Issues and Challenges in Food Service Sector
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
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