Analysis of Indian Food in the UK Food Industry

Analysis of Indian Food in the UK Food Industry EXECUTIVE SUMMARY Eating out in U.K has become a haute gastronomical adventure with lip smacking results. Curry houses are a British institution, as much a part of the national fabric as the local pub. Surprisingly there are more Indian restaurants in London than in Delhi (Capital of India) (Hemisphere Magazine, 2005). The study was aimed at discovering the various problems that besiege the industry in UK. The dissertation weaves through various problem scenarios and the search to find it solutions. The three main problems which were discovered through face to face interviews were Problem of retaining customer through Service Quality Problem of retaining customer due to limited workforce Problem of promotion policy: advertising and sales promotion For these problems two theories of Hospitality marketing were chosen. These two theories i.e. Theory of Service quality and Promotion policy in restaurant industry were taken in conjunction with the fieldwork analysis of the restaurants in London. Problems were then discussed in parallel to the theories. The discussion gave rise to some hypothetical situations which were again tested in further research. The methodology used in the study was selected after careful consideration of the research question and the limitations. Using the appropriate research tools, an in-depth study was done and it was known that all three problems were not isolated in themselves rather they were well connected. The concept of Service Quality was seen missing extensively in the philosophies of the Restaurateurs. In a nutshell, it can be mentioned that nearly all problems seem to stem from deficiencies in service quality. However at this point, it should be noted that no single problem can be the main culprit nor a particular solution, a panacea for all ills. It is with this in mind that this study should be viewed. CHAPTER 1 INTRODUCTION For the purposes of this research, the term Indian food covers food from the Indian, Bengali and Pakistani traditions. The market includes sales through restaurants, pubs and takeaways. ready meals (both frozen and chilled) sauces pastes, accompaniments and curry powder. The introductory part of this research contains Present Scenario The largest ethnic minority group in Britain are Indians (approx 10,000,000 people) (Crown,2004) with over 40% of them (approx 800,000) living in the Capital i.e. London which contribute to 6% of the total population of London (LFC,2004). These facts justify the existence of over 1000 Indian restaurants in UK and 4000 only in London and the South east (Grove International,2004). The survival of these Curry Houses is a blessing for the true Indian food connoisseur. But recently the Indian Food Industry in UK have undergone some major structural changes. With the popping up of Giant restaurants in the Capital like the Cinnamon Club (Westminster), Tamarind (Queen Street) and Zaika (Kensington High Street) in the past couple of years, this has invited the interest of lot of the professional bodies like Time Out Guide, Evening Standards, Daily Telegraph, Financial Times etc. The various reviews (Iqbal Wahab,2004) given by them to the acclaimed Indian restaurants in London speak of their v aried interests. ‘Indian food is a  £3.2 billion industry in Britain, accounting for two-thirds of all eating out (Geraldine Bedell, May2004). This modern evolved Indian Cuisine in London has sparkled since the time when Tamarind and Zaika, Indian restaurants in London, were awarded the Michelin star. The famous dish ‘Chicken Tikka Masala is now an authentic English national dish (Robin Cook,2004) All these facts about this Industry makes it big and at the same time it evolves many prospects and problems in itself. Importance of Indian Restaurants In the last half-century, curry has become more traditionally English than English breakfast. Some fitting facts in this milieu are According to Mintel reports, Indian restaurants is  £ 1733 million industry in Britain which is more than two third of the total food industry in Britain.(Appendix 1) In an exclusive consumer survey commissioned by Mintel, 42% of the respondents stated that Indian/Bengali/Pakistani food was among the types of food that they most enjoyed, up from 38% in 1999. Indian food is most popular with 25-54-year-olds and, in contrast to Chinese food, shows a strong up market bias (Mintel, 05/2004) It is one of the biggest industries in Britain employing over 60,000 people (menu2menu, 2005) There are over 8500 Indian restaurants in UK and 3500 only in London (Grove International, 2004). Indian restaurants are the major players in Brits ethnic cuisines overshadowing Chinese outlets which are around 7400. (Mintel,2005) Indian restaurants serves 2.5 millions Brits every week besides David Beckham celebrated after scoring the goal that qualified England for the World Cup, at Manchesters Shimla Pinks, with his favorite chicken korma. Madonna, more and more the Anglophile, has apparently taken to ordering the taxi curry takeout from the Noor Jahan restaurant near her London home in Westbourne Grove (Guardian,2004, Issue 2). Every