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economic analysis of the environment facing restaurants in London in the next few years (Case Study Sample)


While it is often said that Britain does not have very good food, London is perhaps an exception to this rule. With more Michelin stars then any european city outside of Paris, the city is a centre of global dining. Wealthy, international and with an established reputation for good food, London might appear an excellent place to open a restaurant. However, the average restaurant will also face ferocious competition, and with rising food prices, high rental costs, and inflation squeezing consumers disposable income, it may be quite challenging to make a profit as a London eatery. Making use of the prompt above, as well as your own knowledge conduct an economic analysis of the environment facing restaurants in London in the next few years.


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The Rapidly-Evolving Nature and Future of London’s Hospitality and Cuisine Industry
It is rather widely perceived that England does not offer much satisfaction in the cuisine and hospitality world. However, London stands as the only exception to this bias as it homes the most Michelin star restaurants in Europe, other than Paris. Indeed, London's cuisine and hospitality trade have been characterized by a large degree of satisfaction compared to the rest of England. Although this is evident in the increased demand for hotels and restaurants, the hospitality industry is experiencing some major transformations as it currently shifts toward new customers, technologies, and management practices. Interestingly, the hospitality industry leans more towards digitizing all services and heavy reliance on ICT, but significantly less on employees. In fact, several critics have wondered whether talent is required in the hospitality and cuisine industry, especially with seamless technological advancement and the introduction of service robots. Indeed, the study reveals the unfeasibility of maintaining a 'talented' labour force in London, which is drastically exacerbated by Britain's exit from the European Union and the subsequent fall of trade unions and impediments to foreigners seeking employment in the UK's hospitality industry.
London: A major player in the global hospitality industry
According to Melissen and Sauer (2018), London is one of the largest economic centres in Europe and home to many multinational headquarters. Before the crisis, London was the financial centre of Europe, which led to a rapid increase in economic growth. Furthermore, London's tourism industry is one of the largest in Europe and yields annual revenue of £24 billion (p. 8). London's food and drink culture is a major contributor to the city's success in the hospitality industry. This culture is driven by various factors, including diversity, choice, convenience, entertainment, and costs. The diversity in London's food culture is evident in its world-renowned restaurants and bars. However, London's hospitality industry does not seem consistent with London's food culture due to poor mobility and a lack of change.
Fatal Flaws in the UK's Hospitality Industry Structures
According to Piga et al. (2021), the COVID-19 pandemic has revealed fatal flaws within the hospitality industry’s operational model. The structural defects include a lack of mobility to adapt to the changing clientele, a biased market towards specific events, and a less authentic representation than the natural product. The managerial flaws are primarily the lack of training programmes, employee rewards and wages, and a limited stakeholder engagement in the decision-making process. Furthermore, communication between stakeholders is poor and inefficient. In addition, there were no safety procedures in place which can be attributed to immediate threats of workplace health issues such as smoke inhalation, burns, and other environmental hazards. The managerial flaws are also accompanied by poor tactical decisions, such as no response to difficult situations. For instance, the UK hospitality industry has not responded well to the pandemic crisis and has yet to develop a public safety strategy. Moreover, the hospitality industry has also not responded well to the low demand for certain products, such as hotel rates and hotel room bookings (p. 4). Finally, the strategic flaws expose the lack of a plan to improve the industry. Regarding the pandemic crisis, there were no plans whatsoever on how to manage it.
Perceptively, the hospitality industry took a massive hit as all hospitality and leisure businesses had to shut down in adherence to the government-released COVID-19 protocols for social distancing. The pandemic has revealed to the hospitality industry that they require minimum contact between their staff and customers; this can be a challenge as the hospitality industry relies heavily on its workforce. Many argue that the hospitality and cuisine industry is a 'talent' industry in which talent is required to satisfy customers. The study has observed that many people were unhappy with the lack of human contact with the hotel reception staff, waiters, and chefs. The rise of robotics in tandem with digitization may seem like an intelligent solution to this problem as robots do not require rest breaks and are available daily.
