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Application of

Statistics: Analyzing
customer behavior in
Restaurant Business
Awareness in Statistics Promotes Better Evaluation of
Programme

WMP10047
WMP10048
WMP10055
WMP10062
WMP10073
WMP10080
WMP10087
Table of Contents
I. Objective ................................................................................................................ 2
II. Literature Review .................................................................................................. 2
III. Who are your potential customers? ....................................................................... 3
IV. Research Methodology .......................................................................................... 4
Demographical distribution of the respondents
V. Descriptive Statistics ............................................................................................. 6
VI. Inferential Analysis ................................................................................................ 8
Average Spend
Criteria for Picking of Restaurant
Preference for Alcohol
Do females spend more than males!! Answer is
YES!
Do Non Veg diners spend more at restaurants?
Yes
Willingness to Travel for eating-out
Age Vs Spend Analysis
Do Average age and average Spending have
any correlation? No
Income Analysis
Average Spend vs Marital Status
VII. Multiple Linear Regression .................................................................................. 18
Least squares multiple regression
Regression Equation
Analysis of Variance
VIII. Conclusions .......................................................................................................... 19
IX. Appendix............................................................................................................... 21
X. References............................................................................................................ 22
Objective
Our objective is to research the eating-out habits of Indian Consumers and identify domestic
food trends. This report presents the results of the analysis and includes the following

Analysis of the demographic changes occurring in India and their potential impact on the
restaurant industry
Analysis of responses collected via the questionnaire representing a snapshot of trends
in the Indian eating-out habits

Literature Review
Restaurant Industry in India. Trends and opportunities: This is a report prepared by HVS
International for The Federation of Hotel and Restaurant Industries in India (FHRAI). The
report talks about global trends in the industry and along with guidelines for conducting
feasibility study before opening a restaurant

For starting a restaurant, one should know what types of restaurants are present, what locality it
needs to serve, what are their eating habits?

The common types of restaurants that are widely present are.

A fast food restaurant is an eatery where patrons can order and receive food quickly. The food
is often taken to go, with a few seats provided for eating, but typically there is no table service.
Fast food restaurants can be a franchise (such as Subway) or an independently developed
business idea. The cuisine at a fast food restaurant often consists of standard fare, such as
sandwiches, hamburgers, chips, French fries, fried entrees (chicken, fish), and/or pizza, etc.

A small restaurant is an eatery that provides patrons with table service. Small Restaurant
businesses often have a casual, family style atmosphere, and a limited menu. The facility is
often small, with limited seating. The number and type of small restaurants, vary greatly from
community to community, as do the menu and number of customers.

The fine dining establishment is less common to rural areas, and usually found in an urban or
even metropolitan setting. This type of restaurant provides a formal dining experience at the
premium end of the market.

What do restaurants provide?


Less time to cook and more disposable income have made dining out a frequent experience for
many Indians. There are several important factors to consider if someone want to be successful
in this industry:
Food As mentioned previously, a restaurant is in the business of selling food. One need to
provide patrons with tasty, properly prepared, and affordable food a product that can go out
and sell with pride and confidence.
Hospitality As the restaurant host, it is a responsibility to make sure that the customers has a
positive experience. To build customer loyalty, one will need to welcome customer/guests
warmly, treat them courteously, and make sure they receive excellent service.
Safe, family, friendly establishment It is important to provide an eatery where people feel safe
and find the atmosphere friendly.
Cleanliness One must ensure that the restaurant is presentable, and maintain a rigorous
standard of cleanliness and sanitation.. Patrons will not trust your food safety if they have the
impression that the restaurant is unclean.

Conducting Market Assessment and Research


The type of restaurant one plan to develop will largely determine the market one will target. The
first step in assessing the market is to determine how many potential customers are interested
in what one want to develop. Market assessment and research is about understanding the
primary target market and any secondary markets, knowing whom to attract, and identifying
ways to better understand and communicate with the market.

In conducting the market assessment and research, once goal is to better understand potential
customers

Who are your potential customers?


In a larger community, one might want to target visitors like mall etc. In a small community, one
might focus on selling to locals and also to nearby and visitors.

Location and demand are the most important factors in determining the market. Remember,
most likely customers will come from nearby places. Potential customers choose to eat out for
many reasons. Families may come to your restaurant as a special treat or as a break from
cooking. Children and teens might visit your restaurant for after school snacks and socialization.
Visitors traveling on business might use the restaurant as a source of meals, which they cannot
readily cook for themselves. However, the majority of the markets in most rural areas will be
selling to locals, as well as the potential customers who might come through a small community.

