Hospitality Retail Management
A Case Study Of
Roles and Responsibilities of Retail Managers in Two Existing
Hospitality Business Environments
In today’s context, hospitality has outgrown its roots and is, in fact, representative of an industry. The definition of hospitality that perhaps suits this Paper best is, “the relationship between a guest and a host, or the act or practice of being hospitable, that is, the reception and entertainment of guests, visitors, or strangers at resorts, membership clubs, conventions, attractions, special events, and other services for travellers and tourists” (online: www. answers.com). Since the field has opened up greatly, a surmise can safely be made that there is a vast number of players involved, each with his or her own role to play, blending in the ultimate picture with the host’s averment of caring for and entertaining guests. It becomes necessary, therefore, to go down a level or two and appraise the role of a retail manager, who, as we shall see later, is very much in the forefront of the situational management arena. Thereafter, an elite restaurant will be assessed with respect to its history and current status.
The aim of this Case Study is to evaluate the roles and responsibilities of retail managers in the Food and Beverages category at both ends of the cost scale and appraise a renowned restaurant in relation to its historical and current perspective in a retail environment, the public sector.
Scope of Study
Having introduced the hospitality industry and stipulated the aim, this Paper will look at the industry in greater detail, compare the role and responsibilities of retail managers in the Food and Beverages category of a high end hotel, the Park Plaza Victoria London and the low cost fast food giant, McDonald’s. Subsequently, El Bulli of Roses, Spain will be appraised in
relation to its historical and current perspective in a retail environment, the elitist public sector.
The Hospitality Industry
‘The hospitality industry is composed of a variety of sectors within the service industry that include, among others (online: bhtafe.edu.au):
Food and beverage services, e.g. restaurants, cafes, bistros, clubs, etc.
Accommodation, e.g. hotels, motels, resorts, bed and breakfast, etc.
Entertainment, e.g. theatre, musicals, live band shows and cinema halls, etc.
Functions and event management, e.g. corporate functions, expos, etc.
Recreation services, e.g. health and fitness centres, golf clubs, theme parks, etc.
Gaming facilities, e.g. casino type hotels, casino type resorts, etc.
Additional fields within the tourism industry like transportation, cruise liners, special historic trains, etc.’
‘The hospitality industry is divided into two categories, the commercial and the non-commercial categories (ibid). The commercial category includes establishments that operate for profit, whereas the non-commercial category comprises establishments that operate on a not for profit basis. With the advent of government privatisation policies, commercial caterers are now replacing many of the non-commercial food operators. Thus, there is less of a distinction between non-profit organisations and profit making enterprises nowadays. Examples of the commercial category include’ (ibid):
v Takeaway / fast food shops
Examples of the non-commercial category include (ibid):
Hospitals (food services)
Relief agencies like The Salvation Army (food services)
Note: The above list contains only the core sector within the hospitality industry.
As stated, the hospitality industry offers a variety of services within several distinct sectors. ‘The quality of service on offer to guests depends on the price being charged. For example, in the food and beverage area, eating in a three- star rated restaurant will be far more expensive than eating in a one star-rated restaurant. This also applies in the accommodation sector. Staying for a weekend in a five-star international hotel will dent your wallet far more than staying for a weekend in a two-star rated hotel’ (ibid).
About the Hotel
The hotel in question is the Park Plaza Victoria London. Part of Carlson, a global travel and hospitality company, the four star deluxe Park Plaza Victoria London hotel is centrally located just two minutes from Victoria Station and within walking distance of some of the city's main tourist attractions, including Buckingham Palace, Harrods, Westminster Abbey, etc. Apart from 287 air conditioned guest rooms including Superior and Executive Rooms and Suites, plus 12 one and two bedroom apartments, the hotel features a world-class, AA award-winning
restaurant , the on-site JB's Restaurant offering modern European cuisine and a comprehensive
wine list, as well as the collocated JB’s Bar (www.parkplaza.com).
The retail manager in any section of a hotel has an onerous job, particularly in the Food and Beverages (F&B) segment. His skills in man and situation management are tested almost daily, with crises in different scenarios in different contexts. Basically, he is responsible for ‘running the restaurant and bar to meet the hotel’s targets and policies, aiming to maximise profit whilst minimizing costs. Retail managers ensure promotions are accurate and merchandised to the hotel’s standards, staff is fully versed on the target for the day and excellent customer care standards are met. Depending on the size of the establishment and structure, retail managers may also be required to deal with human resources, marketing, logistics, information technology, customer service and finance’(online: www.prospects.ac.uk). According to U.S. Lodging 1995 statistics, the F&B Department constitutes the second largest revenue generator of a typical hotel with an average of 23.1% for Food sales and 8.6 % for Beverage sales (www.satm.bilkent.edu.tr). JB’s has a F&B staff of 22 under the Retail Manager.
