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Restaurant Outsourcing is a Growing Trend within the Hospitality Sector



Abstract

This report discusses about the concept of restaurant outsourcing in the hospitality industry. It defines the concept of outsourcing. Further it discusses the importance if outsourcing in the hospitality industry describing its benefits as well as the disadvantages along with the risks associated with it. It also discusses the market risk that is associated with outsourcing. It relates the theory with example of two hotels that have outsourced restaurants, its benefits along with the challenges that need to be taken care off in order to ensure an effective and an efficient service.

Keywords: Outsourcing

Restaurant Outsourcing is a Growing Trend within the Hospitality Sector

Introduction

Strategic Outsourcing

Outsourcing is primarily a strategic move. It is therefore a decision of the branch that goes to the core business of the company and its business scope.

What is outsourcing?

Strategic Outsourcing is distinct from the traditional outsourcing. Indeed, it relates to activities that contribute substantially to the creation of a part of the value added by the company. These are activities such as computer support, transportation, logistics, telecommunications, property management, or activities that contribute greatly to the quality of the service or product, and therefore the creation of customer value. However, they should not quite belong in the heart of the company's business because, in this case, it would be an outright restructuring of the portfolio (Allen, 2000, p. 25).

Elements of Outsourcing

Four elements that characterize strategic outsourcing are:

Transfer of ownership of all or part of an activity formerly conducted in-house, which is frequently accompanied by a transfer of employees;

A package deal, much more detailed and long as a contract of subcontracting;

A long-term commitment between the company and its supplier: our sample of one hundred outsourcing operations reported an average of 6 to 7 years;

Defined contractual benefits and obligations of each (Atuahene, 2004, p.33).

Drivers & Strategic Intent behind Outsourcing

The reason behind resorting to such factors is the fact that hotels have been facing challenges with respect to profitability hence they are searching for ways to boost productivity and lower down the fixed costs. Three main problem areas of the hotels are the costs associated with running the hotel smoothly, the quality of products and services along with the speed of the services provided. Hotels recently have been eliminating functions and processes of the organization by establishing franchises or contracting /leasing arrangements to eradicate the problems of associated with costs, the quality as well as time effectiveness of service (Barney, 1999, p.137).

. The hospitality process constitutes different service sectors which an entity needs to compete with as well as different customers needs to fulfill. The Hospitality industry is basically in search of new tools and techniques to utilize to ensure strong survival in the ever-growing and intensely competitive market. In order to better serve their target market in terms of effectiveness and efficiency the hospitality industry is resorting to different techniques such as leasing, outsourcing along with management ...