Pricing and Willingness to Spend


Restaurant meal prices and operating expenses are going to vary between communities. If one
offer high quality, fresh food in a style not usually available to the customers, you will command
a higher price, although you are also going to have higher restaurant costs. Location is also a
large factor. To calculate the pricing, take into account location, food, level of service, and
atmosphere. Prices can vary according to the food and services you provide, the competition,
and the time of year.

Research Methodology
Data was collected from primary sources via questionnaire prepared for this purpose. A total of
170 responses were received which are the basis of the analysis presented in this report. The
questionnaire comprised of 6 demography related questions and 13 direct questions on the
eating out habits of the respondents. The questionnaire is available in the appendix section of
this report.

Demographical distribution of the respondents


Total Respondents: 170

1) Age Distribution of the respondents: The age distribution of the respondents varied from
20 to 50. A majority of the respondents (44%) were in 30-40 range while there were
more than 8 (5%) respondents above 50. The pie chart distribution is shown below

AGE DISTRIBUTION
>50 20-25
40-50

25-30

30-40

2) Income distribution: We believed that the income level would be an important factor in
the eating out habits of the respondents. Nearly 23% of our respondents were in the high
income category of more than 15 lacs per annum.
Income Distribution

23% 20%
<5
5-10
24% 33% 10-15
>15

3) Gender and marital status distribution: 80 % of the respondents were Male as shown
below. Nearly 70% of the respondents were married

Gender Distribution Marital Status


160
140
120
100
80
60
40
20
0
Male Female Married Single

4) No. of children and No. earning members: In nearly 30% of the cases, both spouses
were found to be working. There was a single earning member in 39% of the cases with
other being single. 28% of the respondents had 1 children while 19% had no children.
The following charts give a view of the distribution

Earning members
No of Chidren
80

60

40

20

0
1 Earning Member 2 Earning Members 0 1 2 >2
Descriptive Statistics

1) Eating patterns: While the respondents were nearly divided in half between
vegetarians and non-vegetarians, a majority of those who responded did not
consume alcoholic drinks.

DISTRIBUTION OF VEG VS ALCOHOL CONSUMERS


NON VEG
Yes No

Yes No 26%

74%

2) Frequency of eating out

3) Preference of day of the week for eating out: As expected, weekends are the
preferred days for eating out. A very small percentage of people venture out on week
days.
4) Preferred Cuisine: A majority of the respondents prefer North Indian food when
eating out. This is expected as most of the respondents belonged to the northern
part of India. However tolerance for other cuisines is increasing with Chinese food
being the second most popular

PREFERRED CUISINE
Others
South Indian
North
Indian

Continental

Chinese

5) Reasons for eating out: most of the people eat out with the intent of having a good
time.

Reason for eating out

Celebration Cook on Holiday No time to cook Outing

6) Criterion used for choosing a restaurant: Food quality is the most important criterion
for people while choosing a restaurant with the Hygiene/ambiance being the second
most important factor

7) People are willing to travel to eat in a restaurant. This is evident from the pie chart
below. More than 60% of the people are willing to travel over 5 KMs to eat in a place
of their choice.
Inferential Analysis
Average Spend
Based on the data received, Indian consumers typically do not want to spend more than 500
rupees per person during a restaurant visit.

Amount No of Persons
below 250 22
250-500 71
500-1000 51
above 1000 26

No of Persons vs per Person Spend


80

70

60

50
Frequency

40

30

20

10

0
below 250 250-500 500-1000 above 1000
Per Person Spend - in Rs
It is also observed there is not significant increase in spending when salary increased from
below 5 lacks to above 15 lacks. For calculation point of view we considered that average salary
of person below 5 lacks is 4 lacks and above 15 lacs is 20 lacs.

Salary Earned Avg cost Per meal


(in Rs lacs) (in Rs)
4 515.38
7.5 572.28
12.5 580.30
20 654.37
Income not defined 617
Grand Total 591.02

Avg spending per person vs Salary


700 654.37
617
572.28 580.30
600
515.38
500

400

300 Total

200

100

0
4 7.5 12.5 20 (blank)

Irrespective of income, average person spends equally in range of 500-600 per person. Persons
whose salary is in range of above 15 lacks spends most i.e. above 600 per person

The relation between salary earned and expenditure is given as

Salary Expenditure
(X) (Y) X2 Y2 XY
4 515.384 16 265621.3 2061.53
7.5 572.28 56.25 327507.4 4292.12
12.5 580.30 156.25 336751.6 7253.78
20 654.37 400 428206.6 13087.5
Sum 44 2322.345 1936 1358087 26694.95
Mean 11 580.586
Coefficient of regression (B) =

B 0.791424
A 571.8806
so equation be Y=571.9+0.79X

This equation can be represented by following graph

Avg expenditure of person with different


Salary
700
600
500
400
300
200
100
0
4 7.5 12.5 20 (blank)

