Michelin Star Rating System Analysis

Michelin Star Rating System Analysis Michelin Star System Chapter 2 Literature Review The system of rating organisations with a particular business sector according to the value and quality that these organisations provide to the end user, by methods such as those used by the Michelin Guide Star System is nothing new. However, it is important for the owners of these organisations to understand the relevance of such systems. For example, are they most relevant to the consumer in terms of meeting their needs and expectations and thus influencing behaviour or to the organisation in terms of improving its standing within the business sector and strengthening brand awareness? Commencing with the consumer, this critical literature review is intended to provide an understanding of the current theories and observations relating to these particular issues. 2.1 Consumer needs and satisfaction Abraham Maslows (1998) hierarchy of needs theory is recognised by most academics as having created the foundation for all subsequent research into understanding the consumer, providing a framework that allows organisations supplying a product of service to better understanding how they need to present these in order to satisfy the consumer need, thus achieving their objective of increasing market share. The research carried out by Szmigin (2003) and Porter (2004) also confirms that the success of a businesses strategy is also dependent upon the extent to which that strategy is designed to meet and therefore address the perceived satisfaction levels of the consumer. Figure 1 Maslows hierarchy of needs Esteem needs achievement, status, responsibility, reputation Self-actualization personal growth and fulfilment Belongingness and Love needs family, affection, relationships, work group, etc. Safety needs protection, security, order, law, limits, stability, etc. Biological and Physiological needs basic life needs air, food, drink, shelter, warmth, sex, sleep, etc. In relating the Maslow theory directly to the satisfaction of needs of the consumer with regards to their restaurant experience, it can be seen from the above diagram (figure 1), that this is dependent upon the level at which the consumer is within the hierarchy. For example, it is likely that those at the three basic levels of need will be less driven by optimal quality than price and pace to fulfil that need (Noone et al 2007 and Namkung and SonCheong 2007). The satisfaction of these levels of need is likely to be more important for the tourist sector of the hospitality industry, where the meal is expected to form just a part of their overall vacation experience (Atila and Fisun 2003). However, where esteem and self-actualisation becomes more important is when the consumer wants to make a statement that separates him or her from the crowd. For example, if a salesperson wishes to make an impression with a prospective client, they are likely to want to dine in a restaurant that delivers a higher level of quality. In other words they will be looking for a perfect experience that will satisfy those they are trying to impress (Gupta et al. August 2007 and Chemlinski, R., 2006). 2.2 Consumer behaviour The behavioural patterns of consumer, as with all human reactions, are dependent upon reactions that can result from a psychological, emotional or physical influence. One of the most influential factors that influence consumer behaviour is that of memory. Everything we do is affected by memory, and this will drive our conscious and sub-conscious reaction to a particular event and the ultimate choices that we make. However, the memories formed are also affected by the manner in which pre-existing experiences interpret them (Zaltman 2003, p.186). For example, if we have had a bad experience at a particular restaurant in the past, it is likely that this will deter us from repeating the experience, irrespective of how that particular restaurant may try to re-package the experience. One of the difficulties that the restaurant owner has with delivering satisfaction of needs to the consumer of their product results from the fact that memory determinants of consumer choice are driven by both conscious and unconscious thought processes and therefore can be almost impossible for an outsider to see and measure, let alone alter (Zaltman 2003, p.15). This is certainly true in relation to actions resulting from subconscious memory as, in this case, as Bagozzi et al (2002, p.132) observe, even the person making the choice could be unaware of why they have reacted in the way they did. The memory processes will influence the manner in which the consumer makes a judgement about the benefits of the restaurant product and service being offered. Based upon previous memories it will subconsciously inform the consumer whether the expected experience is likely to be negative or (Zaltman et al 2002, p.68). Furthermore, the consumer will also then use that memory to judge whether th e experience will lead to a satisfaction of their current level of need (Maslow 1998). 