The Restaurant Business

1. Introduction to Hospitality, 6e and Introduction to Hospitality Management, 4e The Restaurant Business John R. Walker Chapter 6

2. The Restaurant Business • A place to relax and enjoy the company of family and friends and to restore energy • As a society we spend about 47.5% of our food dollars away from home • The word restaurant comes from the French word meaning restore • Multi-billion dollar business employing 12.8 million people

3. Classical Cuisine • North America gained most of its culinary legacy from France through 2 main events: • French Revolution in 1793—caused the best French chefs of the day to lose their employment because their bosses lost their heads! Many chefs came to North America as a result. • In 1784, Thomas Jefferson spent five years as envoy to France, and brought a French chef to the White House when he became president. • Mari-Antoine Carême (1784–1833) is credited as the founder of classical cuisine • August Escoffier (1846–1935) is also noted for his many contributions to cuisine

4. Classical Cuisine • There are five mother sauces: Béchamel, Velouté, Espagnole, tomato, and hollandaise • Nouvelle cuisine is a lighter cuisine and is based on simpler preparations—with the aid of processors, blenders, and juicers—using more natural flavors and ingredients

5. Food Trends and Practices • Chefs will need: • A strong culinary foundation. • Multicultural cooking skills and strong employability traits. • Additional management skills.

6. Culinary Practices • To be a good cook, one must understand the basic techniques and principles of cooking. There are six skill areas that are important to becoming a successful chef: cooking, menu development, sanitation/safety, accounting, computer training, food trends and practices for the new millennium. • One of the most important things to learn about the industry is that you can’t do it alone; it’s a team effort.

7. Developing a Restaurant • The restaurant: • Operating philosophy represents the way the company does business. • Market is composed of those guests who will patronize the restaurant. • Concepts are created with guests in mind and should fit a definite market. • Location should also appeal to the target market. • Ambiance, orthe atmosphere,that a restaurant creates has both immediate conscious and unconscious effects on guests.

8. Operating Philosophy, Mission,Goals, and Objectives • The philosophy of the owner is the heart of the enterprise. • This represents the way the company does business. • It is an expression of the ethics, morals, and values by which the company operates.

9. Restaurant Market • The market is composed of those guests who will patronize the restaurant. • A niche is a specific share or slot of a certain market. • The catchment area is a given radius or area where potential customers are—could be a one or two block radius in a big city or a two or five mile radius in rural areas.

10. Restaurant Concept • Successful concepts are created with guests in mind. The concept represents the type of restaurant and clientele—it is an impression or an image that appeals to certain markets (casual, children, formal, family, ethnic, etc.) • The restaurant business with the right location, food, atmosphere, and service is going to get a good market share and make a good return on investment.

11. Restaurant Location • The concept should fit the location and location fit the concept. The location should appeal to the target market. • Rent/lease costs should be between 5 and 8 percent of sales. • Some location criteria include; demographics, average income of catchment area, zoning, visibility, accessibility, parking, city, suburban, etc.

12. Restaurant Ambiance • The atmosphere that a restaurant creates has both immediate conscious and unconscious effects on guests. • The immediate conscious effect is how guests react to the ambiance. • The subconscious is affected by mood, lighting, furnishings, and music.

13. Sustainable Restaurants • The average American meal has a shockingly large carbon footprint, usually travelling 1,500 miles to the plate and emitting large amounts of CO2. • Each meal produces 275 pounds of waste a day, making restaurants the worst aggressors of greenhouse gas emissions in retail history. • Utility costs are a big line item for restaurants, accounting for a median of between 2.3 percent and 3.6 percent of sales.

14. Menu Planning • The menu may be the most important ingredient in the restaurant’s success • There are six main types of menus: • A la carte menus—items are individually priced • Table d’hôte menus—a selection of one or more items for each course at a fixed price • Du jour menus—lists the items “of the day” • Tourist menus—used to attract tourists’ attention • California menus—are so named because in some California restaurants, guests may order any item on the menu at any time of the day • Cyclical menus—repeat themselves

15. Menu Planning • The many considerations in menu planning include: • Needs and desires of guests • Capabilities of cooks • Equipment capacity and layout • Consistency and availability of menu ingredients • Price and pricing strategy (cost and profitability) • Nutritional value • Accuracy in menu • Menu analysis (contribution margin) • Menu design • Menu engineering • Chain menus

16. Classifications of Restaurants • There is not a single definition of restaurant classification. Most experts agree there are two main categories – independent and chain restaurants. Other categories include fine dining, quick service, ethnic, family, dinner house, occasion, casual, etc. • Some restaurants may fall into more than one category. For instance, a restaurant can be both ethnic and quick service, such as Taco Bell.

