy and there are several problems that the consumersare facing like unemployment, reduced incomes, reduced savings etc. Restaurantsector has been the worst hit among all the sectors of the hospitality industry andthus, it is required that this industry comes up with strategies and ways in which theycan attract large number of customers and bring about sustainable development.CHAPTER 2 – LITERATURE REVIEW2.1 IntroductionLiterature review is a very important chapter for any report as it analyses thetheories proposed by various researchers and also discusses the previous studiesdone in relation to the research problem. The information discussed in literaturereview is generally extracted from secondary sources and also from the previousreports based on the studies done earlier in relation to the research problem. Thissection provides a background for successfully conducting the entire study. The pastand current scenario is explored with the help of literature review and the reader getsthe specification as to in what context and background the entire study is beingconducted. 5
This research report deals with the effect of recession on the restaurant tradein London. Recession shook almost all the economies of the world and there was nosector of the economy that was spared from the negative impacts of this globalfinancial turmoil (INVESTOPEDIA, 2009). Consumers have lost confidence in the market and are being extra carefulwhen they make any expenses as they are not sure about their future financialposition (Gregg and Wadsworth, 2010). Recession has brought several problemslike unemployment, reduced incomes and low savings which has forced consumersto cut their expenditures (Thompson, 2012). The most common activity which isfocused upon by customers when they cut their expenditures is dining out (Foster,2010). As a result of this, restaurant trade in London is facing serious challenges interms of attracting customers and survive in the turbulent markets. Cheaper options available at the supermarkets along with the added servicesare attracting the consumers more and thus, restaurant owners are finding it difficultto run their business in such kind of scenario which led closure of some ofrestaurants (Uren Juergen, 2009). The customers are looking for value for moneyand are ready to sacrifice the services of the restaurant if they get quality food atcheaper rates. The consumers are cutting on dining out as they are not sure abouttheir own financial position (Paskin Becky, 2009). They have become more vigilantabout the venue and dishes that they choose so that they have minimum per headexpenditure. Thus, the effects of recession are clearly visible on the restaurant tradein London. A large number of restaurants have been closed in the period after recessionwhich clearly implies that UK economy has still not been able to come out ofrecession (Chomka S., 2012). People have started looking for options through whichthey can cut down per head expenditures. It should be noted at this instance thatconsumers have not stopped eating out all over but have restricted themselves tooptions which can give them reasonable offers (Ruddick, 2012). Also, differenttrends are being observed for food chains and independent restaurants which will bediscussed further in this chapter. The independent restaurants are coming up withseveral strategies to wither the effects of recession and also the effects ofcompetition by large chain restaurants.6
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