INTRODUCTION TO HOSPITALITY

MANAGEMENT
Fifth Edition

CHAPTER 6
The Restaurant
Busisness

Copyright © 2017, 2013, 2009

Introduction to Hospitality
ICD-10-CM/PCS Coding: A Management,
Map to Success
Fifth Edition
by Pearson Education, Inc.
Lorraine
John R. Walker
M. Papazian-Boyce
All Rights Reserved.
 Chapter Objectives

• After reading and studying this chapter,

the student should be able to do the
following:
1. Describe the significance of classical
cuisine
2. Identify food trends and practices.
3. Summarize menu planning.

continued on next slide

Copyright © 2017, 2013, 2009
Introduction to Hospitality
ICD-10-CM/PCS Coding: A Management,
Map to Success
Fifth Edition
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Lorraine
John R. Walker
M. Papazian-Boyce
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 Chapter Objectives

• After reading and studying this chapter,

the student should be able to do the
following:
4. Identify some of the top chain and
independent restaurants.
5. List the classifications of restaurants.

Copyright © 2017, 2013, 2009

Introduction to Hospitality
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 The Restaurant Business

• Restaurants are a vital part of our

everyday lifestyles; because we are a
society on the go, we patronize them
several times a week to socialize, as
well as eat and drink.
• Restaurants offer a place to relax and
enjoy the company of family, friends,
colleagues, and business associates,
and to restore our energy level.
continued on next slide
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Introduction to Hospitality
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John R. Walker
M. Papazian-Boyce
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 The Restaurant Business

• The word “restaurant” derives from the

word “restore.”
• There are more than 990,000
restaurants in the United States, with
sales of $683.4 billion and 13.5 million
employees.

continued on next slide

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Introduction to Hospitality
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 The Restaurant Business

• The restaurant’s share of the food

dollar has risen to 47.0%.
• On a typical day, more than $1.8 billion
is spent in the U.S. visiting a restaurant
or foodservice operation.

Copyright © 2017, 2013, 2009

Introduction to Hospitality
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 Classical Cuisine

• Two events were responsible for our

culinary legacy coming from France.
• First was the French revolution, which
caused all the best French chefs to lose
their jobs; and the second was Thomas
Jefferson installing a French chef in the
White House when he became
president.

continued on next slide

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Introduction to Hospitality
ICD-10-CM/PCS Coding: A Management,
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John R. Walker
M. Papazian-Boyce
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 Classical Cuisine

• North America gained most of its

culinary legacy from France.
• Marie-Antoine Carême and Auguste
Escoffier are credited as the founders of
classical cuisine.
• One of the main foundations of classical
French cooking is the five mother
sauces: béchamel, velouté, espagnole,
tomato, and Hollandaise.
continued on next slide
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Introduction to Hospitality
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John R. Walker
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 Classical Cuisine

• Nouvelle cuisine, which became popular

in the early 1970s and late 1960s, is a
lighter cuisine than French and is based
on simpler preparations. Instead of
thickening a sauce with a roux, a puree
of vegetables would be used instead.

continued on next slide

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Introduction to Hospitality
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 Classical Cuisine

• Nouvelle cuisine combined classical

techniques and principles with modern
technology and scientific research.

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 Food Trends and Practices

• The level of professionalism is rising for

chefs of the 21st century, and they will
need a strong culinary foundation with
a structure that includes multicultural
cooking skills and strong employability
traits, such as passion, dependability,
cooperation, and initiative.

continued on next slide

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Introduction to Hospitality
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 Food Trends and Practices

• Back-to-basic cooking has been

redefined to mean taking classical
cooking methods and infusing modern
technology, and science to create
healthy and flavorful dishes.

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 Culinary Practices

• To be a good cook, one must

understand the basic techniques and
principles of cooking.

continued on next slide

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 Culinary Practices

• There are six skill areas that are

important to becoming a successful
chef:
1. Cooking skills
2. Strong employability traits
3. People skills

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Introduction to Hospitality
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 Culinary Practices

• There are six skill areas that are

important to becoming a successful
chef:
4. Menu development skills
5. Nutrition knowledge, sanitation/safety
knowledge
6. Accounting skills, and Computer skills
for the new millennium.

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Introduction to Hospitality
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 Franchises

• Through a contractual agreement, the

franchisor grants the franchisee the
rights to use their designs and plans,
sell their products, and use their logos,
promotional materials, and operational
services.
• The franchisor normally supplies the
operational systems, menus and recipe
design, and management expertise.
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 Franchises

• The franchisee must agree to maintain

the standards set by the franchisor,
who will also want the franchisee to
meet minimum qualifications.
• The franchisee benefits by joining a
proven successful restaurant concept,
which is more likely to succeed than an
unproven concept.

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Introduction to Hospitality
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John R. Walker
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 Franchises

• However, the increased likelihood of

success does incur costs.
• Franchise costs include a franchising
fee, a royalty fee, and advertising
royalties, and require lots of personal
net worth.

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Introduction to Hospitality
ICD-10-CM/PCS Coding: A Management,
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 Chain Restaurants

• Independent restaurants (also called

“indies”) are typically owned by one or
more owners who are usually involved
in the day-to-day operation of the
business.
• Even if the owners have more than one
store (restaurant-speak for a
“restaurant”), each restaurant usually
functions independently.
continued on next slide
Copyright © 2017, 2013, 2009
Introduction to Hospitality
ICD-10-CM/PCS Coding: A Management,
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 Chain Restaurants

• These restaurants are not affiliated with

any national brand or name.
• They offer the owner independence,
creativity, and flexibility, but are
generally accompanied by more risk.

