HRTM 101 – Introduction to Resort Tourism Management

Walker (5th Edition) – Introduction to Hospitality Management

Chapter 6 – The Restaurant Business

Reality check …

 Almost 50% of the American food dollar is consumed outside the household.

 50% of this outside-of-home food spending is for LUNCH.

 Convenience-oriented buyers are willing to pay $$$ to free up precious time.

 The restaurant workforce is second in size in the US (second only to governmental

employees)

Learning Discuss the significance of classical cuisine

Objective 1

North America gained most of its culinary legacy from France

 First, the French revolution in 1793, which caused the best French chefs of the day to lose
their employment because their bosses lost their heads! Many chefs came to North
America as a result, bringing with them their culinary talents.

 Second, Thomas Jefferson (who starting in 1784 spent five years as envoy to France)
brought a French chef to the White house when he became president. This stimulated
interest in French cuisine and enticed U.S. tavern owners to offer better quality and more
interesting food.

5 Mother Sauces

Béchamel is probably the simplest of the mother sauces because it doesn't require making stock.
If you have milk, flour and butter, you can make a very basic béchamel. Béchamel is made by
thickening hot milk with a simple white roux. The sauce is then flavored with onion, cloves and
nutmeg and simmered until it is creamy and velvety smooth.

Velouté is another relatively simple mother sauce. Velouté sauce is made by thickening white
stock with roux and then simmering it for a while. While the chicken velouté, made with chicken
stock, is the most common type, there is also a veal velouté and fish velouté.

The Espagnole Sauce, also sometimes called Brown Sauce, is a slightly more complex mother
sauce. Espagnole is made by thickening brown stock with roux. So in that sense it's similar to a
velouté. The difference is that espagnole is made with tomato purée and mirepoix for deeper color
and flavor. Moreover, brown stock itself is made from bones that have first been roasted to add
color and flavor. The espagnole is traditionally further refined to produce a rich, deeply flavorful
sauce called a demi-glace
Hollandaise is unlike the mother sauces we've mentioned so far, but as you'll see, it is really just
a liquid and a thickening agent, plus flavorings. Hollandaise is a tangy, buttery sauce made by
slowly whisking clarified butter into warm egg yolks. So the liquid here is the clarified butter and
the thickening agent is the egg yolks. Hollandaise is an emulsified sauce, and we use clarified
butter when making a Hollandaise because whole butter, which contains water and milk solids,
can break the emulsion. Clarified butter is just pure butterfat, so it helps the emulsion remain
stable.

The fifth mother sauce is the classic Tomate Sauce. This sauce resembles the traditional tomato
sauce that we might use on pasta and pizza, but it's got much more flavor and requires a few more
steps to make. First we render salt pork and then sauté aromatic vegetables. Then we add
tomatoes, stock and a ham bone, and simmer it in the oven for a couple of hours. Cooking the
sauce in the oven helps heat it evenly and without scorching. Traditionally, the sauce tomate was
thickened with roux, and some chefs still prepare it this way.

In the present term, the FOOD NETWORK, TRAVEL CHANNEL, CULINARY

TOURISM, CELEBRITY CHEFS, and other factors have ushered in the current
interesting in culinary arts, fusion cuisine, and dining as entertainment.

Learning Identify food trends and practices

Objective 2

 Natural Ingredients
 Lightening the traditional sauces (removing butter, eggs, etc.)
 Fusing different food groups and ingredients
 More sweet and hot flavors (such as chipotle peppers)
 Cross-cultural borrowing of dishes and ingredients
 Substituting herbs for salt/sodium
 One-pot cooking (to capture all flavors)
 More healthy options available
Back-to-Basics Cooking

 Thickening soups and sauces by processing and using the food item’s natural starches
instead of traditional thickening methods
 Redefining the basic mother sauces to omit the béchamel and egg-based sauces and
add or replace them with coulis, salsas, or chutneys
 Pursuing more cultural culinary infusion to develop bold and aggressive flavors
 Experimenting with sweet and hot flavors
 Taking advantage of the shrinking globe and disappearance of national borders to
bring new ideas and flavors to restaurants
 Evaluating recipes and substituting ingredients for better flavor; that is, flavored
liquid instead of water, infused oils and vinegars instead of non-flavored oils and
vinegars
 Substituting herbs and spices for salt
 Returning to one-pot cooking to capture flavors
 Offering more healthy dining choices in restaurants

Learning Describe the different characteristics of franchise, chain, and

Objective 3 independent restaurants.

