Catering Industry in India Analysis Essay Example

food, but it encompasses much more. Numerous other factors play a role.

The catering industry places great importance on food, but it is just one aspect of the overall service. Nowadays, many catering companies also offer comprehensive event planning services. This shift in approach has led to a focus on diversifying their offerings. This change is due to the government's recognition of the shortage in demand and supply of Butane and Isobutene, which are essential components of LPG.

The government has increased prices by Rs. 20, which is a significant increase. However, caterers are unwilling to pass this increase onto consumers. The Food and Drug administration is involved in this matter.

Recommended Formation of F;O of India which plans to make registration of all caterers mandatory to ensure a fixed standard below which the quality of food served will be prohibited.

Ban on Plastic bags: A ban on plastic bags makes it difficult to carry, store, or transport food or food items. Services like 'Free home delivery' have become expected, so any inability to provide these services may impact the caterer's image. It will also increase the cost of finding a better substitute than plastic.

Service Tax: Imposition of indirect taxes will definitely affect the industry.

The consumer, not the Service Provider, bears the burden of taxes. The consumer will have to pay 10.5% of the bill amount. Additionally, taxes such as Entertainment tax will increase the consumer's expenses.

Increase in Fuel prices:

The rise in Fuel rates will impact caterers who offer mobile services, as it requires transportation of services.

And this will directly be proportional to distance traveled. Hence, an increase of Rs. 2-3 per litre seems unfavorable for

this industry. But this just seems to be the small picture as prices of Oil tends to rise in international markets, Govt. will not be able to provide a cushion for any further increase.
Policies of FCI:
better known as Food Corporation of India, it is a regulatory authority, which decides a price range for agricultural consumables.

However, it focuses solely on demand and supply estimates, meaning it limits any unreasonable increase in production and benefits the catering industry. This means that the days when onions were sold at outrageous prices, causing people to cry, are no more. The government should take the initiative to establish more APMC markets (Agriculture Produce Marketing Centers).

The reason for this is that villagers/farmers can directly sell goods in these markets without intermediaries, which decreases the prices of raw materials required in the catering industry. According to a study, vegetables, fruits, etc offered in local markets are extrapolated to an extent of 100% of their cost prices.

Permits, Licenses:

In the case of caterers who offer additional services like Liquor, certain types of permits are required for limited time periods. Although this is a socially good move, it still hampers the industry as it is said, "it is not what goes in is bad, but it is what comes out is bad." Additionally, there are other restrictions like time limits (after 11 pm drinks will not be served, etc.)

The Catering industry, including hotels, is expected to face pressure due to the implementation of a ban on certain types of bars. Legal and constitutional factors also impact the industry, such as The Bombay Hotels and Establishment Act. This act categorizes any hospitality or catering industry with

more than 14 employees (including 2 part-time workers) as an establishment, necessitating them to provide benefits like minimum wages. A recent UN survey reveals that India ranks 116th in terms of ease of doing business, while Pakistan is ranked 90th and China is ranked 60th. As a result, even reaching Karachi seems impossible, let alone Shanghai.

The Government's emphasis on the Housing sector may have a detrimental effect on caterers, as they require ample space. A recent UN study suggests that we need to build 4,000 houses per hour or 96,000 houses per day to meet accommodation demands adequately. Though this might appear advantageous for caterers at first glance, the lack of available space renders it unfeasible. From an economic standpoint, Consumer Spending has risen significantly due to the abundance of options. Moreover, the Cost of living has experienced a substantial increase, further contributing to this upsurge in spending.

Therefore, increasing expenditure on essential items such as food is crucial. A recent study showed that in Delhi, approximately 20% of consumers' total income is allocated to food, while in Mumbai it's 18%. Expenditure is also influenced by tourism, which has a notable effect. This connection arises from the close relationship between tourism and catering. As the number of tourists grows, restaurants and other establishments offer a greater variety of menus.