Role of the Retail Manager
A retail manager’s typical work activities may alter, but tasks usually involve
• managing and motivating a team to increase sales and ensure efficiency;
• managing stock levels and making key decisions about stock control;
• analyzing sales figures and forecasting future sales volumes to maximise profits;
• analyzing and interpreting trends to facilitate planning;
• using IT to record sales figures, for data analysis and forward planning;
• dealing with staffing issues such as interviewing potential staff, conducting appraisals
and performance reviews, as well as providing or organizing training and development;
• ensuring standards for quality, customer service, health and safety are met;
• resolving health and safety, legal and security issues;
• responding to customer complaints and comments;
• organizing special promotions, displays and events;
- attending and chairing meetings;
- updating colleagues on performance, new initiatives and other pertinent issues;
- touring the sales floor regularly, talking to colleagues and customers, and identifying or resolving urgent issues;
- maintaining awareness of market trends in the retail industry, understanding forthcoming customer initiatives and monitoring what local competitors are doing;
- initiating changes to improve the business, e.g. revising opening hours to ensure the store can compete effectively in the local market;
- dealing with sales, as and when required.
- Reporting regularly to superiors and providing feedback and, if called for, advice.
- Stroking staff positively to maintain excellence and retain coveted ratings or ranking.
Low Entry Level
‘The hotel industry is characterized by a large number of employees (online: www. prospects.ac.uk). Both white collar employees and blue collar workers may find gainful employment. Entry level jobs usually require no formal education. Professionals in the sector are usually qualified with trade certificates and college degrees. Many hospitality schools offer specialized courses of study in the hotel industry’ (ibid). The retail manager will invariably be a degree holder in Economics and, more often than not, in Management. This leads to another important topic that is taught at diploma/degree level: Marketing Mix.
The Marketing Mix
The marketing mix is probably the most common marketing term. Its elements are the basic tactical components of a marketing plan. Also known as the Four P's, the marketing mix elements are price, place, product, and promotion (marketingteacher.com).
Figure 1: Marketing Mix
It is easy to understand by comparing it with another common mix, a cake mix, the basic ingredients of which are flour, eggs, milk and sugar. A cake is made using a certain mix. This is easily changed for the next cake. If a sweeter cake is required, more sugar is added. It is the same with the marketing mix. The offer made to the customer can be altered by varying the mix elements. So for a high profile brand, increase the focus on promotion and desensitize the weight given to price (ibid).
The 7 Ps
Modernists have found the need to increase the number of Ps by three, people, physical evidence and process (ibid). These attributes can be used to compare entities. How does the award-winning JB’s restaurant fare, along with JB’s Bar, as controlled by the retail manager?
1. Price: There are many ways to price a product, like Premium Pricing, using a high price where there is uniqueness about the product or service. This approach is used where a substantial competitive advantage exists, as in JB’ Restaurant.
2. Place: Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer. Established concerns like JB’s Restaurant and Bar have an intermediary, established over the years for optimal cost effectiveness.
3. Product: A product is simply the tangible, physical entity that customers may be ordering for consumption. A point to note is that the Product Life Cycle has to be catered for, else it might go stale or get spoiled if it is a wine. JB’s caters for it.
4. Promotion: This includes all tools available to the seller for 'marketing communication'. A restaurant may offer a glass of wine free with a particular dish, as an example. JB’s generally run promotions in the lean months of April and August, aiming to attract customers from outside, i.e. who are not guests residing in the hotel.
5. Physical Evidence: Physical Evidence is the material part of a service. JB’s use it in the excellent class of crockery and cutlery, layout of the menu card, décor on a dish, etc.
6. People: People are the most important element of any service or experience. Services tend to be produced and consumed at the same moment, and aspects of the customer experience are altered to meet the 'individual needs' of the person consuming it. JB’s customizes service by reserving favorite tables, remembering favorite dishes, offering specific brands of liquor to fastidious customers, etc., using a collated database.
7. Process: Process is an element of service that sees the customer experiencing an organization's offering. It's best viewed as something that the customer participates in at different points in time. For instance, JB’s maitre d’ takes the hats and coats of valued customers and ushers them to their favorite table.