Criteria for Picking of Restaurant


Some criterias like Food quality, Hygiene, Cost proximity and Service Quality were considered
for checking the preferences of persons. The data obtained is given below:

Considering each criteria as in fraction


Cost 17.67
Proximity 14.75
Food Quality 69
Hygiene /
Ambience 25
Service Quality 29

It has been observed that approx. 70% prefer for food quality while preference for others like
cost, Proximity, Hygiene and Service quality are in similar range of 10-30.
Criteria for selection of Restaurant
80
70
60
50
40
30
20
10
0
Cost Proximity Food Quality Hygiene / Service Quality
Ambience

Preference for Alcohol


The expenditure of persons who use to drink alcohol was correlated with non-drinkers.
Following observations were obtained

The numbers of persons who are consuming alcohol are less but they are spending more than
non-alcoholic persons

Alcohol Average of Per meal (in Rs) Sum people per visit(in Rs)
No 542.2 407.5
Yes 726.67 172.5
Grand Total 591.029 580

Alcohol Consumption Spend Pattern


800 726.66
700
600 542.2
500
407.5
400
300
172.5
200
100
0
No Yes

Average of Avg Per meal Sum of Avg people per visit


Do females spend more than males!! Answer is YES!
Across all age categories (except 40-50 where there was only a single female respondent) it
was observed that females spend more than males. The average amount spend per person is
Rs. 694 for females and Rs. 565 for males. The gap is maximum in the 20-25 category where
female average spend per son is Rs.706 vs Rs. 331 for males.

1400
Average spend per person per visit
1200

1000

800
Female
600 Male

400

200

0
20-25 25-30 30-40 40-50 >50 All

Do Non Veg diners spend more at restaurants? Yes


From the sample data it was observed that non vegetarians spend on average Rs. 642 per
person vs Rs. 544 for vegetarians. The trend is same across both genders as well as age
groups.
Effect of Veg/ Non Veg in average spend per person across age
groups
800

700

600

500
Veg
400 Non Veg

300

200

100

-
> 50 20-25 25-30 30-40 40-50 All

Effect of Veg/ Non Veg in average


spend per person(M/F)
800

700

600

500
Veg
400 Non Veg

300

200

100

0
Female Male All
Willingness to Travel for eating-out
The data of respondents is as per table appended below:

Distance Travelled No. of People


0-2 kms 20
2-5 kms 49
5-10 kms 61
>10 kms 40

The above data is depicted in the bar chart as below:

70

60

50

40

30

20

10

0
0-2 kms 2-5 kms 5-10 kms >10 kms

This shows that maximum no. of people who are willing to travel distance
between 5-10 kms for a meal in a restaurant i.e. total 61 respondents which is the
average norm also.

Age Vs Spend Analysis


SCATTER DIAGRAM

Its shows that the relation between average spending per meal and age has no correlation. This
can be explained as that the spending on restaurant outings does not increase when average
age of the consumer increases except in a few exceptional occasions.

The spending is more commensurate with the eating & drinking habits of the respondents & less
with the age bracket. It means that the people with lesser age group are willing to spend
relatively higher & people with higher age group does not always spend too high amount while
eating out and the same condition holds good vice versa also.
Average Spending Per Meal
1400

1200

1000

800

600 Average Per Meal

400

200

0
0 10 20 30 40 50 60

Do Average age and average Spending have any correlation? No


Mean 6.170
Median 7.5
Mode 7.5
Standard Deviation 3.056
Coefficient of
Variance 0.495
Correlation coefficient -0.0846

Also correlation coefficient is skewed towards zero so there is no definite pattern


emerging for the average spending of the consumers in relation to the age.

Income Analysis

The data of respondents is as per table appended below.

Not
available 25
4 lacs 26
7.5 lacs 46
12.5 lacs 33
20 lacs 40
This data is illustrated in the chart below

No of respondant

Not avb
4 lacs
7.5 lacs
12.5 lacs
20 lacs

This illustrates that the maximum number of Lacs to 10.00 lacs (7.5 Lacs) i.e. total 46
respondents. Whereas the average income group of people fall in the range of 10- 15 lacs
(12.00 lacs).

SCATTER DIAGRAM is illustrated below

This shows that the relation between income earning is not that as compared to the spending
per trip. Suppose a person who is earning 20 lakhs per annum is not spending too high as
compared to the person who are earning on lower brackets .This can be explained as that the
spending on restaurant outings does not increase when the income level rises except a few
exceptional cases and vice versa.

The spending is more commensurate with the eating & drinking habits of the respondents & less
with the income bracket. It means that the people with lesser income were willing to spend
relatively higher & people with higher income does not always spend too high amount while
eating out.