Therefore, it is essential to give priority to the growth of the catering industry in the tourism sector as it presents a profitable opportunity. Despite already being among the top 3 tourist destinations, India can still improve. With business cycles reaching their highest point, Sensex crossing 8000 points, and inflation rates declining to 3.63%, now is an ideal

time for indulgent expenditures.

The effect of economic stability on individuals can be compared to a self-fulfilling prophecy. If people perceive a strong economy, they are more likely to spend money, thus helping the economy thrive. Additionally, there has been a significant rise in earning potential.

The per capita income in urban areas for the year 2003-04 was around Rs. 5000 ($545) per annum, whereas in rural areas it amounted to approximately Rs. 11500 ($255) per annum.

Although Pakistan's per capita income is $690 annually, a rise in income typically results in increased spending. It is crucial to distinguish between earning capacity and spending capacity, as earning encompasses saving, which is not accounted for in expenditure.

India's move towards liberalization has transformed its economy from one that was constrained by supply to one driven by demand. In addition, the mindset of the average Indian consumer has also changed, as they no longer value austerity and debt is no longer seen as taboo in middle-class households. The growth of the catering industry can be attributed to the availability of affordable consumer finance. To further promote this sector and attract more foreign direct investment (FDI), it is crucial to encourage its development and eliminate restrictions imposed by the Foreign Exchange Management Act (FEMA). Analysts propose increasing the FDI limit to either 100% or at least 60%. This Westernization trend has also influenced Indians, fostering a mentality focused on immediate enjoyment rather than future risks. Consequently, individuals are now more willing to spend all their earnings.

The Bandwagon effect, which is the act of people imitating others to assert their superiority based on status or power, has an impact on consumer spending. India

has an average age of around 28 years, signifying its youthful population. Conversely, China's average age is 33 years. Additionally, individuals aged 20-35 spend more money compared to other age groups. This implies that fast food establishments targeting young consumers have significant growth opportunities given their extensive customer base.

In the catering industry, formal or necessary training is not required. The only prerequisites are having capital and a desire to quickly earn money. According to Sir Robert Giffen's proposal of the Giffen effect, when prices of higher quality goods decrease, individuals tend to continue buying those higher quality goods rather than opting for cheaper alternatives. This behavior stems from their ability to earn money surpassing the rise in living costs. Additionally, intense competition and a wide array of options have led to reduced prices. Consequently, people occasionally choose fancy restaurants while also purchasing lower quality food items.

The paradox of value refers to the phenomenon where essential items that are vital for survival, such as water and food, are priced inexpensively despite their immense importance. This encourages their consumption and ensures accessibility for everyone. The changing attitudes towards various forms of catering have brought about this shift. For instance, the saying "the way to a man's heart is through his stomach" reflects the significance placed on food.

Airlines are taking this advice seriously and are designing, selecting, and preparing menus with a focus on customer preferences. The modern traveler no longer settles for whatever is provided but expects only the best. Technological advancements also play a significant role in the catering industry, particularly in temperature-controlled environments. With the kitchen and delivery locations often far apart, it is essential

to maintain a controlled environment to ensure food and drink quality during transportation.

Currently, food is transported using specialized carriers or vans that maintain a controlled environment. In the past, caterers relied on gas burners and LPG cylinders for fuel. However, the five-star catering industry has embraced a new technology called 'Hot Plates'. These electric burners are smokeless, generate no heat or fire, and only activate when in contact with metal. Additionally, they automatically turn off when not in use.

The hospital catering industry heavily relies on computer software. There are multiple software programs used in this field. When a specific food dish is entered into the software, it immediately provides a list of required ingredients in the exact quantity according to the patient's calorie intake allowance. These software programs have greatly simplified and improved the accuracy of hospital caterers' work. In addition to the aforementioned factors, there are numerous other small and often overlooked details, such as dishwashers, pressure boilers, electronic weighing machines, and laser blade knives.

The catering industry has evolved into a modern service industry in the 21st century due to various factors. Furthermore, the increasing competition has made the use of these services almost essential for businesses. The convenience of payment methods such as cell phone payments has eliminated all the hassles.

