I have been in the restaurant business on and off for 23 years. In that time I have been a server, a line cook, a floor supervisor, a kitchen manager and a FOH (Front of the House) manager. I am a culinary school graduate. I am currently a full-time student and part time baker for my own cake shop. I really love the food industry. I love providing good service and I expect it whenever I eat out. I really enjoy great food and trying new cuisines. To say that I am critical when I eat out at a restaurant, whether it's quick service or if it's fine dining, is an understatement.
According to the National Restaurant Association's website the restaurant industry employs over 13 million people in over 960,000 restaurants nationwide. This is a service industry that both produces a good (food) and provides a service (hosting, serving, cooking, managing). In chapter 5 of Principles of Microeconomics (6th edition, Mankiw) talks about food as having a "fairly inelastic demand because there are no good substitutes." Once you narrow the categories: fast food, coffee shops, self-serve ice cream shops, catering, take-out, casual dining, bakeries and many other types of food establishments, you will find more elasticity.
How does the restaurant industry price its products? Sure, it takes into account what their competitors are selling their products for, for example an ice cream shop has to stay competitive by not pricing their prices too high (or no one will buy) or to low (the business will not make any money and will probably lose money). Food cost, production, portion size, location (Beverly Hills, CA or Lansing, MI--there is a huge difference in the clientele) all play a part in how a restaurant prices its food.
The food industry market changes all the time. There are fads and trends that influence the restaurant business. Currently the "popular" thing in restaurants is organic, farm-fresh, local, made-from-scratch, gluten-free, and dairy-free foods. The economy definitely plays a part in how people eat. People are shying away from haute cuisine and fine dining (except for special occasions) and having to travel long distances for fancy foods. I think a lot of people are still eating out at fast-food restaurants or are staying at home and cooking for themselves. With grocery stores like Whole Foods and with the numerous cooking shows on the Food Network the everyday person is getting more comfortable cooking gourmet foods for themselves at home. Granted, not everyone wants to cook gourmet meals and probably don't have the time to cook this way on a daily basis.
"Restaurant PAC Mission." Web. 31 Mar. 2013. http://www.restaurant.org/advocacy/Support-Industry-Advocacy/Restaurant-PAC.
"Top Trends for 2013.". Web. 31 Mar. 2013. Nationalrestaurantconsultants.com
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