Franchise Restaurants Independently-Owned Chain- or Corporate-Owned

Restaurants Restaurants
 Through a contractual  Owners very actively operate  Brand is developed and sold as
agreement, the business a franchise to interested
franchisor grants the  Owners have freedom in menu operators
franchisee the rights to and operation  Each operating unit is
use their designs and  Owners accept a greater amount same/similar
plans, sell their of risk (not a familiar concept)  Menu and menu items are
products, and use their same/similar
logos, promotional  Owners do NOT tamper with
materials, and the formula
operational services.  Owners must pay for the right
 The franchisee benefits to operate the franchised
by joining a proven operation in exchange for
successful restaurant operating assistance and
concept, which is more expertise.
likely to succeed than an
unproven concept.
However, the increased
likelihood of success
does incur costs.
Learning Summarize menu planning
Objective 4

Menu Types

 A la carte – all items are priced individually

 Table d’hote – ‘pick one from each cluster’
 Du jour items – selections ‘of the day’
 Tourist – have a few high value items to attract attention
 California – guests may order any menu item at any time
 Cyclical – menus rotate for pre-determined period of time (say, 3 weeks)

Factors to Consider in Menu Planning

 Needs and desires of guests

 Capabilities of cooks
 Equipment capacity and layout
 Consistency and availability of menu ingredients
 Price and pricing strategy (cost and profitability)
o Comparative Price range relative to competition
o Food Costs + Percentage Mark-up
 25-30% food cost as common goal
 Nutritional value
 Accuracy in menu
 Menu analysis (contribution margin)
 Menu design
 Menu engineering
 Chain menus (limited local flexibility)

Pareto Principle and Food Service

You will likely find that 80% of your sales come from 20% of the items you sell. So, many
restaurants have very broad menus (many classifications) and many selections within each
classification. And, later, they find they don’t get adequate ‘turns’ from some items.

Appetizers Soups Salads Entrees Desserts

6–8 2–4 2–4 8 – 16 4–6
Items Items As both Items Items
appetizers and
entrees
Food Costing

 $5.00 appetizer at 25% food cost must cost $1.25 ($5.00 x 0.25) or less to meet food cost
targets.

 $15.00 appetizer at 30% food cost must cost $4.50 ($15.00 x 0.30) or less to meet food cost
targets.

 An item that costs you $3.00 to produce must be sold for $12.00 if your targeted food cost
percentage is 25% (100 / 25 = 4), 4 x $3.00 = $12.00

 An item that costs you $3.00 to produce must be sold for $9.00 if your targeted food cost
percentage is 33% (100 / 33 = 3), 3 x $3.00 = $9.00

 Weighted Average Approach – some components of the meal cost more than others. The goal
is to achieve an overall targeted food cost percentage.

Cost-Volume-Profit (CVP) Analysis

Selling Price Per Unit and Total

Minus Variable Cost Direct Materials
Direct Labor
Direct Overhead
Equals Contribution Margin The amount available to help recover the fixed costs of
operations
Minus Fixed Cost Allocated cost of operations that do NOT vary over
the scope of operations (at least, in the relevant range
of operations)
Equals Earnings before Interest and Tax Earning before we pay Interest and Taxes

 Total Food Cost + Total Labor Cost = PRIME COST (not to exceed 60%)
 Leaving 40% of profit and overhead of operations.
Learning Identify some of the top chain and independent restaurants
Objective 5

Learning Name the classifications of restaurants

Objective 6

Restaurant Market

 What is the unique selling proposition (USP) or NICHE of the restaurant?

 What is the service area (catchment area) of the restaurant? And, what are the area’s
demographics, psychographics, and economics?

o # of restaurants / total population = avg. # of people per restaurant

o USA number of 500 is common

 Location-Specific Factors
o Demographics of immediate area
o Zoning of area
o Visibility of property
o Accessibility of property to guests
o Parking (required and accessible)
o Curbside Appeal (judge a book by its cover)

