Effective development mechanism for public catering services in Azerbaijan

Adalat Baba Azizov

Journal number 1 ∘ Adalat Baba Azizov ∘
Effective development mechanism for public catering services in Azerbaijan

DOI: 10.52340/ekonomisti.2025.01.03

Summary

The purpose of the research work is to analyze the current state of public catering services in Azerbaijan. Also, the issue of researching and evaluating the development perspectives of public catering facilities by types was also considered. In the article, directions for improving the mechanism of regulation of public catering services in Azerbaijan were widely analyzed and important proposals for the further development of this field were considered.

Key words: Public catering, bar, cafe, restaurant, canteen, fast food, coffee shop, confectionery, pizzerias, snack bars, meatball restaurants.

JEL – 014, UOT – 33

Introduction

Public catering is a service sector engaged in the production and sale of ready-made food and semi-finished products. Public catering is an entrepreneurial activity related to the organization of the production, processing, sale and consumption of food products. In the post-Soviet years, public catering facilities in Azerbaijan were mainly divided into the following categories:

1) restaurant - a public catering and recreation facility offering consumers a range of comprehensively prepared dishes, including made-to-order and signature dishes, as well as alcoholic beverages, with the mandatory provision of waiter services;

2) cafe - a public catering and recreational establishment offering consumers a range of simple prepared meals, as well as alcoholic beverages, with the mandatory provision of waiter services;

3) bar - a public catering and recreational facility offering snacks, desserts and confectionery, as well as alcoholic beverages to consumers;

4) canteen - a public catering facility that provides independent services to consumers.

The composition of modern public catering is broader, including pizzerias, meatball restaurants, snack bars, coffee shops, confectionery shops, fast food, etc., which has literally turned public catering into a wide service area.

The presentation of menus to visitors in public catering facilities is recognized as an offer (public offer) to conclude a retail purchase and sale contract for the public catering goods specified in the menu.

Many people do not like the word "catering"; for them, it is a relic of the Soviet era. When they mention catering, the image of shabby, faceless interiors of cafes with dirty furniture, chefs in greasy aprons, and slippery waiters with disheveled hair comes to mind before the eyes of older people.

But even though there is no trace of that catering today, the word remains and gradually acquires a neutral, “non-Soviet” meaning. Public catering is a restaurant, a cafe, a pizzeria, a meatball restaurant, fast food... - all of this is public catering. For those who are completely disgusted by the word “catering”, there is a newer concept - “eating out” (eating away from home).

It is difficult to imagine the modern service sector without food establishments. Restaurants, cafes, and eateries open their doors to numerous visitors with hospitality, trying to attract them with impeccable cuisine, quality service, and affordable prices. Statistics show that the network of public catering facilities and the number of visitors to them are increasing year by year. This industry is extremely interesting for investors and those who want to start their own business. However, despite all its attractiveness, the food industry is a labor-intensive and energy-intensive industry that requires significant financial investment. And only if you competently organize the production process, choose the right technological equipment for public catering, and organize the production of high-quality products that are in constant demand among consumers, you can earn real income.

Organization of an effective catering mechanism

One of the main factors for the effective operation of public catering facilities is that they not only sell food, but also sell a beautiful atmosphere, pleasant entertainment and new experiences. If this factor is taken into account, it will distinguish you from your competitors and demonstrate the advantages that make customers choose you. In general, there are several conditions for the effective operation of the enterprise, which need to be considered:

Unique selling proposition - “We deliver pizza hot” is a unique selling proposition. Regular master classes, tea ceremonies and live concerts can also be organized. You can organize the sale of artisanal wines in the restaurant, offer visitors dishes made from organic products from local farmers - all this will be a unique selling proposition. The main thing is that it works for you. . Make sure you know your target audience. Draw portraits of typical guests of the establishment based on age, gender, social status, place of work, income level, etc. But use only criteria that really influence the choice, because segmenting visitors is for fun. Men and women may not like or dislike your offers to the same extent.

