Broadly speaking, restaurants can be categorized into a number of categories:
1. Chain or independent (indy) and franchise restaurants. McDonald & # 39; s, Union Square Cafe, or KFC
2. Quick service (QSR), sandwich. Burger, chicken, and so on; convenience store, noodle, pizza
3. Fast casual. Panera Bread, Atlanta Bread Company, Au Bon Pain, and so on
Family. Bob Evans, Perkins, Friendly & # 39; s, Steak & # 39; n Shake, Waffle House
5. Casual. Applebee & # 39; s, Hard Rock Caf & # 39; e, Chili & # 39; s, TGI Friday & # 39; s
6. Fine dining. Charlie Trotter & # 39; s, Morton & # 39; s Steakhouse, Flemming & # 39; s, The Palm, Four Seasons
7. Example, Steakhouses, seafood, ethnic, dinner houses, celebrity, and so on. Of course, some restaurants fall into more than one category. For example, an Italian restaurant can be casual and ethnic. Leading restaurant concepts in terms of sales have been tracked for years by the magazine Restaurants and
Institutions.
CHAIN OR INDEPENDENT
The impression that impose that a few huge quick-service chains completely dominate the restaurant business is is misleading. Chain restaurants have some advantages and some disadvantages over independent restaurants. The advantages include:
1. Recognition in the marketplace
2. Greater advertising clout
3. Sophisticated systems development
4. Discounted procurement
When franchising, various kinds of assistance are available. All you need is a few thousand dollars, a knowledge of restaurant operations, and a strong desire to
With their own habits and taste change drastically, there are plenty of room for for their own can thing & # 39; in their terms of concept development, menus, decor, and so on. Independent restaurants in certain locations. Restaurants come and go. independent business will will grow into small chains, and larger companies will buy out small chains.
Once small acquires a big company or will be far away. A temptation for the beginning restaurateur is to observe large restaurants in big cities and to believe that their success success Kansas City, or Main Town in New York City, Las Vegas, Los Angeles, Chicago, Washington, DC, or San Francisco may give the impression That unusual restaurants can be replicated in Des Moines, Kansas City, or Main Town , USA. Because of demographics, these high-style or ethnic will will not click in small cities and towns.
5. operation Franchising involves the least financial risk in the restaurant format, including building design, menu, and marketing plans, already have been tested in the marketplace The reason is that the concept is proven and the operating procedures are established with all (or most) of the kinks worked out. Training is provided, and marketing and management support are available. The increased likelihood of success does not come cheap, however.
There are a franchising fee, a royalty fee, advertising royalty, and those of substantial personal net worth. For those lacking substantive restaurant experience, franchising may be a way to get into the restaurant business-providing they are at the bottom and Restaurant franchisees are entrepreneurs who prefer to own, operate, develop, and extend an existing business concept through a form of contractual business arrangement called franchising.1 Several franchises have ended up with multiple stores and made the big time. Naturally, most aspiring restaurateurs want to do their own thing - they have a concept in mind and can not wait to go for it.
Here are examples of the costs involved in franchising:
1. A Miami Subs traditional restaurant has a $ 30,000 fee, a royalty of 4.5 percent, and requires at least five years & # 39; experience a multi-unit operator, a personal / business equity of $ 1 million, and a personal / business
net worth of $ 5 million.
2. Chili & # 39; s require a monthly fee based on the restaurant & # 39; 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 is at least 8.5 percent of monthly sales.
3. McDonald & # 39; s requires $ 200,000 of nonborrowed personal resources and an initial fee of $ 45,000, plus a monthly service fee based on the restaurant & # 39; s sales performance (about 4 percent) and rent, which is a
monthly base rent or a percentage of monthly sales. Equipment and preopening costs range from $ 461,000 to $ 788,500.
4. Pizza Factory Express Units (200 to 999 square feet) require a $ 5,000 franchise fee, a royalty of 5 percent, and an advertising fee of 2 percent. Equipment costs range from $ 25,000 to $ 90,000, with miscellaneous costs of $ 3,200 to $ 9,000 and opening inventory of $ 6,000.
5. Earl of Sandwich has for requirement of $ 750,000 and liquidity of $ 300,000; for 5 units, a net worth of $ 1 million and liquidity of $ 500,000 is required; for 10 units, net worth
of $ 2 million and liquidity of $ 800,000. The franchise fee is $ 25,000 per location, and the royalty is 6 percent.