Product MIX

• LevelType of service: Catering
• Basic core product: Food and beverages.
• Expected service: Hygiene, taste, banquet services, etc.
• Augmented service: Meeting customer needs by providing specialties.
• Potential service: Providing the best specialties.

Product lines:
Width:
refers to the number of different services offered by the caterers.

For example, in different industries such as airlines, railways, hospitals, and corporate meetings, the depth of services offered may vary. The

depth refers to the variety of services provided within a sector.

The food requirements differ across industries. Airlines need dry and portable food that can be stored for a longer time. Hospitals require nutritious food that won't negatively affect their patients' health. Schools aim to provide students with a balanced diet, etc. Consequently, the needs vary across different fields.
Consistency: It refers to the relationship maintained between various services.

The main objective of catering is to offer food for customers to eat, which can happen in various settings like hospitals, parties, schools, and others. The catering industry is divided into three categories: Commercial Catering, Transport Catering, and Welfare Catering. Commercial Catering specifically concentrates on meeting commercial demands.

The suggestion is that commercial activities aim to generate profits. However, in the current situation where customer satisfaction takes precedence, prioritizing pleasing customers over profits is not viable.

Commercial catering can be divided into two types: residential catering and non-residential catering. Residential catering involves providing food, beverages, and accommodation services. Hotels serve as an example of residential catering establishments that offer food, drinks, and lodging options. These hotels can be classified based on their star rating or their target audience such as business travelers or transit guests. There are also other forms of commercial catering establishments such as motels, resorts and spas, and floatels.

Motels are usually found along highways and cater to travelers who need a brief stay during an overnight road trip. They offer basic amenities including parking, refueling stations, garage services, as well as food drink and lodging facilities.Resorts and spas,on the other hand,situate themselves in picturesque locations away from cities like seaside or hill stations.These places experience higher occupancy rates

during holiday seasons compared to motels.They attract guests for longer stays too.A resort example would be Club Mahindra.Floatels refer to floating boats that provide guests with food,dinks,and lodging services.

According to the size of the floatels, the facilities vary. For example, guest houses do not offer the same level of accommodation as hotels or resorts. The services provided are not very professional and the menu is also not very extensive. However, expenses at guest houses are much lower compared to other establishments, making them a preferred choice for those who cannot afford the luxuries of hotels or resorts. On the other hand, lodges only provide accommodation facilities.

They can typically be found near railway stations or bus stops.

Non-Residential Catering

As the name suggests, these establishments provide food and beverages but not accommodation.

1. Restaurants: These establishments are classified as specialty restaurants based on the type of food they serve, such as Chinese, Thai, fast food, Mexican, or multi-cuisine restaurants. They can be associated with hotels or independently operated.
2. Bars: These places only serve alcoholic drinks along with light snacks. They may or may not be connected to restaurants or hotels. In India, the rules and regulations governing bars are very strict, limiting their scope and operations.
3. Fast Food Outlets: These are independent establishments that specialize in quickly prepared food and beverages, but they do not serve alcoholic drinks.

The focus is

primarily on quick preparation and service. Discotheques are business establishments that provide a space for a large group of people to dance to music played by a DJ. They may have a small bar, but the main emphasis is on dancing and music rather than food. Vendors, typically found at railway stations, offer food and non-alcoholic beverages, primarily targeting the lower-income segments of society.

Transport Catering:

1. Railway Catering: In this case, pantry cars are attached to trains where food is either cooked or catering is done by outside contractors. Originally, catering on Indian Railways was done exclusively by the railway itself, but private players have entered the market, reducing the demand for Indian railway catering. For example, recently McDonald's partnered with Radha Krishna Hospitality Services Ltd. to secure the first private railway contract.
2. Marine Catering: This involves catering services provided mainly to the crew and passengers of cruise liners. Cruise liners are now well-known for their high standard of catering.

They have various amenities such as restaurants, bars, discotheques, golf course, swimming pool, laundry service, ball rooms, casinos, etc. The level of service on these liners is exceptional. In addition to serving different types of meals, social activities such as parties and dances are organized to enhance customer satisfaction and reputation.

