The foodservice business in big Polish cities

Introduction

Foodservice is the largest industry in the hospitality sector in the European Union, including Poland (Eurostat 2017). Foodservice business is one of the most vigorous sectors of the Polish economy. In today’s world, foodservice companies play an important role in successfully meeting the changing nutritional needs of consumers. This industry generates the largest part of value-added and the majority of jobs in the hospitality sector. The development of the foodservice industry is undoubtedly related to the social and economic changes which have taken place in recent decades in Poland (Dąbrowska 2008; Gheribi 2013a). Stable economic conditions, labor market development, and accelerating the pace of life will further boost this sector (Gheribi 2013b).

The foodservice business is an important part of the tourism economy. In recent decades tourism has become one of the most important service industries in the global economy and the development of foodservice services and tourism are closely linked. There is a feedback loop (Kwiatkowska 2009) between the foodservice industry and tourism. Local and regional food could give added value to a destination and contribute to the competitiveness of an area. The local area or territory is the backbone of foodservice products being offered. The territory is an element that differentiates and is the source of local identity. It encompasses environmental and landscape values, history, culture, tradition, the countryside, the sea, and the area’s own cuisine. In this regard, the conversion of the territory into a culinary landscape is one of the challenges of tourism destinations. Foodservice businesses allow tourists to access the cultural and historical heritage of destinations through tasting, experiencing and purchasing. On the other hand, eating out has become a recreation, food is not only for satisfying hunger, but is also a kind of entertainment.

The development of tourism and the increased number of visitors to Poland, as well as domestic tourists, have forced the creation of new options. This in turn encourages tourists to visit places with developed infrastructure, hotels and restaurants (Gheribi 2015). This applies mainly to large cities, but can also apply to smaller ones, particularly those attractive to tourists. One of the important factors stimulating the relationship between tourism and food experience is the role of these elements in local development. Both food and tourism have a wide range of linkages to other areas of the economy which tends to increase the value of the activities to the local economy.

Foodservice businesses and gastronomic tourism can be an engine with potential to mobilize other sectors and resources, to contribute to a city’s overall experience and its attractiveness.

In 2014, the Committee on Culture and Education of the European Parliament approved a motion for a European Parliament Resolution on the “European gastronomic heritage: cultural and educational aspects” (European Parliament 2014). The Committee recognized the importance of food and foodservice establishments for artistic and cultural expression and as fundamental pillars of family and social relationships.

The aim of this paper is to present the development of the foodservice industry in major cities in Poland.

Methodology

The research materials in this work comprise secondary sources of information such as the data of the Central Statistical Office (CSO), business reports, and industry newsletters and publications. The research period covered the years 2000 – 2015. The analysis presented in this article is based on the main dataset for structural business, size class data and regional data, all of which are published annually in CSO. Quantitative data was subjected to statistical methods and descriptive statistics were used. A comparative method was applied for the analysis of the data and materials collected.

Conditions for the development of foodservice businesses

Performance in the foodservice industry in Poland is closely related to the general- and regional economy which in turn is dependent on macro trends. Factors favoring the development of foodservice companies in big cities are also associated with the development of urbanization, an increasing share of the population living in urban areas (Gheribi 2015). Most urbanization is the result of net rural to urban migration. The most important factor for the development of foodservice in Poland is the level of citizens’ wealth, which is above all affected by: the amount of GNP, the trend and tempo of changes in it, as well as the unemployment rate (Kwiatkowska & Levytska 2007).

Conditions of business development services, including foodservice, can be divided into demand and supply. Demand and supply are the backbone of the market and a feedback loop is observed between them. There is an active sphere of influence of supply to demand and consumer preferences. The scale and structure of foodservice businesses are primarily determined by consumers. Demand conditions for the development of foodservice businesses are related to the level of economic development in terms of the macro, such as national product and unemployment rate, and the micro level (income situation, structure of expenditure) (Gheribi 2013a). The most important factor for the development of foodservice services in Poland is the level of citizens’ wealth, which above all is affected by the level of GNP, the trend and tempo of changes in it, as well as the unemployment rate. The results of the research on household budgets also prove the importance of the level of wealth in determining the use of foodservice services.

