The Restaurant

Business

Chapter 7

Copyright © 2010 by John Wiley & Sons, Inc. All Rights Reserved

THE RESTAURANT BUSINESS

• The word “restaurant” covers a broad

range of types of operations (restorer of

energy)

• The term “food service” is even more far

reaching , encompasses all sorts of public

and private locations that provide food for

sale

• Servicio de alimentación

– Se puede definir como el proveer alimentos

totalmente preparados para su consumo

inmediato.

– Pueden ir desde restaurantes de full-

service hasta de self-service buffets. De

fine restaurants to take-out operations

(on- or off- premise)También pueden ser

independientes, de cadena o franquicia.

Tipos de Foodservice

• Comerciales

– Independientes

– En hoteles

– Clubes

– Catering

– En otros establecimientos

– “Eatertainment”

• No comerciales

– Escuelas

– Militares

– Correccionales

– Hospitales

– Comedores

Industriales

THE VARIED FIELD OF FOOD

SERVICE• Restaurants (and the larger food service industry)

represent an important part of North American

society – for most of us it is an everyday activity

• Think of your last “restaurant occasion” Breakfast?

Lunch? Dinner? Coffee? Snack?

INDUSTRIA DE LOS

ALIMENTOS• NRA (National Restaurant Association)

• https://www.restaurant.org/News-Research/Research/What-s-Hot

• 2014 Facts at a Glance

• $683.4 billion: Restaurant industry sales.

• 3.6%: Restaurant industry sales increase in nominal terms.

• 1.2%: Restaurant industry sales increase in real (inflation-adjusted) terms.

• 990,000: Restaurant locations in the United States.

• 13.5 million: Restaurant industry employees.

• 10%: Restaurant workforce as part of the overall U.S. workforce.

• 47%: Restaurant industry share of the food dollar.

• Eight in 10: Restaurant owners who started their industry careers in entry-level

positions.

• Nine in 10: Salaried restaurant employees who started as hourly workers.

• Nine in 10: Restaurants with fewer than 50 employees.

• Seven in 10: Restaurants that are single-unit operations.

• 3.8 veces a la semana el comer fuera

• 45.8% del presupuesto de comida se gasta en establecimientos de alimentos

• Desde 1970 crecimiento del 7.5% anual

• Agosto y Sábado los más populares

• Comer fuera: cumpleaños (50%), día de las madres y día de San Valentín

• La comida más popular: Italiana, china y mexicana

• http://jobs.aol.com/articles/2014/10/06/how-working-at-mcdonalds-prepares-you-for-bigger-and-better-job/

México

• http://canirac.org.mx/pdf/canirac-20110713-cifras-del-

sector-restaurantero.pdf

Classifications of Restaurants• There is not a single definition of restaurant

classification.

• Most experts agree there are two main categories –

independent and chain 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.

• Other categories include fine dining, quick

service, ethnic, family, dinner house,

occasion, casual, etc.

• We can classify them by price, service

level (of type), menu, 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.

THE VARIED FIELD OF FOOD SERVICE

• Some segments of the industry with which you should be familiar include:

• Quick-service restaurants (QSR)– http://www.qsrmagazine.com/reports/qsr50-2012-top-50-chart

• Fast Casual– http://www.qsrmagazine.com/reports/top-10-fast-casuals

• Casual dining– http://nrn.com/article/consumers-rank-favorite-restaurant-chains#ixzz0vqOOFPlb

• Fine dining– http://www.executivetravelmagazine.com/slideshows/americas-best-fine-dining-restaurants/3

• Others include ice cream, coffee shops, food courts, etc.