Franchisors will provide:
1. Help with site selection and review
2. Assistance with the design and building preparation
3. Help with preparation for opening
4. Training of managers and staff
5. Planning and implementation of pre-opening marketing strategies
6. Unit visits and ongoing operating advice
The restaurant owned or leased by franchisee may fail even though it is part of a well-known chain that is highly successful. Franchisers also fail. A case in point is 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, it was eager bought, increasing the price to a high of $ 50 a share. In 1999, after the company declared bankruptcy, the share price sank to 75 cents. The contents of many of its stores were auctioned off at
One group that did not lose was the investment bankers who put together and sold the stock offering and received a sizable fee for services.
Quick-service food chains as well-known as Hardee & # 39; s and Carl & # 39; s Jr. have also gone through periods of red B. Both companies, now under one owner called CKE, experienced periods as long as four years when real incomes, as a company, had negative. (Individual stores, company owned or franchised, however, may have done done during during down periods. ) There is no assurance that a franchised chain will prosper.
In 1995, the chain numbered a few more than 600. After a buyout that year, the chain expanded by 400 A restaurant concept may do well in one region but not in another. There are plenty of restaurants in the area where you can not have other expansions like tok place in nonstraditional locations, such as kiosks, truck stops, colleges, and convenience stores. The style of operation may be highly compatible with the personality of one operator and not another.
If the franchisee lacks sufficient capital and leases a building or land, there is the risk of paying more for the lease than the business can support. Relations between franchisers and the franchisees are often strained, franchisers want maximum fees, while franchisees want maximum support in marketing and franchised services such as employee training. At times, franchise chains get involved in litigation with their franchises.
As franchise companies have set up hundreds of franchises across the planet: More franchised units were built than the area can support. Pizza Hut, for example , stopped selling
As can be expected, McDonald & # 39; 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 & # 39; s profits come from outside the United States. A number of other quick-service chains also more large numbers of franchised units abroad.While the beginning restaurateur Once a concept is established, the entrepreneur may sell out to a franchiser or, with a lot of guidance, take the format overseas via the franchise. (It is folly to build or buy in a foreign country without a partner who is financially secure and well versed in the local laws and culture.
The McDonald 's success story in the United States and abroad ___ ___ 0 The importance of adaptability to local conditions. ___ ___ 0 The Indonesia crisis, for example, french fries that have been taken imported from the menu, and rice was substituted. Thomas Monaghan, founder of Domino Pizza, tells a different story. Monaghan, a devout Catholic, said that changed his life by renouncing his greatest sin, pride, and rededicating his life to & # 39; & # 39; God, family, and pizza. & # 39;
A meeting with Pope John Paul II had changed his and his feeling about good and evil as & # 39; personal and abiding. & # 39; Monaghan & # 39; s case, the rededication worked well There are 7,096 Domino Pizza outlets worldwide, with sales about 3.78 billion a year. Monaghan sold most of his interests in the company $ 1 billion and announced that he would use his fortune to further Catholic church causes. recent past, most food-service millionaires have been franchisers, yet a large number of would-be restaurateurs, especially those enrolled in universality degree courses in hotel and restaurant management, are not very excited about being a quick-service franchisee.
They prefer owning or managing a full-service restaurant. If they have appropriate for them. If they have little or no food experience, they can consider starting their restaurant career with The less than expensive franchise. For those with some experience who want a proven concept, the Friendly & # 39; s chain, which began franchising in 1999, may be a good choice. The chain has more than 700 units. The restaurants are considered family dining and feature ice cream specialties, sandwiches, soups, and quickservice meals.
If you have enough experience and money, you can strike out on your own. Better yet, work in a successful restaurant where a partnership or proprietorship may be possible or where the owner is thinking about retiring and, for tax or other reasons, may be willing to take payments over time.
Franchisees are, in effect, entrepreneurs, many of what create chains within chains.
McDonald 's had the highest system-wide sales of a quick-service chain, followed by Burger King. Wendy & # 39; s, Taco Bell, Pizza Hut, and KFC came next. Subway, as one among hundreds of franchisers, earned total sales of $ 3.9 billion. There is no doubt that 10 years from now, a listing of the companies with the highest. Some of the current leaders will experience sales declines, and some will merge with or bought out by other companies - some of which may be financial giants not previously engaged in the restaurant business.