In today’s wide-open market economy, it is important to respond to demand not only from households, but also the demand of travelers, including foreign tourists, who are increasingly eager to visit Poland. Poland is part of the global tourism market with a constantly increasing number of visitors. Tourism in Poland contributes to the country’s overall economy. The most popular cities are Cracow, Wroclaw, Gdansk, Warsaw, Poznan, Lublin and Torun. In 2015 Cracow was visited by 10 050 000 people, 7 430 000 of whom were Polish tourists, and 2 620 000 tourists from abroad. Most of them came to Cracow from Great Britain (15.76%) and Germany (13.16%) – according to surveys conducted by Malopolska Tourist Organization on behalf of Cracow City Council (Record year for Kraków’s tourist business 2015). During their stay in Cracow, visitors spent over 4 billion 450 million zlotys (excluding travel expenses and the price of accommodation paid in advance).

Food is a significant component of overall tourist spend. Food is a central element of the travel experience. A large part of the travel budget is spent on the day’s three meals (breakfast, lunch and dinner) and eating in general. People need to eat while travelling and this alone creates a close relationship between the tourism and foodservice sectors. Wolf (2006: 19) states that “nearly 100% of tourists dine out while travelling, and food and beverages consistently rank first in visitor spending”. Tourists want to enjoy the food from the tourist spot which is visited. Food has therefore developed from being a basic necessity for tourist consumption to being regarded as an essential element of regional culture (Jones & Jenkins 2002). Research conducted by Failte Ireland (2012) indicates that 2 billion EUR was spent on food and drink by tourists in Ireland in 2009. Overseas visitors accounted for 60% of the total spending estimated at 1.2 billion EUR in 2009, while expenditure on food and drink by domestic tourists is estimated at over 700 million EUR. Food and drink represents 36% of visitors’ expenditure apart from accommodation. This expenditure has led to an estimated 163 200 employees providing food services to tourists. During recent decades many of those involved in the management of tourism have started to see food as an opportunity to add value to a destination. Foodservice cannot become a bland and anonymous product; it must have personality (UNWTO 2012). The foodservice offer is one of the most important factors that influence the overall impression tourists get about a destination.

All this has influenced the development of foodservice companies especially in big attractive tourist cities. One of the indicators characterizing the development of a foodservice business is the number of enterprises. According to CSO data, in 2015 there were 68 342 foodservice enterprises, compared to 70 483 in 2010 (table 1). According to the data, the number of foodservice enterprises in Poland gradually increased in the period of 2000–2005 (the economic boom period) and thereafter gradually decreased (the economic crisis period).

The decreasing number of food service enterprises (excluding restaurants) proves that the economic crisis was also observed in the sector described (Gheribi 2015). Food stands (33.8% of the total number) and bars (32.6% of the total number) dominate the structure of foodservice enterprises. The next largest group consists of restaurants (27.5% of the total number), while canteens comprise only 6.1% of the total number of foodservice enterprises (own calculations from CSO data). According to CSO data, there were 18 789 restaurants in 2015, compared to 8 519 in 2000, 9 716 in 2007 and 14 937 in 2010. The restaurant industry shows a significant improvement in the quality and variety of services, but the industry is still not available to many Polish consumers (Gheribi 2013a). We can see an increase of the percentage of people using foodservice services (2013 – 44%; 2014 – 46%; 2015 – 56%) but in 2015 46% of people still didn’t use foodservice services (2016 rokiem dynamic-znego rozwojupolskiej gastronomii 2017).

