Challenges involved in managing a restaurant operation in New York City (NYC)
Having been described as the “restaurant capital of the world”, New York City (NYC) is no doubt a good investment location for people seeking to set businesses in the food and beverage industry (The Restaurant Opportunities Center of New York, 2005, p. 14). Among factors that make NYC a good investment location for restaurants include the huge resident population, the tourists who visit the city, and rapidly growing Manhattan among other things.
However, managing a restaurant in NYC has its own fair of challenges. Most specifically, managing a hotel to long-term profitability requires investors and the management teams they entrust with the day-to-day running of the restaurants to overcome regulatory, social (the diverse tastes and preferences), competitive, and geographical challenges in the city.
Among the regulatory challenges that the restaurant sector in NYC face include adhering to stringent requirements set by the New York City Department of Health and Mental Hygiene (DOHMH). Such requirements include facility design, personal hygiene, food protection, food sources, and food temperatures (EHA Consulting Group Inc., 2012).
To ensure that the restaurants adhere to set requirements, DOHMH inspects them every 150 to 210 days and grades them based on the HACCP score sheet. A poor score for three consecutive inspections leads to the closure of the restaurant (EHA Consulting Group Inc., 2012).
Socially, restaurants in NYC have to contend with a wide range of consumer demands, which are driven by diverse tastes and preferences from each customer. As such, ensuring that each consumer demands are met is a challenging task especially when consumers demand for customized services.
Another social challenge faced by NYC restaurants relates to the quality of employment it creates. While the restaurant sector is touted as continuously creating hundreds of thousands of jobs annually in the city, most of such jobs are low-paying, and in 2005, restaurants were depicted as the lowest paying employers in NYC’s private sector (The Restaurant Opportunities Center of New York, 2005).
To worsen matters, it has been noted that restaurants contravene laws such as just pay for work by refusing to pay workers for the extra time worked, and failure to provide workers with workplace benefits such as vacation days, paid sick days, and healthcare insurance coverage (The Restaurant Opportunities Center of New York, 2005).
In spite of the huge population in NYC, competitive pressures further pose challenges to players in the restaurant sector. Except for restaurants that offer niche cuisines, the rest offer similar foods and drinks hence meaning that the diversity among competitors is minimal.
Additionally, the concentration of competitors mainly in the Manhattan means that the competitive pressure especially for new market entrants is stiff. As Parnell (2003) observes, when there is no differentiation among competitors, there is low switching costs among consumers and this then means that they (consumers) do not develop loyalty towards a specific products or services.
Another challenge faced by the restaurant sector in NYC relates to geographic issues, and most especially accessibility. Like every other place, the strategic investment locations in NYC attract premium costs and hence only wealthy investors can afford to invest therein. Other investors have to do with investment locations that are less exposed to the food and drinks-consuming population hence meaning that they have to put in extra efforts to market their restaurant establishments.
The impact of computerization on food service and lodging operations in NYC
Generally, computerizing food service and lodging operations in NYC and elsewhere has contributed to three outcomes namely: enhanced employee efficiency; enhanced customer satisfaction; and enhanced accounting systems (Brewer et al., 2008).
Employee efficiency has been improved since computerization has enabled them to streamline customer check-in, in-room and check-out processes. Consequently, customers in NYC restaurants where computerization in different customer service departments has been done are largely a satisfied lot.
Such satisfaction enhances the customer experience and possibly accounts for repeat customers in future. In relation to revenue generation and accounting for the same, the computerized systems reduce loopholes that may jeopardize optimal revenue collection from the business.
Computerization of the food and lodging operations in NYC has also reduced the relative risk of burglary especially since some hospitality service providers have adopted a cashless payment system where point of sales systems are now used to process debit or credit cards to settle transactions (Brewer et al., 2008).
