An Application of the Experience Economy and Strategic Management in the Restaurant Industry
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“BEYOND GOODS AND SERVICES”: AN APPLICATION OF THE EXPERIENCE ECONOMY AND STRATEGIC MANAGEMENT IN THE RESTAURANT INDUSTRY A qualitative study of restaurant professionals Alexia GROGA-BADA & Estelle LARROUQUET Department of Business Administration Managerial Perspectives on Strategy, People, Projects and Processes Master's Thesis in Business Administration I, 15 Credits, Spring 2020 Supervisor: Siarhei MANZHYNSKI Abstract “In a world saturated with largely undifferentiated goods and services, the greatest opportunity for value creation resides in staging experiences” (Pine & Gilmore, 2011, p. ix). This observation is more than ever actual. Nowadays, organizations must face intense competition and struggle to differentiate themselves. The saturation of the market is due to the decline of the industrial and service economy. This decline is a synonym of high competition and announces the emergence of the next economy, which is, in this case, the experience economy. In the experience economy, experiences are economic offerings, in the same way as products and services. The theory of the experience economy is new. It has influenced some theories and concepts but remains understudied. This idea is the starting point of our research gaps. For now, most of the studies concern the hospitality and tourism industry. However, no study deals with the restaurant industry. Besides, most of the research focuses on customer perception of experience. None studies have adopted a management and strategic perspective. That is why we explore the link between strategic management an experience economy through the specific case of restaurants. The purpose of our study is to gain a deeper understanding of the impact of staging experiences on a restaurant’s strategic management. In this way, we conduct qualitative research in which we interview six restaurant professionals. These interviews help us to understand how restaurants adapt themselves to the emerging experience economy. We also gain substantial knowledge about the advantages and drawbacks of the experience economy. To interpret our results, we use a thematic network analysis that generates four themes: coherence, business strategy, management and leadership, and customer relationships. Our findings confirm that customer experience is a strong competitive advantage for restaurants. However, entering in the experience economy necessarily affects the strategic management of the restaurant. Managers must make several strategic choices at different levels of their restaurant. In this way, we found that consistency is a crucial factor when staging experiences. All the decisions and choices, whether in terms of management, food, decoration, marketing, music, and staff, must be in line with the restaurant strategy. The findings also show that the relationship between the manager and the employees can positively or negatively affect customer experiences. Managers must have some leadership skills to foster a respectful and trusting work environment. Lastly, we find that in the experience economy, customer relationship is essential and participate in building a sustainable competitive advantage for the restaurant. The relationship between customers and the staff can have an impact on the experience. Yet, we found that if the experience is successful, customers are likely to talk about it. In this way, they become ambassadors of the restaurant. The four themes that we identified and described are the key elements to stage experience from a strategic management perspective successfully. In this way, our findings suggest that experience economy cannot exist without good strategic management. Acknowledgements We want to begin by thanking Siarhei MANZHYNSKI, who was our supervisor for this thesis. His honesty, criticisms, and watchful remarks helped us a lot during the writing process of this thesis. His commitment and availability also allowed us to fulfill research of quality. We would also like to thank the people who answered our questions. We want to thank them for the time they devoted and for the completeness of the information they provided. Umeå May 25, 2020 Alexia Groga-Bada & Estelle Larrouquet Table of contents 1. Introduction ...................................................................................................................1 1.1 Subject Choice .........................................................................................................1 1.2 Problem Background ...............................................................................................2 1.3 Theoretical Background and Research Gap ............................................................3 1.4 Research Question and Purpose ..............................................................................3 2. Theoretical framework ..................................................................................................5 2.1 The Experience Economy Theory ...........................................................................5 2.1.1 Definition of the experience economy .............................................................5 2.1.2 Main opposition to the experience economy ....................................................6 2.1.3 Attributes of experience in the experience economy........................................7 2.1.4 Implications of the experience economy ..........................................................9 2.2 The Meal Experience Theory ................................................................................11 2.2.1 Definition of the Meal experience ..................................................................11 2.2.2 The consumer perspective ..............................................................................12 2.2.3 The restaurant perspective ..............................................................................13 2.2.4 Gustafsson’s Five Aspects Meal Model .........................................................14 2.3 Strategic Management in the field of hospitality and tourism ...............................16 2.3.1 Hospitality industry ........................................................................................16 2.3.2 Context and definition of strategic management in the hospitality industry ..17 2.3.3 Strategic management process .......................................................................18 2.4 Relationship between experience economy, meal experience, and strategy .........20 3. Methodology ................................................................................................................23 3.1 Theoretical methodology .......................................................................................23 3.1.1 Ontology .........................................................................................................23 3.1.2 Epistemology ..................................................................................................24 3.1.3 Research approach ..........................................................................................24 3.1.4 Research design ..............................................................................................25 3.1.5 Preconceptions ................................................................................................26 3.1.6 Literature search .............................................................................................27 3.1.7 Choice of theories ...........................................................................................27 3.2 Practical methodology ...........................................................................................28 3.2.1 Qualitative data collection ..............................................................................28 3.2.2 Interview guide ...............................................................................................29 3.2.3 Sampling technique and access ......................................................................30 3.2.4 Conducting the interviews ..............................................................................32 3.2.5 Transcribing ....................................................................................................34 3.2.6 Qualitative analysis ........................................................................................34 3.2.7 Ethical considerations .....................................................................................35 4. Qualitative empirical findings .....................................................................................37 4.1 State of the restaurant industry ..............................................................................37 4.2 The experience economy .......................................................................................39 4.3 Meal Experience ....................................................................................................42 4.4 Strategic Management ...........................................................................................44 5. Thematic network analysis and discussion ..................................................................47 5.1 Emerging themes ...................................................................................................47 5.2 Coherence ..............................................................................................................48 5.3 Business strategy ...................................................................................................49