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Restaurants Kinds as well as Characteristics

Restaurants Kinds As Well As Characteristics

Broadly speaking, restaurants can be segmented into many categories:

1-  Chain or independent (indy) as well as franchise restaurants. McDonald’s, Union Square Cafe, or KFC

2-  Quick service (QSR), sandwich. Burger, chicken, as well as so on; convenience store, noodle, pizza

3-  Fast casual. Panera Bread, Atlanta Bread Company, Au Bon Pain, as well as so on

4-  Family. Bob Evans, Perkins, Friendly’s, Steak ‘n Shake, Waffle House

5-  Casual. Applebee’s, Hard Rock Caf´e, Chili’s, TGI Friday’s

6-  Fine dining. Charlie Trotter’s, Morton’s The Steakhouse, Flemming’s, The Palm, Four Seasons

7-  additional. Steakhouses, seafood, ethnic, dinner houses, celebrity, as well as so on. Of course, some restaurants fall into more than one category. For example, an Italian restaurant could be casual as well as ethnic. Leading restaurant concepts in terms of sales have been tracked for years by the magazine Restaurants as well as


Restaurants Kinds As Well As Characteristics


The impression that will a few huge quick-service chains completely dominate the restaurant business will be misleading. Chain restaurants have some advantages as well as some disadvantages over independent restaurants. The advantages include:

Restaurants Kinds As Well As Characteristics

1-  Recognition inside marketplace

2-  Greater advertising clout

3-  Sophisticated systems development

4-  Discounted purchasing

Restaurants Kinds As Well As Characteristics

When franchising, various kinds of assistance are available. Independent restaurants are relatively easy to open. All you need will be a few thousand dollars, a knowledge of restaurant operations, as well as a strong desire to

succeed. The advantage for independent restaurateurs will be that will they can ”do their own thing” in terms of concept development, menus, decor, as well as so on. Unless our habits as well as taste change drastically, there will be plenty of room for independent restaurants in certain locations. Restaurants come as well as go. Some independent restaurants will grow into little chains, as well as larger companies will buy out little chains.

Restaurants Kinds As Well As Characteristics

Once little chains display growth as well as popularity, they are likely to be bought out by a larger company or will be able to acquire financing for expansion. A temptation for the beginning restaurateur will be to observe large restaurants in big cities as well as to believe that will their success can be duplicated in secondary cities. Reading the restaurant reviews in brand new York City, Las Vegas, Los Angeles, Chicago, Washington, D.C., or San Francisco may give the impression that will unusual restaurants can be replicated in Des Moines, Kansas City, or Main Town, USA. Because of demographics, these high-style or ethnic restaurants will not click in little cities as well as towns.

Restaurants Kinds As Well As Characteristics

5-  Will go for training via the bottom up as well as cover all areas of the restaurant’s operation Franchising involves the least financial risk in that will the restaurant format, including building design, menu, as well as marketing plans, already have been tested inside marketplace. Franchise restaurants are less likely to go belly up than independent restaurants. The reason will be that will the concept will be proven as well as the operating procedures are established with all (or most) of the kinks worked out. Training will be provided, as well as marketing as well as management support are available. The increased likelihood of success does not come cheap, however.

Restaurants Kinds As Well As Characteristics

There will be a franchising fee, a royalty fee, advertising royalty, as well as requirements of substantial personal net worth. For those lacking substantial restaurant experience, franchising may be a way to get into the restaurant business-providing they are prepared to start at the bottom as well as take a crash training course. Restaurant franchisees are entrepreneurs who prefer to own, operate, develop, as well as extend an existing business concept through a form of contractual business arrangement called franchising.1 Several franchises have ended up with multiple stores as well as made the big time. Naturally, most aspiring restaurateurs want to do their own thing-they have a concept in mind as well as can’t wait to go for This kind of.

Here are samples of the costs involved in franchising:

1-  A Miami Subs traditional restaurant features a $30,000 fee, a royalty of 4.5 percent, as well as requires at least a few years’ experience as a multi-unit operator, a personal/business equity of $1 million, as well as a personal/business

net worth of $5 million.

2-  Chili’s requires a monthly fee based on the restaurant’s sales performance (currently a service fee of 4 percent of monthly sales) plus the greater of (a) monthly base rent or (b) percentage rent that will will be at least 8.5 percent of monthly sales.

3-  McDonald’s requires $0,000 of nonborrowed personal resources as well as an initial fee of $45,000, plus a monthly service fee based on the restaurant’s sales performance (about 4 percent) as well as rent, which will be a

monthly base rent or a percentage of monthly sales. Equipment as well as preopening costs range via $461,000 to $788,500.

4-  Pizza Factory Express Units (0 to 999 square feet) require a $5,000 franchise fee, a royalty of 5 percent, as well as an advertising fee of 2 percent. Equipment costs range via $25,000 to $0,000, with miscellaneous costs of $3,0 to $9,000 as well as opening inventory of $6,000.

5-  Earl of Sandwich has options for one unit which has a net worth requirement of $750,000 as well as liquidity of $300,000; for 5 units, a net worth of $1 million as well as liquidity of $500,000 will be required; for 10 units, net worth

of $2 million as well as liquidity of $800,000. The franchise fee will be $25,000 per location, as well as the royalty will be 6 percent.