On that note, many critics have wondered about the existence of talent in the hospitality industry (Baum, 2019). Traditionally, hospitality is assumed to be an industry with high-skill and high-wage jobs. However, the industry has already shifted towards technology interventions instead of human workers. These technological interventions increasingly require consultants and technology experts who potentially replace traditional labour jobs and reduce the need for skilled employees. Baum (2019) reiterates that another problem facing the hospitality industry is the lack of changes in the industry and its customers. This implies that the hospitality industry is not responding well to the demands of its customers, which contradicts one of the essential principles of hospitality—accommodation. In addition, Baum (2019) argues that the hospitality industry is becoming more of a service industry than a production industry. The industry adapts to the changing demands and requirements of the public, which is not necessarily good for businesses as it can result in loss or damage to profits. In fact, the study observes that most brands have fallen into stagnation due to faulty decision-making by many businesses.
Coincidentally, Wood (2020) asserts that hospitality trade unions, especially in the UK, have not been as effective as they once were. The fall of the hospitality trade unions has been attributed to company restructuring and the shift towards technology intervention. Nevertheless, the hospitality trade unions suffer from poor management and lack of professionalism. The author further argues that the trade unions do not have sufficient resources to match up to their competitors and are incapable of providing quality services for employees. Moreover, Britain's exit from the European Union imposed tighter restrictions on foreigners travelling to the UK, which could lead to a decline in tourism influx in the future (Wood, 2020). Consequently, acquiring ‘talented’ staff, who are mainly foreigners, would be an exercise in futility.
It is not entirely clear whether the UK's hospitality industry will be booming in the long term. Although some argue that it has already experienced a decline in customer satisfaction, Baum (2019) argues that it may be a matter of time before customer satisfaction improves again due to future shifts in technology and customer demands. Furthermore, Piga et al. (2021) argue that there is a possibility of a long-term decline in hospitality industry profits due to the increased international exposure and competition from other industries. In fact, companies such as Airbnb provide accommodation to travellers, and this competition will likely increase and therefore affect the profits of UK hospitality companies. It is, therefore, quite evident that UK's hospitality industry is rapidly evolving towards digitization in every aspect, ultimately in the service sector.
Alternative Solutions for Maintaining Workforce Mobility: An Emphasis on Technology
With large-scale job losses as a cause for concern, service robots seem to be a viable alternative to human labour. However, some studies have revealed a lack of human contact between hotel reception staff, waiters, and chefs. Fearful of the impacts of robots on the hospitality industry, many stakeholders were apprehensive about the implementation of robotics. Moreover, despite some hotel guests showing positive reactions to robot waiters, such responses were somewhat limited compared to customer satisfaction with human workers. Perceptively, with the introduction of robots, some customers may feel strange and uncomfortable interacting with robots and prefer human workers.
Khan and Hossain (2018) explore the role of ICT in improving the hospitality industry. To this end, the author employed a primary research technique and conducted a study with hospitality management students. Resultantly, the study revealed that students accept the use of ICT to improve service workers' performance by reducing their working hours or workloads and allowing them to enhance customer relationships. The study observed that ICT was widely adopted in the hospitality industry as most hotels have standardized computers and printers and use modern technology to maintain data security (Khan and Hossain, 2018). It would be not preposterous to argue that the Internet of Things and Big Data could equally be utilised to improve service bots since they can efficiently determine consumer personas and provide personalized service.
Moreover, Baum (2019) asserts that the hospitality industry is an ideal location to explore and attempt to implement ICT solutions. Not only are there numerous opportunities for technology innovation, but also there are numerous problems that could be utilized to improve and update existing products and services. The study also asserts that hospitality employees tend to believe in their strengths and skillsets to a conceited end (Baum, 2019). Consequently, this tendency of individualism reflects the trend of hospitality industry professionals and leads to a decrease in performance. Further, the study ass...

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