Running head: THE USE OF MICHELIN STARS RANKING SYSTEM AS A MARKETING TOOL IN HOSPITALITY ESTABLISHMENTS 1
The use of Michelin Stars Ranking System as a marketing tool in Hospitality Establishments
Aida …
Glion Institute of Higher Education
The use of Michelin stars ranking system in hospitality establishments 2
Table of Contents
Abstract.....................................................................................................................................2
Introduction..............................................................................................................................5
Problem statement..................................................................................................................5
Research Objectives...............................................................................................................6
Research Questions................................................................................................................6
Chapter 2...................................................................................................................................7
Literature Review.....................................................................................................................7
Hospitality establishments’ ranking system as a marketing tool...........................................7
Consumer needs and satisfaction...........................................................................................8
Consumer Behavior................................................................................................................9
Branding strategy and the Consumer...................................................................................10
Restaurant recognition.........................................................................................................11
Competitive advantage.........................................................................................................12
Overview of the literature....................................................................................................13
Chapter 3.................................................................................................................................15
Research Methodology...........................................................................................................15
The reaction of the Industry towards Michelin....................................................................16
Data Analysis.......................................................................................................................18
The reaction of consumers towards Michelin......................................................................18
The use of Michelin stars ranking system in hospitality establishments 3
Abstract
This paper investigates the use of the star rating system used by Michelin, in the
hospitality industry as a marketing tool, with the aim of advising Alain Ducasse; a Michelin
rated establishment in London. The approach is based on finding out whether the system can
be a marketing tool for promotion of the organization’s services. The competitive advantage
that emanates from holding a better rate may be effective in fostering the organization’s
objective. This paper takes into consideration the customer’s perspective by studying both;
the rating system and the customer’s behavior. In order for a Michelin rated establishment to
be well perceived, the Michelin rating system must first be well perceived by the market.
The use of Michelin stars ranking system in hospitality establishments 4
Chapter 1
Introduction
Marketing is one of the important aspects in any business. Hospitality industry is
made of different establishments that compete for customers from different parts of the
world. The Michelin stars ranking system has been accredited for being the best known star
system (Blah Le Guide Rouge, 2003, p. 16). Stars are given to restaurants in the hospitality
industry to acknowledge their standard. One star represents a very good establishment in its
category, two stars mean excellent cooking that is worth a detour, and three stars represent an
exceptional cuisine that is worth a special journey. An establishment that has acquired many
stars performs better than other firms and therefore the Michelin starts system has an impact
on business as a marketing tool. The system rates the quality of food separately from the level
of luxury. The Michelin rating system is the most respected and best known star ranking
system for quality and cuisines of restaurants in Europe (Blah Le Guide Rouge, 2003, p. 16).
The respect and extend in which customers value Michelin’s ratings, may or may not
be transferred to the brand of Alain Ducasse. The research will examine the value placed on
Michelin rated establishments before and after the rating. Alain Ducasse had two stars in
2009 and three stars in 2010. The management has to decide whether to retain Michelin’s
ranking or suspend it, after evaluating the effect it brings on the brand of the organization.
According to Marylou Costa (2011), industry rankings are highly esteemed in the industry
especially in the valuation of performance, and future potential of organization’s brands. This
paper will determine whether this statement is true.
Problem statement
The effect of star rating systems in the hospitality industry bears great uncertainty and
has unclear significance. One would expect a four star hotel to charge more than a three star
The use of Michelin stars ranking system in hospitality establishments 5
hotel which are located in the same city, but be surprised to find a contrary reality to these
perceptions. The ratings could be influenced by many other unanticipated factors including
tax obligations, among other quantitative measures which require research (Martin, 2012).
These uncertainties call for immediate research on the relationship between the effectiveness
of the rankings and the customer’s behavior. According to Grossman David (2004), there is a
great confusion over the star and hotel rating system, because some facilities are ranked high
but provide low customer services while others which are very efficient are ranked low.
Research Objectives
This paper aims at studying the Michelin star rating system, to determine whether it
can be used as a promotional tool in an attempt to give the hospitality establishment’s a
competitive advantage.
1. To assess whether Michelin star rating system can be used as a marketing tool
2. To analyze the use of Michelin star ranking system as a strategy for achieving brand
promotion in the hospitality industry.