2.3 Branding and the consumer Brand image is another important factor that will influence the consumers choice of purchase. It is an almost automatic reaction of the consumer to make an association between the brand and what it denotes. For example, in terms of restaurants and hospitality, the brand McDonalds automatically conjures up an image of fast, cheap food or the burger type variety. Irrespective of the adjustments that the burger chain tries to make to their products, such is the depth of that association within the mind of the consumer that it will be almost impossible to change Haig (2004, p.78 and 85). Once a brand has been created therefore, changing the consumers perception of it is extremely difficult. One of the problems that the Michelin Star System has in respect of brand image is that it has, consciously or unconsciously within the mindset of the consumer, created an image of quality, but with that quality being achieved at a price. In the minds of certain segments of the consumer public this puts their recommendations beyond the bounds of affordability, irrespective of whether it will satisfy their needs (Surlemont et al 2005). However, Porter (2004) would argue that the differentiation in terms of the quality of the product and the price premium could have certain competitive advantages. For example, it would appeal to those who wish to set themselves apart from the masses or, as indicated earlier, are trying to create an impression for their own purposes. Furthermore, as the research on consumer behaviour conducted by Zaltman (2003, p.227) suggests, this differentiation may also be able to produce satisfaction in terms of another influential factor that exists within the con sumer decision-making process, this being peer influence. It is well recorded that our perception of what others think has a significant influence upon the way we make decisions. For example, we will often make decisions simply in an effort to be connected to a particular group or segment of people. As mentioned earlier, within the restaurant experience this may manifest itself in the need to impress others. However, in the hospitality sector it can be said to be equally true that people will dine at a certain restaurant simply as a means of making a statement, which indicates to others that one is within a different consumer group. In this case, the consumer will be satisfying the Maslow (1998) levels of need that relates to self-esteem and actualisation. 2.4 Restaurant recognition Literature does however show that the Michelin rating system and the recognition it brings does make a difference within some areas of the sector (Guide 2008). From listening to the videos of the comments of Gary Rhodes and Anthony Demetre (Video Links 2008), it is apparent that to the proprietors of the restaurants concerned both consider that it improves the quality of their respective brands, which in turn will enhance the business drive for success. This view is reinforced by the reaction of those who lose or fail to gain stars, which shows obvious disappointment (Latest news 2008). 2.5 Summary In the opinion of the author, the literature evaluated for this review shows why there is such a diversity of opinion regarding the relevance of the Michelin Star System within the current restaurant sector of the leisure and hospitality sector. There are those whose theories argue that, except for the higher levels of satisfying the consumer needs (Maslow 1998), which relate to self-esteem and actualisation, it has little impact upon the average consumer. Similarly, many consumers perceive that its influence is more related to the pricing strategy and restaurant environment than in delivering service satisfaction to the consumer (Snyder and Cotter 1998). However, employees and owners within the industry would argue that the Michelin Star has a beneficial impact in that it increases the strength of the brand (Balasz K 2002) and that it denotes an assurance of quality that the consumer can rely upon. Chapter 3 Research Methodology As McGivern (2006, p.4) observes within her study on the subject, research is about a systematic investigations to find things out, which means that the researcher has to devise a system of methods and rules to facilitate the collection and analysis of data (Hart 2006, p.28). Thus it follows that the particular method adopted for any research project has significant importance in relation to the intended aims and objectives of the study being conducted. Essentially, data used in a research studies can be collected through one of two methods. These are the primary resource, which often entails the direct collection of data through the use of surveys, interviews and questionnaires, or the secondary resource, which relies upon the use pre-existing data (Clark 2002). The decision that every researcher faces is which of these methods, of combination thereof, is most appropriate to the subject matter of their research project. Bearing these factors in mind, the intention of this chapter is to provide the reader with an outline of the methodology chosen by the author for this study into the Michelin Star System. 