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Hospitality Management Week 5

by: Brandon Notetaker

Hospitality Management Week 5 HOSP 1603

Marketplace > University of Arkansas > Hospitality > HOSP 1603 > Hospitality Management Week 5
Brandon Notetaker
GPA 3.5

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Chapters 6, 7, and 8 Notes and Vocab.
Intro to Hospitality Mgmt
Kelly Way
Class Notes
Hospitality and Business Management
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This 5 page Class Notes was uploaded by Brandon Notetaker on Sunday October 2, 2016. The Class Notes belongs to HOSP 1603 at University of Arkansas taught by Kelly Way in Fall 2016. Since its upload, it has received 11 views. For similar materials see Intro to Hospitality Mgmt in Hospitality at University of Arkansas.

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Date Created: 10/02/16
Hospitality Management Week 5 (Week of 9/18/16) Chapter 6: Competitive Forces in Food Service  COMPETITIVE CONDITIONS IN FOOD SERVICE 1. Managers must pay attention to competition now more than ever because of the following:   There are more competitors than ever (the “pie” is only so big)  The market is growing more slowly than in the past   Markets are changing COMPETITIVE CONDITIONS 1. Slim profit margins at risk  2. Shortage of prime locations left  3. Entry of more domestic competitors  4. Entry of international competitors  5. Continued dominance of chains  6. New business environment—some companies have left food service COMPETITION = MARKETING 1. Marketing is not just advertising  Marketing is “communicating to and giving…customers what they want, when they want it, where they want it, at a price they are willing to pay” (Lewis, 2000) PRODUCT LIFE CYCLE RESTAURANT CONCEPT LIFE CYCLE 1. First Generation  Concept Development → Expansion → Maturity  2. Evolution Period  Concept Redevelopment  3. Second Generation  Expansion → Maturity COMPETITIVE CONDITIONS 1. The Marketing Mix consists of four main activities (the 4 Ps –sometimes the 6 Ps)  Promotion, Product, Price, Place, and sometimes People and Process PROMOTION  1. Major forms of Promotion (paid communications):  Advertising  Sales promotion 2. Recent data show full­service restaurants (check averages between $15 and $24.99) spent 1.8% of sales on marketing while QSRs spent  2% 3. In total, the food service industry spends over $5 billion each year on advertising (most is still radio and television) 4. Less is spent on the Internet (only about 10%) PROMOTION 1. Sales promotion consists of paid activities other than advertising and include:   Coupons (Applebee’s, Chili’s)  Games/Contests (“Buy this get that”, McDonald’s Monopoly)  Promotional merchandise (QSR ­ toys)   The use of all three are increasing in restaurants ADVERTISING MEDIA – Marketing Mix Characteristics 1. Medium Broadcast Media:  Television – Large audience, low cost per viewer but high total cost. Combines sight, motion, and sound.  Radio – Highly targetable, lower cost than TV.  Cable TV – Highly targetable, fragmented market.  Web­based – Readily customized, interactive, can include couponing. 2. Print Media:  Newspapers – Limited targeting possible. Many people regard printed word as credible.  Magazines – Targetable, generally prestigious, high­quality reproduction of photos. 3. Others:  Roadside – Excellent for directions. Message limited to about eight words.  Direct Media – Excellent targeting but costly per prospect reached. Good coupon distribution vehicle. PRODUCT 1. The “product’ in hospitality is actually the guest experience  This represents some combination of the tangible and intangible aspects of that experience  2. Food and service are large parts of the experience  3. Elements of this P may include: variety, creativity, quality, etc.   Restaurants have added salads, wraps, and more international items recently. 4. The process of adding a new menu item to a restaurant menu can be quite extensive:  Idea generation→  Screening →  Development and testing →  Test marketing 5. Taking a broader view, the “Product” can also be viewed as the overall concept  6. To capitalize on additional markets (and to combat maturity), some chains have developed or purchased new concepts PRICE 1. Price is the only P that produces revenue (others incur cost)  2. There is always pressure from internal and external forces to adjust price 3. Price is often determined based upon three factors:   Cost   Competition   Demand PLACE 1. Place refers to the location – or where the product/service is sold/delivered  2. Place is also known as Distribution  3. As we have discussed, the notion of place is changing – from traditional locations to “alternative” locations 4. Essentially, restaurants are looking to bring their product to the customer COMPETITION WITH OTHER INDUSTRIES 1. There are more competitors than there have ever been:   convenience stores ($13 B)  Supermarkets (becoming a main source for take­out food) and home! Chapter 6 Vocab 1. Marketing – communicating to and giving customers what they want, when they want it, where they want it, at a price they are willing to  pay. 2. Marketing Mix – Mix of the 4 p’s. Product, Price, Place, and promotion. 3. New products – key part of a campaign to revitalize sales in a well­established chain. Usually a product that has not been served before. 