The analysis of an institution is incomplete if the macro-environmental factors are not considered, to whatever end they are applicable. Used under the acronym of PESTLE in the UK, each factor will be considered in sequence (www.renewal.eu.com).
1. Political Factors: A reflection of how government laws, which vary from country to country affect JB’s. These factors were catered for from inception as proved by the award of the coveted AA One Rossette to JB’s Restaurant.
2. Economic Factors: These affect JB’s as the exchange rate of the GBP has increased to a fair extent vis-à-vis the USD and other non-EU currencies. The currently weak USD more or less offsets the strong Euro.
3. Social Factors include cultural aspects, health consciousness, age of staff, career attitude and understanding of safety. These fall within the ambit of a retail manager and JB’s have not faced any problem in recent times.
4. Technological Factors include ecological aspects, such as automation, technology incentives and the rate of technological change. JB’s feature state of the art technology
used in the kitchen, discreet billing procedure and all-round Wi-Fi availability for guests (www.parkplaza.com).
5. Legal Factors include discrimination law, consumer law, antitrust law, employment law, and health and safety law. These factors affect how a company operates, its costs, and the demand for its products. JB’s is fully compliant with all socio-economic mandates.
6. Environmental Factors include awareness to climate change, carbon footprint and greenhouse effect and adoption of the UK's Hospitable Climates initiative (www.hospitableclimates.org.uk). Though this is more of the hotel’s responsibility, JB’s does its best to stay within limits laid down by the Hotel Management.
If the six parameters discussed above are broken down into their components at the standard level, they could even be put through a SWOT study. Having completed the review of a high-end complex like JB’s, we could compare it in the qualitative sense, using the same parameters, with the role of a retail manager in the fast food chain giant, McDonald’s.
When McDonald’s Corporation founder Ray Kroc’s first ‘Golden Arches’ opened for business fifty-five years ago, on April 15, 1955, little did he know that he was creating history (www.aboutmcdonalds.com). He had organized an operation built on taking care of the customer, providing a clean, family environment, and serving hot, fresh product, fast. With all attention on details (ibid), the McDonald’s of 1955 focused on three foundational principles: Quality, Service, and Cleanliness (‘QSC’). An additional ‘V’—for value—was added in 1975. Today, they have more than 32,000 restaurants around the world in 117 countries, one of the world's largest chains of hamburger fast food eateries, catering to close to 60 million
customers every day (ibid). McDonald's main products are hamburgers, cheeseburgers, chicken
nuggets, egg muffins, French fries, milkshakes and desserts, sold under brand names (ibid).
The Retail Manager
In general terms, the role of the retail manager at McDonald’s is similar to that of his
counterpart at JB’s. There are, however, many differences when it comes down to the fine print. Firstly, JB’s is a 4-star rated high-end restaurant, catering to the elite and affluent. McDonald’s is a low-cost minimum frills fast food eatery for people who either do not have the time to dawdle over a meal, or have a budget to adhere to. Moreover, JB’s is a diner where no one can predict how many customers will turn up and what will be ordered on any specific day. All items listed on their wide menu have to be made available in a reasonable timeframe. As only fresh vegetables are served, their menu has to be seasonal. It is not so difficult at the Bar, as can be readily understood. In McDonald’s case, the only question is that of volume. The menu is fixed. Changes, if any, may be seen in different parts of a country, depending on demographics. Sometimes, competition may force a cut in prices. Pricing techniques need some flexibility. At JB’s, retention of staff is important, as considerable amounts of money and time are spent on bringing the staff up to desired standards. Staff at McDonald’s tend to be students working part-time, second jobbers, etc. Turnover is rapid, but the cost involved in training is relatively small. So what does the Marketing Mix have in store for the retail manager at a McDonald’s outlet?
1. Price: As just said, pricing techniques need flexibility. McDonald’s therefore uses:
Penetration Pricing: The price charged for products is set artificially low in order to
gain market share. Once this is achieved, the price is increased to normal. This approach
was also used by France Telecom and Sky TV.
Ø Optional Product Pricing: Companies will attempt to increase the amount customer spend once they start to buy. Optional 'extras' increase the overall price of the product or service. This technique is used by airlines, who charge extra for seats that provide more leg room. On a pricier scale, corner plots of land come at a premium.
