Hospitality Today Introduction to Restaurant and Hotel Industry

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Hospitality TodayIntroduction to Restaurant
and Hotel Industry

• RHM 175

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Part IIHospitalityOrganizations
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Chapter 4 Understanding the Restaurant Industry

• Competencies
• 1. Describe in general terms the size of the
  restaurant industry, list restaurant industry
  segments, and describe eating and drinking
  places.
• 2. Describe food service outlets in lodging
  operations the transportation, recreational,
  business and industry, educational, health care,
  and retail food service markets corrections and
  military food service and contract food
  management companies.
• 3. Summarize some of the pitfalls of starting a
  new restaurant, cite reasons restaurants may
  fail, and outline some of the issues involved in
  starting a new restaurant, such as developing a
  concept, selecting a site, and having a
  feasibility study done.

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Todays Restaurant Industry

• Equal opportunity employer
• 511 billion dollar sales in 2006
• Employs 12.5 million people in 925,000
  establishments
• Restaurant sales equal more than 4 of U.S. gross
  domestic product
• Statistics say, that for every 1.00 spent, 47.5
  is to the FS industry
• 2/3 of employees in FS occupations are women
• 14 are African American
• 16 are Hispanic

Page 82
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Restaurant Industry Segments

• Many different types of facilities.
• Eating and drinking places
• Lodging operations
• Transportation market
• Recreational market
• Business and industry market
• Educational market
• Health Care market
• Retail market
• Corrections food service
• Military food service
• Contractors

Page 82 - 83
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Eating and Drinking Places

• 74 of the total industry sales comes from eating
  and drinking places
• This segment is comprised of full-service
  restaurants, quick-service restaurants,
  commercial cafeterias, social caterers, ice cream
  and frozen custard stands, and bars and taverns.
• Over 87 of this segments sales are made by
  full-service and quick-service restaurants.

Which offers the most opportunities for
hospitality students!
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Eating and Drinking Places

• Full-service restaurants
• Feature a dozen or more main-course
• Cook to order
• Categorized in terms of price, menu or atmosphere
• Price (luxury, high-priced, mid-priced,
  low-priced
• Fusion Cuisine (food from all over the globe)
• Menu (stick with a theme steaks, shrimp, etc.)
• Atmosphere
• Other categories Dinner Houses like Ruby
  Tuesday, Olive Garden, (all décor is alike)

Page 83 - 84
Review Page 87 - 88
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Eating and Drinking Places

• Quick-service restaurants
• Narrow selection of food, limited services, focus
  on speed of preparation and delivery
• McDonalds is a leader in innovative marketing
  approaches.

View Exhibit 4
Page 89
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Restaurant Segments -Lodging Operations

• Range from gourmet to coffee shops and even
  quick-service outlets.
• In 2002, Marriott Hotels and Resorts alone had
  food sales of 1.695 billion.
• Food sales for the top seven hotel chains totaled
  5.234 billion.

Page 89 -89
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Restaurant Segments -Transportation Market

• Highway stops, airplanes, ships, trains.
• This market enjoys about 3.6 billion in sales
  each year.
• Example of a Cruise line employees
• 3,114 passengers
• 1,181 crew
• 30 or 354 crew members work in the kitchen

Page 89 -89
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Restaurant Segments -Recreational Market

• FS facilities located at sports arenas, stadiums,
  race tracks, movie theaters, bowling alleys,
  amusement parks, municipal convention centers,
  and other attractions.

Page 90
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Restaurant Segments -Business and Industry Market

• Located in non-food service businesses that offer
  on-site food service to their employees.
• Usually provided by Contract Food Company -
  ARAMARK, Sodexho, Compass Group

Page 90 - 91
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Restaurant Segments -Educational Market

• College food service programs
• Offering a la carte items
• Healthier choices
• High schools now have variety

Page 91
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Restaurant Segments -Health Care Market

• Comprised of three areas Hospitals, Nursing
  homes, and Retirement communities
• Vending services, cafeterias, coffee shops,
  employee cafeterias, special dining facilities
  for doctors, day-care food programs, regular and
  special patient food programs, gourmet meals

Page 92 - 93
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Restaurant Segments -Retail Market

• Americans are cooking less
• Increase in take-out sales
• Food courts

Page 93
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Restaurant Segments -Corrections Food Service

• State, federal, local jails
• Provides cyclical menus
• No bones in meats
• Plastic spoons are the only utensils
• Hard to attract employees
• Not much growth

Page 93 - 94
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Restaurant Segments -Military Food Service

• Includes Space Shuttle food preparation, aircraft
  carriers, nuclear submarine mess operations, to
  Army, Navy, Air Force, Marine and Coast Guard all
  over the world.
• Both military and civilian personnel are employed
  by many of these facilities.

Page 94
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Restaurant Segments - Contractors

• Major operators of noncommercial food service.
• Are hired to operate restaurants and other food
  service outlets in convention centers, sports
  arenas, tourist attractions, colleges and
  schools, office buildings, manufacturing plants,
  and health care facilities.
• In addition, some contract food management
  companies provide housekeeping, grounds
  maintenance, laundry, and other services for
  their clients.

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Starting a NEW Restaurant

• Theme Restaurant
• One of the easiest businesses to enter
• Staying in business is the real challenge.
• 57 of all new restaurants fail within the first
  3 years
• 70 closed their doors after ten years
• Most individuals never move past their initial
  restaurant

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Why Do Restaurants Fail?

• Lack of business knowledge
• Marketing, accounting, finance, law, engineering,
  and human resources
• Lack of technical knowledge
• Planning and operating a professional restaurant
  (site selection, menu planning, recipe
  development, purchasing, production techniques,
  and service procedures
• Lack of sufficient working capital
• Underestimate the amount of capital they will
  need to pay for food, labor and fixed operating
  expenses

Page 97 - 98
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Building a Successful Restaurant

• Come up with a Concept
• Who do you want to attract?
• Where do these people live and work?
• How do they buy?
• How much competition is there now?
• What are the current competitors menus, prices,
  and hours of operation?
• Will be concept be ethnic, eclectic, traditional,
  regional American?
• Decide on a menu, décor, number of seats, type of
  service, hours of operation, pricing structure,
  the investment required

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Building a Successful Restaurant

• Select a Site
• One, Two, Three mile radius
• Number of households within the radius
• Socioeconomic conditions of the households
• Areas of Dominant Influence (ADIs) are areas
  covered by major television station signals
• Central-city business and shopping districts,
  Shopping centers, Planned communities, Highway
  intersections
• Accessibility to customers
• Parking
• Site availability
• Affordability

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Building a Successful Restaurant

• Conduct a Feasibility Study
• Financial Analysis Portion
• Land and construction
• Equipment
• Furniture and Fixtures
• Working Capital
• Pre-opening expenses for inventory
• Pre-opening staff salaries and training expenses
• Pre-opening advertising and promotion
• Operating budget for the first three years