Copyright © 2017, 2013, 2009

Introduction to Hospitality
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 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.
continued on next slide
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Introduction to Hospitality
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 Sustainable Restaurants

• Utility costs are a big line item for

restaurants, accounting for a median of
between 2.3% percent and 3.6% of
sales.

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Introduction to Hospitality
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 Menu Planning

• The menu may be the most important

ingredient in the restaurant’s success.
• The menu must agree with the concept
and exceed guest expectations.

continued on next slide

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 Menu Planning

• Guests’ needs and desires are what is

important when planning a menu, not
what the owner thinks.
• The menu must harmonize with the
theme, concept, guest expectations,
etc.

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Introduction to Hospitality
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 Capabilities of Cooks

• Cook capabilities must harmonize with

the menu and concept.
• An appropriate level of expertise must
be employed to match the demands of
the guest.
• This will affect many other aspects of
the operation such as equipment
needs, purchasing, salaries, etc.

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Introduction to Hospitality
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 Capabilities of Cooks

• Menus must be developed with regard

to the capacity and layout of the
equipment, or, the menu more or less
dictates the competency of labor to hire
and type of equipment necessary.

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Introduction to Hospitality
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 Price and Pricing Strategy

• The target market generally determines

the menu pricing strategies.
• Factors to consider include competition,
food cost, labor cost, other overhead
costs, expected profit, and contribution
margin.

continued on next slide

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Introduction to Hospitality
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 Price and Pricing Strategy

• The two main ways to price a menu are

the comparative approach, which refers
to analyzing the price ranges of local
competition.
• The second method is to cost each
menu item and multiply it by a ratio
amount necessary to achieve the
desired food cost percentage.

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Introduction to Hospitality
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 Classification of Restaurants

• Most experts agree there are two main

categories, or classifications of
restaurants: independent and chain.
• Other categories include fine-dining,
quick-service, ethnic, family, dinner
house, occasion, casual, etc.
• Some restaurants may fall into more
than one category.

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Introduction to Hospitality
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 Classification of Restaurants

• For instance, a restaurant can be both

ethnic and quick service, such as Taco
Bell.
• Americans are eating out up to five
times a week, as well as on special
days such as Mother’s Day, Valentine’s
Day, birthdays, and anniversaries.
• The most popular meal to eat away
from home is lunch.
continued on next slide
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Introduction to Hospitality
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 Classification of Restaurants

• Individual restaurants have 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.

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Introduction to Hospitality
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 Fine-Dining

• A fine-dining restaurant is one where a

good selection of menu items is
offered, with 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.

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 Fine-Dining

• Most fine-dining restaurants are

independently owned and operated by
an entrepreneur or a partnership.
• In recent years, fine dining has become
more fun because creative chefs offer
guests fine cuisine as an art.

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 Celebrity Restaurants

• Celebrities who may or may not have

food and beverage backgrounds own
these operations.
• The operations are designed to be
entertaining, drawing heavily on the
notoriety of their owners.

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 Celebrity Restaurants

• 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).

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 Steak Houses

• The steak house is still strong despite

recent nutritional concerns.
• To remain more competitive, many
operations are adding “value priced
items,” such as chicken or fish.
• The upscale steak house, like
Fleming’s, Ruth Chris’s, and Houston’s,
continue to attract the expense account
and “occasion” diners.
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Introduction to Hospitality
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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.

continued on next slide

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Casual Dining and Dinner House
Restaurants
• Casual dining is relaxed and could
include restaurants from several
classifications: chain or independent,
ethnic, or theme.
• Hard Rock Cafe, TGI Friday’s, The Olive
Garden, Houston’s, Romano’s, Macaroni
Grill, and Red Lobster are good
examples of casual dining.

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Introduction to Hospitality
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 Family Restaurants

• Family restaurants evolved from coffee

house restaurants.
• Many are individually or family
operated.
• Most often they offer an informal
setting with a simple menu and service
designed to please everyone in the
family.

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Introduction to Hospitality
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 Ethnic Restaurants

• The majority of ethnic restaurants are

family owned and operated, and sprang
up to cater to the tastes of various
ethnic groups.
• The fastest growing segment of ethnic
restaurants is Mexican.

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Introduction to Hospitality
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 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 with the total
experience.

continued on next slide

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Introduction to Hospitality
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 Theme Restaurants

• People are attracted to theme

restaurants because they offer a total
experience and a social meeting place.

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Introduction to Hospitality
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 Quick-Service/Fast-Food
Restaurants
• 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 cobranding at stores
and nontraditional locations, including
highway plazas and shopping centers.
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 Hamburgers

• 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
megachains combined—Burger King,
KFC, and Pizza Hut.
• McDonald’s is now in 118 countries.

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Introduction to Hospitality
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 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.

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 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
14,000 units.

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 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.
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 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.

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Trends in Restaurant Business

• Social media, sustainability and local

foods, concerns over public health,
environmental responsibility, global
menus, locally sourced foods, and
healthful kids menus.

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Introduction to Hospitality
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