Lesson 5

FOOD AND
BEVERAGES
SECTOR
• At the end of this chapter, you should be able to:
1. Trace the history of the food and beverage industry;
2. Describe the different types of restaurants;
3. Explain the importance of franchising to the restaurant industry;
4. Discuss restaurant profitability and calculate food cost percentage, gross profit,
and average guest check;
5. Calculate the restaurant’s breakeven point;
6. Explain the role of the menu in a restaurant’s success;
7. Differentiate airline catering from restaurant catering; and
8. Discuss restaurant promotion.
 History of the Food and Beverage Service

• In early history, there was much evidence that certain groups of people
cooked together in big groups and that the early inns provided a crude
menu. In the Roman era, there were some establishments that offered
sausage or roast meat, bread, and cup of wine. The forerunner of the
modern
• In restaurant
1200, public thatwere
cook shops provides
openedhot food and
in London whichdrink developed
offered in Rome.
precooked takeout
food. The royal families of Europe introduced cutlery, table linen, crystal glasses,
new foods such as turkey and potato, and the roadside tavern. In the sixteenth
century, British inns and taverns began to serve one meal a day at a fixed time and
price and at a common table.
• In the United States, taverns and inns were very similar to those in England. A famous
tavern in New York was Fraunces Tavern. In 834, the famous Delmonico’s was opened in
New York. In the early 1900s, several events that were significant to the food industry
occurred. The hamburger was first served in 1904 at the St. Louis World’s Fair. The first
root beer stand was founded by Roy Allen and Frank Wright.
• At present, modern popular cuisine including French, Chinese, Mexican, and Japanese
have become common in most cities. The role food plays in tourism may not be a direct
but an indirect attraction.
 Types of Restaurants
1. Family or Commercial Restaurants
Family-style restaurants offer a wide menu of “meat
and potato” selections with a price range that appeals
to an average family income. They serve beer and
wine if they have liquor license. The décor is bright.
A combination of counters, tables and booths is
common.
2. Coffee Shops
Coffee shops are characterized by a fast-food service. The
décor is simple and prices are relatively low. It is usually
located in an office building or shopping mall. The rent is
high.
3. Cafeterias
Cafeterias are usually located in shopping centers
and office buildings. Self-service is typical with
limited menus of soups, entrees, deserts and
beverages.
4. Gourmet Restaurants
Gourmet restaurants generally require a higher initial
investment than other types of restaurants because they
require and expensive ambience and décor. They cater
to those who want a higher standard and are willing to
pay the price.
5. Ethnic Restaurants 8. Buffet Restaurants
Ethnic restaurants feature the food of a specific Buffet restaurants are established on a completely self-serve basis.
region or country. They can be Chinese or classical However, if liquor, beer, and wine are offered, table and service for
French cuisine. The décor usually has an ethnic these beverages are provided.
motif.
6. Fast-food Restaurants
9. Transportation Restaurants
Fast-food restaurants have increased in the
There is a natural link between transportation and food service. Several
past 20 years as people have become more
restaurants are generally found along auto and bus transportation routes.
mobile. Franchising is common in this type of
They are also found at bus, rail and air transportation buildings, as well
restaurant. The menu is limited with low
as on transportation vehicles as trains and ships.
prices. Because of low prices, many
customers patronize fast-food restaurants.

7. Deli Shops
Deli shops provide delicatessen food service, combining traditional
delicatessen cold meats and cheese with takeout sandwiches, salads, and
similar items. Some deli shops have limited seating capacity. They are
usually located in shopping areas or office buildings and are open from
9:00am to 5:00pm or 9:00pm.
 FRANCHISING
Franchised restaurants are a major component of
the food service industry, particularly in the fast-
food sector. The reasons for the popularity of
franchising in the restaurant industry are very
similar to those in the hotel industry.
Franchised restaurants include fast-food chains
such as McDonald’s, Kentucky Fried Chicken,
Pizza Hut, A & W Root Beer, and Burger King.
They also include dine-in types of restaurants
such as Wendy’s and Pizza Inn and carry-out
establishments like Orange Julius. The Fast-food
franchise is the most common.
 Restaurant Profitability

Food Cost Percentage Gross Profit

Food cost percentage is often used to measure a
restaurants marketing success. It is determined by
dividing the food cost for a period (a day, a week, a
month) by the sales for that same period and then
multiplying it by 100.
Gross profit is the selling price of an item
less its food cost. Table 3 shows the
importance of gross profit in comparing
two menu items.

