Meaning of Hospitality and Catering Industry

The hospitality industry is one of the largest employers of labor globally. Its sectors range from specialized institutional areas, such as hospitals, industrial outfits, schools, and colleges, to the more glamorous five-star resorts.

The food service industry (catering) is one of the most challenging of these sectors. In this first article of the course, the discussion focuses on the different types of catering establishments.

Key Characteristics of the Hospitality Industry

The hospitality industry has four distinct characteristics that make it a unique operation:

1. Customer-Centric Operations: Hospitality cannot be delivered without customers, who provide the source of revenue for the continued financial viability of the operation.

The customer is directly involved in many aspects of the delivery of the hospitality service and serves as the judge of the quality of the hospitality provided.

2. Balancing Demand and Resources: Achieving a satisfactory balance between demand patterns, resource scheduling, and operations is a particularly difficult task in the hospitality industry.

3. Combination of Skills: All hospitality operations require a combination of manufacturing expertise and service skill. In many cases, they operate twenty-four hours a day.

To deliver a consistent product to each individual customer requires teams of people well-trained to deliver to a set standard every time.

4. Importance of Customer Interaction: No matter how well-planned the operation is or how good the design and environment may be, if the interaction between the customer and the service provider is not right, this will have a detrimental effect on the customer experience of the total product and a missed opportunity to sell future products.

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Overview of the Catering Industry

The food service industry encompasses those places, institutions, and companies that provide meals eaten away from home. This industry includes restaurants, schools and hospital cafeterias, catering operations, and many others, including both ‘on-premises’ and ‘off-premises’ catering. The food service industry is divided into three general classifications:

1. Commercial segment
2. Non-commercial segment
3. Military segment

Catering management may be defined as the task of planning, organizing, controlling, and executing catering operations.

Each activity influences the preparation and delivery of food, beverage, and related services at a competitive yet profitable price.

These activities work together to meet and exceed the customer’s perception of value for their money.

Catering Industry Segments

Catering management is executed in diverse ways within each of the segments. The first, the commercial segment, traditionally considered the profit-generating operation, includes:

1. Independent caterers
2. Restaurant/catering firms
3. Hotel/motel caterers
4. Private clubs
5. Home-based caterers

The non-commercial segment, or the ‘not-for-profit’ operations, consists of the following types of catering activities:

1. Business/industry accounts
2. School catering
3. College and university catering
4. Health care facilities
5. Transportation catering (in-flight catering)
6. Recreational food service (amusement and theme parks, conference and sports arenas)
7. Social organizations (fraternal and social clubs)

The military segment encompasses all catering activities associated with the armed forces and/or diplomatic events. The table below illustrates how the food service/catering industry is segmented:

Types of Catering Services

There are two main types of catering: on-premises and off-premises catering, which may concern both large and small caterers.

1. On-Premises Catering: This involves any function banquet, reception, or event held on the physical premises of the establishment or facility organizing/sponsoring the function.

For instance, a caterer within a hotel or banquet hall will prepare and cater to all requirements without taking any service or food outside the facility. Examples include hospital catering, school, and university/college catering.

2. Off-Premises Catering: This involves serving food at a location away from the caterer’s food production facility. The function takes place in a remote location, such as a client’s home, a park, an art gallery, or even a parking lot, and the staff, food, and decor must be transported to that location.

Off-premises catering often involves producing food at a central kitchen, with delivery to and service provided at the client’s location.

Part or all of the production of food may be executed or finished at the event location. For instance, small chops like samosa and puff-puff are part-prepared and fried at the venue.

Catering can also be classified as social catering and corporate (or business) catering. Social catering includes events such as weddings, high school reunions, birthday parties, and charity events.

Business catering includes events such as association conventions and meetings, civic meetings, corporate sales or stockholder meetings, recognition banquets, product launches, educational training sessions, seller-buyer meets, service awards banquets, and entertaining in hospitality suites.

On-Premises Catering Operations

All required functions and services that caterers execute are done exclusively at their own facility. For instance, a caterer within a hotel or banquet hall will prepare and cater to all requirements without taking any service or food outside the facility.

Many restaurants have specialized rooms on-premises to cater to the private-party niche. A restaurant may have a layout strategically designed with three separate dining rooms attached to a centralized commercial food production kitchen.