Ø Product Bundle Pricing: McDonald’s often combines several products in one package, usually when a fresh crop of raw products is expected and the retail manager is being proactive. Videos and CDs are often sold using this approach.
Ø Value Pricing: This approach is used where external factors such as recession or increased competition force companies to provide 'value' products and services to retain sales (marketingteacher.com).
2. Place: Logistics is the focal point of any quick-delivery entity. It is crucial for McDonald’s, which thrives on its reputation for speed. McDonald’s invariably have more than one outlet in any city it serves, located at spots where the younger generation tend to throng, like multiplexes and malls. McDonald’s outsources most of its supplies. For instance, in India, it has outsourced most of its supplies to McCain Foods, with Cremica bakeries in Delhi and Mumbai providing the 380 sesame seed laden buns and Dynamix Dairy the sliced cheese (www.economist.com). The dynamic supply chain is constantly on the go.
3. Product: The various items from different sources meet up at the restaurant at the right time, part of the retail manager’s charter of duties.
4. Promotion: McDonald’s uses this strategy to good effect; for instance, its Extra Value Meals offers more generous helpings of French fries and chicken nuggets and its Happy
Meals has a toy as a gift.
5. Physical Evidence: In 2008, McDonald's introduced its most comprehensive global packaging design ever, to reiterate honesty and openness with customers and remind them of McDonald's food’s quality and freshness (www.aboutmcdonalds.com).
6. People: At McDonald's, all customer facing personnel are trained and developed to maintain a high quality of personal service. Attention is given to personal hygiene, dress and deportment.
7. Process: McDonald's delivers value through all elements of the marketing mix. Process, physical evidence and people enhance services.
McDonald’s operates in 117 countries, all of which have different rules and regulations, specific to the F&B industry. For example, some countries ban beef products, including imports. That forces McDonald’s to shift to poultry and a wider range of vegetarian meals. (The latter category is also touted as a low-calorie meal, much required in an obese populace in the U.S., while also offsetting the high content of oil in McDonald’s products and calories in their sodas and desserts). Poultry, per se, can be a risky proposition, with the world having already experienced three Bird Flu epidemics. Some countries have fixed hours, some have power consumption limitations (like India), and some require the menu to be bi-lingual, with the local language having priority over English. McDonald’s must be complimented for managing so many outlets in so wide a range of countries, with absolute standardization insofar as uniform, products, ethics, deportment and hygiene are considered. The only weak area identified is recycling, due to the volumes involved, but the Retail Managers are doing a good job at keeping their carbon footprint down to the lowest possible. This is in keeping with the company policy of 2009, named McDonald's 2009 Global Best of Green (ibid). Progress has been demonstrated on multiple fronts - energy, packaging, anti-littering, recycling, logistics, communications, greening the restaurants, greening the workplace, sustainable food and supplier leadership.
The El Bulli Restaurant, Roses, Girona, Spain
El Bulli, a medium sized restaurant in the city of Roses, Spain had been selected by the highly regarded gastronomic magazine ‘Restaurant’ as the best restaurant in the world in 2009 (www.theworlds50best.com), a distinction achieved for the fourth consecutive year (www.wharton.universia.net). Owned by Ferran Adrià, a Spanish culinary expert, in partnership with Juli Soler and Albert Adrià, the restaurant had retained its 3 Michelin Star status since first achieving that laurel in 1997 (ibid). It had won this award in 2002 and then come second once.
What was amazing about this restaurant is that it was open for only twenty-seven weeks in a year, from lunch on 15th June to lunch on 20th December every year. El Bulli would announce its operating schedule for the next year a month later. It was virtually impossible to get a reservation for a meal in El Bulli, as it received over one million requests for its seating capacity of about eight thousand a year, when open (ibid).
Adrià was known as the ‘alchemist of the kitchen’. Both he and his restaurant were recognized “for their research in the realm of molecular gastronomy, in which his studies of the micro-properties of specific foods, species and ingredients have led to the development of unique recipes” Sandulli and Chesbrough (2009: online). The research was carried out in the six months the restaurant is closed. “Studies of the micro-properties of specific foods, species and ingredients have led to the development of unique recipes. In 1999, they decided to share their knowledge about creating oils, sauces and aperitifs with Borges, the food manufacturer. Borges launched products that were co-branded by both companies. This became a new source of revenue for El Bulli, which concluded similar co-branding agreements with other companies such as NH Hotels and Nestlé. This strategy, based on a small number of close alliances, aims to avoid any loss of control over the brand” (ibid).