3. To determine whether Alain Ducasse should use the Michelin star rating system to
compete against her rivals in the industry
Research Questions
1. Does the Michelin ranking system offer the hospitality establishments any promotional
advantage as a strategy for competitive advantage?
2. Is the Michelin star ranking effective as a driver of perceived value for hospitality
products and/or services, and can this be substantiated by the secondary data acquired
from GIHE?
The use of Michelin stars ranking system in hospitality establishments 6
Chapter 2
Literature Review
Hospitality establishments’ ranking system as a marketing tool
The Michelin stars ranking system classifies establishments in the hospitality industry
according to the quality of services they offer to the customers. A high rated establishment is
perceived as one that offers high quality services to the customers and therefore this increases
its competitive advantage in the market. Establishments therefore rely of the Michelin stars
ranking system as a marketing tool to expand their market share for economic and financial
games. The background of the ranking system is quite vast. In order to investigate whether
the ranks provided by Michelin have any effect, it is viable to ascertain whether the system is
well perceived by customers. From the background of the system, it may be stated that many
customers have in one way or another referred to the Michelin guide in the past. Michelin
green guides provided a wealth of destination information and travel guide including tips for
longer trips. The guides can be rated based on the efficiency, organization and accuracy of
the information on art, architecture, restaurant and hotel information (Michelin guides, 2011-
2012).
The star represents the quality provided by the hotel in terms of amenities and
services. Highly ranked establishments will be perceived to be provider’s of high quality.
However, it must be determined whether the process of awarding these stars is fair and
viewed by the public to be fair. Either way, the customer’s response will dictate whether the
ratings have any effect at all (Blank, 2007). The hospitality ranking system is partially
responsible for the growth in the hospitality industry, as a result of competition between
different establishments to meet the requirements for the highest number of stars (Muller,
1999).
The use of Michelin stars ranking system in hospitality establishments 7
Ranking systems are important as methods of comparing the standards of different
hospitality establishments internationally (Muller, 1999). Although the ranking system isn’t
focused on marketing the organization, but as a guide to customers, it is an indirect tool for
increasing quality services in different hospitality establishments. The management of
hospitality establishments has to assess whether the ranking system that they endorse, relates
to the needs and expectations of their customers. Ranking systems which fail to influence the
behavior of customers are not essential in improving the position of the organization in the
industry.
Consumer needs and satisfaction
The organization must understand the consumer in order to satisfy their needs.
According to the study carried out by Porte (2004), and Szmigin (2003), the success of any
business strategy is dependent on the extent to which it meets perceived consumer
satisfaction. The aim of advertisements and other promotional services that are carried out in
business organization are meant to create competitive advantage in the market.
Promotional activities are conducted to increase the consumer awareness about
existence of a particular product in the market. In the hospitality industry, the Michelin stars
ranking system can be used as an effective strategy to communicate to the consumers about
the quality of services offered in a particular establishment. Consumers are rational and
therefore they focus on maximization of utility subject to their incomes. They would perceive
an establishment with more stars in the ranking as one that can offer better quality services
and therefore they would be attracted to it. This will benefit the establishment significantly
since the increased customers imply an increase in the volume of sales. As a result, the profits
of the establishment will increase which facilitate realization of the goals of shareholders.
Firms view the Michelin stars ranking system as an ineffective evaluation scheme
especially before they have exercised its use. However, once they are rated and they continue
The use of Michelin stars ranking system in hospitality establishments 8
to improve the quality o services they offer, they acquire benefits that make the management
develop positive attitudes towards the rating system. In addition, they become more
competitive since they can be compared with other firms in the industry that have used the
rating system before. It is therefore important for the firms to understand consumer behavior
before they can apply the rating system to increase competitive advantage in the market.
The satisfaction from meals may form just a segment of the overall vacation of such
customers (Atila and Fisun, 2003). Customers who value esteem and self actualization need
more than the basic levels and will be enticed by the quality of services more than the price
levels. These customers will use the hospitality guide and Michelin stars ranking system to
find the best establishment for their vacation. They will prefer to make a statement by
separating themselves from the crowd (Gupta et al, August 2007). It might be a sales person
who wants to entice a potential client, or a politician who wants to make a statement or a
celebrity who values his/her status.