high street has its Star of India or Taj Mahal. Surprisingly twice as much Indian food is sold in Britain as fish and chips (Economist, 1999) and McDonalds have had to adapt their British menus to include â€Å"curry and spice†. These ubiquitous curry houses are coming up in the world. They are no longer consigned to the ranks of post-pub grub besides there is a gradual growth rate in the Indian restaurant market since 1999. (Appendix 1) Also the fact that Indian restaurants have a strong influence on the retail sector is undeniable. They have provided most of the recipes and are the sole benchmark for authenticity for products like Indian ready meals, sauces, pastes and accompaniments. UK Food Industry The food industry in the UK has undergone dramatic change over the last few decades, a phenomenon which has been named the consumption revolution [Ritson, C. and R. Hutchins (1991)]. Fragmentation of demand has been coupled with concentration in supply, so that the majority of food expenditure is now channeled through five major supermarket groups [Waterson, M. J. (1995)]. This has posed threats to the small agrifood producer, who is typically unable to meet the volume and consistency of supply requirements of the large retailers. However, opportunities have also arisen: many small producers have successfully targeted niche markets, often through direct marketing or distribution through independent outlets. Their offerings commonly carry the typical characteristics of niche products, in that they possess added value, are differentiated from competitive offerings and charge a premium price. With such characteristics it is possible for small producers to succeed within a highly competi tive environment [Phillips, M. (1994)]. However, recent opportunities have also arisen in the food multiple sectors, as supermarket groups show an increasing interest in stocking specialty and value-added food products. This interest stems in part from a desire to improve product range and enhance consumer choice. However, it could also be viewed as a response to public criticisms of the negative social and environmental effects of concentration in food distribution: in particular, the development of centralized distribution systems which mitigate against the use of smaller, local suppliers by food multiple chains. Some supermarket groups in the UK are now attempting to improve links with such suppliers, by, for example, devolving decision-making power to store managers, improving purchasing technology and creating opportunities for buyers and producers to meet and discuss one anothers needs [Carter, . Shaw (1993)]. There was a Greek community in Greek Street, London as long ago as 1677 so Greek cuisine is not exactly new to Britain. The influx of Cypriots started in the 1920s and 1930s and they began opening restaurants after the Second World War. Greek Cypriots tended to settle in Hackney, Palmers Green, Islington and Haringey and Turkish Cypriots in Stoke Newington. Greek Cypriots appeared in Soho in 1930s then Camden Town after the war and then Fulham by the mid 1960s. The main influx of Turkish Cypriots was in the 1960s and by 1971 the Greek Cypriot community had turned its attention to Wood Green, Palmers Green and Turnpike Lane. Only around one third of the 550 or so Greek restaurants in Britain are in London, most of these being in North and West London. Some 40% of the 150 or so Turkish restaurants are in the capital with a heavy concentration in North London. Turkish cuisine is also well represented in Scotland. One of the earliest Greek restaurants was not in London at all but Georges in St Michael Street, Southampton in 1940, slightly pre-dated by The White Tower in Londons West End in 1939. Kalamaras in London W2 opened in 1966 and remains popular today. The most successful of the Turkish restaurants at present is the Efes Group which started in London but is now in several locations throughout the country. Aims and objectives of the research The mechanisms of globalization has made the world a `smaller place and, while this has helped to introduce various cuisines to new regions, it has subsequently resulted in the development of `fusion foods, which has implications for the Indian restaurant market. The image of men behaving badly, gulping downing super-hot curries with several pints of lager, are long gone. Today, a trip out for a curry is a posh affair, with some of the countrys top chefs cooking up sophisticated dishes of complexity and variety. (LFC,2004) With these growing fashion of globalization, there is a huge threat to Indian restaurants which are traditionally managed by the family members. According to the Economist:- But once trends become clichà ©s they have a way of nose-diving. Open the pages of the â€Å"Good Curry Guide, and you will discover that all is not well. According to the guide, last year there were at least 300 closures of Indian restaurants in Britain, compared with just over a hundred openings. Indian restaurants, while still the biggest players in the industry, are losing market share eastern cuisine, such as Thai and Japanese food. (Economist, 2005) The main aim of the research is:  · To assess the major issues that determines the performance and efficiency of the Indian foods/restaurants in UK. The Objectives are to  · To Assess the Service quality and the Supply Chain Management.  · To Assess the consumer Perception towards Indian Foods and the relevant Marketing Mix to exploit the opportunities Rationale Indian Cuisine which the westerners commonly call ‘Curry is highly popularized by the Indian restaurants in UK. These restaurants which are generally owned by Indians reflect the specialty of every region of India. The spread of curry beyond its home in the sub-continent is inextricably linked to the presence of the British Raj in India. Army personnel and civil servants acquired a taste for spicy food whilst in India and brought their newly found dishes home. Since then spicy Indian dishes are highly liked by the people in UK. London is a hub of Indian foods and restaurants. With the growing area of specialization and people trying new and creative things in their restaurants in London the problems have started increasing. Problems of not only external environment like increasing competition , strict food and health policies or inflation, etc but also the internal problems which relate to the marketing strategies, sourcing of raw materials or inefficient management, etc. This study will explore SCM issues with reference to market fragility and market access; purchasing power; purchasing decisions and relationships; understanding of customer needs; barriers and frustrations; and strengths and successes. This report is premised on the belief that supply chains are important for maximizing efficiency. But supply chains are far more important than that: the management of supply chains increasingly influences the nature, scale and participation in enterprise development and sustainability. In other words, supply chains are re-structuring the lines of business development in knowledge-based economies. This study will further high light the consumer perception and the Marketing mix. CHAPTER 2 Literature Review 2.0 Chapter Overview As Indian Restaurants are a part of the hospitality industry, this chapter contains the literature taken from the subject of marketing in hospitality industry. Two main theories are used to analyze the three main problems stated in the previous chapters. They are * Service Quality and Supply Chain * Promotion Policy: Advertising and Sales promotion The two theories are then analyzed in light of the problems. A relationship is developed between the industry and theories by researching the trends. These theories are then used for drawing conclusions and recommendations in further chapters. For the reader, this chapter will be the base of understanding the ongoing trends in the Indian Restaurant industry. 2.1 Introduction to Hospitality Marketing in Restaurants Nowadays marketing isnt simply another function of business rather its a philosophy, a way of thinking and a way of organizing your business and your mind. The customer is the king (Iverson, 1989). According to Kotler (2000, Ch. 1), satisfying the customer is a priority in most businesses. But all customers cannot be satisfied. There has to be a proper selection of customers which enable the restaurants to meet its objectives. In the Restaurant industry, many people confuse marketing with advertising and sales promotion. It is not uncommon to hear restaurant managers say that they do not believe in marketing, when they actually mean that they are disappointed with the impact of their advertising. In reality, selling and advertising are only two marketing functions, and often not the most important. As Kotler said in his book, Marketing for Hospitality and Tourism (1996, Chapter-1), advertising and sales are components of the promotional element of the marketing mix. Other marketing mix elements include product, price and distribution. Marketing also includes research, information systems and planning. The aim of the marketing is to make selling superfluous. The aim is to know and understand customers so well that the product or service fits them and sells itself.(Drucker,1973,p. 64-65) The only way selling and promoting will be effective is if we first define customer targets and needs and then prepare an easily accessible and available value package. The purpose of a business is to create and maintain profitable customers. Customers are attracted and retained when their need are met. Not only do they return to the same restaurants but they also talk favorably to others about their satisfaction. Customer satisfaction leading to profit is the central goal of Hospitality Marketing. (Kotler Bowen Makens, 1996, Chapter- 1) Fewer repeat customers and bad words of mouth are deeds of the manager who interprets profits above customer satisfaction. A successful manager will consider profits only as the result of running a business well, rather then its sole purpose. So in this service based industry (Indian restaurants) the entrance of corporate giants with mesmerizing marketing skills have increased the importance of marketing within the industry. Now lest see how far these Hospitality marketing stunts can save the appalling scene in the industry. 