4. Concept Extension – Food service companies are changing the nature of their product by seeking to serve entirely new markets. This  Method ultimately changes the way the public perceives them, and increases sales. 5. Branding – Considered a product characteristic because the brand is used to heighten awareness of the product in the consumer’s mind. 6. Points of distribution – Down sized units where traditional unit won’t work. Ex: Bank ATM or mobile cart. 7. Advertising – Long­term communication strategy that is intended to create an image. 8. Sales promotion – Consists of activities other than advertising that are directed at gaining immediate patronage. Chapter 7: On­Site Food Service ON­SITE FOOD SERVICE  1. Definition:   Examples ­ food outlets in business and industry, schools, universities, hospitals, skilled­nursing centers, eldercare centers,  correctional facilities, recreational facilities such as stadiums, and child care centers   Can include locations where people are at work, play, recreation, school, etc.   Originally known as “institutional” food service because it was associated with “institutions” such as universities and hospitals 2. General categories include:   Business and industry; education; health care; corrections; and recreation.   On­site food service also known as: “noncommercial food service” because originally it was operated by the institutions themselves  on a break­even basis (without attempt to make a profit). it was long operated on the assumption that its customers represented a  “captive market”  Some terms that you will need to understand (that are unique to this segment) include the following: • participation rate (compare with measure used in commercial restaurants), self­op, contractor, managed services, client  Areas that it has in common with other hospitality sectors   Involvement of traditional hospitality companies in management  Size and scope   Professional opportunities available  SELF­OPERATED FACILITIES 1. Self­ops are food service operations that institutions choose to manage themselves   historically, before the advent of professional management companies, this was how most operations were managed MANAGED SERVICES COMPANIES 1. Managed services companies are those companies that specialize in managing food service operations for a third party  2. Such companies believe that they are able to offer operational advantages to the host company (client) including:   cost savings, economies of scale, variety of offerings, and problem­solving abilities (trouble­shooting) 3. Managed service companies have been able to develop a network of expertise from managing “accounts” all over the country and the  world   They develop managers who are experts in the area   They have support systems, new product development and financial stability 4. The contract company’s name rarely appears in (or on) the facility itself so that the customer sometimes does not know which company  operates the food service BUSINESS AND INDUSTRY 1. Business and industry (or business dining) provides food service to company employees  2. B&I food service is affected by the size of the work force and the health of the economy (or employment rate)  3. Has the highest rate of managed service of all four segments?  4. Companies have reduced subsidies in recent years  5. Competition is bigger than ever from commercial restaurant segment  6. Many companies specialize in business dining such as guckenheimer and others TRENDS IN BUSINESS AND INDUSTRY 1. Aggressive marketing, organic growth, more options for diners, more branded concepts, innovative menus, and grab n’ go COLLEGES AND UNIVERSITIES 1. food services must not only accommodate students but also faculty, staff, and visitors  2. where “board plans” were once the rule, now there are many options 3. college and university food service is affected by demographics, students living on campus, and food quality, among others  4. the introduction of brands has been the biggest factor in recent years (national and proprietary)  5. most college and university programs are managed by contractors TRENDS IN COLLEGES AND UNIVERSITIES 1. Healthy segment, new brands (Starbucks), more choice, comfortable/multi­purpose dining areas HEALTH CARE FOOD SERVICE 1. This segment includes hospitals (large and small) and nursing homes  2. The presence of dietitians makes this segment different   dieticians are professional qualified individuals who manage the nutritional aspects of food service 3. Hospitals are taking food more seriously as a result of:   Competition; customer feedback and; becoming more “business like”  4. health care has sophisticated facilities and systems as well as unique challenges   Only about 50 % of health care food service facilities are outsourced but this number is increasing TRENDS IN HEALTH CARE FOOD SERVICE 1. More emphasis on retail, introduction of brands, cost reductions – doing more with less, revenue enhancement (catering, cooking events),  and growth! SCHOOL FOOD SERVICE 1. School foodservice serves two functions:   proving food to school children and; and taking care of underprivileged children through federally assisted meals   This is accomplished through subsidies and government food programs   some systems feed 1 million children a day 2. lower profit margins, specialized market, large systems (650 schools in Chicago), challenges with restrictions and diet TRENDS IN SCHOOL FOOD SERVICE 1. Fighting child obesity, greater responsibility of food service programs, growing importance of education RECREATION 1. Onsite