Consumer Behavior
The correlation between brand promotion and star ranking systems greatly depends on
the behavior of consumers. Consumer reactions may emanate from psychological, physical or
emotional influence. However, the most important element is one’s memory. The success of
many brands has resulted from consumer’s free promotion. A customer who remembers a bad
experience from a restaurant will not repeat such an experience, and tries to inform others
about his/her experience. In such a case, the ranking of the establishment will not avail much
(Zaltman 2003, p. 186).
According to Bagozzi (2002, p.132), both the conscious and subconscious of the
consumer affects their future decisions. The owner of the restaurant should not underestimate
his/her customer’s memory, because it will shape their predetermined judgment about the
The use of Michelin stars ranking system in hospitality establishments 9
quality they are likely to receive from the establishment (Zaltman et al, 2002, p.68).
Furthermore, the memory of a past experience will prevent the promotional attributes
received from the ranking from taking effect, after the negative assumption spreads through
the informal setting, developed by the consumers.
Branding strategy and the Consumer
The Michelin ranking system offers longevity for the Michelin brand which leads to
the development of an association between the Michelin brand and the ranked
establishment’s brand, in the mind of the consumer (Johnson et al., 2005). The establishment
is at an advantage because ratings are not permanent, which offers the organization an open
opportunity to enforce measures that will enable it to reach the ideal rank. However, using the
Michelin star as a promotion strategy is limited to what Michelin may allow (Grimes, 2005
and Hickman, 2008).
In the hospitality industry, consumers will quickly relate a brand to specific attributes.
For instance ‘McDonalds’ will automatically be related to the image of cheap, fast, and
variety of food or burger. This depth of association in the mind of consumers might not be
easily altered (Haig, 2004, p.78 and 85). The Michelin star system has created the image of
quality in the consumers’ mind. However, this quality has been branded the image of high
prices, which also creates an image of ‘beyond the bounds of affordability’ in the minds of
consumers (Surlemont et al., 2005).
Porter (2004) argues that the differentiation of quality and prices provides room for
several competitive advantages, especially for consumers at the higher level of the hierarchy.
Zaltman (2003, p.227), also supports this view by stating that differentiation enables
satisfaction of consumer’s needs through decision-making process as influenced by peers.
The Michelin ranking system may invest in peer influence as manifested in the hospitality
industry. Several studies indicate that consumers value the connection towards certain groups
The use of Michelin stars ranking system in hospitality establishments 10
and segments of people. People may dine in a specific restaurant just to make a statement
about the consumer group that they belong to (Maslow, 1998).
Restaurant recognition
Many hospitality establishments recognize and value the Michelin star system. Those
with low ratings cannot hide their disappointment, while those with higher ratings express
their joy (Elliot, 2008). This response indirectly affects the behavior of consumers. According
to the Michelin Guide (2008), the Michelin rating system makes a difference in some sectors
in the industry. Restaurants which receive the rating often aspire to use it as a marketing tool
in competition against rivals in the industry. This competition is characterized by the
commitment to offer quality food, enhance style, and increase luxury status (Willan, 2007).
The Michelin Star rating system
The Michelin star rating system may have a substantial number of critics but still
carries authority in its processes. It can be identified as a brand on its own and is easy to
recognize, having a clear and well understood identity and definition. The desirability of the
star emanates from its pursuit for quality using anonymous but qualified judges. Michelin
stars asserts in its guide (2008), that their ratings are useful marketing tools used by
hospitality establishments for a competitive edge, just like FMCG (fast moving consumer
goods) brands uses the seal of approval in order to gain a USP (unique selling proposition)
and be ahead of their competitors (Costa, 2011).
The Michelin guide was first introduced in France in 1900, with the original intention
of assisting drivers with travel advice (Johnson et al., 2005). By 2005, a million copies of this
guide were sold in eight countries. Restaurants that need to be included in the guide were to
be visited and their meals judged before they were added. According to Michelin, the visits
by inspectors show a great level of independence than other guides, because no advance
notice is issued to the restaurant before inspection (Balasz, 2001). Over 70 inspectors operate
The use of Michelin stars ranking system in hospitality establishments 11
around Europe, and have more than five years experience in hotel and catering industry. The
stars can be added or removed from an establishment, thereby creating corresponding
promotion changes.