3.1 Choice of research design The restaurant sector of the leisure and tourism industry in which the Michelin Star System operates is diverse, both in terms of the numbers of participating market players, the business models used and the consumer audience to which they appeal. With the UK Michelin guide covering a total of over 4,500 hotels and restaurants (Hickman 2008) it is also a sizable sector for any research to cover. Furthermore, due to the importance of the restaurant sector in relation to the leisure and tourism industries, together with its influence upon the consumer, there is a proliferation of pre-existing academic and practical data available in relation to this sector, which is being increased on a regular basis. These include empirical studies in targeted leisure and hospitality journals, observations from external stakeholders such as magazines and newspapers and numerous regularly conducted questionnaires and surveys. The considerations to be given to the choice of the research design was therefore to assess whether this level of secondary data would provide a sufficiency of information to add value to the research being conducted or if approaching the research using a primary data approach would prove to be of more relevance to the aims and objectives that form the basis of this paper. In the final analysis the author decided to design the research around the secondary data approach. In reaching this decision, there were several reasons for the discarding of the primary option. The first of these took into account the limitations that would attach to primary data collection. Of necessity, the completion of this research is restrained by a definitive time set for its completion. Furthermore, in view of the size of the sector, it was considered that to construct and conduct a sufficiently robust primary data choice, through the use of questionnaires and interviews would be cost prohibitive. For example, there would need to be a sufficiently large sample of such data collection achieved through restaurant employees, consumers and other stakeholders to create a representative sample, which in the authors opinion could not be achieved within the prevailing limitations. It is recognised that secondary data has two potential disadvantages. Firstly, with this method, the researcher is reliant upon the validity of data being collected from an external source over which they have no control; therefore there is no direct knowledge of the responses and theories available. Secondly, there is also the issue of the validity of the data to be considered. However, its main advantage is the depth and breadth of the amount of data available. It choosing a design based upon secondary data it is recognised that there are two potential disadvantages. Firstly, with this method the researcher is reliant upon the validity of data being collected from an external source over which they have no control; therefore there is no direct knowledge of the responses and theories available. Secondly, there is also the issue of the validity of the data to be considered. However, in addition to the limitations attached to the collection of primary data, there were also positive reasons for choosing the use of secondary data as the foundation for the design of this research paper. The first of these relates directly to the fact that, from an initial exploratory examination of the data field, it is apparent that much of the secondary information is of a higher quality and has a more extensive coverage than could be achieve from a primary method (Punch 1998). Secondly, as the aim of this dissertation concentrates upon the current value and relevance of the Michelin Star System, it is necessary to study the differing views and theories of academics and researchers in respect of those who are likely to be affected by the system, including the restaurant operators and their customers. In this respect the theory relating to business branding, quality and competitive advantage, such as those promoted by Arnold (1992) and Porter (2004) need to be considered. From the customer aspect, understanding the needs, expectations and behavioural patterns need to be included. For this area was considered that the academic studies and theories promoted by authors such as Abraham Maslow (1998) and Szmigin (2003) are also relevant. It is generally accepted that these authors have a high level of expertises and therefore, as Dingwell (1997) and Steward and Kasmins (2003) suggest, their works will adds a higher level of quality to the research being conducted for this study. In reaching the choice of using secondary data for the design of this particular research, the author took the same view as other researchers, such as Steward and Kamins (1993), McGivern (2006) and Hart (2006). These authors suggest that the type of methodology used is not overly important providing the data and information collected is reliable, trustworthy and resolves the questions being posed within the research aims and objectives. The author is confident that the choices for secondary data made fulfil these criteria. 