Hospitality and the (ir)rational consumer: demands for healthy, sustainable and cheap food
The hospitality sector in the UK includes restaurants/take-aways, quick service outlets, pubs and hotels to contract caterers serving food in settings such as education, health care and institutions. Currently the sector accounts for approximately 30% (£84billion) of all food and drink spending, serving 8 billion meals/year.
Figure 1 Breakdown of hospitality sector by market sector.
Figure 1 shows that education, healthcare and other public services account for 6% of total spend but 29% of all meals, this pressure on providers to the public sector is likely to continue with the demands on the public sector to reduce costs. Some of this may be delivered through smarter and bigger procurement projects in the public sector where bulk buying can contribute to reduced costs. The continuing demands for cost savings in this sector are likely to fall to the contract caterers.
The following table shows the changes on the high-street over 30 years in Coventry. What can be gleamed from the table, allowing for some cross over between categories, are that there are changes in high street outlets but maybe not as big an increase in total numbers as many of us might have expected. There have been changes and losses of traditional outlets such as fish and chips shops and public houses these being replaced by more restaurants and take-away outlets.
Table 1 Changes in the type and number of eating premises in Coventry 1978-2008
|Cafés and sandwich shops||43||24||29||64||21|
|Fish and chip shops||61||63||52||31||-30|
Source McDonalds and Allegra Strategies 2009
Revolutions in technology such as internet ordering are also changing the face of the sector. Delivery to the home is now a facet of most take-aways with customers expecting this as a matter of course. Online ordering, as seen in figure 2, is now part of the everyday reality of many consumers.
Figure 2 Screenshot of ordering app from an iphone
Before the 2007 recession the sector was growing and the UK was fast approaching the USA situation where as much was spent on eating food prepared out of the home as that prepared and eaten in the home. The recession brought about a new consciousness regarding food. Caterers came under pressure to hold food prices steady at a time when raw goods, inputs and operating costs were increasing. Although we are now ‘technically’ out of recession, some of that mindset remains with customers seeking value and convenience. The category of consumer called ‘price conscious lunchman’ has resulted in many of the meal deals we see being offered at midday. Additionally the recession resulted in more awareness of ecological sustainability and the emergence of the ‘austerity customer’ who has an eye on value but is also concerned with saving the planet through their purchasing decisions. Hence why many big companies have shifted to marketing ecological sustainability as part of their core offer. See McDonalds for an example of this here. More recent data on indicates that the ‘punter’ is returning to eating-out following the recession albeit with a slightly different outlook and seeking value in some areas while operating with a more ethical mindset in others.
While generally customers are more affluent and willing to try new foods, tastes and experiences there is still a primary drive for value for money. Value, for customers may be found in the experience of eating food as opposed to the food itself and may relate more to novelty as a value item. The old adage ‘great experience shame about the food’ holds true here. The demands from customers are many and varied. Those most likely to eat out are: those with a higher education qualification, higher social class, not married, full time students, between 18 and 24 years old and equally likely to be male/female. The range of choice makes for a vacillating consumer who can change allegiances with more demand for food on the go and an expressed concern with health and ecological issues.
For the last 30 years the drive has been to deliver more for less, this was achieved in an economy where food prices were being driven down by cheap food and economies of scale. The top food and drink trends according to the Leatherhead Food Research are
- Reformulations and stealthy reductions
- sustainability and provenance
- health and wellness – obesity
- riding out the recession
- ever-expanding tastes
- small indulgences
- frozen foods
So hospitality is gong to be driven by many customer demands some of which are contradictory and sit at opposite sides of a continuum so cheap food and the ethical sourcing of this are at odds as one demands more resources and may result in a customer not willing to pay for the ‘added value’. One thing to begin to recognise is that all of these customer demands are not necessarily driven by different consumer groups but may in fact represent the same consumers in different roles, so ‘price conscious lunchman’ referred to above may in the evening be concerned parent with an emphasis on healthy eating and ethical sourcing. In one piece of work I was involved with we asked customers what they thought of the cheap chicken they were eating and they said well they knew it is cheap because it was processed, not free range etc. Their rationale was one of convenience and value for money. During the recession consumers did not give up their daily specialist coffee, opting for this as a ‘small indulgence’. It is important to distinguish between customers’ expressed preferences and what they are, in fact, willing to pay for. So asking the question do you want a fairer, more sustainable and equitable food system will most likely result in a positive affirmation, putting a cost on this and asking are you willing to pay for it is a different question and problem.
Nonetheless, the food and drink trends set out above will continue to develop and addressing these may be ways for some in the sector to distinguish themselves from their competitors. The modern world we live in is subject to shocks and the food system is not immune to this, whether this be rising oil prices, climate change and natural disasters. The hospitality sector has an important part to play in helping address these shocks. This is important as the customer consumes more and more from this sector and possibly abandons preparing food in the home. The challenge remains…..
Written by Dr Martin Caraher, Professor of Food and Health Policy, Centre for Food Policy D110, City University London