Competitive advantage
Researchers such as Yuksel and Yuksel (2003), Johnson et al (2005), and Balasz
(2001), present mixed views about the relevance of Michelin star system. According to
Yuksel and Yuksel (2003), a study of the system in Japan revealed that it fails to take into
consideration the people factor. These authors indicate that it does not consider the main
quality satisfaction and reliability attributes, which are responsible for causing repeat visits to
the establishment by the customer. Bagozzi et al., (2002), also pointed out the importance of
consumer satisfaction during the study of consumer behavior. They indicated that the impacts
of the system will be evident once the procedures incorporate the consumer behavior, in
terms of satisfaction.
The star is presumed to offer an establishment, the competitive edge against rivals.
This implies that management of different establishments can adapt the use of the Michelin
star model as one of competitive tools to acquire competitive advantage in the market. This
will facilitate acquisition of more customers and therefore the market share of an
establishment that uses the rating will increase significantly. The profits of the establishment
will increase thereby facilitating improvement of the welfare of shareholders. In addition, the
utility of consumers will be maximized which will make them to become loyal customers I
the future.
According to Surlemont and Johnson’s (2005, p.589), studies indicate that some
establishments are accredited with stars which do not merit their position. This raises several
questions over the quality and reliability of the system. Moreover, since the system has no
structured measurement process, the awarding of stars is the discretion of the inspectors. This
The use of Michelin stars ranking system in hospitality establishments 12
means that any flaws by Michelin inspectors could cost innocent establishments their
competitive advantage. It also increases risks of competitors illegally manipulating
inspectors, in a bid to get ahead of the competition.
Based on the previous argument, the establishments with the best cuisine may suffer
loss against those with luxurious settings in case the ratings impact on the competitive
advantage of the establishment. However, the ability to issue and withdraw stars places the
establishments on toes to either get one more star, or maintain the number of stars acquired.
This is the ideology that frames the competitive advantage theory. Alain Ducasse rating on
the Zagat is better than the rating from the Michelin system. This indicates that the two rating
organizations apply two different approaches. Competitive advantage may thus be dependent
on the system used, rather than the quality available.
Overview of the literature
Many authors continue to discredit the attributes of Michelin rating system as a
marketing tool due to the lack of clarity and low value emanating from its ranking (Satran,
2011). According to Wells (2003, Para. 7), the system recently has concentrated on luxury at
the expense of cuisines. He insisted that questions have risen on whether Michelin has
reliable indicators for the quality metrics that it purports to measure. Most researchers support
this argument by stating that the system is only applicable to the higher level of customer
needs (self actualization and esteem needs), and does not in any way influence average
customers (Maslow, 1998).
Some customers perceive the influence of the Michelin system to be closely related to
the environment of the restaurant and the pricing strategy, as opposed to delivery of
consumer service satisfaction (Snyder and Cotter 1998). Contrary to these opinions,
employees and owners emphasize that the system has a broad impact on the strength of the
The use of Michelin stars ranking system in hospitality establishments 13
establishment’s brand (Balasz, 2002). They argue that consumers rely on the assurance of
quality offered by Michelin rating system.
The table shown below lists the hospitality establishments by Michelin. Bib
Gourmand is a new category in the Michelin rating system, which includes establishments
that do not have a star, but are in the process of getting one in the nearest future (Michelin
Guides, 2008).
Table 1: Michelin guide Released January 2012
Establishment Town County Chef Stars 2012
Stars 2011
Fat Duck Bray Windsor & Maidenhead
Heston Blumenthal
3 3
Waterside Inn Bray Windsor & Maidenhead
Alain Roux/Fabrice Uhryn
3 3
Gordon Ramsay Chelsea Kensington and Chelsea
Clare Smyth 3 3
Alain Ducasse at The Dorchester
Mayfair Westminster (City of)
Jocelyn Herland 3 3
Midsummer House Cambridge Cambridgeshire 2 2Gidleigh Park Chagford Devon 2 2Le Champignon Sauvage
Cheltenham Gloucestershire 2 2
Whatley Manor (The Dining Room)
Malmesbury Wiltshire 2 2
Hand and Flowers* Marlow Buckinghamshire 2 1Restaurant Sat Bains* Nottingham Nottinghamshire 2 1Le Manoir aux Quat'Saisons
Oxford/Great Milton
Oxfordshire 2 2
Source: Michelin guide, 2012
The empirical data shown in the table insinuates that the higher the star, the fewer the
number of establishments. It also reflects on the vastness of the operation of Michelin
internationally.
