Home / ANALYSIS / Front of House / Challenging the foodcourt myth

The Indian consumer has embraced foreign food concepts quite well.
[More Images]

Q: In your opinion, is price the only reason people tend to prefer going to food courts over the traditional options?
JVS RANA: In my view price is not the main reason, it is more the variety and informal, interesting experiences which food courts provide. Today, people are more independent and different in their food choices; this kind of an option is only available at food courts and not in traditional stand-alone restaurants.

YOGESWARAN VEERSAMY: Price, accessibility, and varied options could be the reasons why more people prefer food courts. I haven’t seen many customers who only prefer to go to a food court; most of them club the food court visits with shopping or movies.

PRASHANT GUPTA: Food courts are made keeping footfalls in mind so their menu pricing targets the college kids with not much pocket money, housewives shopping in groups and families whose whole idea for a good weekend is to spend a day in the mall doing some shopping, watching a movie, and having some lunch in between.

While price is not the only criterion, it is certainly one of the major criteria both for families and corporate. Flexibility to order different cuisines is also a good factor, but not necessarily a deciding one.

ABHISHEK SHARMA: The ability of food courts to be able to varying tastes simultaneously also plays an important factor.

MAHESH SHARMA: In my opinion, price is not only the reason for this trend, the location and various entertainment and shopping options available helps to target people.

Q: Should hotels reduce the price of liquor and other beverage items which are generally sold on a premium price, as a customer retention strategy?
JVS RANA: The price a guest pays at a hotel bar is not just for the liquor but for the overall lifestyle experience he/she enjoys. In many cases, it is the quality of food, service, and entertainment, which provides new and repeat customers for hotels.

YOGESWARAN VEERSAMY: Liquor prices are always competitive and the markets flourish on a big retention policy. Liquor laws and tax components are generally steep and the tag gets heavier by the time the beverage reaches the consumer. The idea is to be competitive and realistic, while offering a huge range of beverages to suit individual moods and tastes.

PRASHANT GUPTA: Reducing the pricing in hotels as a customer retention strategy will not work as firstly, most of the stand-alones are maybe 20% less or equal to hotels as they have higher costs, majority being the venue cost. Also there are not many malls where alcohol is allowed to be served.

Hotels use the price factor as a way of segmenting their patronage in order to attract the right kind of people and that economic stratum; because of a growing economy, there are more and more Indians who are embracing this kind of lifestyle which involves patronising food and beverage in a hotel once or twice a month.

ABHISHEK SHARMA: The ultimate pricing of any branded liquor depends on its perceived value from a customer, and the added costs of excise and custom duty paid to bring it in. Customer retention strategy will have to be based on creating experiences rather than lowering costs continuously.

Attractive packages, depending on various factors for each establishment and its target audiences have been created by many free standing operations, and hotels would be wise to learn from them. Our traditional business model needs to evolve as the free market becomes more brand positive and quality consciousness.

MAHESH SHARMA: Hotels should study the psychology of their target guest and then formulate a customer retention strategy because, in my opinion, our target customers are willing to pay for quality and experience.

Story continues below

Advertisement

COMMENT Comment on this article

Q: Is it a good idea to open established (international) restaurant brands in hotels to increase your revenue from the F&B section?
JVS RANA: Yes, it is a good idea, especially for hotels who do not have a strong track record of food and beverage concepts.

YOGESWARAN VEERSAMY: Established international brands always do well in stand-alone/independent locations. Globally, established restaurants or coffee shops like Starbucks do well in budget or medium hotels. Five-star hotels would always showcase their expertise in cooking and presenting a great restaurant - they have their own signature restaurants which are a brand in itself.

PRASHANT GUPTA: It depends on what business model is it based on - revenue sharing, profit sharing or management fee based.

All three impact the revenues differently. Some hotels where the business model is more room focussed, would prefer to lease out some of the restaurant space except for the bar and the multi-cuisine all day dining, as it might make more business sense to have an international brand in their hotel. There will be more footfalls because of that, and more exposure to the hotel.

ABHISHEK SHARMA: It depends on many factors - location, target audience group, saleability of that brand, and awareness in its own regional market, may contribute towards profitability.

MAHESH SHARMA: Yes, it could be a great idea if your organisation policies allow you to do so. In recent years, various chain restaurants have emerged as a popular choice for dining. International hotel companies are now standardising dining experiences which are becoming a signature offering unique to a brand. Branded consistent quality and authentic cuisine is the way forward.

Q: The concept of having hotels and malls in the same building is entering into India. Do you agree with this trend?
JVS RANA: This trend is good for serviced apartments, business hotels catering to the mid segment, and hotels at holiday destinations. For luxury hotels, it is more advisable to have a separate dedicated area with a few, very high-end international brands.

YOGESWARAN VEERSAMY: This is a very positive trend. It is mixing entertainment and leisure with quality and choices. Maximising footfalls and revenues is the mantra of this concept. Business and city hotels thrive on this concept, while luxury hotels would still like to be aloof and special.

PRASHANT GUPTA: I don’t agree with this trend. The huge human traffic in and around a mall might be a deterrent to some corporate and leisure guests due to the noise generated. Even though the hotel is in a mall, it will still have to have all F&B concepts, which may be a loss making proposition if their pricing is not right as they might lose out to the outlets in the mall.

For these outlets to ensure footfalls they will have to provide enough choice in order to make sure outside guests come and patronise the outlets instead of the malls, as well as capture their in-house guests.

ABHISHEK SHARMA: Although being attached to a mall may increase footfalls at an early time, it needs to be matched to what perception the hotel would like to create. Also the desired positioning of the hotel plays an important role in this decision to pair up or not. The average five-star consumer may still benefit from going to a classy hotel with high-end retail stores rather than a cheap mall with a classy hotel.

MAHESH SHARMA: This trend could be applicable for business hotels, as the clients are mostly business travellers and they would find every necessity within the same premises. But for resorts where people come to relax, this trend would be questionable. However, as new trends emerge we must change with them and continue the learning process.