2.2 Service Quality Daryl Wyckoff has defined service quality as, â€Å"Quality is the degree of excellence intended, and the control of variability in achieving that excellence, in meeting customers requirements.† ( Wyckoff, 1984, p 81) This theorem of quality is however not accurate as experts says ‘Quality is whatever the customer says it is and the quality of a particular product or service is whatever the customer perceives it to be (Powers,2000, p 179). So the main emphasis is on the customer and perceived quality. A more professional way of looking at quality is by conceptualizing it broadly along the two critical dimensions i.e. technical quality and Interpersonal quality. Technical Quality is generally the minimum expected from a hospitality operation.(Did things go right, Was the food hot) (Powers, 1997). This dimension of quality is relatively objective in nature and is thus measurable. Interpersonal Quality is a comparatively difficult dimension (Was the waiter friendly? Did the service staff go out of their way to be helpful? Did the customer feel welcome or out of place?) As Gronroos (1980) points out â€Å"Even when an excellent solution is achieved, the firm may be unsuccessful, if the excellence in technical quality is counteracted by badly managed buyer-seller interactions.† And vice versa the charm in this world will not make up for bad food or a lost reservation. So each dimension is critical. 2.3 Concept of building customer satisfaction through quality The fundamental strategic decision to be taken by the Indian Food manufactures at the outset is to consider the service system either standardized or routine/customized. In the former, more importance is given to technical quality, operation goes by the book and little importance is paid to employees discretion. While the later gives importance to both qualities and more discretion is given to the employee. Customized system of service is recommended to the restaurants as consumers go to the restaurant that they believe offers the highest customer delivered value or customer satisfaction i.e. the difference between total customer value and total customer cost: * The customer derives value from the core products, the service delivery system and restaurants image. * The costs to the customer include money, time, energy and physic costs. Quality is made up of two components viz. technical and interpersonal. Managers must keep in mind that in the end the customer perceptions of the delivered quality are what is important. Customers assess delivered services against their expectations. If perceived service meets expectations, they view the service as good quality. If perceived service falls short of expectations, they view the service as poor. Expectations are formed by past experiences with the restaurants, word of mouth, the restaurants external communication and publicity. A widely used model of service quality is known as the five gap model. This model defines service quality as meeting customer expectations. The principle behind the formation of this model was to discover the expectation of the customer which is possibly the most critical step in delivering service quality. This model is closely linked to marketing since it is customer based. This model has five gaps, Gap 1: Consumer expectations versus Management Perception Gap 2: Management Perception versus Service Quality Specifications Gap 3: Service Quality Specifications versus Service Delivery Gap 4: Service Delivery versus External Communications Gap 5: Expected Service versus Perceived Service The detail study of this 5 gap model is out of the boundary of this research. But the question is whether this aspect can solve the issue, can it benefits the industry? The answer is discussed in Chapter 4. 2.4 Supply Chain Most Important aspect for increasing service Quality performance is Supply Chain Integration. Effective Supply Chain Management can:- * Cut Down The Total Cost Significantly. * Increase the productivity and Performance. * Improve time and labour economy. * Can differentiate Service quality. * Can provide optimum Speed and comfort in quality Service delivery. In other words it provides better economy of scale and competitive advantage. The Value Chain Source: Johnshon and Scholes, 2004 The Value Chain will be discussed in the essence of the Supply Chain Management Issues. These elements of a brand are illustrated in 1. It has long been recognized that products have meanings for consumers beyond providing mere functional utility. Symbolic consumption was recognized by Veblen (1899) in his Theory of the Leisure Class and termed conspicuous consumption. Noth (1988) quotes Karl Marx and his metaphor of â€Å"the language of commodities† in which â€Å"the linen conveys its thoughts† (p. 175) while Barthes (1964) discussed a semiotic threshold with the semiotic existing above the â€Å"utilitarian or functional aspects† of objects. Given the symbolic usage of brands it is no surprise that semiotics, as the study of signs in society, is increasingly being used in understanding consumer behavior. Initially used in facilitating understanding of the consumption behavior surrounding cultural products such as film and other works of art (Holbrook and Grayson, 