These separate dining rooms are available at the same time to support the restaurant’s operation and for reservation and overflow seating.

In addition, any of the three dining rooms may be contracted out for private event celebrations and may require their own specialized service and menu options.

Off-Premises Catering Operations

Off-premises catering involves serving food at a location away from the caterer’s food production facility. One example of a food production facility is a freestanding commissary, a kitchen facility used exclusively for the preparation of foods to be served at other locations.

Other examples include hotel, restaurant, and club kitchens. In most cases, there is no existing kitchen facility at the location where the food is served.

Caterers provide single-event food service, but not all caterers are created equal. They generally fall into one of three categories:

1. Party Food Caterers: These supply only the food for an event. They drop off cold foods and leave any last-minute preparation, plus service and cleanup, to others.

2. Hot Buffet Caterers: These provide hot foods delivered from their commissaries in insulated containers. They sometimes provide serving personnel at an additional charge.

3. Full-Service Caterers: These not only provide food but frequently cook it to order on-site. They also provide service personnel at the event, along with all necessary food-related equipment china, glassware, flatware, cutlery, tables, chairs, tents, etc.

They can arrange for other services, like decor and music, as well. A full-service caterer can plan and execute an entire event, not just the food.

Types of Catering Establishments

Various catering establishments are categorized by the nature of the demands they meet. The following are some of the catering establishments:

1. Restaurants: A restaurant is an establishment that serves customers prepared food and beverages to order, to be consumed on the premises. The term covers a multiplicity of venues and a diversity of cuisine styles.

Restaurants are sometimes a feature of a larger complex, typically a hotel, where dining amenities are provided for the convenience of residents and to maximize the hotel’s potential revenue. Such restaurants are often open to non-residents as well.

2. Transport Catering: This involves the provision of food and beverages to passengers before, during, and after a journey on trains, aircraft, ships, and in buses or private vehicles.

These services may also be utilized by the general public in the vicinity of a transport catering unit. The major forms of modern-day transport catering include:

i. Airline Catering: Catering to airline passengers on board the aircraft, as well as at restaurants situated at airport terminals, is known as airline catering.

Modern airports have a variety of food and beverage outlets to cater to the increasing number of air passengers.

Catering to passengers en route is normally contracted out to a flight catering unit of a reputed hotel, a catering contractor, or a catering unit operated by the airline itself as an independent entity.

ii. Railway Catering: Catering to railway passengers both during the journey and during halts at railway stations is called railway catering.

Traveling by train for long distances can be tiring; hence, a constant supply of a variety of refreshment choices helps make the journey less tedious. On-board meal services are also provided on long-distance trains.

iii. Ship Catering: This involves catering to cargo crew and passenger ship passengers. Ships have kitchens and restaurants on board.

The quality of service and facilities offered depends on the class of the ship and the price passengers are willing to pay. Cruises range from room service and cocktail bars to specialty dining restaurants.

iv. Surface Catering: Catering to passengers traveling by surface transport, such as buses and private vehicles, is called surface catering. These eating establishments are normally located around a bus terminus or on highways. They may be either government-run restaurants or privately owned establishments.

3. Outdoor Catering: This form of catering includes the provision of food and drink away from the home base and suppliers. The venue is left to the customer’s choice.

Hotels, restaurants, and catering contractors meet this growing demand. The type of food and setup depends entirely on the price agreed upon. Outdoor catering includes catering for functions such as marriages, parties, and conventions.

4. Retail Store Catering: Some retail stores, apart from carrying out their primary activity of retailing their own wares, provide catering as an additional service. This type of catering evolved when large departmental stores wished to provide food and beverages to their customers as part of their retailing concept.

It is inconvenient and time-consuming for customers to take a break from shopping to have refreshments at a different location.

Thus, the need arises for a dining facility in the retail store itself. This style of catering is becoming more popular and varied nowadays.

5. Club Catering: This refers to the provision of food and beverages to a restricted member clientele. Examples include golf clubs, cricket clubs, and similar establishments. The service and food in these clubs tend to be of a fairly good standard and are economically priced.

Nightclubs are usually situated in large cities with an affluent urban population. They offer entertainment with good food and expensive drinks.

6. Welfare Catering: The provision of food and beverages to people to fulfill a social obligation, determined by a recognized authority, is known as welfare catering.