3.2 Construction of the chosen method It is important that the correct approach is used in dealing with the quantity of data collected and its subsequent analysis and evaluation. This is particularly the case in terms of eliminating any bias that exists within the mind of the author. In this particular case it is the considered view of the author that, potentially, the research may conclude that the Michelin star system is only of relevance to the internal stakeholders of the restaurant sectors, namely the chefs and owners, and is paid little regard to from the consumers viewpoint. Therefore, in selecting a range of between thirty and forty references from a range of databases, which includes books, professional journals, reports and surveys, websites and other online resources, these issues have been borne in mind. For example, in order to balance the potential bias, resources have been chosen that support the current relevance of the Michelin Star System current relevance as well as those sources that take the opposite viewpoint. Similarly, for the same reason it was felt the relationship between consumer needs, behaviour and branding also needed to be addressed, as this will provide a view of the influence that a Michelin Star brand has upon the end user of the restaurant facilities. 3.3 Sample The sample of literature used within this research has been chosen from a number of relevant sources. In the main the concentration has been upon selecting resources from the most current available sources, being generally that produced within the last two to three decades, as this was considered to be the most appropriate for the issues being discussed. Similarly, the sampling was concentrated mainly upon the UK. The only exception to this was in cases such as Maslows hierarchy of needs, which is considered to contain the founding principles of consumer behavioural determinants. With the exception of the theoretical literature, where the approach of author choice was made for the reasons discussed in section 4.1 above, the sampling method used was based upon the maximum variation approach (Hart 1998 and 2006) as this was felt to provide a firm foundation from which to address the objectives of the study. 3.4 Procedure The procedure used for the collection of the secondary data was through the normal database channels of journals, books accessed from libraries and speciality bookshops and online resources. However, these searches were further defined to ensure that there was a direct relevance to the tourism and leisure industry, with particular concentration upon hospitality. 3.5 Data analysis Having collected the data using the previously defined methods and selection choices, it then needed to be analysed and evaluated. A dual approach was used for this purpose. The first stage involved correlating the data into differing viewpoints, for example those who considered the Michelin star relevant and those that did not. The second stage required evaluating the relevance that the various theories studied had in a practical application. Chapter 4: Findings As has been discovered within the literature review, there are conflicting opinions as to whether the Michelin Star system of quality measurement is of value within the restaurant industry. Using available secondary data within this chapter is in tended to present an analysis of the findings of the current opinion and research on this issue, which will then be discussed in depth. 4.1 The Michelin Star reward system The Michelin Guide, which derives its name from the Tyre company from which it originated, was first introduced in France in 1900 (Johnson et al 2005). Its original intention was to assist drivers with technical and travel advice. From there it developed into a tourist guide until eventually, in the 1930s, it became the gastronomic guide that it is renowned as today. By 2005 the Red Guide, as it had become known, was selling over one million copies across eight countries (Johnson et al 2005). Restaurants and other eating establishments cannot be included within the guide until their location has been visited and the meals judged by a dedicated team of inspectors. In order to avoid accusations of bias and to ensure independence, these inspectors are employed by Michelin and are required to pay for their meals and any accommodation that may be required. In fact, they also do not inform the establishment of the reason for their visit until after their inspection has taken place. In this respect, Michelin suggest, and other research has confirmed (Balasz 2001), the results of the inspections show a greater level of independence than that of some other guides, which give advance notice of the inspection and do not expect to have to settle the meal bill. According to the Michelin Guides Direct, Mr Naret, the Michelin inspectors are also not swayed by the name of the chef or the establishment. This was made evident in a recent interview where he said, Inspectors arent looking at the name. They dont care whether the chef is on television or how many of his cookbooks you might have on your shelf. They enter the restaurant and look solely at what is on the plate: the quality of ingredients, how they are cooked, how well the flavours are kept, presentation, personality and consistency (Foster 2007), although as will be discussed later, there is some disagreement over this claim. The Inspectors, of which there are currently around 70 operating throughout Europe, are persons who have had at least five years experience within the hotel and catering industry, particularly in respect of the cuisine element. Prior to being allowed to commence their inspection duties, these