Presentation on theme: "The Restaurant Business"— Presentation transcript:
1 The Restaurant Business Chapter 3The Restaurant Business
2 THE RESTAURANT BUSINESS The word “restaurant” covers a broad range of types of operations, some of which students may be unaware ofThe term “food service” is even more far reaching and will be more clearly defined in later chaptersThe most important thing for students to take away from this module is how different restaurant types are classified and characterized
3 THE VARIED FIELD OF FOOD SERVICE Restaurants are those public places that specialize in the sale of prepared food for consumption on- or off- premiseSometimes, it is not even easy to discern what is and what is not a restaurant (e.g. Dream Dinners)Restaurants (and the larger food service industry) represent an important part of North American society – for most of us it is an everyday activityThink of your last “restaurant occasion” Breakfast? Lunch? Dinner? Coffee? Snack?
4 THE VARIED FIELD OF FOOD SERVICE Together, Americans spent over $500 billion in food service establishments in This amount has doubled just since the early 1990sThat translates to well over $1 billion each day and 47.5% of the “food dollar”This amount is expected to increase into the foreseeable future as Americans continue to seek convenience and activities that suit our lifestyles
5 THE VARIED FIELD OF FOOD SERVICE There have been some recent “dips” in food service performance but overall the industry has shown steady growth for the last yearsSome of the major trends that are occurring are increases in “off-premise” dining, new and emerging segments (such as “fast-casual”), and a blurring of the commercial and on-site sectorsOverall, the industry continues to grow and is striving to meet consumers ongoing needs
6 THE VARIED FIELD OF FOOD SERVICE Some segments of the industry with which you should be familiar include:Quick-service restaurants (QSR)Fast CasualCasual diningFine diningOthers include ice cream, coffee shops, food courts, etc.
7 CLASSIFICATIONSThere are many ways to classify restaurants in the industry. We can classify them by price, service level (of type), menu, etc.In the next segment, we will classify them into “dining” and “eating”
8 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. There may be some overlap between the twoThe dining market is defined as including those restaurants that primarily serve our social needsPeople will eat in restaurants (that makeup the dining market) to escape from boredom, to socialize, to be waited on, to have a different experience, and for convenience
9 THE DINING MARKETCertain elements of the dining market distinguish these restaurants from the eating market: the importance (and sophistication) of service, the customer, and the occasion as well as othersThe most obvious example of a restaurant type that makes up this market is fine diningFine dining restaurants tend to be characterized as: full-service, small, independent, high quality food and service, nice ambience and expensive
10 THE DINING MARKETIn recent years, the demand for fine dining has decreased, resulting in the increasing popularity of “casual upscale” dining. Some well known fine dining restaurants in some cities have even closedCasual upscale restaurants are characterized by sophisticated menus, excellence in food, strong management (typically run by chains), and good wine lists but are slightly less expensive and more casual than traditional fine dining restaurants.
11 THE DINING MARKETExamples of casual upscale chains would include Houston’s, Mimi’s, Cheesecake Factory, and the Chart HouseBecause of their ambience and the overall experience that they provide, many of these concepts appear as if they were independent restaurantsInterestingly, because of the success of these chains, they have been the targets for acquisitions by other companies
12 THE EATING MARKETThe eating market is differentiated from the dining market in that it caters more to meeting biological needsThe best (and most obvious) example would be quick-service restaurants or QSRThe other primary segment is the family dining segment which offers table seating and full service (examples, Denny’s, IHOP, and Cracker Barrel)
13 THE EATING MARKETThe eating market can be sub-divided into (1) on-premise and; (2) off-premise diningOff-premise can be further classified into:Takeout (or take-awayDrive throughDeliveryTogether, these three areas have grown tremendously as a result for customers’ demand for speed and convenience
14 CONTEMPORARY POPULAR PRICED RESTAURANTS When we use the term Contemporary Popular-priced restaurants, we are referring to the restaurants that cater to the eating marketAs you will recall, the two primary segments in this market or QSR and Family Dining restaurantsWe will also include casual restaurants which provide a bridge between the eating and dining markets. We will discuss each of these in turn
15 QSRsThe Quick Service segment is a very unique segment for a variety of reasons. You have all been consumers of “fast food.” Think about why you go you QS restaurants…..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 in industry in new developments
16 The Eating and Dining Markets UpscaleCasualFamily DiningVendingEQSRFastCasualCasualDiningFine Dining
17 QSRsEven though many believe that QSR begins and ends with McDonald’s, it is generally believed to have begun in the 1920s with White Castle and then began to develop in the 1940s with Carl’s Jr. and In-N-Out. Others also started around this time including McDonald’s.The industry has undergone many changes in the past 60 years including the domination by chains and the emergence of McDonald’s as the leader
18 QSRsThe QSR industry is characterized by a variety of things including:LocationLimited menusSales volumeFast serviceTypes of employees (many part-timers)
19 QSRs (continued)The QSR industry is characterized by a variety of things including:Use of unskilled laborKey roles for unit managersHighly competitive menu pricesChain dominationSimple unit, complex system
20 QSRs Some changes have occurred over the last few years including: Going more “upscale”Companies diversifying (changing again?)Introduction of healthy itemsExpansion of menusNontraditional locations
21 MIDSCALE RESTAURANTSMidscale restaurants include those restaurants that have simplified production systems (requiring lesser skilled employees), specialized menus and moderately priced foodThis category of restaurants include:Family restaurantsCafeterias and buffetsPizza (sit-down)
22 CASUAL RESTAURANTSCasual restaurants are a “step-up” from Midscale RestaurantsThese restaurants have become more popular in recent years driven by their popularity with a number of demographic groupsThese restaurants are characterized by a relaxed atmosphere, more varied menus and reasonable prices
23 CASUAL RESTAURANTS Casual restaurants include: “Mainstream” casual restaurants such as Applebee’s, Chili’s, Ruby Tuesday, and Friday’sSpecialty restaurants such as those focusing on steak (Outback), seafood (Red Lobster) or pasta (Semolina’s)Ethnic restaurants include, among others, Chinese, Italian and MexicanTheme restaurants including Hard Rock Cafe
24 HIGH CHECK AVERAGE RESTAURANTS “High Check Average Restaurants”, also known as fine dining restaurants, have a special place in American societyFine dining restaurants are solidly established as serving the dining marketThe “average check” begins at about $30.00 and goes up from there – a notable $200 meal in New Orleans comes to mind
25 HIGH CHECK AVERAGE RESTAURANTS These restaurants are typically found in high income and densely populated areas (although there are exceptions)Several large US cities are known for fine dining including New York, Chicago and LAThey are also typically found in large tourist areas such as New Orleans, Vail and Las Vegas
26 HIGH CHECK AVERAGE RESTAURANTS Although this type of restaurant is in decline, some are as popular as ever: Excelsior, Restaurant L, Seasons, Aujourd’hui, Julien, and L’EspalierThey cater to people going out for special occasions (birthdays and anniversaries), celebrations (end of the school year) and business mealsEven some of these have become more casual (although not necessarily less expensive)
27 RESTAURANTS AS PART OF A LARGER BUSINESS The restaurants in this category do not really fit neatly into another category.These restaurants exist to serve another business or businessesExamples include: restaurants in retail stores such as Nordstrom and Lord and Taylor, and restaurants in shopping malls. We differentiate these because they are not “free standing”
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