Preferred format – the unique selling proposition and the format of the business should be compatible with each other. If the latter does not meet expectations, change it to a more suitable one. For example, there are already many restaurants that offer sushi. A cheap establishment with meat dishes, fast food, coffee shop, national cuisine or beer restaurant will be more popular with visitors. Based on semi-finished products, you can start a fast food business with minimal investment.

Thoughtful menu – the experience of restaurateurs shows that in mid-priced establishments the menu should not be exaggerated. You can get by with 5-6 hot meat, 5-6 fish and 3-4 poultry dishes. However, even an elite restaurant should not have too diverse a menu so as not to confuse customers and not throw away kilograms of spoiled food.

Standard services – this is one of the dominant success factors in the catering industry. Each establishment must adhere to generally accepted principles and have its own standards to meet the needs of typical customers.

Marketing policy – proper promotion of a restaurant provides the largest share in its success in the market. The main thing is to choose the right marketing tools. Experience shows that social networks are the best practice tool in the catering industry. To figure out which marketing tool will work specifically for your business, you need to test everything and draw conclusions based on the number of customers (don't forget to ask what they're saying about you), the size of the average receipt, etc.

Restaurant staff – it is important to remember that the main employee of a restaurant is the chef. You will not be able to find a great advertising specialist, so build all your connections, contact the best recruitment agencies or promise a higher salary and ideal working conditions to your competitor’s chef. You can also invite a foreign chef who will bring status to the restaurant. Another important person in a restaurant is the administrator or manager, who is also the most trusted person of the leader.

Prices – what should be considered when setting the prices of dishes on the menu? In the catering industry, as a rule, the lower limit of prices is the cost price plus a profit margin set by the restaurateur. The additional value depends on the location and appearance, interior, food and beverage design, additional services, etc.

Product suppliers – don’t relax after signing a contract with two or three suppliers. It is important to remember that anything can happen in this field, they can disappoint you at any time. It is best to contact 5-10 other companies to place orders quickly. These should include both large suppliers and local farmers. Don't rely on a few regular suppliers. Don’t rush the documentation process right away – a trial period with a liability check never hurts anyone. Include a clause that allows you to terminate the contract in the event of serious violations by the supplier.

Cost management – often catering establishments save on products, personnel, advertising and non-core processes (security, cleaning). This approach cannot be called effective. It would be better if you create control over all processes occurring in the restaurant and understand where you are losing money. This may be suboptimal planning and improper storage of products, or long idle time of employees.

Additional profit – in 2020, food delivery was the leader in the restaurant market in terms of growth rates. This trend continues to strengthen in the following years. It is not clear how businesses that do not follow this trend will “survive”. So make sure to add an online ordering form to your website, or better yet, develop your own mobile app. If there are not enough resources for delivery within the city, consider delivering orders to the nearest areas or to several business centers located near the restaurant.

In a market economy, the efficiency of an enterprise's activities largely depends on the turnover of the enterprise, which in turn depends on the demand for products and services. The demand of the population arises from specific needs and requirements. Need is a demand that has taken a specific form depending on the level of culture and the characteristics of a person's personality. Considering the hierarchy of human needs, it can be argued that catering establishments satisfy the basic physiological need for food, as well as various social needs - communication, belonging to a certain group, etc.

Therefore, the main role of public catering is to meet the population's food needs. In our opinion, the implementation of this role is very important, because properly organized nutrition in enterprises leads to increased productivity, which in turn affects the efficiency of the enterprise. Rational and quality nutrition in schools, universities, and other educational institutions affects the formation of public health. Studies conducted on school health have shown that 5 The main reason for this is the poor organization of meals at school.0 percent of them have eating disorders. Properly organized nutrition in hospitals and other medical institutions directly contributes to the recovery of patients. Organizing catering to the population outside of working hours, whether through the sale of ready-made meals in catering facilities or through culinary departments, reduces the time spent on preparing meals and helps to facilitate women's housework.