persons also have to undergo a vigorous six months training programme to ensure that they meet with and maintain the required Michelin standards (Johnson et al 2005). Michelin states that on average one inspector will perform the following tasks during the course of a year: Inspect 240 meals per annum Undertake 130 overnight stays Submit 1000 reports It has to be stated that this is an exceptionally heavy workload for one person. It is partially because of this level of activity that some expert observers, and indeed restaurateurs themselves, have called into question the quality, appropriateness and validity of the inspection teams work and conclusions. This element of concern is discussed in later sections within this chapter. The guide includes a wide range eating establishments, most of which are included simply for information purposes, with these totalling around 50,000 in number, a level that is constantly increasing. However, amongst this number around five percent are picked out for special mention, these being rated based upon the awarding of the coveted Michelin Star to them. There are up to three stars available, the awarding of which depends upon the consistency of quality and, as Johnson et al (2005) explain, To some extent tradition. Michelin denote the definition of their stars as follows: One Star A very good restaurant in its own category Two Stars Excellent cooking, worth a detour Three Stars Exceptional cuisine worth a special journey. One always eats extremely well here, sometimes superbly. In 2005 a further merit recognition was introduced, which was called the Bib Gourmand. This is awarded to an establishment that had not quite managed to reach the level of quality required to achieve one star status, but which was considered by the inspector to be able to achieve that position within the near future. Although there is limited information available as to the criteria which is used for the determination of the star level being awarded, in the main this relies upon the standard exhibited within the following five areas: Meal ingredient quality Culinary skills exhibited in preparation and the combination of flavours Level of creativity that has been displayed How consistent the meal standards at the establishment are Monetary value of the product 4.2 General academic perception of the Michelin Brand and competition Academics such as Johnson et al (2005), Yuksel and Yuksel (2003) and Balasz (2001) have mixed views about the quality and relevance of the Michelin Star system. Yuksel and Yuksel (2003) in their research into the systems entry into the Japanese culinary market, suggest that, in that country at least, the guide fails to take into account the people factor. In other, it is being suggested that by using paid professionals, the Michelin organisations does not pay sufficient attention to the qualities of reliability and satisfaction that lead to repeat usage of the establishment by the consumers. This area is considered by many academics that study consumer behaviour to be of equal importance to the standard of the fare being offered (Bagozzi et al 2002) and should therefore be incorporated into the Michelin procedures. The second element of concern expressed related to the pressure that the Michelin Star System placed upon the establishment chefs and owners. Although, as Johnson et als (2005) research concluded, the possession of a Michelin star does not guarantee profitability, its loss was discovered to have serious implications for the business, with some experiencing revenue reductions of up to 50% when this situation occurred. Issues of a practical nature in relation to the Michelin Start system have also been raised by many observers. There is a general view that the reflection of changes within eating establishments is not dealt with efficiently by the Michelin inspectors, with the awarding or removal of stars failing to keep up with these changes in many cases. There is little doubt that the excessive workload of the Michelin inspectors outlined in section 4.1 is a contributory factor in the occurrence of these delays. Furthermore, it is felt by many that, outside of the Star system originating market, France; the rating system lacks the same level of reliability. This will be evidenced by the response from the Japanese restaurant industry presented in the following section. Surlemont and Johnsons (2005, p.589) research also indicated that, in their opinion, there were some flaws within the Michelin star system. In the first of these it was noted that there were restaurants included within the varied stars that did not merit their positions, which adds to the perception that there might be a problem with the quality and reliability of the system and its operating procedures. Secondly, the lack of a structured measurement process being implemented by Michelin, its awarding of stars being solely at the discretion of inspector reports, did mean that the chefs had no definable target to aim for. Instead they simply had to develop their own style and be patient, and hope that it would be noticed and appreciated by the Michelin inspectors at some stage. Another area that has been questioned with regard to the Michelin Star system is its prevalence for print