Recently, Ambassador Sky Chief secured a

contract with Air India to provide 28,000 meals per week. This catering service is exclusive to Air India and no other caterer serves meals on their flights.

Welfare Catering:

This type of catering involves providing meals without making a profit, although the intention is also not to incur losses.

It is generally done out of compulsion, obligation, legal requirement, or charity.

1. Industrial Catering: This type of catering occurs in large industrial or manufacturing units. Different levels and types of employees are served in various canteens. The employees contribute a small amount towards the food cost and are provided buffet meals. The company itself may handle this catering or it may be contracted to a private body.
2. Institutional Catering: This catering type is found in school and college canteens or institutional hostels. The price charged to students is minimal. It is usually managed by the institution itself, although sometimes students may run it. It is rarely entrusted to outside contractors.
3. Service Catering: This type of catering is carried out in jails and military services where consumers are not charged any money. The food is either prepared in-house or outsourced.

I’S.

The intangibility of product life cycles can vary. While manufactured items generally have longer life cycles, service delivery systems often change. For example, microwaves cannot be used to cater to customers on flights, which makes warming up food a challenging task. On the other hand, perishable food items have shorter life cycles. If food is not preserved properly, it may lose essential nutrients and become inedible. Building

brand loyalty is difficult in service businesses due to easy copying.

If one caterer comes up with a new dish, presentation, or arrangement, it is quickly copied by others in the industry.

The need for innovation and the introduction of new service features is essential in order for businesses to differentiate themselves from competitors in the food industry. Neglecting to properly preserve food can result in service failures and a negative perception from customers. For example, if out of 10 arranged functions, even just 2 of them are not properly catered, it can create hesitation among future customers in placing orders due to concerns about the authenticity of the catering company. The reputation of a company is particularly important in service industries, as customers are unable to accurately measure the quality of service they receive.

In the catering industry, the most influential factor is word of mouth. If even a single mistake is shared with others, customers believe they may experience the same issue and as a result, the number of customers decreases.

Inventory

• Due to the nature of services, there are no inventories available to manage fluctuations in demand. Caterers do not prefer to stock up on inventory.

Even if they do, it is only for a short period of time because their main products are fruits, vegetables, and other perishable food items. However, caterers should have sufficient backup in order to fulfill the demands of their customers. Services lack inventories that can be used to balance the supply and demand of products. Additionally, because there is no separation between different stages of production, planning and control can be

complex. Successful caterers need to excel in forecasting and planning based on their past experiences.

If there are more guests than expected at a party, it is not possible to ask them to leave or go hungry, so a backup plan is necessary. The caterer must meet urgent demands in order to ensure customer satisfaction. This illustrates the complexity of planning and control without an inventory to manage demand. It is not possible to tell a customer that there are no seats and they will be put in an inventory box until the next day's flight. Inconsistency and difficulty in establishing standards, particularly regarding the psychological aspects of service, make it challenging to define and measure service quality. Each person has different preferences, with some prioritizing presentation and others valuing taste. Additionally, it is difficult to ensure that set standards are being met, as customers may be treated differently during the same airline flight. Without relying solely on customer feedback, management must find ways to verify that their desired level of service is being provided.Quality control in recruiting and training is essential in ensuring the success of a service. It is crucial to recruit the right individuals who possess the necessary qualities for delivering a specific service concept. For instance, if personality is significant, it is important to hire individuals with good personalities. In certain cases, such as providing services for weddings, it is common to hire local workers. However, for larger events or parties, workers may be sourced from hotel management institutes to ensure their ability to cater to the guests appropriately. On the other hand, for important corporate meetings, staff members who are permanent

and have a good understanding of service quality are preferred. It is imperative that these individuals have the knowledge and experience required to provide exceptional service.

Inseparability

• The service business faces a geographic limitation since customers must come to the specific service facility. Unlike manufacturing businesses that can ship products globally, service delivery over a distance is challenging.