foodservice is found is many recreation venues including:   Stadiums, arenas, museums, national parks  2. Trend is to offer a wider variety of food in these venues CORRECTIONS 1. The u.s. has 2.3 million people in prison 2. foodservice is cost driven in this sector  3. privatization is creating more opportunities for contractors  4. for foodservice managers, setting and challenges is often offset by competitive compensation VENDING 1. vending is in all segments of onsite foodservice 2. over 50% of all vending machines in the us are in b&i settings  3. the variety of products and machines is growing and constantly improving  4. technology will dramatically change vending of the future Chapter 7 Vocab 1. Managed Service Companies (or contract management companies) – feel that their method of operation offers advantages to institutions of all sizes. 2. Business and Industry (B&I) Food Service – Provides food for the convenience of both the guests (the company associates) and the client  (employer). 3. Dietician – a person with a legally recognized qualification in nutrition and dietetics, who applies the science of nutrition to the feeding  and education of groups of people and individuals in health and disease. 4. Clinical Dietician – Concerned principally with the problems of social diets and with educating patients who have health problems that  require temporary or permanent diet changes. 5. Registered dietitians – complete a bachelor’s degree, a supervised practice program, and who pass the national registration examination. 6. Group purchasing organization – pooled purchasing volumes, often in the hundreds of millions of dollars, secure lower unit costs. 7. School food service model – meets clearly defined social needs that attract broad public support. Ex: Provide food to needy children in  public schools. 8. Congregate meals – low cost meals provided for those in need. Payed by AOA and by state and local agencies. Supported by volunteers  and private donations. 9. In­flight – airline food service. Most used type of food transportation. Hospitality Management Week 6 (Week of 9/25/16) Chapter 8: Issues Facing Food Service ISSUES FACING FOOD SERVICE  1. There are a variety of pressing issues that are facing the industry  2. Some of these are left to the individual operator to manage, some are legislated, and others are handled by trade associations  3. They range in scope from health concerns to waste management CONSUMER CONCERNS 1. Concerns/Issues include:   Obesity, Nutritional Content of Foods, Genetically Modified Foods, Truth in Menu, Alcohol Consumption, Food Safety, Garbage, and Others (smoking, trans fats, etc.) OBESITY 1. Numerous lawsuits have been brought, primarily against QSRs, blaming them for obesity related health problems  2. Plaintiffs have sought menu labeling changes, advertising restrictions, nutritional labeling regulations and financial reimbursement  3. Many companies are responding with various changes in menus, items, or ingredients TRANS FATS 1. Trans fats are a type of unsaturated fat  2. Trans fats are not beneficial and may be harmful (heart disease)  3. Food manufacturers (but not restaurants) must list use on labels  4. Some municipalities have banned them from restaurant foods (NYC, 2006) and others are sure to follow NUTRITIONAL CONTENT OF FOOD 1. Consumers are becoming more concerned about what they eat and what is in their food  2. The NLAE was passed in 1990 but only covered packaged foods  3. In 1997, it was extended to cover restaurants under certain conditions (health claims)  4. Some states have passed similar legislation which does cover restaurants, and some companies have done it voluntarily ALCOHOL CONSUMPTION 1. Drunk driving is a problem as well as the potential for lawsuits –legislated in 50 states  2. Restaurants have generally been proactive but some states are legislating server training FOOD SAFETY 1. Food borne illness accounts for 76 million illnesses, 325,000 hospitalizations, and 5,000 deaths each year  2. Several states require that restaurant workers have food safety and sanitation certification GARBAGE 1. Restaurants are considered to be a “clean” industry but still contribute to the waste stream  2. Solid waste disposal is becoming harder to manage and more expensive for cities and towns  3. The average American generates 4 pounds of garbage per person per day  4. Recycling has been one response that restaurants have voluntarily adopted TECHNOLOGY 1. One of the advantages of food service technology is enhanced customer service  2. In the back of the house, technology lends itself to energy savings, efficiency, and food safety  3. Food service is also benefiting from Internet applications Chapter 8 Vocab 1. Nutritious food and consumer demand – do not always go hand and hand, but food service operations need to be ready to make both. 2. Consumerism Movement seeking to protect and inform consumers by reaching such practices as honest packaging and advertising,  product guarantees, and improved safety standards. 3. Nutrient claims – make a statement about a specific nutrient of a menu item or meal. 4. Health claim – ties the food or meal with health status or disease prevention. 5. Hazard analysis and critical control points – Application of good common sense to the production of safe food. 6. Waste stream – replaced concept of dump, where things are dropped and forgotten.


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