Trends in the Food and Beverage Sector of the Hospitality Industry

The hospitality sector in Ireland represents an important part of the tourism industry and comprises hotels, restaurants, pubs and clubs, guesthouses and self-catering operations. The largest component within the Irish hospitality sector is hotels. In addition to hotels, food and beverage operations comprise a significant proportion of the industry. These businesses operate in a highly competitive environment as a consequence of a number of factors. First, there is a downturn in the global and domestic economies with a corresponding decrease in business across the tourism industry (Failte Ireland, 2010; Pitta, 2010). Second, there has been a rise in market demand for, and expectations of, in-house facilities, quality of service and products and value for money (Jones, 2009; Hotel and Catering Review, 2010 ), where visitors want to experience excellence at all levels of service, which can be readily recognised as good value for money. Third, hotel capacity has increased by 40% in the eight years from 2000. This growth contributed to the increasingly competitive environment and an over capacity in the sector. Food and beverage operations expanded exponentially in the same period with severe competition in the sector (Kincaid, Baloglu, Mao and Busser, 2010). Finally, a sharp rise in operational costs has resulted in declining profitability for businesses in addition to the need to manage costs and provide lower prices across the sector. Data available in January 2011 suggest that 2010 figures reflect worrying trends with all sectors of the industry experiencing deteriorating demand (Fáilte Ireland, 2010). In addition, the restaurant sector is facing a very difficult financial crisis according to the RAI (2010). A number of issues of concern have been identified, which include, energy costs, local authority service charges, rising costs of doing business, local competition and surplus capacity (Failte Ireland, 2011). Costs have not significantly reduced; consequently, margins are under severe pressure resulting in a slowdown and a decrease in business traffic and footfall (Pitta, 2010) and closures across the country with a large number of restaurant businesses entering examinership, receivership or liquidation in 2010. This is set to continue in 2011 with additional closures (Hotel and Restaurant Times, 2011; Howarth Baston Charleton, 2010, Hotel and Catering Review 2010). The food and beverage industry is subject to numerous trends and these trends have an impact on business success or decline. A trend is defined as ‘a line of general direction of movement, a prevailing tendency of inclination, a style or preference, a line of development, or the general movement over time of statistically detectable change’ (Google Thesaurus, 2011). Whereas, a fad is considered to be a temporary popular notion, artistic activity, fashion or food that is usually followed by a large group of people for a short time (Google Thesaurus, 2011). This paper analyses trends in the wider food and beverage industry and provides insights into the trends that are most likely to influence future business success. Trends, such as, consumer expectations, consumer spending, dining out, health, obesity and wellness, demographics, convenience, food trends and the food service industry’s world wide top 10 trends are discussed. This paper is based on primary and secondary research providing a comprehensive snapshot of trends in the sector. Primary research was carried out through focus group interviews and an in-depth case study of the trends in catering in Dundrum Shopping Centre, Dublin. This paper provides insights into the implications of these trends for operators of food and beverage businesses and considers drivers for success