The full service segment is made up of restaurants that fully prepare the meals and serve customers. Restaurants typically feature menu options based on a certain type of cuisine. Customers of full service restaurants are not typically in a rush and they expect a higher quality experience, which results in a higher price for the product. The quick service segment is made up of restaurants that offer buffets or take-out service. Most restaurants prepare the meal immediately after the order is placed, and the food is often prepared in front of the customer (Gheribi 2017).

In 2015 the number of foodservice outlets continued to fall while consumer expenditure on eating out and revenues from the foodservice business increased, reflecting the changes affecting the industry. The restaurant sector is one of the sectors of the economy which has experienced a steady increase in a trend continuing over a period of several years.

A major element that shows the increase turnover in foodservice businesses is the systematically growing revenue. The economic crisis has not spared any sector in Poland. Still, foodservice businesses were able to overcome it much better than other industries. Since 2000 the value of sales in the foodservice sector and in restaurant outlets too has been increasing (table 2), even in the period in which a drop in the number of restaurant outlets was observed compared to previous years.

The revenue of foodservice enterprises is generated mainly by producing their own food, followed by alcohol and tobacco sales. It is important to stress that the revenue generated by their own production of food has been rapidly increasing. In 2015, own production generated 80.1% of total foodservice activity revenue. In 2015, the foodservice industry in Poland maintained its growth in value, which was attributed to increasing consumer confidence and a rising inclination to dine out. In 2015, revenues amounted to 31 387 million zl (current prices) and were 44.75 % higher compared to the year 2010 and 104.06 % higher compared to the year 2000.

In conclusion, the increasing number of foodservice companies in large conurbations is due to demand from customers. On the other hand the rising demand for foodservice services contributes to an increase in revenue from foodservice activities, which encourages this type of activity. The increasing number of companies in this sector positively influences the quality of the service provided, as companies compete for customer satisfaction. Leading global foodservice brands such as McDonald’s, Pizza Hut, and Starbucks are opening their outlets in large conurbations, and other international brands are planning to open there (Colliers International 2015). Also, the strategies of Polish foodservice chains are based on opening facilities in large cities where the income of residents is above average (Sfinks Polska 2015; Nowochatko-Kowalczyk 2016).

Foodservice business in urban agglomerations

CSO data shows that foodservice companies are undergoing very intense development in major cities. On the one hand, this is related to the fact that the inhabitants in these cities are more engaged in their work and spend more time in work and therefore do not have time for shopping and preparing food. The profile of people eating out in Poland by place of residence is shown in Figure 1. On the other hand analysis of CSO data shows that expenditure on restaurants in Polish households in major cities was statistically higher than in smaller cities and villages (Figure 2). The most important determinant of spending on restaurants was disposable income per person. The mean household disposable income per capita is higher in cities than in villages and the more residents there are, the higher is the income (Figure 3). Analysis of CSO data shows that the biggest relationship between restaurant expenditure and household characteristics was demonstrated in relation to the disposable income per capita and then the location of households. The higher disposable income per capita in households located in cities of 500 000 people and more leads to higher restaurant expenses.

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Profile of people eating out in Poland in 2016.

Source: GfK Polonia, 2016 after Sfinks Polska 2017: 22.

Citation: Urban Development Issues 53, 1; 10.1515/udi-2017-0006

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Average monthly spending on restaurants and hotels per capita in households by class of locality in PLN in 2015.

Source: Own calculations based on household budget survey CSO (GUS) data.

Citation: Urban Development Issues 53, 1; 10.1515/udi-2017-0006

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Average monthly receipts per capita in households by class of locality in zlotys in 2015.

Source: Own calculations based on household budget survey CSO (GUS) data.