The use of Michelin stars ranking system in hospitality establishments 14
Chapter 3
Research Methodology
The data from secondary sources indicate that the application of Michelin rating
system has spread across many countries. This data includes the star rating for restaurants,
Hotels, and Bib Gourmand around the world. Alain Ducasse operates in a diverse sector of
leisure and tourism, in terms of the number of market players and the underlying business
models applied by them. From the data collected from secondary sources, Michelin covers a
total of 4,500 hotels and restaurants (Hickman, 2008). Many of these establishments fall
below the one star rating, and decline upwards. The narrow path between two stars and three
stars leaves many establishments fighting for a place in the highest rank. The research on this
industry reveals that the nature of the industry influences the need for the higher rating status.
Empirical data on the leisure and tourism industry for this study is obtained from external
stakeholders including academic journals, newspapers, and regular surveys.
The research design was not solely build on the research design of primary sources
because of the size on the industry, and the amount of time available for the research.
Furthermore, the costs involved in carrying out interviews and filling questionnaires would
be very prohibitive. Moreover, a careful exploratory investigation on the data field revealed
that for this specific study, secondary data would be more applicable, because of the
availability of extensive coverage (Punch, 2008). In order to control the element of bias, the
databases from various sources were compared on their view about the relevance of the
Michelin system, alongside those with a contrary view.
The sources were analyzed to determine whether a relationship between consumer
behavior, branding, and consumer needs, showed any correlation with the ranking system
provided by Michelin. The research was basically undertaken from the UK database, in order
The use of Michelin stars ranking system in hospitality establishments 15
to reduce the number of factors which might distort the results. The Michelin guides receive
competition from other rating organizations in the UK. The two of these rivals that are worth
noting include AA Rosette system which has a significant base in the UK, and Zagat.
Some sources imply that AA Rosette is a more advanced rating system than Michelin
especially in terms of measuring quality. AA Rosette system applies a five-star system as
opposed to Michelin’s three stars. Zagat originates from France like Michelin and has a rating
system that is based on an aggregation of unpaid individual consumers (Gobe, 2002, p.139).
Although Michelin argues against Zagat’s approach, terming it as being unprofessional, it
continues to increase in popularity as it impacts on consumer behavior and choice.
The reaction of the Industry towards Michelin
A survey of 791 restaurants that are Michelin ranked, that was conducted by Johnson
et al (2005), in eight different countries showed that France had the highest number of stars,
having 25 of the 32 three-star establishments, 62% one-star restaurant, and 67% of two-star
restaurants. The database on the financial success from such ratings is still inconsistent.
Balasz (2002) suggested that having a star from Michelin could boost the organization’s
financial success. Contrary to this opinion, Johnson et al (2005), disputes these findings and
claims that in his research, there was no indication of higher profits after a higher rating. He
however, admits that the Michelin star had an impact on the revenue of the organization.
Although the Michelin star could increase the organization’s revenue, insignificant
difference was reflected on the establishment’s profitability. Moreover, Balasz (2002), in her
research found out that Michelin ratings had an adverse impact on chefs. She mentioned that
chefs approach their work with sacred obsession, having the role of both a business person
and creator at ago (Balasz, 2002). The chefs greatly value the rating, with a craving of being
awarded a star for their craft of culinary creation. Gordon Ramsey has various hospitality
establishments that have the most number of stars, namely 12. He could not hide his delight
The use of Michelin stars ranking system in hospitality establishments 16
when his Manhattan based restaurant was added to this elite club. He emphasized that the
recognition showed the customer value and quality offered to customers (Video link, 2008).
Some U.S food critics did not support Michelin’s opinion on several occasions,
branding the food that has been rated as leathery, overcooked, rubbery, or a distinct
disappointment. Other American chefs supported Michelin’s ratings and pointed out that it
was important to their business (Petkanas, 2006). Ripert and Bitali are some of the owners of
restaurants, who indicated that they observed profitability in their businesses after being
starred by Michelin (Petkanas, 2006). Similarly, a survey conducted in Holland and
Netherlands indicated that 53.84% of restaurateurs considered that being included in the
Michelin guide was a major promotional activity; 30.77% of those surveyed agreed that the
guide offered a platform for word of mouth promotion by consumers (Gehrels et al 2006,
p.51).