17. Classifications of Restaurants • Individual restaurants are typically one or more owners who are usually involved in the day-to-day operation of the business. • Chain restaurants comprise a group of restaurants, each identical in market, concept, design, service, food, and name. Part of the marketing strategy is to remove uncertainty from the dining experience.

18. Fine Dining • A fine dining restaurant is one where a good selection of menu items is offered – at least fifteen or more different entrees cooked to order and nearly all the food being made on the premises from scratch or fresh ingredients.

19. Celebrity Restaurants • Celebrities who may or may not have F & B backgrounds own these operations. • The operations are designed to be entertaining, drawing heavily on the notoriety of their owners. • Celebrity restaurants generally have an extra zing to them…a winning combination of design, atmosphere, food, and perhaps the thrill of an occasional visit by the owner(s).

20. Steak Houses • The steak restaurant is still strong in spite of recent nutritional concerns. To remain more competitive, many operations are adding “value priced items” such as chicken or fish. These items serve to attract more customers. • The upscale steak house, like Morton’s of Chicago, Ruth Chris’s, and Houston’s, continue to attract the expense account and “occasion” diners.

21. Casual Dining and Dinner House Restaurants • The types of restaurants that can be included in the casual dining restaurants category are: midscale casual restaurants, family restaurants, ethnic restaurants, theme, and quick-service/fast-food. • The trend in dinner house restaurants has been toward more casual dining. Many dinner house restaurants have a casual, eclectic décor that may promote a theme.

22. Family Restaurants • Family restaurants evolved from coffee shop restaurants. Many are individually or family operated. • Most often they offer an informal setting with a simple menu and service designed to please all of the family. • The lines separating the various restaurants and chains in the family segment are blurring as operators upscale their concepts.

23. Ethnic Restaurants • The majority of ethnic restaurants are family owned and operated and sprang up to cater to tastes of various ethnic groups. • The fastest growing segment of ethnic restaurants is Mexican.

24. Theme Restaurants • Many theme restaurants are a combination of a sophisticated specialty and several other types of restaurants. • They generally serve a limited menu but aim to wow the guest by the total experience. • People are attracted to theme restaurants because they offer a total experience and a social meeting place.

25. Quick Service/Fast Food • This quick-service sector really drives the industry. Quick-service or fast-food restaurants offer limited menus. • In an attempt to raise flat sales figures, more quick-service restaurant (QSR) chains are using co-branding at stores and nontraditional locations, including highway plazas and shopping centers.

26. Hamburger • The world’s greatest fast food success story is undoubtedly McDonald’s. McDonald’s story is amazing because it’s larger than the next three mega-chains combined – Burger King, KFC, and Pizza Hut. McDonald’s is now in 117 countries. • Each of the hamburger restaurant chains has a unique positioning strategy to attract their target markets. Burger King hamburgers are flame broiled, and Wendy’s uses fresh patties.

27. Pizza • The pizza segment continues to grow due to delivery services. • The segment continues to grow by marketing discounts and continuing its very successful delivery business.

28. Chicken • Chicken has always been popular, in part because it is inexpensive to prepare, readily available, versatile, and perceived as a healthier alternative to burgers. • KFC dominates the chicken segment with a worldwide total of more than 15,000 units.

29. Sandwich Restaurants • Sandwich restaurants are a popular way for entrepreneurs to enter the restaurant business. • Subway is a particularly successful chain in this segment. Part of its success may stem from the strategy of investing half of the chain’s advertising dollars in national advertising.

30. Bakery Café • Headed up by Panera Bread with the mission of “a loaf in every arm” and the goal of making specialty bread available to consumers across the country. • Panera focuses on the art and craft of breadmaking.

31. Trends in Restaurant Business • Demographics • Branding • Alternative outlets • Globalization • Diversification within various dining segments • Shared locations, • More points of service • A new focus on Las Vegas.

32. The End