Citation: Urban Development Issues 53, 1; 10.1515/udi-2017-0006

On the other hand, Poland has an excellent location in the centre of Europe and big cities are attractive to foreign and domestic tourists. Reports by the Central Statistical Office of Poland indicate that the main purpose of visits to Poland is tourism and recreation but also often business and shopping. Tourism has long been recognized as an instrument for local economic development due to its ability to increase profits and generate economic benefits to host regions and communities (Craggs & Schofield 2009). Growth in the Travel & Tourism sector typically leads to the development of restaurants, bars, cafes, retail establishments, and other tourism related businesses. Not only are these businesses part of the direct impact generated by Travel & Tourism, but also they help to improve the quality of life for local residents by expanding the choices available to them in their local community. C.M. Hall (2012) argues that “food consumption is integral to tourism and its economic impact can be important not only for the immediate businesses that directly provide food for tourists (such as hotels, restaurants and attractions), it can also have a significant economic impact throughout the food supply chain”, especially if the food provided is supplied locally. The Organization for Economic Cooperation and Development (OECD 2012) revealed that food plays an important role in the development of tourism services, since it often comprises 30% or more of tourist expenditure and this money is regularly spent directly with local businesses.

According to C.M. Hall and L. Sharples (2008) and Hall (2012), several motivations push private and public interest in the relationships between foodservice businesses, tourism and branding:

• Gastronomy and cuisine-oriented tourists are perceived as high yield markets;
• Urban neighborhoods or quarters can become attractive to visitors, especially those that specialize in particular ethnic foods. A concentration of restaurants, cafés and markets can bring character to the neighborhood.G. Richards (2015) underlines the role that food can play in influencing the overall branding and positioning of a destination:
• Food is part of the destination marketing mix, because it helps to give a sense of place and allows tourists to literally taste the destination, coming directly into contact with local culture.
• Since we eat two or three times a day, foodservice is the aspect of culture that tourists most frequently come into contact with;
• Eating habits are differences that immediately become obvious: the time people eat, the way they eat and what they eat all become immediate points of difference upon entering a new culture;
• Food provides a direct connection with the landscape because tourists can recognize the origins of food.

According to CSO data, the structure of expenses incurred in 2015 varied according to the type of trip.

In the case of short-term domestic departures, besides a large share of expenditure on food (28.9%) and transport (25.8%), housing expenditure (22.0%) and purchases of goods (16.5%) were significant. Compared to the year 2014, the share of expenditure on food and accommodation increased by 1.5pp and 2.6pp, respectively, while the share of expenditure on transport and shopping decreased by 1.7pp and 3.2pp).

During national journeys of 5 days or longer, the largest expenditure was incurred on accommodation (35.2% in expenditure structure), then on food (32.0%) and on transport (15.8%). Compared to the year 2014, only expenditure on accommodation increased (by 2.0pp) in the structure of expenditures.

The above makes foodservice companies see the potential for growth in big cities and an attraction for tourists. Although there are many different types of restaurants in the biggest cities, towns are still missing well-known brands and new concepts. The expansion of existing brands and the appearance of new ones show that there is still a lot of room for new players.

Four Polish cities were selected for analysis, cities that are the most popular for visitors and with the highest salaries: Warsaw, Cracow, Wroclaw, and Poznan. In Warsaw, the average monthly salary in 2015 was 5585.89 zl which was the highest in the country, average monthly salaries in Poland were 3907.85 zl. In Cracow the average monthly salaries were 4726.55 zl, in Wroclaw 4569.88 zl and in Poznan 4 549.11 zl (GUS 2016).

Warsaw is an attractive city due to suitable connections with European cities, a high standard of hotel, transportation, telecommunication and financial services, as well as easy access to many interesting sites in Mazovia. Warsaw fulfils the role of a tourist centre, with a wide range of accommodation and foodservice enterprises and a plethora of monuments and remnants from past times. Statistical data shows that Warsaw takes first place in the country in terms of the number of foodservice companies, and revenues from their activities are the highest. In 2014, there were 2 390 foodservice enterprises and by 2010 this number had increased by 6% (Table 3). It was about 50% of all foodservice enterprises in the Mazowieckie voivodeship. The structure of foodservice enterprises is dominated by bars (898) and restaurants (632). These companies also show a high growth rate in the years 2000–2014. In all the cities analysed in the years 2000–2014, there was an increase in the overall number of foodservice enterprises and an increase in the number of restaurants. The largest growth dynamics were recorded in the general number of foodservice companies in Poznan, 70.5% in 2014 compared to 2010 and Cracow – 18.2% in 2014 compared to 2010.

