Seasonality of the Restaurant Industry: Friend or Foe?
The restaurant industry can be a fickle friend. Business trends directly with the economy and is linked with a dizzying amount of other factors, enough to make any manager go crazy. Yet at the same time the industry is lucrative and therefore enticing. The industry has been a contributing factor in the slow recovery from economic recession and is showing growth in sales (Stensson, 2011). Specifically, the fast food industry if projected to grow at a slightly higher rate of 3.3% over that of the full service industry at 3.1% (Stensson, 2011). With expanding sales comes higher demand and restaurant jobs are estimated to rise by 1.3 million positions by 2021 (Stensson, 2011). As the national economy begins to recover the fact that rising income is the number one contributor to restaurant industry spending becomes more relevant (Ray, n.d.). Today more and more people are eating out with as much as 49% of the consumer food budget going to the restaurant industry each year (Stensson, 2011). But a growing market does not mean an easy one. Managers of both the fast food and full service sections of the industry must be able to recognize how seasonality affects business. But what exactly is seasonality? According to Ronald Larson it is the “systematic, although not necessarily regular or unchanging, intra-year movement that is caused by climatic changes, timing of religious festivals, business practices, and expectations and gives rise to the spectral peaks around the seasonal frequency and its harmonics” (1997, p. 38). Seasonality can be a hindrance to restaurants that are not ready for it. There are a few answers to dealing with seasonality and even using it to the advantage of fast food and full service restaurants alike. This paper will look at the problems inherent in our naturally seasonal culture and then present several areas in which restaurants can manipulate their marketing and operations in order to use seasonality for consistent and even increased sales. The fast food industry has a unique problem set for food seasonality. Menus are not usually fixed but customers expect the same experience every time they encounter a brand and changing seasons affect produce, shipping and supply potential. Food grown in a specific season inside the U.S. can only be acquired during its season and hence shipping in the same produce from different regions of the globe add high movement costs. The location of a restaurant is greatly affected by seasonality as well. It is the highest contributor to consumer base and marketing applications. Fast food restaurants in tourist or vacation destinations can suffer large drops in sales when the tourist season is low or the weather is opposite to the vacation expectation (Brumback, 2000). Seasonality is no less of a concern for the full service restaurant industry. In fact, it can be even more severe. Up to 61% of the industry loses business around the Thanksgiving, Christmas, and New Year’s holidays (Higuera, 2012). The business loss can be significant as well, as much as 20% of sales (Higuera, 2012). The winter itself can be a barrier to business as the colder weather demotivates people to leave the house and going out to eat at a sit-down restaurant becomes a less enticing event for people in cold winter climates. The effects are real, with 75% of the industry reporting at least a 10% drop in sales when there are rapid changes towards colder weather (Avant, 2012). When weather becomes a hindrance to travel or vacations, people check the weather channel or the internet and cancel reservations based on forecasts (Brumback, 2000). When the weather cooperates and tourism is up huge swings in customer base and sales can cause full service restaurants to seek out seasonal employees who are only willing to work in vacation destinations for higher wages to compensate for higher costs of living. A dishwasher in...
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