Alternative economies? What alternative economies?by Christine Demen Meier, Stéphanie Buri and Clémence Cornuz
L-R: Clémence Cornuz, Christine Demen-Meier, Stéphanie Buri.
We have been exploring the impact of ‘alternative economies’ on the Swiss restaurant industry but from a series of interviews we have conducted with professionals in the restaurant industry and other businesses – both Swiss and international – as well as with academics, we found that little is known about the topic.
Our study into ‘alternative economies’ refers to two types of businesses: those that belong to the sharing/collaborative economy (these two terms are used interchangeably), and Uber-like businesses. The difference between the two lies primarily in market orientation (for-profit vs. non-profit) and market structure (P2P vs. B2C). The term ‘alternative economies’ is also linked to concepts such as the ‘gig’ and ‘on-demand’ economies.
For our study, we interviewed 16 experts: 3 academics and 13 professionals. The academics have studied food systems, peer-to-peer economies, and businesses in the digital age; as for the professionals, five managed a restaurant and another eight a business in the alternative economies sector.
The interviews, either face-to-face or by phone, aimed to identify the awareness, interests and concerns of the experts when it comes to alternative economies, especially in relation to the restaurant industry.
We asked the interviewees about their experience, activities and expertise; their perceptions of alternative economies and their views about this field; as well as their vision of the foodservice industry, and of customer behavior and expectations.
The main findings from these interviews are presented below. They will be compared to the results of a more broad-based, quantitative study, which is currently underway.
According to several of the interviewees, price is the main selection criterion for customers, who are used to benefiting from free services and discounts. Despite being price sensitive, they also expect high quality products and services (e.g. delivery). This is related to health consciousness: for many patrons, it is normal to expect ‘balanced’ – and even vegan – meals, made with organic and local products.
According to some experts, decor and atmosphere are becoming increasingly important, sometimes more so than the food. These aspects of a restaurant indeed play a large part in the experience of going out, and memorable (and/or Instagram-able) moments are highly sought after. Hence also a relentless pursuit of novelty: customers are eager to discover new concepts and experiences. Paradoxically, nostalgia is also a powerful force, with traditional concepts, dishes and techniques making a comeback.
Impediments to the development of alternative concepts in Switzerland:
The geography of the country is a big obstacle to the development of alternative concepts. First and foremost, Switzerland is not very urbanized, and population density is low. As some experts pointed out, alternative start-ups in other countries only launch in places that guarantee a pool of 2-3 million customers, which not even Zurich can provide. Topography is another hindrance: not only does the mountainous nature of the country mean that some restaurants (and houses) are isolated and hard to access, but some cities can also be a challenge for delivery bikers.
Restaurateurs themselves will most likely hamper the growth of alternative businesses in Switzerland. Indeed, while some of them are interested in technology and some younger professionals do think outside the box when it comes to their business model and concepts, Swiss restaurateurs are, by and large, reluctant to use technology, invest in tools or services, or explore new business models.
According to our panel of experts, consumers’ perceptions and habits will also hinder the development of alternative foodservice concepts in Switzerland. One issue is that they are unwilling to pay for delivery and other such services, meaning that the costs would have to be passed on to others. Moreover, the Swiss tend to be reserved and wary of strangers, especially when it comes to something as essential as food. In addition, they still frequently use cash to pay for their purchases, which complicates payment logistics.
Finally, our experts consider that legislation is not suited to these new business models and practices. Current legal gaps and loopholes are a cause for concern for customers and restaurateurs alike; for example, the question of who would be responsible if food is tampered with during delivery (the company/platform, driver, restaurant or perhaps the buyer?) is a recurring concern. Further, while it is true that some gaps in the law can be exploited by start-ups, legislation will eventually have to be adapted to new business and consumption practices, and uncertainty about the future may deter some entrepreneurs.
Criticisms of alternative economies:
While nearly all experts use and appreciate the most well-known alternative businesses (such as Uber and Airbnb), some of the interviewees were critical of alternative economies. Experts condemned the unequal power relationship between the companies/online platforms and service providers, pointing out that, while the former advocate a collaborative economy, they discourage the latter from banding together to defend their own interests. Additionally, because they need to reach a critical mass of users, they attract customers with cheap prices, passing on the costs to service providers, who are often already in a precarious situation.
Alternative economies also jeopardize the social system, as service providers and companies do not always pay taxes. They certainly destabilize the job market and threaten to impoverish societies by being solely focused on reaping profits (instead of creating jobs and new infrastructure, with the result that traditional sectors might disappear.)
Elements that might favor the development of alternative economies in Switzerland:
Alternative businesses can also help increase restaurants’ profits in several ways. For instance, a delivery service may boost production capacity, but is expensive and challenging to implement, as it requires specific logistics and equipment; a food delivery company can be a way to reap the benefits of food delivery while circumventing the difficulties. Other advantages include improved management of resources (staff, space, tools), increased visibility, and being responsive to new customer demands and habits. Also, there is also little competition in the alternative foodservice market: international businesses have few Swiss users, and no Swiss concept has succeeded beyond the country’s borders – up to now.
However, the main takeaway from the interviews is that, apart from those who actively study the topic, the interviewees did not know much about alternative economies. Even having created or managed a business in the alternative sectors did not necessarily guarantee insights.
Considering how many food-related online platforms (e.g. UberEATS, Deliveroo, Take Eat Easy) have been mentioned in the media recently, restaurateurs’ knowledge of the topic is particularly superficial. While this might have been expected of traditional restaurateurs, it is also the case for catering professionals who are interested in technological tools and new concepts.
This confirmed our theory that alternative economies represent a very specific domain and that their potential development in the Swiss foodservice industry will be better assessed through a broad study of customer expectations, than of professionals’ perceptions.
The Saviva Food & Beverage Chair presented the findings of its initial research on the impact of the alternative economies on the Swiss restaurant industry on November 24, 2016.
Dr. Christine Demen Meier is an associate professor of entrepreneurship at EHL and is the head of the F&B chair. Clémence Cornuz is a research associate with the chair and Stéphanie Buri is co-ordinator of the F&B chair.