guides. Although the company has recently introduced online facilities for consumers to respond to the content of the guides, the main method of information distribution is through the published guides, which at prices starting at around 9.99 ($20.00) is seen by some consumers to be quite expensive, especially as access to restaurant reviews and comments is freely available through the Internet. Bagozzi et al (2002), indicate that consumers pay a considerable amount of attention to peer pressure and comments, and the Internet provides them with access to this type of response. Others such as Zaltman (1998) also suggest that the reliance upon peers can be a strong determinate for purchase, thus if consumers recommend restaurant brands in many cases this will produce a more positive effect upon others than the professional approach of recommendations provided by Michelin. The recen t drop in guide sales in Europe shows that this situation is affecting the strength of the Michelin brand, at least in this geographical area, and is seen as part of the reason for the guides expansion into the US and Asia. In addition, there are competitors to Michelin Guides. There are two that are particularly worthy of note. The first, which has built a significant market share in the UK, is the AA Rosette system, which is awarded to hotels and restaurants for their culinary standards. In this case there is a five star system in operation, with the lowest being awarded to restaurants of note in their particular location to the highest being awarded to establishments that are considered to be world class. There are consumers and observers who believe that the AA Rosette system is a more reliable indicator of quality than Michelin. The other guide that is receiving good reviews, and like the Michelin guide originates from France, is the Zagat guide. What has brought this guide to the attention of culinary observers is the fact that its rating system is based upon an aggregation of the opinions of unpaid individual consumers their experiences of the restaurant establishment (Gobe 2002, p.139). Michelin would argue that this is not a professional approach to the determination of quality, standards and culinary skills. Nonetheless, the fact that the Zagat guide is increasing in popularity indicates that it is having an impact upon consumer choice and behaviour. 4.3 Industry reaction to the Michelin Brand Within the culinary industry itself there is considerable debate about the value of the Michelin star system, with the supporters and opponents of this accolade being equally vocal in expressing their views on the subject. For example, in terms of country bias, a survey of 791 Michelin-ranked restaurants conducted by Johnson et al (2005) conducted throughout eight countries indicated that France was favoured in the awarding of stars, with it being home to 62 percent of the one-star restaurants, 67 percent of the two-star restaurants, and 25 of the 32 three-star operations. Furthermore, its financial importance to financial success is also argued. For example, whilst Belasz (2002) suggests that holding a Michelin star can provide an establishment can be a key determinant for its financial success, Johnson et al (2005) disputes this claim, finding in their research that in most cases there was no indication of this being the case, at least in terms of profitability. However, Johnson et al did concede that the Michelin star made a difference to revenue in most cases, although this does not mean that the restaurant became more profitable as a result. The impact that the Michelin stars have had upon chefs and their reactions to the system has also been diverse. As Balasz (2001 and 2002) mentions in her research into behaviour and leadership within the hospitality industry, chefs belong to the rare species of individuals who are able to take on the duel role of businessperson and creator at the same time. Referring also to their dedication to the craft of culinary creation, Balasz also mentions that chefs approach this with an almost sacred obsession and in this respect they aspire simply to be the best. Therefore, it is not surprising that the Michelin star system has a significant affect upon these people. There are many chefs and culinary establishments that crave being awarded the stars and make little secret of this desire. For instance, in addition to the response from TV chefs Rhodes and Demetre (Video links 2008), one of their peers Gordon Ramsey, whose various establishments are said to currently hold the most number of stars (12), was also delighted with the recent additions to this elite club, which occurred with the recognition of his restaurant based in Manhattan, New York. In the Editorial (2007), Ramsey expounded the view that it showed the quality and customer value that the staff at the restaurant delivered to the customer. However, other US food critics and observers did not share Michelins opinion, branding the food as overcooked, rubbery, leathery and a distinct disappointment. Nevertheless, other American chefs are supporting of the Michelin rating system. Eric Ripert and Mario Batali, both of whom have been starred by Michelin have indicated that it is important to their businesses (Petkanas 2006). Ripert s