Restaurants & Catering – Social Media the new word of mouth
15 May 2013
The self-employed restaurant owner has certainly been impacted by the difficult economic climate over the last few years. Reduced consumer confidence has tightened the purse strings of households meaning customers are less willing to spend their hard earned cash on luxuries like clothing and eating out. In addition, trends can alter the shape of the sector rapidly, meaning that businesses need to be able to change quickly to keep up with the rest of the market.
Justin Pleass, legal and policy advisor at Restaurant and Catering Australia (R&C), advises that the performance of the industry has been affected by difficult conditions over the last twelve months. In current prices, the trend estimate for Cafes, restaurants and takeaway food services rose 0.3% in February 2013. The seasonally adjusted estimate rose 1.3%. By industry subgroup, the trend estimate rose for Cafes, restaurants and catering services (0.5%).
The main cost that is hurting cafes and restaurants are penalty rates for weekend and public holiday rates for employees. IBIS World estimates that on average wage costs account for 26.20% of industry revenue in 2012-13.
The R&C advised that during the global financial crisis the restaurant & catering industry experienced restricted growth as economic uncertainty brings in an element of price sensitivity, meaning any growth was mainly driven by more affordable dining options. Their research further indicates that the turnover in terms of opening and closing of restaurants are equal which means for every eating venue that closes it is replaced by another.
In the last few years alone there have been some big changes to the industry including tapping the power of social media, the introduction and success of pop-up dining restaurants, & the conscious consumer. Pop-up restaurants have encourages aspiring chefs to showcase their work without fear of bankruptcy. The surprise & temporary nature of these events makes social media their primary advertising tool namely Facebook, Twitter and bloggers. This has created a new word of mouth for the industry. Television cooking shows like MasterChef, My Kitchen Rules and Ready Steady Cook have certainly contributed to the industry performance.
IBIS World Pty Ltd forecasts that the restaurant industry will grow by 2.9% annually over the next five years, a favourable improvement on 0.4% over the past five years.
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