Supply and Demand
Food and Beverage

The nature of demand

They are many types of foodservice operations all designed to meet specific range of customer need.

The important factor to remember the type or operation meets a specific need a person has at a specific time, rather than the type of person they are. For example during the week a person may be a business customer, looking for a snack while travelling from A to B, or they seek a formal lunch environment to entertain new clients.

At the weekend the same person may want to feed their family because they are out shopping, at the cinema, conference or exhibition. They way wish to book a wedding, organise a conference.

So what can we conclude the reasons people eat out vary the type of food service operation needs to be appropriate to satisfy the customers need and occasion.

Differing establishments offer different service, in both the extent of the menu and price as well as varying service levels. Menu offering may be restrictive or wide.

Essentially there are three types of market in which a food service operation may meet demand.

  • Captive market. Essentially the customer has little choice, a hospital, school, prison etc.
  • Full market choice. The customer can go to wherever they wish.
  • Part captive market. A customer may be travelling by air, rail, and motorway or perhaps they are on holiday and their package includes food and beverages.

To summarise identifying what business your food service operation is in. It’s not just about what sector it occupies or the type of operation, it’s about identifying the range and types of demand the establishment seeks to satisfy. Understanding these factors helps identify direct and indirect competition that may exist.

The question you should pose to yourself, can your customers differentiate you from the competition?

What it is about your product service that is unique.

What is it that allows you to stand out in the minds of your customer?

For example a baker is known for speciality breads, bakewell tart, puddings etc. The greater your product service differentiation the greater your profit margin.

Provided there is a market for your offering. Differentiation that’s tacit in nature is difficult to replicate.

Explicit differentiation can be imitated by your competitors while flattering your ability overtime to determine price differentiation will be extinguished.

Success REQUIRES strategy

Christopher Bird Author