1986) and fashion (Barthes, 1983), its widespread usage to interpret symbolic consumption in all aspects of consumer behavior is anticipated (Mick, 1986). The theory behind this research technique is that brand equity is built on consumers perception of the emotional benefits or brand affinity, combined with physical or Concrete benefits The performance delivered by the product or service offered. The technique attempts to evaluate each of these two aspects in detail, providing a clear understating of its importance for the category under investigation as well as for the brands in that category. During the development of this technique we identified and coded the emotional factor that repeatedly appeared in all markets in the study, allowing us to conclude that They are valid for virtually any product or service category when the subject is brand equity evaluation. These aspects can be classified into three groups: brand authority, level of identification that the user or consumer has with its positioning, and level of social approval it offers to its user or consumer. Authority might be defined by the brands heritage or long-standing reputation and leadership, by the trust or confidence it inspires to consumers, and by aspects associated to innovation or technological development as perceived by consumers. Thus all the branding theories leads to the consumers Perception. 3.2 Consumer Perceptions Of Foods Investigation and analysis of food purchase and consumption is well-documented within the discipline of consumer behavior. Studies in this area tend to stress the complexity of factors which drive food-related tastes and preferences, and some authors have proposed models which attempt to categories and integrate these factors and so offer insights into the formation of food preferences and choices. Shepherd. R, (1989) provides a review of such models, from Yudkin, J. (1956), which lists physical, social and physiological factors, to Booth and Shepherd (1988) which summarizes the processes influencing, and resulting from food acceptance, and lists factors relating to the food, the individual and the environment. However, none of these models incorporate a consideration of the role of place in food, and consumer perceptions of this attribute. It may be noted that, by their very nature, food products have a land-based geographical origin (Bà ©rard, L. and P. Marchenay 1995), which would suggest that people readily make strong associations between certain foods and geographical locations. On the other hand, the process of delocalization of the food system in the twentieth century, as described by Montanari , (1994) has weakened the traditional territorial and symbolic links between foods and places. The inference is that the concept of Indianity in foods may no longer be important or attractive to the modern food consumer, who is faced with such a wide array of exotic and international products all year round. Thus it may be that in the mind of the consumer, specific names, production methods or presentational forms of particular foods are no longer associated with the geographic areas from which they originate. An opposing view is taken by Driver, (1983) however, who describes resurgence in the interest in traditional Ind ian dishes in the UK, which perhaps reflects the symbolic importance that particular foods have in our lives and culture. These debates highlight the need for empirical investigation of peoples perceptions and understandings of Indianity in food. Linked to this debate of the perceived meaning of Indianity in foods is the concept of authenticity. If Indian foods are linked in some way to origins and tradition, it implies that producers of Indian foods are involved in providing and communicating intangible attributes of heritage, tradition and authenticity in their product offerings. These require careful management, particularly in view of authors such as MacCannell [1989], Hughes, (1995) and Urry, (1995), who, in relation primarily to tourist experiences, point out the difficulty in defining what is authentic, and in communicating this to an increasingly sophisticated and diverse audience of consumers. In relation to Indian foods, information is needed on consumer perceptions of app ropriate attributes of products, which are the most attractive and why. CHAPTER 4 METHODOLOGY A-RESEARCH PHILOSOPHY APPROACH In the previous chapters, author has outlined research aim and objectives with examining the relevant literature review. However, the successful completion of any study is heavily dependent on the choice of an appropriate research method and approach. Moreover, the appropriate research methodology provides guidance for the development and evaluation process of study. Wit the appropriate methodology the author can justify the achievement of the objective. Research process The research process adopted is based on exploratory approach, but prior to that it is necessary to highlight upon the methodological frame work. The recognized exponents in this field are Hussey Hussey (1997), Zikmund (2000), Saunders et al (1997, 2000) and others who presented different methodological framework from which researchers can conduct their research. Most of these frameworks follow certain similar central theme. The author has adapted the below-illustrated methodological framework to fulfill the research aim and objectives. This is chosen, as it supports the author research design and process, Furthermore, methodology has been designed where data is collected and interpreted. The findings and analysis with conclusions and recommendations at the end follow this. METHODOLOGY Research aim The main aim of the research is:  · To assess the major issues that determines the performance and efficiency of the Indian foods/restaurants in UK. Research objectives  · To Assess the Service quality and the Supply Chain Management.  · To Assess the consumer Perception towards Indian Foods and the relevant Marketing Mix to exploit the opportunities Research Philosophy Easterby-Smith et al (1993) states three reasons why it is useful to state the research philosophy about proposed research before collecting data: * To clarify the research design-the method by which data is collected and analyzed-taking a holistic view of overall configuration. * To help recognize which designs will work and which will not * To help identify and create research design to adopt research approach according to the required research aim and objectives. There are two main types of research philosophies in existing literature. They are Positivism and Phenomenological. â€Å"They are different, if not mutually exclusive, views about the way in which knowledge is developed and judged as being acceptable. They have an important part to play in business and management research†. (Saunders et al, 2005, p 83) The positivistic philosophy which â€Å"seeks the facts or causes of social phenomena†(Hussey Hussey,1998) is more objective, analytical and structured and the researcher is independent of the subject. (Remenyi et al., 1998:33). In addition, the quantitative data should be collected and statistical analyzed when test the certain theories.(Saunders et al, 2005, Hussey Hussey,1998) On the other hand phenomenological philosophy which â€Å"understanding human behavior from the participants own frame of reference† (Hussey Hussey, 1998) is more subjective and the researcher is dependent on their mind. Qualitative method can be used such as a case study. It is important that which philosophy is better for my project. Saunders et al. (2005) state that no philosophy is better than others so choosing philosophy depends on the research question. Having considered the aims of this research project, I will choose phenomenological philosophy because this research question is â€Å"How the Supply Chain helps the Indian Food Industry in UK in achieving efficiency and the significance of Consumer perception to the marketing mix†. The research will be qualitative. In order to answer the research question, I would do case study on Chinese and UK textile and clothing firms and collect data by using interviews. Research Approach Inductive or Deductive Research Undoubtedly the research approach is very important for the project. There are two research approaches, which is the deductive approach and the inductive approach. As mentioned in Saunders et al (2000), the major differences between the deductive and inductive approaches to research are as follows: Deduction emphasis Induction emphasis Scientific principles Gaming an understanding of the meaning humans attach to events The need to explain cause and effect relationship between variables A close understanding of the research context The collection of quantitative data The collection of qualitative data The application of controls to ensure clarity of definition and highly structured A more flexible structure to permit changes of research emphasis as the research progress Researchers independence of what is being researched A realization that the researchers is a part of research progress The necessity to select sample of sufficient size in order to generalize conclusion Less concerned with the need to generalize Deductive approach aims to develop a theory and or hypothesis and design a research strategy to test it. Deductive approach is a rigid methodology, which not permits alternative explanation. It emphasizes on scientific principles and moving from theory to data. It is a highly structured approach and need more operationalisation of concepts to ensure definition. Oppositely inductive approach is which the researcher would collect data and develop a theory as a result of data analysis. It is an alternative approach and theory building followed data collection. In addition, it is the better way to study the small sample because of concerning with the context in which the events are taking place. (Saunders et al, 2005, p 85) Easterby-Smith et al. (2004) state that if the researcher have interested in understanding why something happening the inductive approach is more appropriate. Having considered the aims of this research project, it seems that inductive approach is more suitable. First ly, according to Saunders et al (2005), inductive approach is closely related to phenomenology. Secondly, although there are many author contributed to theories about international branding but not specifi