This grew out of the welfare state concept, prevalent in Western countries. It includes catering in hospitals, schools, colleges, the armed forces, prisons, institutes, and less privileged homes.

7. Industrial Catering: The provision of food and beverages to people at work in industries and factories at highly subsidized rates is called industrial catering.

It is based on the assumption that better-fed employees at concessional rates are happier and more productive. Catering for a large workforce may be undertaken by the management itself or contracted out to professional caterers.

Depending on the choice of the menu suggested by the management, catering contractors undertake to feed the workforce for a fixed period at a predetermined price.

8. Leisure-Linked Catering: This type of catering refers to the provision of food and beverages to people engaged in rest and recreation activities. This includes the sale of food and beverages through different stalls and kiosks at exhibitions, theme parks, galleries, and theaters.

The increase in the availability of leisure time and a large disposable income for leisure activities has made this a very profitable form of catering.

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Additional Aspects of the Catering Industry

1. Chain-Catering Organizations: Many establishments with chains spread over wide areas, and in some cases overseas, exist. Prospects for promotion and opportunities are often considerable, whether in a chain of hotels or restaurants.

These include well-known hotel companies, restaurant chains, popular types of restaurants, chain stores, and shops with restaurants that often serve lunch, teas, morning coffee, snack bars, and cafeterias.

2. Specialty Restaurants: Moderately priced specialty eating houses are in great demand and have seen tremendous growth in recent years. To ensure a successful operation, it is essential to assess customers’ requirements accurately and plan a menu that will attract sufficient customers to generate adequate profit.

A successful caterer gives customers what they want, not what the caterer thinks they want. The most successful catering establishments offer the type of food they can sell, which is not necessarily the type of food they would like to sell.

3. Country Hotels: Country house hotels have been and are being developed in many tourist Jon areas. Many are listed buildings, stately homes, or manor houses.

4. Consortia: A consortium is a group of independent hotels that purchase products and services, such as marketing, from specialist companies, providing members access to international reservation systems. This enables the group to compete against larger chains.

5. Motels/Travel Lodges: These establishments are sited near motorways and arterial routes, focusing on business persons requiring an overnight stop or tourists on driving holidays.

These properties are reasonably priced, consisting of a room only with tea and coffee-making facilities. Staffing is minimal, and there is no restaurant, though other services are often nearby, managed by the same company.

6. Timeshare Villas/Apartments: A timeshare owner purchases the right to occupy a self-catering apartment, room, or suite in a hotel or leisure club for a specified number of weeks per year over a period of years or indefinitely.

7. Health Farms: Often luxury hotels where clients can access specialist health treatments for those who are stressed, overworked, or wish to lose weight.

8. Guesthouses: Guesthouses are found all over the country. The owners usually live on the premises and let their bedrooms to passing customers. Many have regular clients. Guesthouses usually offer bed, breakfast, and evening meals. They are small, privately owned operations.

9. Farms: Farmers, recognizing the importance of the tourism industry in the countryside, formed a national organization called the Farm Holiday Bureau. Most members have invested to transform basic bedrooms to meet required standards.

The National Tourist Board inspects every member property to ensure good value and quality accommodation. In most cases, the accommodation is on a nearby working farm.

10. Youth Hostels: The Youth Hostels Association runs hostels in various locations in Nigeria, e.g., Young Men Christian Association (YMCA), Young Women Christian Association (YWCA).

These establishments cater mainly to single people and groups traveling on a tight budget. In some locations, there are sports facilities.

Public Sector Catering (Cost Sector)

Public sector catering in places like hospitals, universities, colleges, schools, prisons, and military barracks has been known for many years as welfare catering and was characterized by its non-profit-making focus, minimizing costs by achieving maximum efficiency.
However, with the introduction of competitive tendering, many public sector operations have been won by contract caterers who have introduced new concepts and commercialism to the public sector. This sector is more commonly known as the cost sector.

Prison Catering

Catering in prisons may be run by contract caterers or by the Prison Service. The food is usually prepared by prison officers and inmates. The kitchens are also used to train inmates in food production to encourage them to seek employment upon release.

Prisons have lost their Crown immunity, which previously prevented prosecution for poor hygiene and negligence.

