AHDC 2524 Restaurant Business

Operation

Week 2 & 3: Restaurant Operation

Concept, Location, Design

Ms Nur Nadirah Mohammad Shahid

 Objectives

– Recognize benefits of a good restaurant name

– Explain the relationship between concept and market
– Explain why a restaurant concept might fail
– Discuss some qualities of successful restaurant concepts
– Identify factors to consider when choosing a restaurant’s location
– Identify factors to consider when developing a restaurant concept
– List restaurant knockout criteria
 Restaurant Concepts

• Matrix of ideas
– Constitute what will be perceived as the restaurant’s image
– Should fit a definite target market
– Distinguishes the establishment as D&B (different and better than the
competition)
– May be necessary to modify as competition arises
– Best concepts are often the result of learning from mistakes
 Restaurant Concepts (cont’d.)

• Tips:
– Make it different enough from the competition
– Do not let it be too far ahead of current times
– Do not price your menu out of the market
– Pay attention to food costs
– Make your concept profitable
– Good concepts are on-trend
– Make your concept easily identifiable
– Take inspiration from others and love your concept
– Make sure the concept and location fit
 Concepts: Clear Cut or Ambiguous?

• Many restaurants lack clear cut concepts

– No integration of the atmospherics
– Everything should fit together
• Concept is strengthened if it establishes an identity
• The name of the restaurant is part of the image.
• The restaurant name can tell the customer what to anticipate.
 Protecting a Restaurant’s Name

• Lawsuits over names happen

– If another party uses your name, you should take action
– Loss of the right to a name means changing signs, menus, promo
material, many costs
 The McDonald’s Concept and Image

• Greatest restaurant success story of all time

– Concept: all-American family restaurant
• Clean
• Wholesome
• Inexpensive
• Fun
– Simple, straightforward menu
• Key to effectiveness of McDonald’s advertising
 Defining the Concept and Market

• Selecting a concept
– Define it precisely in the context of which markets will find it
appealing
– Market may constitute a small percentage of the total population
• Coffee shop with counter service appeals to interstate travelers
• There must be a market gap
– Need for the concept offered
• Figure 2.1: The concept and market comprise the hub around which the restaurant
develops
 Successful Restaurant Concepts

• Examples:
– T.G.I. Friday’s
– Spago
– Planet Hollywood
– Lettuce Entertain You Enterprises
– Corner Bakery Café
– Hard Rock Café
– Union Square Hospitality Group
– Parallel 33
 Hard Rock Cafe

• The Hard Rock Cafe is one of the most successful restaurant chain
concepts of all time
 Restaurant Life Cycles

• Nearly all restaurants have an almost human life cycle: birth, growth,
maturity, senescence (deterioration), and death.
– Familial lack of enthusiasm
– Changing demographics
– Fashions change
 Concept Adaptation

• Concept development
– Always has been important in the industry
• Becoming more so now that dining districts are developing in
almost every community
• Concepts that have not been tested
– Most need some adaptation to the particular market
• Different menus and prices attract different markets
 Changing or Modifying a Concept

• Many highly successful concepts that have worked well for years gradually
turn sour
– Customer base and demographics change
– Morale and personal service may decline
• Copy and improve
– Every concept is built on ideas from other concepts
• Modifications and changes, new combinations, and changes in
design, layout, menu, and service
 When a Concept Fails

• Concept can be changed to fit the market

– Conversion can take place while the restaurant is doing business
• Name, decor, and menu can be changed
– Customers who have left may return if the new concept appeals to
them
– New concept may better appeal to the same market
• Draw off customers away from the competition
 Restaurant Symbology

• Includes the logo, line drawings, linen napkins, and service uniforms
– All helps to create the atmosphere
• César Ritz: waiters dressed in tails
• Chart House: servers dressed in Hawaiian attire
• McDonald’s: Ronald McDonald
– Take cues from larger companies to come up with symbols and signs
that reflect the restaurant’s concept
 Multiple-Concept Chains

• Can have five or more restaurants in the same block

– Each competing with the others
– Each acquiring a part of the restaurant market
• Tricon Global Restaurants, Inc.
– Largest of all restaurant companies
– Three concepts: KFC, Taco Bell, and Pizza Hut
 Sequence of Restaurant Development

• From concept to opening:

– Choosing a location
– Business marketing initiated
– Layout and equipment planned
– Menu determined
– First architectural sketches made
– Licensing and approvals sought
– Financing arranged
Sequence of Restaurant Development (cont’d.)