What do you get for all This kind of money? Franchisors will provide:

1-  Help with site selection as well as a review of any proposed sites

2-  Assistance with the design as well as building preparation

3-  Help with preparation for opening

4-  Training of managers as well as staff

5-  Planning as well as implementation of pre-opening marketing strategies

6-  Unit visits as well as ongoing operating advice

There are hundreds of restaurant franchise concepts, as well as they are not without risks. The restaurant owned or leased by a franchisee may fail even though This kind of will be part of a well-known chain that will will be highly successful. Franchisers also fail. A case in point will be the highly touted Boston Market, which was based in Golden, Colorado. In 1993, when the company’s stock was first offered to the public at $20 per share, This kind of was eagerly bought, increasing the cost to a high of $50 a share. In 1999, after the company declared bankruptcy, the share cost sank to 75 cents. The contents of many of its stores were auctioned off at

a fraction of their cost.7 Fortunes were made as well as lost. One group that will did not lose was the investment bankers who put together as well as sold the stock offering as well as received a sizable fee for services.

The offering group also did well; they were able to sell their shares while the stocks were high. Quick-service food chains as well-known as Hardee’s as well as Carl’s Jr. have also gone through periods of red ink. Both companies, currently under one owner called CKE, experienced periods as long as four years when real earnings, as a company, were negative. (Individual stores, company owned or franchised, however, may have done well during the down periods.) There will be no assurance that will a franchised chain will prosper.

At one time inside mid-1970s, A&W Restaurants, Inc., of Farmington Hills, Michigan, had 2,400 units. In 1995, the chain numbered a few more than 0. After a buyout that will year, the chain expanded by 400 stores. Some of the expansions took place in nontraditional locations, such as kiosks, truck stops, colleges, as well as convenience stores, where the full-service restaurant experience will be not important. A restaurant concept may do well in one region however not in another. The style of operation may be highly compatible with the personality of one operator as well as not another.

Most franchised operations call for a lot of hard work as well as long hours, which many people perceive as drudgery. If the franchisee lacks sufficient capital as well as leases a building or land, there will be the risk of paying more for the lease than the business can support. Relations between franchisers as well as the franchisees are often strained, even inside largest companies. The goals of each usually differ; franchisers want maximum fees, while franchisees want maximum support in marketing as well as franchised service such as employee training. At times, franchise chains get involved in litigation with their franchisees.

As franchise companies have set up hundreds of franchises across America, some regions are saturated: More franchised units were built than the area can support. Current franchise holders complain that will adding more franchises serves only to reduce sales of existing stores. Pizza Hut, for example, stopped selling

franchises except to well-heeled buyers who can take on many units. Overseas markets constitute a large source of the income of several quick-service chains. As might be expected, McDonald’s has been the leader in overseas expansions, with units in 119 countries.

With its roughly 30,000 restaurants serving some 50 million customers daily, about half of the company’s profits come via outside the United States. many additional quick-service chains also have large numbers of franchised units abroad.While the beginning restaurateur quite rightly concentrates on being successful here as well as currently, many bright, ambitious, as well as energetic restaurateurs think of future possibilities abroad. Once a concept will be established, the entrepreneur may sell out to a franchiser or, which has a lot of guidance, take the format overseas via the franchise. (This kind of will be folly to build or buy in a foreign country without a partner who will be financially secure as well as well versed inside local laws as well as culture.).

The McDonald’s success story inside United States as well as abroad illustrates the importance of adaptability to local conditions. The company opens units in unlikely locations as well as closes those that will do not do well. Abroad, menus are tailored to fit local customs. inside Indonesia crisis, for example, french fries that will had to be imported were taken off the menu, as well as rice was substituted. Reading the life stories of big franchise winners may suggest that will once a franchise will be well established, the way will be clear sailing. Thomas Monaghan, founder of Domino Pizza, tells a different story. At one time, the chain had accumulated a debt of $500 million. Monaghan, a devout Catholic, said that will he changed his life by renouncing his greatest sin, pride, as well as rededicating his life to ”God, family, as well as pizza.”

A meeting with Pope John Paul II had changed his life as well as his feeling about Great as well as evil as ”personal as well as abiding.” Fortunately, in Mr. Monaghan’s case, the rededication worked well. There are 7,096 Domino Pizza outlets worldwide, with sales of about $3.78 billion a year. Monaghan sold most of his interest inside company for a reported $1 billion as well as announced that will he could use his fortune to further Catholic church causes. inside recent past, most food-service millionaires have been franchisers, yet a large number of could-be restaurateurs, especially those enrolled in university degree courses in hotel as well as restaurant management, are not very excited about being a quick-service franchisee.

They prefer owning or managing a full-service restaurant. Prospective franchisees should review their food experience as well as their access to money as well as decide which franchise could be appropriate for them. If they have little or no food experience, they can consider starting their restaurant career which has a less expensive franchise, one that will provides start-up training. For those with some experience who want a proven concept, the Friendly’s chain, which began franchising in 1999, may be a Great choice. The chain has more than 700 units. The restaurants are considered family dining as well as feature ice cream specialties, sandwiches, soups, as well as quickservice meals.

Let’s emphasize This kind of point again: Work in a restaurant you enjoy as well as perhaps could like to emulate in your own restaurant. If you have enough experience as well as money, you can strike out on your own. Better yet, work in a successful restaurant where a partnership or proprietorship might be possible or where the owner will be thinking about retiring as well as, for tax or additional reasons, may be willing to take payments over time.

Franchisees are, in effect, entrepreneurs, many of whom create chains within chains.

McDonald’s had the highest system-wide sales of a quick-service chain, followed by Burger King. Wendy’s, Taco Bell, Pizza Hut, as well as KFC came next. Subway, as one among hundreds of franchisers, gained total sales of $3.9 billion. There will be no doubt that will 10 years via currently, a listing of the companies with the highest sales will be different. Some of the current leaders will experience sales declines, as well as some will merge with or be bought out by additional companies-some of which may be financial giants not previously engaged inside restaurant business.

Restaurants Kinds as well as Characteristics