Directions for improving the mechanism for regulating public catering services in Azerbaijan:

Public catering is one of the most profitable industries of all time. That is why there is so much interest in this field. . Modern public catering is full of innovations. This is natural, there must be healthy competition in order to develop, and innovations are at the root of healthy competition. Currently, the demands of modern customers have also changed, and attractive facilities, quality food, and low prices are among the factors that attract modern customers. If entrepreneurs pay attention to these facts, they will see that public catering is a truly profitable industry in the truest sense of the word. In the catering industry, it is not enough to just have a beautiful facility. . In general, public catering facilities should be provided with the necessary devices and equipment. In this area, special attention should be paid to refrigerators for high-quality storage of products, an ideal ventilation system for regulating temperature and humidity in the service hall, furniture, dishes, tools, etc.

So, why is public catering considered an important sector of the economy?

Public catering is considered an important sector of the economy for several reasons:

- Meeting the population's nutritional needs - properly organized nutrition in enterprises leads to increased productivity, which affects the efficiency of activities.

- Job creation – public catering establishments provide employment for the population by creating stable sources of income.

- Growth of the gross regional product - the development of such a network of enterprises helps to increase the region's contribution to the country's economy.

- Budget replenishment - the activities of food service establishments strengthen regional budgets through tax revenues.

- Improving the standard of living of the population – public catering provides services that help save time, improve leisure time, and strengthen social interaction.

The growing interest in the public catering sector in the Republic of Azerbaijan is reflected in statistical indicators. When looking at the statistical data for 2021, it becomes clear that for that year, the catering turnover in Azerbaijan increased by 9.2 times compared to 2006, reaching 979.1 million manat (see table 1).

Table 1

Key indicators of catering turnover

2006

2010

2015

2019

2020

2021

Catering turnover, million manats

106,2

417,8

1111,2

1655,2

759,6

979,1

Including

state

non-state

7,1

99,1

10,5

407,3

15,2

1096,0

15,4

1639,8

5,6

754,0

8,6

970,5

Physical volume indices of the exchange turnover, in percentage terms compared to the previous year

128,3

16,3

114,0

106,7

45,4

123,2

including

state

non-state

100,4

130.9

85,1

117,4

101,2

114,2

96,7

106,8

35,8

45,5

147,3

123,0

Number of business entities engaged in catering activities, units

7590

8697

15645

20878

21483

22783

including

state

non-state

105

7485

8660

15633

20859

21464

22771

Number of seats in catering facilities, thousand seats

242,1

289.5

575,7

906,5

934,6

1025,1

Catering turnover as a percentage of total

100

including :

state

non-state

6,7

93,3

2,5

97,5

1,4

98,6

0,9

99,1

0,7

99,3

0,9

99,1

Source:Statistical indicators of Azerbaijan, Baku, 2022, p. 328

When analyzing the data in Table No. 1, it becomes clear that in 2021, 970.5 million manat of the catering turnover falls on the non-state sector, and 8.6 million manat on the state sector. The table also shows that the number of business entities engaged in catering activities increased 3 times compared to 2006, reaching 22,783 units in 2021. In general, 99.1% of the catering turnover in 2021 fell to the non-state sector, and 0.9% to the state sector.

In 2022, the cost of paid services provided to the population in Azerbaijan increased by 132.2% compared to 2020, reaching 9253.4 million manats. The turnover of public catering increased by 2 times in 2022 compared to the corresponding period, reaching 1586 million manats (see table 2).

Table 2

Main indicators of paid services and public catering provided to the population

	2020	2021	2022
Cost of paid services provided to the population, million manats	6998.4	7758.2	9253.4
of which:
for legal entities	5257.0	5885.0	7019.8
Paid services index (compared to the previous year, in percent) of which:	72.1	104.8	108.0
legal entities	74.8	105.8	108.0
Cost of paid services per capita, manat	701.7	774.4	919.1
Household services, million manat	756.1	819.9	987.
Household services index (compared to the previous year, in percent)	73.2	103.9	107.6
Public catering turnover, million manats	759.6	979.1	1586.0
Public catering turnover index (compared to the previousyear, in percent)	45.4	123.2	137.0

Source:Azerbaijan in numbers, Baku, 2023, p.168

Looking at the data in Table 2, it becomes clear that the share of the cost of public catering services in the total paid services is 17.1%, which is 6.3% more than in 2020.