CLASSIFICATIONS

• In the next segment, we will classify

them into “dining” and “eating”

http://algarabia.com/top-10/top-10-

restaurantes-raros/

THE DINING MARKET vs. THE

EATING MARKET

• Restaurants serve both:– social needs (dining) and

– biological needs (eating)

• some restaurants serve one or the other

while some serve both markets

• The dining market is defined as including

those restaurants that primarily serve our

social needs

• People will eat in restaurants (that makeup

the dining market):

– to escape from boredom

– to socialize

– to have a different experience

– and for convenience

THE DINING MARKET

• Certain elements of the dining market

distinguish these restaurants from the eating

market:

– the importance (and sophistication) of service

– the customer

– the occasion

• The most obvious example of a restaurant

type that makes up this market is fine

dining

THE DINING MARKET

• Fine dining restaurants tend to be characterized as:

– full-service

– Small

– Independent

– high-quality food and service

– nice ambience

– Expensive

– http://www.theworlds50best.com/

• Casual upscale restaurants are

characterized by:

– sophisticated menus

– excellence in food

– strong management (typically run by chains),

– good wine lists but are slightly less expensive

and more casual than traditional fine dining

restaurants

THE DINING MARKET

• Examples of casual upscale chains would

include.

– Houston’s, Mimi’s, Cheesecake Factory, and

McCormick & Schmick’s, Mortons

– http://www.mccormickandschmicks.com/

THE EATING MARKET

• The eating market is differentiated from the

dining market in that it caters more to meeting

biological needs

• The best example would be quick-service

restaurants or QSR

• The other primary segment is the family dining

segment which offers table seating and full

service (examples, Denny’s, IHOP, and Cracker

Barrel)

– http://www.vips.com.mx/

THE EATING MARKET

• The eating market can be sub-divided into:

– (1) on-premise and

– (2) off-premise dining

• Off-premise can be further classified into:

– Takeout (or take-away)

– Drive through

– Delivery

• Together, these three areas have grown tremendously

as a result for customers’ demand for speed and

convenience

The Eating and Dining Markets

Fine DiningCasual

Dining

Fast

CasualQSR

Upscale

CasualFamily DiningVending

HIGH CHECK AVERAGE

RESTAURANTS• High check average restaurants also

known as fine dining restaurants

• Fine dining restaurants are solidly

established as serving the dining market

• The “average check” begins at about

$30.00 and goes up from there – a notable

$200 meal in New Orleans comes to mind

• http://www.thedailymeal.com/americas-28-

most-expensive-restaurants-slideshow

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.

HIGH CHECK AVERAGE

RESTAURANTS• They cater to people going out for special

occasions (birthdays and anniversaries),

celebrations (end of the school year) and

business meals

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).

• http://www.businessinsider.com/restaurants-

owned-by-celebrities-2011-11?op=1

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.

MIDSCALE RESTAURANTS

• Midscale restaurants include those

restaurants that have simplified production

systems (requiring lesser skilled

employees), specialized menus and

moderately priced food

• This category of restaurants include:• Family restaurants

• Cafeterias and buffets

• Pizza (sit-down)

CASUAL RESTAURANTS• Casual restaurants are a “step-up” from Midscale

Restaurants

• These restaurants are characterized by:

• a relaxed atmosphere

• more varied menus

• reasonable prices

CASUAL RESTAURANTS

• Casual restaurants such as Applebee’s,

Chili’s, Ruby Tuesday, and Friday’s

• Specialty restaurants such as those

focusing on steak (Outback), seafood

(Red Lobster) or pasta (Semolina’s)

• Ethnic restaurants include, among others,

Chinese, Italian and Mexican

• Theme restaurants including Hard Rock

Cafe

Fast Casual

• Full-service quality in a quick-service

format

• Hybrid that combines convenience with

higher-quality ingredients

• Examples include Panera Bread, Baja

Fresh, and Qdoba Mexican Grill

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.

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.

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.

QSRs

• The Quick Service segment is a very unique

segment for a variety of reasons

• QSRs have a very long history, are among the

most productive types of restaurant operations in

the entire industry and have a history of leading

the industry in terms of innovation

• Tarea: Realizar una investigación sobre la

historia de los QSR

QSRs• The QSR industry is

characterized by a variety of

things including:

• Location

• Limited menus

• Sales volume

• Fast service

• Types of

employees (many

part-timers)

• Use of unskilled labor

• Key roles for unit

managers

• Highly competitive

menu prices

• Chain domination

• Simple unit, complex

system

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.

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.

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.

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.

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.

RESTAURANTS AS PART OF

A LARGER BUSINESS• These restaurants exist to serve another

business or businesses

• Examples include: restaurants in retail

stores such as Liverpool, Palacio de

Hierro, and restaurants in shopping malls

• We differentiate these because they are

not “free standing”