Data analysis shows that in all the cities surveyed, revenues from foodservice activity are growing dynamically (Table 4). The highest revenue growth was recorded in Cracow and Wroclaw. The impact may be the result of the growing number of tourists visiting these cities and changes in the eating habits of the residents. Cracow is without a doubt one of the most famous and most visited Polish cities. Called by many the cultural capital of Poland – this city is famous not only for its bohemian atmosphere, great theatres, galleries and museums, but also because of the unique blend of tradition, history and modernity. The city is also well-known because of the fantastic cafes, pubs and restaurants where you can spend time with friends. Sotheby’s International Realty has ranked Cracow as first in a list of Poland’s ten most attractive towns and cities (Sotheby’s ranks Kraków… 2015). Second place went to the Tri-City conurbation of Gdansk, Sopot and Gdynia, and third place was taken by Wroclaw.

In terms of location, restaurants and bars located close to major streets, commercial centers and offices, train stations and universities are the most popular. The expansion of existing brands and the appearance of new ones show that there is still a lot of room for new players. Although there are many different types of restaurants in the largest cities in Poland, smaller towns are still missing well-known brands and new concepts. Both independent and networked restaurants see the potential for growth in large cities, but opening new enterprises in smaller cities has become less risky and easier since shopping centers have started to appear there and this is reflected in their development strategies.

Tourists coming to the major cities in Poland such as Warsaw, Cracow, Wroclaw, Poznan have at their disposal restaurants of different standards and featuring both foreign and Polish cuisine. The majority of restaurants, cafes, night clubs and pubs have a nice location in the old town, city center or shopping center. In large cities we can find restaurants from different segments from fine dining to fast food. Restaurants offer a broad range of cuisines from all around the world (from traditional Polish to Italian, Mexican and Chinese).

A report of a study conducted by PBS Sp. z o.o. on behalf of the Polish Tourist Organization (2015) shows that foreign tourists consider tourist and foodservice services in Poland relatively cheap and of good quality. Domestic tourists perceive foodservice and tourist services as relatively expensive.

Conclusions

Socio-cultural-economic development, growing revenue and the increasing importance of leisure time, have all contributed to the dynamic development of the whole area of social activity, such as tourism and foodservice activity. The development of foodservice services and tourism are closely linked. There is a feedback loop between the foodservice industry and tourism.

Analysis shows that the foodservice business is one of the most vigorous sectors in Poland. The number of foodservice enterprises increased every year since the start of analysis in 2000. Also, in more recent years the revenue from foodservice activity has grown significantly. The development of foodservice enterprises is unequal across the cities in Poland, and various factors affect it having different correlative interrelations and impacts on the industry. Intensive development is particularly seen in big cities (metropoli), where residents earn higher than average incomes, and in attractive tourist destinations. Warsaw, the capital of Poland takes first place in the country in terms of the number of foodservice companies. The increased number of foodservice companies in large conurbations is due to demand from customers. On the other hand the rising demand for foodservice services contributes to an increase in revenue from foodservice activities, which encourages this type of activity. Cities with a wide range of foodservice facilities on offer attract tourists. The conditions for foodservice business development can be divided into demand and supply. We can observe a feedback between these considerations. Demand fundamentally determines how development proceeds and does not detract from the supply-side conditions, and vice versa.

The foodservice sector shows a significant improvement in the quality and variety of services also offering a wide range of prices.

Poland is becoming increasingly attractive as a tourist destination. Its natural environment, modern infrastructure and improving access to culture and national heritage of exceptional value make the country popular to international tourists. Foodservice businesses and gastronomic tourism can be an engine with potential to mobilize other sectors and resources to contribute to a city’s overall experience and attractiveness.