Business of Restaurants

London: An analysis of the current restaurant business

Essay, 2008

16 Pages, Grade: 1,6


Table of contents


Economic environment

Social elements
Ethnic Cuisine
Eating Trends
Marketing and Media

Environmental sustainability



Appendix 1: Marketing and Media continued
Appendix 2: Consumers and Employees


From swanky restaurants to greasy spoons London offers a fantastic range of places to eat owing many of its rich pickings to its many ethnic communities. As John Willoughby, executive editor of “Gourmet” recently said: “ What London has that other cities don't right now is high quality food at all levels. In every category, from comfort food to gastronomic experiments, we loved what we ate".

On this note the following report will demonstrate the significance of the vast array of London restaurants to the economic and social environment and will deal with related issues such as ethnic cuisine, eating trends, design and sustainability. Research has been conducted through various sources providing detailed information including academic books, trade magazines and the World Wide Web.

Economic environment

The UK restaurant industry has experienced a constant growth over the years (see Figure 1) with an overall spend on eating out exceeding £30 billion for the first time ever in 2007. However with issues such as the escalating credit crunch, (which is said to be the gravest financial crisis for Britain in the last 60 years possibly even leading to recession), restaurant operators in London and in the UK have had to come to terms with weaker demand. The relentless increase in overheads from areas such as staff costs and compliance with new legislation add to the sector’s current woes as do rising food prices, which put pressure on menu prices and margins. As a result many restaurants have been forced to decrease portion sizes and impose surcharges on ingredients such as fillet steaks. Moreover grain and rice cost increases have been particularly pronounced, with Indian basmati rice up 100% to £1,000 per ton between April 2007 and 2008 and vegetable prices up by 9.6% through a combination of bad weather and crop damage due to flooding (Mintel, 2008).

Figure 1: UK restaurant sector growth trends, 2003-08

illustration not visible in this excerpt

Source: Mintel

Although faced with higher menu prices consumers generally do not want to eat out less frequently. However there are indications that consumers may trade down in terms of spend per head or the type of outlet they visit. This trend is likely to benefit operators towards the lower end of the price spectrum and is likely to impose a threat to fine dining and mid-market chains (Mintel, 2008). “Cheap eats” which could benefit from this trend include Little Bay, Hummus Bros, Leon, Stockpot and The Table. Furthermore the current rise of petrol could also increase the price of home deliveries, making home cooking an increasingly attractive alternative. All these factors combined decrease the chance of new restaurants opening as potential investors might find the current risk too high.

Nevertheless with the upcoming Olympics in 2012 “soft” benefits such as increased tourism can be expected. According to Lewis, CEO of the London Development Agency, the Games will bring “something like £2 billion of added value to tourism and inward investment”. The Olympics offer a huge opportunity for London to be showcased to the world including its restaurant sector, which is likely to benefit immensely from the increased visitor levels (Hospitality, Issue 7).

Social Elements

In westernized societies restaurants are part of the entertainment industry and eating out is therefore democratic and open to all with money. Eating out not only influences table manners and behaviour with others positively but also benefits society by widening the cultural horizon of consumers when experiencing food from different world cuisines (Beardsworth & Keil, 1997: 103, 120). A recent survey found that 36% of diners are now eating out more often than they were five years ago, with 16% saying they eat out twice a week. Nearly two-thirds of diners prefer to return to their favourite restaurant to trying out new places, while 60% said they will try new cuisines in 2008 (Caterersearch online, 2008).

Ethnic Cuisine

London is one of the world’s most cosmopolitan cities with more than 300 languages spoken by the people of London and at least 50 non-indigenous communities with populations of 10,000 or more. New immigrants continuously open ethnic restaurants all over London in a bid for the new communities to express and establish themselves. As a result one has the possibility to dine on food from more than 70 countries in the capital (Guardian online, 2008). According to Driver (1980:176) such ethnic restaurants can provide a “tentacle of taste, extended laterally to global food ways that lie outside the British tradition” (Beardsworth & Keil, 1997:108).

Historically the birth of ethnic restaurants can be partially attributed to the various Diasporas that had taken place. London is renowned in particular for the vast offer of authentic Asian cuisine, demonstrated by dedicated areas such as Chinatown (Chinese cuisine), Brick Lane (Indian cuisine) and Shoreditch (Vietnamese cuisine). Chinese dining in London does not only encompass cheap takeaways but, as a new generation of Chinese residents are demanding more sophisticated food and more authentic regional flavours, also premium restaurants such as China Tang (in the Dorchester), Bar Shu in Soho and Dragon Castle in Elephant & Castle. The city has also seen a rise in Vietnamese eating places including restaurants Huong-Viet, Viet Hoa and Song Que.

Indian food enjoys immense popularity and is considered to be one of the most authentic cuisines available in the capital. Traditional Indian food can be found in restaurants such as Café Spice Namaste, Chutney Mary, Painted Heron and Red Fort. Modest enterprises that serve properly prepared regional cuisine to customers largely from the Asian community include Dadima, Five Hot Chillies, Nauroz, Ram’s and Sagar (Time Out, 2007). The success of this cuisine is further demonstrated by the UK curry industry turning over £ 3.5 billion a year. Nevertheless Indian restaurants today find themselves facing a crisis. This is due to a recent government crackdown on short-term visa schemes for foreign workers resulting in restaurateurs not being able to find sufficient skilled chefs in an industry that has normally expanded year on year. Dramatic increases in world food and rice prices add to the problems of the Asian restaurant industry in the UK. Lastly businesses are finding it increasingly difficult to persuade their sons and daughters to follow them into the trade, a cultural factor that has been influencing the London restaurant business for years (Independent online, 2008).

Eating Trends

Food and eating trends have changed considerably in recent years with new trends currently emerging on a regular basis. In order for restaurants to stay competitive new food trends need to be incorporated into menus in due time as this satisfies consumer needs, wants and values.

Nowadays obesity levels are at an all time high due to demanding lifestyles that leave the public little time to invest in a balanced diet. On the other hand, however, unprecedented levels of consumer interest in the market for celebrity chefs and dieting demonstrates a consumer desire for healthier, better food, which is all part of the global consumer trend towards wellness. The UK food industry is responding to consumer desires for healthier foods through new products, changed ingredients and healthier brand extensions. Current food trends include wellness foods, new world foods, ethical/environmental eating, ethnicity, portion control and retro eating. Additionally food products need to address health concerns with features such as whole grains, probiotics, omega-3, antioxidants, carotenes, vitamins, sugar free and low salt, and all need to be offered in calorie-friendly portions (Market Research online, 2008).


Excerpt out of 16 pages


Business of Restaurants
London: An analysis of the current restaurant business
London Metropolitan University
Hospitality Management
Catalog Number
ISBN (eBook)
ISBN (Book)
File size
456 KB
Hospitality Management, Restaurants, Tourismus, Tourism
Quote paper
Bachelor of Arts Verena Stickler (Author), 2008, Business of Restaurants, Munich, GRIN Verlag,


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