Some renowned chefs, who have been highly rated by Michelin for quite some time,
joined the criticizer’s wagon, stating that they prefer their own standards. Some of these
defectors include Alain Senderens of the Lucas Carton Restaurant from Paris and Landanis
from London. Despite being in the three star level of the Michelin system for three decades,
renounced his inclusion and preferred a personal approach of increasing profitability levels.
The chefs argued against Michelin’s approach, stating that it ignored the essentials for
consumer satisfaction. They also expressed their concerns over the costs required to achieve a
star status (Petkanas, 2006).
The star system has been categorized by many consumers, as an inter-chef rivalry,
with little benefits reaching the consumer. The process of this rivalry leads to increased food
prices. Although Michelin is highly accredited in France, it is losing its appraisals in London
and has no strong backing in Japan (Frackler, 2008). Some chefs in Japan turned down the
offer to be ranked under the star system, arguing that the inspectors lack knowledge, of the
The use of Michelin stars ranking system in hospitality establishments 17
local culture in Japan. Many concerns arise about the transparency of Michelin systems. The
development of the Michelin system in New York had serious concerns of bias. All
restaurants awarded the three stars status had French cuisines or were being run by French
chefs. Alain Ducasse was run by Alain Ducasse, Vongerichten was run by Jean-Georges, and
Le Bernadin was run by Eric Ripert. Many competitors exclaimed this to be as a result of
unfair measurement of standards (Elliot, 2008). Alain Ducasse had 2 stars in year 2009 and 3
stars in year 2010. This implies that the establishment improved the quality of its services
between year 2009 and 2010 and therefore it should continue to use the Michelin stars
ranking system to acquire a competitive advantage future.
In 2005, a restaurant in Belgium was rated as Bib Gourmand before it even opened for
business (BBC News, 2005). The validity of the inspections was further discredited when a
serving inspector wrote a book admitting that there was bias towards certain chefs. These
chefs were guaranteed a three star rating regardless of the inspection results. He further
explained that the number of inspectors delivering the services were not enough (BBC News,
2005).
Data Analysis
A dual approach of data analysis becomes effective, because the first stage correlates
the performance of the Michelin rated establishments after a higher star and before receiving
the star. The second stage involves the evaluation of the relevance and practical application,
of the theories studied under the literature review.
The reaction of consumers towards MichelinConsumers perceive the role of restaurants to be the satisfaction of their needs
(Bagozzi, et al 2002). This means that restaurant owners must customize their business to
exhibit sufficient differentiation, in an attempt to lure consumers to prefer their establishment
over others (Muller, 1999, p. 401). According to the research by Yuksel and Yuksel (2003, p.
The use of Michelin stars ranking system in hospitality establishments 18
52), consumers have different levels of purchasing determinants. The value of quality and
satisfaction is measured differently by different consumers (Zaltman, 2003).
The Michelin star system concentrates on the quality end of the market. The chefs
compete on achieving the perceived quality, leading to a similar experience. Therefore, the
element of choice is very limited in the eyes of the consumer segments. Yuksel asserted this
in his Japanese research, stating that there are five different customer segments with each
having different expectations (Yuksel and Yuksel, 2003). The consumer seems to be drifting
away from the habit of responding to information that is provided by professional sources.
According to the research conducted by Polesz (2004, p. 317), the modern consumer relies on
a variety of sources other than professional opinion.
The consumer behavior has changed significantly, in terms of how consumers make
decisions. Polesz’s research signifies that the modern consumer is more likely to select the
opinion of other consumers on social sites or elsewhere, than concentrate on professional’s
view. Zagat seems to be having an edge against Michelin for this reason. The hospitality
industry has seen major expansion with increased leisure and social activities and the outburst
of the internet. Zaltman determined that the degree of trust between consumers is greater than
that of a consumer and a professional organization. This leads to the argument that the
relevance of Michelin could be deteriorating (Zaltman, 2003).
The use of Michelin stars ranking system in hospitality establishments 19
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