Innovation in an industry can lead to more success within an industry. This is a broad statement; however, think about starting a new business, or developing a new product- this is usually done when a company or entrepreneur has found a hole in the market that needs to be filled. Innovation is exactly that- finding where there are areas for improvement and then tactfully filling them. Capitalizing on this can help already established companies become more profitable or help entrepreneurs establish new companies.
When analyzing restaurants, particularly fast-food restaurants, new opportunities have risen in areas dealing with what foods are offered, but also focusing on how the food is offered, is it a drive- through, sit down, or cafe. The largest industry service segment is limited-service restaurants. This category includes carryout restaurants, delicatessens, fast food establishments, pizza delivery shops, pizza parlors and sandwich shops. (See Graph 1) However, over the last five years, the relative size of this service segment has shrunk. In 2006, this segment accounted for 97.0% of industry establishments and 95.8% of revenue; in 2011, it is expected to account for only 96.7% of establishments and 95.4% of revenue. This decline is said to be due to changing consumer tastes and the increasingly fast- pace lifestyles of many Americans. Consumers simply do not have the time to eat at fast-food restaurants; instead, they are opting for quicker snack and beverage outlets such as coffee shops. These cafes offer in-and- out service that accommodate consumer’s needs. However coffee shops also meet another demand of consumers: the increasing demand for beverage options. Starbucks and McDonald’s have continued to be successfully because of the variety of beverages they offer. In addition, health conscious food and beverage options are things consumers are always interested in. With that said, it seems that cafes, yogurt/smoothie shops, and any restaurant that offers healthy food and drink options “on the go” will likely make for a profitable and innovative business in the restaurant sector.
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| Graph 1 IBISWorld |
Moving on to the lodging sector of the hospitality industry, technology and acknowledgment of international markets seem to be ares of innovation. Direct bookings to websites of major hotels are increasing rapidly. For example, the share of Hilton reservations booked through its website increased from 9.0% to 17.0% over the five years to September 2005 and rose to an estimated 25.0% in 2010. Although third party travel websites, like Travelocity and Expedia, are already in existence it seems consumers are more apt to visit the actual website of the hotel they are staying at. This leaves lodging companies a great opportunity to revamp the content and capabilities of their website. Computer and communication systems are essential for most hotels, it allows them to acquire guests via large reservation systems; provide guest services; provide online checkout capabilities; and track reservations, guests, and room charges. If a hotel's website contained all these benefits it would certainly give them a competitive advantage. In addition, the expanding number of international tourists, especially from Europe, also means that offering a Spanish, French, Italian, etc. translation of ones website could be especially conducive to attracting a large number of consumers. (See Graph 2)
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| Graph 2 First Research |
Another interesting areas to look at in the lodging sector is the worker turnover rate. Annual personnel turnover in the hotel and restaurant industry is about 60 percent for low-level employees and 25 percent for managers. Seeing as lower level employees, who are usually less educated, are more likely to return, companies might consider establishing training programs for these employees. This would give them the opportunity to move up in the ranks. A housekeeper might be able to become a manager with the right amount of training and experience. Although in the short- term this might be costly, in the long-run it might improve worker turnover and benefit the company, which is especially helpful in light of the unemployment dilemma .
Lodging:
Restaurants:
Laura,
ReplyDeleteIt is interesting that you bring up the recent increase in demand for quicker snack and beverage outlets because I have seen this trend firsthand. I noticed this in my hometown (a suburb of NYC in New Jersey.)Especially in this economy, more people have had to take jobs with further commutes, meaning they have less time and need quick options. As an more and more people begin to take jobs where they have to commute into the city, there have been many more Starbucks and Dunkin Donuts opening up in my area. (There are about ten total within a ten minute drive.)If this is the case in my small suburban community, it only goes to show how much of an impact this trend makes as it is common throughout the entire country.
-Bryan Brodek
I think this trend is happening everywhere. It just goes to show that what one industry does has a great effect on other industries. It also makes me wonder what is going to happen in rural parts of the country. If people in rural ares have to commute to cities will the rural areas see more chains pop up?
ReplyDelete~Nia M