The establishment of a profitable catering system is one of the main factors in the development of tourism. In the development of tourism, the accessibility of prices, high quality and professional service in restaurants must coincide with the wishes of tourists. Therefore, great work is being done in this area in Azerbaijan, as in the whole world. The constant increase in the creation of modern and beautiful catering facilities in the country day by day is a clear example of all this.

Conclusion:

In order for a catering company to operate with a stable profit, it is necessary to develop a number of measures to increase the sales volume of its products. After all, as a rule, the potential of the building is complete, the renovation is extraordinary, and the technological equipment installed for public catering is operating at high efficiency.In addition to the dining room, most catering establishments have a banquet hall where ceremonial visits are held for guest groups. In the warm season, summer areas are opened where a certain range of drinks and goods are sold.

It is advisable to sell your products through a culinary store. It is equipped with counters and has the necessary types of refrigeration equipment, including chest freezers, which ensure the display of goods taking into account storage temperatures.

Some restaurant industry experts believe that it is necessary to conduct a precise classification of public catering establishments, because consumers should know in advance what to expect when visiting a particular point of sale. Others believe that true fans of delicious food and excellent drinks appreciate the atmosphere and level of service, not the correspondence of the menu to the official status of the establishment.

In public catering establishments of any type and class, the safety of life and health of consumers and the safety of their property must be ensured, and sanitary and technological norms and rules, as well a Sanitary and hygienic requirements for food industry enterprises (milk, meat, fish processing, bread, confectionery, fruit and vegetable, etc.) are based on relevant sanitary regulations and general rules, which have a number of general sanitary requirements for food industry entIn addition to the sanitary regulations established for food products, certain requirements are also imposed on employees of catering establishments.erprises.s fire and electrical safety requiremEmployees of public catering establishments must undergo mandatory medical examinations to protect public health and prevent the occurrence of diseases.ents, must be observed.

The executive has the right to establish rules of conduct for consumers that do not contradict the legislation (restriction of smoking, handing over outerwear to the wardrobe at the entrance when entering the hall, etc.). Relations arising during the sale of products purchased from outside and the provision of additional services in public catering facilities are regulated by the relevant sales or service rules. There should be a calculation for each product prepared in public catering facilities. The menu and assortment list should be based on calculation sheets drawn up for each dish and product. When settling accounts with consumers in public catering facilities, an invoice confirming the cost of the public catering service provided (the value on the receipt) and indicating the names of the dishes and products included in the service must be presented, along with the cash register receipt. The executive must provide consumers with the necessary information about the name, address, type, category, operating hours, culinary products offered, and services provided of his organization.

Increasing the efficiency of public catering is based on the principles of production intensification common to the entire national economy - the principles of achieving high results with the least expenditure of material and labor resources. It is necessary to improve the forms of division of labor in public catering, to apply the achievements of scientific and technical progress. The social forms of division of labor in public catering include the processes of concentration, specialization and cooperation.

Thus, it can be argued that public catering is an important structural element of social infrastructure, the role of public catering is quite significant and is aimed at fulfilling the main function of social infrastructure - creating a complex of conditions for economic development and ensuring the normal functioning of peoples life.

References:

Regulations of the Ministry of Justice of the Republic of Azerbaijan and the Ministry of Trade of the Republic of Azerbaijan on granting grades to facilities operating in the field of public catering according to the level of service, Baku, May 30, 1998, No. 106; May 10, 1998, No. 34/y.
Resolution of the Cabinet of Ministers of the Republic of Azerbaijan on approval of the Rules for trade, household and other types of services in the Republic of Azerbaijan, Baku, April 3, 2014, No. 94.
Azerbaijan in numbers, Baku, 2023, p.168.
Statistical indicators of Azerbaijan, Baku, 2022, p.328.
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