People are of the income group is that of people who earn between Rs 5.00
spending

20
20
20
20
20
20
20

Average Spend vs Marital Status


Average spend of the respondents is plotted against their marital status. The graph below
clearly shows that single men and women tend to splurge a little more when it comes to eating
out

Aveg Spend

UnMarried

Married

500 520 540 560 580 600 620 640 660 680
Multiple Linear Regression
We ran multiple linear regression with Average per person spent as the dependent variable with
6 different dependent variables. The results of the regression are shown below

Dependent Y Spent

Least squares multiple regression

Method Enter

Sample size 143

Coefficient of determination R2 0.1876

R2-adjusted 0.1454

Multiple correlation coefficient 0.4331

Residual standard deviation 290.4321

Regression Equation

Independent variables Coefficient Std. Error rpartial t P

(Constant) 467.7066

Age -5.7123 4.0276 -0.1212 -1.418 0.1584

Alcohol 143.6155 61.6269 0.1967 2.330 0.0213

Income 15.9750 4.7967 0.2755 3.330 0.0011

MaritalStatus 47.7210 64.6951 0.06336 0.738 0.4620

Non_Veg 41.6751 51.7331 0.06917 0.806 0.4219

Number 3.5074 16.9333 0.01782 0.207 0.8362


Sex 192.6929 66.0335 0.2436 2.918 0.0041

Analysis of Variance

Source DF Sum of Squares Mean Square

Regression 7 2629069.307 375581.330

Residual 135 11387355.518 84350.782

F-ratio 4.453

Significance level P=0.0002

As indicated by the coefficients of the regression, the biggest factor determining the average
amount spent are a) gender of the person paying the bill and b) whether alcohol is consumed
during the meal.

Conclusions
Restaurateur can use inference below as strategy to increase revenue.
The two major factors which determine the average spend of an Indian consumer are
gender and alcohol consumption. Average tends to be higher in females and alcohol
drinking groups.
Weekday foot falls are less however restaurant is open for full week, To improve
utilization factor
o Weekdays promotional schemes or specific cuisine should be marketed to bring
most customers on lean days(Monday, Tuesday being the most lean)
o On weekdays restaurant facility can take orders from customers not mentioned
here like corporate functions, celebration occasions like marriage, birthday
parties etc.
Most critical factor for selection of restaurant by customers are Food quality and
Hygiene/Ambience. Therefore these must be give highest priority by restaurant to focus
upon.
People who consume alcohol tend to spend more in restaurants and also tend to visit
restaurants more (3.83 visits vs 3.2 for non-drinkers). In this light, a restaurant owner will
do well to have a bar in the restaurant so that repeat visits and higher total bills are a
more frequent occurrence.
One interesting fact which has come up is people dont mind travelling far for good
quality food as per survey. This has further been supported by another question in the
survey that Proximity is the least concern of selection of restaurant by customers.
Revenue come more from females however volume comes from male customers.
Restaurant should try to increase volume of female customers by female customer
oriented discount schemes.
An interesting point is that irrespective of salary drawn, average spend is even, except
for higher salary where there is increase in spending.
Appendix
Questionnaire for collecting data:

Demography Options
Please specify your age group 20-25, 25-30, 30-40, 40-50. 50-60,60+
Sex M,F
Marital Status Yes No
How many children you have? Yes (1, 2, more than 2)/No
Are both, you and your spouse, working? Yes No
Please specify your income level

Closed Ended
When you go out to restaurants, do you eat non-vegetarian
food? Yes No
When you go out to restaurants, do you consume alcoholic
drinks? Yes/No
On an average, how many time ins a month do you go out
to eat in a restaurant? 1-2, 3-4, 5 and above
What is the average amount spent, per person, during your
restaurant visits? <500, 500-1000, 1000-2000, 2000+
When you go to a restaurant, what is the average number of
people in the group that you go out with? 1-2, 3-4, 5-8, 8+
Which day of the week do you prefer for visiting a
restaurant? MTWTFSS
For which meal of the day do you prefer going out to a
restaurant? Lunch/Dinner
Which cuisine do you prefer when you go out to a North Indian, South Indian, Chinese,
restaurant? Continental
Change/cook absent/party/no time to
Why do you visit a restaurant?
cook
Below 2 kms /2-5 kms /5-10 kms/ above
How far you are willingly to travel to visit a restaurant? 10 kms
According to you, what is the most important aspect while Service quality/Cost/Menu/Approach
picking a restaurant? (nearness)
References
1) http://ced.uaa.alaska.edu/publications/manuals/FINALRestaurantHandbook.pdf
2) http://www.ranw.com/starting-a-restaurant

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