The quality of technology in different restaurants in NYC is by no means communal; as such, different restaurants and hospitality service providers have different quality technologies, something that contributes to their competitiveness or lack thereof. Such differences therefore make it hard to generalize the quality of technology in New York food service and lodging service providers.
The aforementioned notwithstanding, it must be noted that NYC food and lodging service locations are highly computerized, and this could partly be as a result of consumer demand hence meaning that visitors to the city or resident customers are equally high technology users.
The Interdependence of food service, lodging, and meeting segments of the hospitality industry
Food and lodging services are interdependent segments in the hospitality industry owing to the logic that a visitor (or even a resident) who needs use the food and drinks services may also need lodging facilities and services for the night and vice versa.
While food and lodging services can be availed to individuals or groups, meeting services are usually availed to groups, and often translate into a bigger business for the hospitality service providers.
Usually, the meeting participants need food and drinks, and may even need accommodation for one or more nights. While individuals or groups can attain food and beverage, lodging, and meeting services separately from different providers, convenience often calls for a centralized service provider who can give group customers a full package at an agreed price.
This then means that pricing the food, lodging, and meeting package needs the input of managers/supervisors in the different segments.
Improving synergy among the food, lodging and meeting segments
Usually, the hospitality service providers need to enhance service provision in the entire food, lodging and meeting services, since failures in one segment may cause customer dissatisfaction hence negating other quality service provisions in other segments. For such service packaging to be attained, managers/supervisors in the different segments may need to work together and lead their teams towards identified collective objectives.
Specifically, it is recommendable that the segments: I) enhance communication amongst themselves in order to improve inter-segment work relationships; and II) enhance team work among the three segments in order to ensure that the collective objectives of enhancing customer satisfaction is attained.
The likely consequences of the introduction of gaming entertainment in NYC
According to Cline (2012) the introduction of gaming entertainment often impacts the hospitality industry by “creating new development and investment opportunities for hotel projects” (n.pag.). NYC is no different and it would be expected that an introduction of gaming entertainment would create new investment opportunities while drawing game lovers into the industry.
By so doing, it would be expected that the gaming entertainment will attract more customers who in addition to gaming, will probably use other services such as food, beverage and lodging. Notably, for the gaming entertainment to make economic sense, players in the hospitality industry will need “to create operational structure designed to deliver an economically viable product” (Cline, 2012, n.pag.).
Indirectly, gaming entertainment may act as a marketing tool since gamers who attend specific hospitality providers may notice other facilities such as conference or meeting facilities and may therefore recommend the same to others in future.
Overall, and as noted by Cline (2012), gaming entertainment will stop the economic flight that happens whenever New York residents go to game in other States because gaming is illegal in the city. When such capital flight is curtailed, the monies that New York residents spend in entertainment, food and lodging will remain in the State and will therefore aid in the development of the hospitality industry in the state and other sectors as well.
Conclusion
In conclusion, the hospitality industry is booming, something that has been aided by the growth of the Manhattan over the years, the expanding population, and the diversity of the same population. As noted herein however, the restaurant sector has its fair share of challenges which include competition, strict regulation, geographic factors, and the diverse customer tastes and preferences.
Such challenges notwithstanding, it is worth noting that gaming could still open new opportunities for the hospitality industry in NYC, something which could enhance the industry’s economic contribution to the city and the larger state.
References
Brewer, P., Kim, J., Schrier, T. R., & Farrish, J. (2008). Current and future technology use in the hospitality industry. Web.
Cline, R. S. (2012). US gaming — an economic force—Industry takes stock after rapid growth. Hotel Online- Ideas & Trends. Web.
EHA Consulting Group Inc. (2012). Making the grade in New York- Navigating the NYC restaurant ABC grading system. Web.
Parnell, J. A. (2003). Strategic Management: Theory and practice. New Delhi: Dreamtech Press.
The Restaurant Opportunities Center of New York. (2005). Behind the kitchen door: pervasive inequality in New York’s city’s thriving restaurant industry. Web.