“They also aim to find and absorb new ideas in that period. This enables the restaurant to stay one step ahead of other restaurants that try to copy its formula for success” (ibid). On the other hand, said the authors, “El Bulli markets its brand and its knowledge through a variety of tightly managed relationships that have enabled its brand to penetrate business sectors far beyond the typical business activities of a restaurant. So while the restaurant is not profitable, its overall group of businesses does make money” (ibid). This paragraph is a succinct summary of El Bulli’s strategy and part of its perspective of the restaurant business.
El Bulli’s prime perspective was of exclusivity: to provide exotic and one-of-a-kind dishes, seeking to stay atop the lofty peak of ‘best restaurant in the world’. There are more than 10 million restaurants in the world (answers.google.com), but we can discount 99.99% of them on grounds of quality. Competition was fierce and Adrià was willing to accept financial loss on account of El Bulli, to retain top slot!
A look at their past history will provide an idea of how the restaurant and its concepts evolved. From a mini-golf installation that provided barbecues alfresco in 1961 to a beach bar in '63, the first restaurant came up as a grill in '64 (www.elbulli.com). Owned by a Dr. Schilling, whose hobby was gastronomy, and who spent a lot of time away in Germany studying fine restaurants and dishes, the restaurant would gain from his inputs and El Bulli went from strength to strength as a restaurant. From '70-75, many more fancy French dishes began to be served, including flambéed sea-bass with fennel, prawns in Pernod, double entrecôte with béarnaise sauce and emincé of beef Stroganoff. A new chef, Jean-Louis Neichel joined in 1975 and he was asked to study the cuisine in the most famous restaurant then, La mère Charles, whose owner was known to Dr. Schilling. By 1982, El Bulli was on its way to stardom.
Ownership changed hands, with age catching up with the Schillings. Staff stayed on. El Bulli was one of the first haute cuisine restaurants in Spain to serve sea urchins. Prices went up, as did decor and style. Quality became a byword and soon, tables began to fall short. As the Michelin stars came in, the concept had already evolved. Uniqueness. One-of-a-kind. Exclusivity. The rest is history.
It is with great regret that I have to inform you that this restaurant downed shutters for the last time July 30 2011, to reopen as a creativity center in 2014.
Definition of hospitality, as given in http://www.answers.com/topic/hospitality; extracted on 14 April 2014.
Composition of the Hospitality Industry, as given in http:// online. bhtafe.edu.au/TROL/Websites/R108147/LO3/LO3_pages/SectorsHosp.htm, extracted on 14 April 2014.
Park Plaza Victoria London, as given in http://www.parkplaza.com/londonuk_victoria,accessed on 15 April 2014.
Retail Manager, as explained in http://www.prospects.ac.uk/p/types_of_job/
retail_manager_job_description.jsp, extracted on 15 April 2014.
Revenue Generation in a Typical Hotel, as given at www.satm.bilkent.edu.tr/~jamel/Foo/52148-
Chapter%201.doc, accessed on 15 April 2014.
Marketing Mix, as given at http://marketingteacher.com/Lessons/lesson_marketing_mix.htm accessed on 15 April 2014.
Macro-environmental Factors, as given at http://www.renewal.eu.com/resources/Renewal_Pestle_Analysis.pdf, accessed on 16 April 2014.
UK's Hospitable Climates Initiative, as detailed in http://www.hospitableclimates.org.uk/Documents/pdf/
About McDonald’s as given at http://www.aboutmcdonalds.com/mcd/our_company.html accessed on 16 April 2014.
Place, as given at http://www.economist.com/business-finance/displaystory.cfm?story_id=15663767, accessed on 17 April 2014
Physical Evidence, as given at http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html,
accessed on 18 April 2014.
McDonald's 2009 Global Best of Green, as given at http://www.aboutmcdonalds.com/mcd/csr/about/environmental
_responsibility/best_of_green.html, accessed on 18 April 2014.
Best restaurant in the world in 2009, as given at http://www.theworlds50best.com/awards/1-50-winners,
accessed on 18 April 2014.
http://www.wharton.universia.net/index.cfm?fa=viewArticle&id=1747&language=english, accessed on 18 April 2014.
Sandulli and Chesbrough (2009: online) as reported in http://www.wharton.universia.net/index.cfm?fa=viewArticle&id=
1747&language=english, accessed on 19 April 2014.
http://answers.google.com/answers/threadview?id=224199, accessed on 20 April 2014.
accessed on 20 April 2014.