The Food Service Industry

Food Service : A diverse Industry

Objectives
• By the end of this session, you will be able to:
Classify and differentiate the various types of
Food and Beverage Operations
Outline the origins and development of food
service in hotels, restaurants and institutions
Describe various commercial food service
facilities and discuss the use of for profit
contract management companies to run
noncommercial operations.
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Two Segments of the Food Service Industry
Commercial Non-commercial
Freestanding eating and drinking Self Operated Food Service or
places: (Fine Dining Restaurants, Contract Management Companies:
Casual Service Restaurants, Fast
Food Restaurants)
Business Industry,
Hospital, Nursing Homes,
In Lodging properties: (Room Educational Institutions,
Service, A la Carte dining, Banquet
Leisure/ Recreation Operations,
Operations.
Transportation Companies…
Other: Cafeterias, Bar Taverns
Lounges, Stands, Caterers…
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Commercial & Non-commercial logos

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Food Service Today
• Something for Everyone:
Drive-through in quick service operations
Food Court in Shopping Malls
Laundro-Bars
Help yourself Salad Bars in groceries stores
Airline terminals
Home delivery…

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Food Service Today
• Something for Everyone:
Providing home replacement meals is a trend
that continues to grow. Take home meals are
on the fast track. This offer busy people
(money rich & time poor) the opportunity to
consume a variety of meals at home without
having to cook and clean up.

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Food Service Origins
• Food Service in Non-commercial Facilities
• In Businesses
Originates from Scotland in the British Textile
industry in 1815 as part of a program to
improve working conditions. Robert Owen
opened the first “Eating Room” for employees
and their families
Today this concept has been duplicated
throughout the world.

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Food Service Origins
• Food Service in Non-commercial Facilities
• In Hospitals
Hospital were known in India and Egypt as
early as 600BC In early Greece and Rome,
the sick took refuge in temples.
The emphasis on therapeutic diet became
important in the mid-1800

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Food Service Origins
• Food Service in Noncommercial Facilities
• In Schools
There are few records of f&b service in the
universities of the ancient times until late,
where dining halls were established. Then,
formal table service was performed at diner.
Today cafeteria run by schools or contract
management companies is the trend.

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Organization of Commercial Operations
• Independents
• Chain restaurants
• Franchises
• Contract Management companies &
Noncommercial Operations

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Independent Operation
• Owned and operated by one or more owners.
• No chain relationship
• Procedures can vary in case of multi-unit operations
• New operators are often lured into the restaurant
business by lack of knowledge/ understanding: High
rate of business failure.
• Difficult to compete with the domination of Chains

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Chain Restaurants or BRAND Restaurants
• They are part of multi-unit operations
• Share standardized menus, processes equipment dictated
by a parent company.
Advantages:
• Easy to acquire cash, credit, lease, building
• Can afford to experiment & improve
• Specialized HR
Disadvantages
• Bureaucracy, Difficult to adapt to market changes, lots of
rules & regulations.

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Franchises
• A special category of chain operations
Franchisee (owner of the restaurant) pays fees to
Franchisor (parent company) in exchange for the right
to use name, building design, business methods…
Franchisee generates founds, pays fees, royalties
Franchisor provide Start-up Assistance, Sponsors
Training, Advertising,
Benefits are: More revenues because of Name
recognition, consistency of products and services,
Lower food cost, Tested Operating procedures…

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Commercial Organizations can be complex
• Can be own by one or more investors
• May be affiliated with franchisor (chain) selected by
owner(s). The Chain may have different Brands and the
visitor associates that Brand to his experience when visiting
the property.
• Might be managed by a contact management company
• Could have sub-contracted food services in the à la carte
dining room to a fourth party (independent restaurant
operator for example)

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Non-commercial Operations and Contract
Management Companies
• Today, as pressures for cost containment
accompany lower revenue and bottom lines, Non-
commercial F&B service Operations are calling for-
Profit Professional Management Companies to run
their F&B outlets.

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Advantages
• Large management companies have greater
resources to solve problems
• They can save costs through effective negotiations
with suppliers and usually have lower operating
costs than self-operated services.
• Institutions (often not F&B operations specialists)
can delegate to professionals.

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Disadvantages
• Losing “control” over the F&B service operation…
which affect the public image. The Institution
becomes dependent on the management company
• Some feel it may be tricky to involve a for-profit
organization in a noncommercial service program
Quality vs Profit ?

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Review Questions
• Freestanding eating and drinking places include
what types of operations?
• What types of institutions provide Food Service?
• What are Three basic types of commercial food
service operations?
• What are some advantages and disadvantages of
chain restaurants and franchises –
• Management Companies?
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Questions?

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