– Working blueprints developed

– Contracts for bidding created
– Contractor selected
– Construction or remodeling begins
– Furnishing and equipment ordered
– Key personnel hired
– Hourly employees selected and trained
– Restaurant opened
© John Wiley & Sons, Inc.
 Planning Services

• Many aspects of design are carried out by other parties

– Designers perform the following services:
• Basic floor plan and seating layout
• Equipment schedule
• Electrical requirements
• Plumbing requirements
• Equipment
• Equipment elevations (height)
• Refrigeration requirements
• Exhaust and in-take requirements
Common Denominators/Standard/Characteristics

• Some common factors:

– Human needs met by the restaurant
– Menu prices and cost per seat
– Degree of service offered
– Space provided for each customer
– Rate of seat turnover
– Advertising and promotions expenditures
– Productivity per employee
– Labor and food costs
 Utility versus Pleasure

• Include:
- What is the purpose of a particular restaurant
- Pleasure dining increases as service, atmosphere, and quality of food
increases
- Pleasure increases as menu price increases
 Degree of Service Offered

• Restaurant service varies from none at all to a maximum in a high style

luxury restaurant.

© John Wiley & Sons, Inc.

 Seven categories of service

– Vending
– Quick service
– Fast casual
– Casual
– Family restaurant
– Dinner house
– Luxury restaurant
 Time of Eating and Seat Turnover

• The seat turnover and speed of

eating correlate with the restaurant
classification but not perfectly
• Turnover is also highly correlated
with the efficiency of the operation

© John Wiley & Sons, Inc.

Square Food Requirements

• Amount of space per

customer needed by
each type of restaurant

© John Wiley & Sons, Inc.

 Menu Price and Cost per Seat

• Menu pricing correlates highly with the degree of service offered, the
time of eating, the labor cost, the amount of space offered the customer,
and cost of the restaurant itself
 Correct Number of Seats

• Theoretically, a given location will support a given number of seats with a

particular concept
• Surveys show that 40 to 50 percent of all table service customers arrive
in pairs; 30 percent come alone or in parties of three, and 20 percent in
groups of four or more
• It is better to build too small than too large
 Advertising and Promotion Expenditures

• Expenditures may vary according to the type of restaurant

 Planning Decisions that Relate to Concept
Development
• Who are the target markets, the customers?
• Buy, Build, Lease, or Franchise?
• Food preparation from scratch or from convenience Items?
• Limited or extensive menu?
• How much service, limited or full?
 Planning Decisions that Relate to Concept Development
Cont.

• Young part-time employees or older career employees?

• Paid advertising or word-of-mouth advertising?
• Grand or quiet opening?
• Electricity or gas?
 Profitability

• Most profitable restaurants are in quick-service category

• Oddly enough, few restaurant management students opt for quick-service
management, believing it lacks the variety, glamour, and opportunity for
self-expression
• Investor cares most about profitability and maximized profits
 Concept and Location

• Good location depends on the:

– Kind of restaurant
• Roadside restaurants
– Clientele
• Professionals
– Size of potential market
– Price structure
• Criteria for locating a restaurant
– Restaurant Business
• Annual Restaurant Growth Index
 Location Criteria

• Includes:
– Demographics of the area
– Visibility from a major highway
– Accessibility from a major highway
– Number of potential customers passing by the restaurant
– Distance from the potential market
– Desirability of surroundings
 Some Restaurants Create Their Own Location

• Dinner or family-style restaurants

– Need not place the same high priority on convenience of location
• Necessary for casual and quick-service establishments
 Some Restaurants Create Their Own Location
Cont.
• Sources of location information
– Location decisions
• Based on asking the right questions and securing the right
information
– Real estate agents are prime sources
• Other sources: chamber of commerce, banks, town or city planner,
other restaurant owners, etc.
 Knockout Criteria

• Includes:
– Proper zoning
– Drainage, sewage, utilities
– Minimal size
– Short lease
– Excessive traffic speed
– Access from a highway or street
– Visibility from both sides of the street
 Other Location Criteria

• Includes:
– Market population
– Family income
– Growth or decline of the area
– Competition from comparable restaurants
– Restaurant row or cluster concept
 Other Location Criteria

• Downtown versus suburban

– New restaurants continually displace old ones
•  Average travel time to reach restaurants
– Most diners-out select restaurants that are close by
• Matching location with concept
– Size of the lot, visibility, availability of parking, access from roads, etc.
all have an impact on style of restaurant that will fit a location
 Suburban, Nook-and-Cranny, and Shopping Mall
Locations
• Restaurants do well in a variety of locations
– Depends on menu and style of operation
 Restaurant Chain Location Specifications

• Critical criteria
– Metropolitan area with 50,000 population
– 20,000 cars per 24 hour period
– Residential backup, plus motels, shopping centers or office parks
– Minimum 200 foot frontage
– Area demonstrating growth and stability
– Easy access and visibility
– Availability of all utilities to the property, including sewer
 Visibility, Accessibility, and Design Criteria

• Visibility and accessibility

– Important criteria for any restaurant
• Design
• Needs to correlate with the theme and includes:
- the exterior, the entrance and holding area, the bar or beverage area,
the
dining area (including the table arrangements), the kitchen, and receiving
(including access for deliveries), and storage and trash areas