Is there too much food?
Do we have too many F&B outlets in our communities, our shopping centres,
Let’s put the answer right up front: No.
Food may be on every street corner, but that does not mean it is successful. The essence of the Hospitality industry is that it is not about the volume of food around, but the quality and consistency to drive sales and bring customers back time and time again.
Let’s look first at some of the reasons why F&B has been, is and will continue to be a growing part of our lives.
Growing demand for Food and Beverage is very much tied into the evolution of society. The long-term demonstrated pattern of spending in Australia and around the world has shown that as we get richer, we demand more experiences and social interactions than more “things”.
Furthermore, we have witnessed an internal migration into ever-expanding urban areas. These two core lifestyle/life-cycle factors has powered the growth of F&B over the last 10 years to outpace the growth of retail in general and the core retailing categories of Clothing and Household Goods.
This growth has been achieved because F&B, unlike groceries, is scalable. In shopping for groceries, customers generally have a fairly defined budget as to what they will buy and how much they will spend.
Consumer spending on F&B – despite our utilitarian need for sustenance – is very much a discretionary type of spending and money for F&B can come out of several different budgets: Entertainment, socialising, networking, fund-raising, along with food catering itself.
Furthermore, F&B spending can crowd out spending on other discretionary items such as fashion and homewares – a situation that has been occurring for the past several years – because food and hospitality creates positive experiences that people like to repeat.
The level of hospitality, the quality of the food, the type of cuisine can combine to create a package that services our core needs while also appealing to our creativity, sociability and desire for entertainment and fun. As such, there is no set limit to Hospitality and consumers can, and do, spend money on F&B as their indulgence.
Equally, there are a number of other factors that drive expenditure on F&B. Millennials, being the children of Baby Boomers, were raised eating a lot of restaurant meals and takeaway as they grew up and came of age at a time where it was completely normal for mothers to work outside of the home. So, for them, the habit has continued as they've moved out of their parents' homes.
Finally, dual-income households have more disposable income thanks to the second job. Technically speaking, the 'opportunity cost' of home cooking relative to eating out or getting takeout has increased. At the same time many restaurants have been quick to respond to consumer demand for healthier, vegetarian/organic, or locally sourced food (sometimes all three), making them a more attractive destination
Another part of the equation for the demand for F&B is that households are but one (rather large) part of the F&B market. The Australian Bureau of Statistics tells us that 22% of all F&B spending (or about $17 billion) comes from businesses and international tourists. These two groups form an important component for supporting the very best in Australian Hospitality.
In looking at this question of too much food, many people point to the fact that Food and Hospitality businesses have some of the lowest survival rates of any industry in Australia – only about 52% of F&B businesses that were trading in 2014 are still with us today. This is only part of the story. Despite this loss of venues, there are more Hospitality businesses trading today than ever before.
There are a number of reasons for this trend of increasing number of F&B businesses. First and foremost, as we have shown, the market keeps growing on the back of very sound fundamentals. Developers and landlords have identified that Food = Sales = Rent. As such, the property industry has been very eager to provide spaces
Additionally, there are relatively few barriers to entry into Hospitality. This means that with new concepts continually opening up, the deadwood gets found out quickly. Those people who do not stay on-point with the first principles of Hospitality are not able to satisfy their customers consistently or sustainably.
Just as importantly, the best restaurateurs and chefs are entrepreneurs - a bunch that like to create things. They are not managers – those who prefer to run on-going, settled operations. Those who are creative types like to move on after a while because the thrill for them is in building a business, not running it.
The exception that proves the rule is Melbourne’s Attica where Ben Shewry has kept his restaurant going for almost 15 years, but has constantly challenged himself, his staff and his customers in providing hospitality that has never become stale.
As we have written about before, F&B is an industry that is in constant flux. Customers are looking for both new tastes and concepts while also wanting their favourites to keep up with the times. Complementing consumers’ desires has been the marketing around food which is both pro-active and convincing.
All of these factors ensure that Food and Hospitality is never stagnant.
This brings us back to our initial question: Is there too much food in our lives? Only if you believe that the status quo is all that we will need to satisfy our hunger for experiences, that the restaurateurs/chefs have done all they can/need to do to create dishes and delight people and that Australia will defy centuries of human history and decide that eating out and socialising are activities for your grandparents.
This in no way implies that opening up an F&B outlet is a guarantee of success – that is dependent on a number of items that are appropriate to each location – cuisine, level of service, design and style, to name but a few.
What we are saying is that there is no natural limit to the F&B industry. The limitations are only those that we impose on ourselves.
Cover image: Top Paddock (Image via Visit Victoria)