Issues and Challenges in Food Service Sector

Topics: Foodservice, Restaurant, Supply chain Pages: 3 (933 words) Published: June 27, 2013
Issues and challenges
Major Key Issues and Challenges that the Food service Industry faces can be broadly divided into the following categories: * Economic /Market Factors
* Operational Factors
* Fragmented Supply Chain
* Government/ Regulatory Factors
* Consumers Factors
Economic/ Market Factors
* Rising Food Costs: Food price inflation is a key factor affecting the food services market in India and is impacted by delayed monsoons, the economic slowdown and unfavourable demand-supply conditions. Across all food services formats, food costs (raw materials) account for 30%-35% of the revenues. The perpetual rise in food costs narrows the player’s margins, compelling them to increase menu prices. This in turn affects the price conscious customers. * Fragmented Market, Increasing Competition: The Food market has many small and mid-sized unorganized players competing with large chain players. This fragmented market reflects a number of challenges, including the unclear format segmentation, varied consumer options for eating out, and the lack of best practices for the industry there are a number of players who offer products that are more or less similar, at competitive prices. No single player leads the market and also low on customer loyalty. This makes it a challenge for players to engage and retain consumers. Operational Factors

* Manpower Issues: The Indian hospitality industry is labour-intensive, but the availability of trained chefs, managerial staff and other support staff is low. According to a study done by Ministry of tourism the current supply of skilled trained manpower is estimared to 9% of total manpower requirement. Given this shortfall of quality manpower requirements and the industry’s high attrition rate the cost of labour is high. * Real estate Issues: High Real Estate and labour cost impacting the profitability. For more than a decade the Real Estate industry in India is touching the sky and the demand for the...
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