The Food Service Management Sector

Food service management covers areas such as feeding people at work in business and industry, schools, colleges and universities, hospitals and healthcare, welfare and local authority catering, and other non-profit-making outlets.

Work in traditional sectors, called cost, non-profit-making, ‘non-commercial’ catering, or ‘social’ catering, continues. However, as contractors develop their interests in commercial catering, the term food service management more accurately describes the total contract catering industry.

Definitions in this sector are becoming increasingly blurred as contract catering enterprises move into other areas, including catering for the public in outlets such as leisure centers, department stores, airports, railway stations, public events, and places of entertainment.

Contractors also provide a range of other support services, such as housekeeping and maintenance, reception, security, laundry, bar, and retail shops.

Contract Catering Services

The most important market in contract catering is business and industry, where the number of outlets is increasing. Branded outlets are another growth area, reflecting the commercial influence of contracting.

Many catering concerns undertake catering for businesses, schools, or hospitals, allowing these establishments to focus on their core activities, such as education or nursing.

By employing contract caterers, organizations can relieve themselves of the worry of entering a field outside their expertise. Contract caterers are used by nearly every type of organization, including the armed forces. However, arrangements vary.

1. Contract Catering Arrangements

No two services or clients’ requirements are the same; therefore, contracts differ from company to company.

2. Contractor’s Charges and Fees

Contractors generally offset their administration costs and gain profits from three sources:

1. Fees charged
2. Cash spent by customers
3. Discounts from food and materials supplied to the client’s operation

Fees are charged in various ways:

1. A set annual figure charged on a weekly or monthly basis
2. A percentage of takings or costs
3. A combination of both, with different percentages applying to various sections of costs
4. A per capita or per meal charge

Franchising in Catering

Franchising involves a manager paying a license fee and earning above an agreed percentage on the food sold. Various catering concessions and outside contract arrangements at clubs, leisure centers, colleges, and offices are similar to franchising.

A form of franchising is also practiced in the pub business, in addition to other systems like the managed pub. Many companies supplying caterers with products like soft drinks, ice cream, or coffee distribute their products through purchased operators.

Some suppliers providing food and drink to caterers have ‘brand franchises,’ sometimes backing their product with appropriate equipment and advertising material to ensure consistent preparation, presentation, and promotion.

Operating styles vary considerably, from pizza, hamburgers, and baked croissants to full-menu restaurants, coffee shops, and pancake houses. Despite the differences, all franchise schemes work on the same basic principle.

An established catering company offers a complete package of experience, operating systems, and ongoing marketing support sufficient to enable outside operators to set up and operate their own units within the chain.

The investor makes an initial franchise payment and then pays a continuing royalty or commission, often expressed as a percentage of gross turnover.

All investment in property, buildings, and equipment is borne by the franchisee; in some cases, the franchise may play a role in securing the property.

Advantages of Franchising

1. Franchising allows many units to be set up nationally, maximizing economies of scale in purchasing promotional material and developing the brand image.
2. The franchisee benefits by sharing the opportunity to invest in a pretested catering concept, backed by advertising, research and development, training, and other resources that may otherwise be beyond their financial capability.
3. Banks show interest in franchising, viewing it as a reasonably safe investment.

Examples of Franchise Catering

Many active franchise schemes are based on a fast-food style of menu and operating system. There is now a growing market involving wider menus and medium-spend restaurants, mainly licensed.

Examples include Pizza Express Chain, Dutch Pancake Houses, Mr. Biggs, Tantalizers, Tasty Fried Chicken (TFC), and Kentucky Fried Chicken (KFC).

The catering industry encompasses places that provide meals to customers at cost. It includes both ‘on-premises’ and ‘off-premises’ catering types.

On-premises catering refers to the preparation and serving of food at the place where the function is held, whereas off-premises catering involves producing food at a central kitchen and providing service at the client’s location.

The catering industry is divided into three segments: commercial, non-commercial, and military. Catering management is defined as the task of planning, organizing, controlling, and executing food preparation and serving.

Catering can also be classified as social catering and corporate (or business) catering. Catering establishments are categorized by the nature of the demands they meet, including restaurants, transport catering (airline catering, railway catering, ship catering, surface catering), outdoor catering, retail store catering, club catering, welfare catering, industrial catering, and leisure catering.

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