For instance, if a person requests catering services from Sea princess Mahal for an event in Bandra, they would suggest Sea princess lands end instead of making the long journey from Churchgate to Bandra with all the necessary equipment. Core/Supplementary products in services Service products often consist of a bundle that includes various elements and sometimes physical goods. It is crucial to distinguish between the main product that the customer purchases and the additional services that come with it. In the Catering Industry, the core product is the food provided for a specific event, while supplementary services may include decoration, arrangement of tables and chairs, themed setting, and hospitality.The decision faced by firms in planning and configuring the service delivery process involves a combination of both core and supplementary products. This decision includes providing information about the service, processes, cost, and benefits. For example, in the Catering industry, SEA Princess's outdoor catering service starts by informing customers about the different schemes they offer, such as lunch, dinner, or get-together options. They also provide information about the menu and any additional facilities that can be requested.

In summary, the customer is provided with an overview of the service to be provided. Consultation: This is the next step after informing the customer, where their requirements

are determined and a solution is developed. Taking the example of SEA PRINCESS, the customer can choose a scheme that suits them and make changes to menus, themes, decor, cost, etc. Order taking: This involves a detailed document that includes the customer's specific requests in the form of an order, reservation, or application. At SEA PRINCESS, this process is done systematically.

Every customer’s requirement is recorded in a MOF (menu order form) which systematically includes details such as the number of people, venue, menu, beverages, timings, pre-determined prices, themes, crockery, and more.

Hospitality: This refers to ensuring that employees treat customers as guests. When SEA PRINCESS caters for outdoor events, there are staff members present to inquire about the food's taste, escort guests, and provide similar services.

Caretaking - safe custody: This implies taking proper care of customers' belongings. In catering, this would involve maintaining hygiene while preparing, heating, and serving food. Additionally, the venue owned by the customer should also be looked after.

Exceptions: This involves doing things for customers that are not typically included in regular service. This may include addressing special requests, solving problems, handling complaints, and more.

The order for outdoor catering in SEA PRINCESS should be placed at least 48 hours before the event. However, for regular customers or in emergency situations, the order can be placed a day before, ensuring the same quality and sometimes at the same cost.


Billing:


SEA PRINCESS provides a detailed bill to inform customers about the payments that need to be made. The bill includes a breakdown of the cost for each item provided.

Payment:

Payment pertains to the chosen mode or method of payment. It should be predetermined, taking into consideration the convenience of the customer. At SEA PRINCESS, they follow a 50:50 payment scheme, where 50% of the payment is made in advance and the remaining 50% is made after the service. This ratio can be adjusted depending on the customer receiving the service. PRICE Categories of customers: Recognizing the type of customer is as crucial as distinguishing between salt and pepper.

Budget consumers: These consumers are very conscious about their spending on food and prefer economical options. They mostly eat out of necessity rather than choice. Since they eat outside regularly, they prefer lighter, home-cooked meals over heavy restaurant food. For example,

: Students and employees living in hostels and people with long working hours starting early in the morning can be classified as budget customers.

Variety-seeking consumers: They are consumers who regularly visit food joints and prioritize having a variety of food options. For example, a family that goes out every week would prefer not to have the same type of food on every outing.

Wouldn't it be as dull as eating at home? The main purpose of eating out is for recreation, and college students are a prime example of this. Occasional consumers: These consumers rarely eat out or go to restaurants because they prefer homemade food for health or economic reasons. For example,

: This category of consumers includes middle-aged and older individuals who typically prefer homemade food over eating out, although they may occasionally visit a restaurant. Lower middle-class families may also fall into this category as they cannot afford to eat out regularly.

Bulk

regular consumers:

These consumers typically purchase raw materials or prepare food in large quantities on a regular basis. They may have entered into a contract with a catering or other enterprise to meet their regular food requirements. E.

g. : Both vada pav walas and canteens often buy their required commodities in large quantities every day. College canteens, in particular, prepare food in large quantities, which classifies them as bulk customers.

Bulk occasional consumers:

These consumers also purchase food in bulk, i.