Table 3. Gross Profit of Two Menus

Item Cost Price Selling Price Cost Percentage Gross Profit

1 $4 $8 50% $4
2 $1 $4 25% $3
• Labor Costs
Labor costs are controlled by expressing
them as a percentage of sales on daily,
weekly or monthly basis and comparing
the actual cost with the standard desired. For example, if a restaurant has an annual fixed cost of $125,000 and
an average guest spending of $10.00 and its variable cost such as
• Average Guest Check food, labor and others is 75% of revenue or $7.50% guest served, its
Another profitability measure used in restaurants breakeven point is:
is the average guest spending or average check.
Average guest spending is calculated by dividing The contribution margin is average check less variable costs or $2.50
less $7.50. The breakeven number of customers is $50,000.
the total revenue received for a particular period
(a day, a week, a month or a year) by the total The proof of this is:
number of guest served during that period. Total revenue: $50,000 x $10 = $ 500,000
• Breakeven Point Variable costs: $ 50,000 x $ 7.50 = $ 375,000
Breakeven is that point at which business will make Fixed costs: $ 125,000
neither a profit nor a loss. The operation for Profit or loss: 0
determining the breakeven point is:
Fixed costs are those costs that remain the same
regardless of the volume of business.
 MENU
The menu is the basic planning document for a successful restaurant. Several
aspects of the restaurants operation depend on the menu. The menu contains what the
restaurant offers, the range of offerings, as well as the selling prices. The menu must
portray the style and theme of the restaurant. Thus, the menu’s design, printing, size
and colors are important.
 Airline Catering
Airline companies spend billions of dollars
every year for food purchase. The average
cost per airline passenger is between $1 and
$7 depending on the length of the journey.
The amount is less for shorter trips, since
passenger may be offered only a non-
alcoholic beverage and a light snack.
Food Quality
The main problem of airline companies is to
cook the meal on the ground and serve it
several hours later in an extraordinary dry
cabin atmosphere, seven miles high, to
different groups of peoples with their own
food preferences, and whose main
motivation is to travel rather than to eat.
Logistics
To produce hot meals, the airline companies have to prepare specifications
for recipes, ingredients, cooking methods and temperatures, and labor for
each flight. These require a forecast using the actual passenger reservation
for each flight including an allowance for standbys and last-minute
reservations in order to have the correct raw materials, equipment’s, and
food productions staff for each shift.
Airplane Galleys
The first airplane galley was designed in 1936 by Douglas for its
DC-3. Meals prepared on the ground were kept hot or cold in
insulated containers on the aircraft. After World War II, the
introduction of larger airplanes enabled them to have ovens and
refrigerators on board in their galleys.
 Flight Kitchens
The first airline kitchen was opened in the late 1930s near Washington
D.C. Hoover Field airport by a gentleman named Marriott. He had a
restaurant near the airport. He noticed that passengers would go to his
restaurant to eat before boarding their flights because no meals were
served it the airplane. He approached Eastern Air Transport, now
known as Eastern Airlines, and offered to prepare lunch boxes in his
restaurant for Eastern passengers. Eastern agreed, so the first flight
kitchen was
stablished.
Some airline companies have their own flight kitchens
while others contract with other airline companies that are
equipped with their own kitchens. Most of the airline
companies turn over their catering services to outside
caterers because airline kitchen are not large and efficient.
 Difference Between Airline Catering and Restaurant Catering
Airline catering is different from restaurant catering because in the latter, the
cooks can make last-minute adjustments. In an ordinary restaurant, a meal like
this will not be served but on an airline, the serving crew usually has no other
choice but to serve it. In airline catering, the logistics are very complex but
airlines exert great efforts to serve good meals to the passengers. They even
respond to the needs of passengers on special diets if given enough notice.

Restaurant Promotion
Many restaurants advertise their menu on news papers. Local newspaper
advertisements are used by most restaurants as a major form of external
promotion. Several restaurants advertise in the yellow pages of the local
telephone directory; some use local radio or television stations. Most popular
restaurants and national restaurant chains advertise in airline in-flight
magazines, consumer travel magazines, and travel trade publications.
Escalera, Cindy Graze Z.
Enao, Eleazar