Demand fluctuation in restaurant industry; patterns, impacts, and management strategies : a case study in fine dining restaurants in Phuket

Abstract

It is widely accepted that demand fluctuation has strong impacts on the management of restaurant operations. Hospitality industry in Phuket must be characterized by seasonality, which is a major role in establish customer character. Seasonality can have divided to low season, green season, and high or peak season. Those cycles time will be effect to different expectation and demands. Thus, it leads to the variation in customer arrival. The peak seasonality (normally start from December) attracts numerous of tourist to the destination. Then the service providers have to prepare high tourist demand and also good qualified service. As a result of demand variation, restaurant sector also faced with loss of sales, service quality deterioration leading to damaged reputation, unpredictable business performance and consequently cash flow problems. These issues have become increasingly significant and thus understanding the nature and impacts of demand fluctuation is essential to the management of restaurant business operations. In this study, the researchers empirically investigated patterns, impacts, and management strategies of demand fluctuation specifically on standalone fine dining restaurants in Phuket, Thailand. The study employed a qualitative method involving 19 in-depth interviews. The key results showed that patterns of demand fluctuation were slightly different between the restaurants located in Phuket Town and those located in beach front areas, but this reflects the different types of clients namely the locals and tourists. Furthermore, demand fluctuation lead to different impacts on business. The operation cost became a major issue when the revenue dropped; follow by the awareness of raw material usage and the inconsistency in service delivery patterns. Therefore, it needed for demand fluctuation management strategies to recover the instability of income. However, restaurants in both locations commonly remained open for business during periods of low customers and attempt to smooth the operation with intelligent enhancement strategies