 Location Types
o Stand-alone building locations
o Cluster or Restaurant Row locations
o In-Shopping Mall
o Outparcel – Shopping Mall
o Downtown
o Suburban
Fine Dining
Casual Dining / Dinner House
Quick Service (QSR) (Casual)
Ruth Cris, Morton’s Steakhouse, PF Changs
Celebrity Restaurants
Steak Houses: Outback (Bloomin’ Brands), Longhorn
(Darden)
Mid-scale: Olive Garden (Darden), Carrabas (Bloomin’
Brands), Romano’s Macaroni Grill (Ignite), Red Lobster
(Darden), TGI Fridays,
Family: Cracker Barrel, Bob Evans, Carrows, Coco’s,
Chili’s, TGI Fridays, Beef O’Bradys, Applebee’s, Ruby
Tuesdays
Fast Casual: Panera, Chipotle, Five Guys
Ethnic: Panda Express, Abuelo’s,
Themed: Rain Forest Café, Planet Hollywood, Hard Rock
Café,
Misc: Joe’s Crab Shack (Ignite), Bonefish (Bloomin’
Brands)
Hamburgers: McDonald’s, Burger King, Wendy’s
Pizza: Pizza Hut, Cici’s Pizza, Godfather’s
Steak: Bonanza, Ponderosa, Ryans
Seafood: Long John Silvers, Captain D’s
Chicken: KFC, Bojangles, Chick fil A, Zaxby’s, Popeyes,
Church’s, El Pollo Locco
Sandwiches: Subway, Firehouse, Blimpies, Jersey Mike’s,
Jimmy John’s
Mexican: Taco Bell, Del Taco, El Torito, Baja Fresh, Mo’s
Southwestern Grill
Sandwiches (non-Deli): Arby’s
Drive-In: Sonic, A&W
Bakery/Cafe: Panera Bread Company, Tim Horton, Einstein
Bagels
Delivery/Carry-Out: Domino’s, Papa John’s, Little Caesars
Beverage/Café: Starbucks, Dunkin,

Local Example

 Homegrown Hospitality Group proudly celebrates our family of restaurants:

TBonz Steakhouse, TBonz Gill & Grill, Kaminsky's Baking Company, Liberty
Steakhouse & Brewery, Liberty Tap Room & Grill, Pearlz Oyster Bar, Flying Fish Market
& Grill, Rioz Brazilian Steakhouse, and The Barksdale House Inn.
Top Corporate Brands (with many units) include:

Darden Restaurants

The Darden family of restaurants features some of the most recognizable and successful brands in
full-service dining: Olive Garden®, LongHorn Steakhouse®, Bahama Breeze®, Seasons 52®,
The Capital Grille®, Eddie V's® and Yard House®. Through subsidiaries, we own and operate
more than 1,500 restaurants, employ 150,000 people and serve more than 320 million meals a
year.

Ignite Restaurant Group

 Brick House Tavern + Tap

 Joe’s Crab Shack

Bloomin’ Brands, Inc.

Since the first Outback Steakhouse opened, our family has expanded to include Carrabba’s Italian
Grill, Bonefish Grill, and Fleming’s Prime Steakhouse & Wine Bar. Together, these unique,
Founder-inspired restaurants that deliver exceptional quality and welcoming hospitality make up
Bloomin’ Brands, Inc.

Today, Bloomin' Brands is one of the world's largest casual dining companies with approximately
100,000 Team Members and close to 1,500 restaurants throughout 48 states, Puerto Rico, Guam
and 22 countries.

YUM Brands

Yum! Brands, Inc., (NYSE: YUM), based in Louisville, Kentucky, is one of the world’s largest
restaurant companies with nearly 43,000 restaurants in almost 140 countries and territories. Yum!
Brands is ranked #218 on the FORTUNE 500 list with revenues of more than $13 billion and in
2014 was named one of the Aon Hewitt Top Companies for Leaders in North America. Our
restaurant brands – KFC®, Pizza Hut® and Taco Bell® – are the global leaders of the chicken,
pizza and Mexican-style food categories.

Since our spin-off from PepsiCo in 1997, Yum! Brands has become a truly global company going
from approximately 20 percent of profits coming from outside the U.S. to almost 65 percent in
2015. We’re a leader in global retail development, opening on average over six new restaurants
per day worldwide.

We’re proud to be the worldwide leader in emerging markets with nearly 16,500 restaurants,
nearly twice as many as the nearest competition. With about 2.5 restaurants per million people in
the top 10 emerging markets, compared to 57 restaurants per million in the U.S., we are on the
ground floor of global growth.
McDonalds

McDonald's is the world's leading global food service retailer with over 36,000 locations in over
100 countries. More than 80% of McDonald's restaurants worldwide are owned and operated by
independent local business men and women.

Wendy’s

The Wendy’s Company (NASDAQ: WEN) is the world’s third largest quick-service hamburger
company. The Wendy’s system includes more than 6,500 franchise and Company restaurants in
the U.S. and 29 other countries and U.S. territories worldwide.

Subway

The SUBWAY restaurant chain is the world's largest submarine sandwich franchise, with more
than 44,000 convenient locations in 112 countries. There are more SUBWAY restaurants in the
world than any other restaurant chain, making us a leader in the global development of the quick
service restaurant industry.

Current Trends in the Restaurant Industry

 Social Media
 Sustainability and local foods
 Concerns over public health
 Environmental Responsibility
 Global menus
 Healthful kids meals

 Increased focus on branding of products, restaurants, and concepts.

 Increased focus on non-traditional outlets (such as grocery stores, convenience stores, gas
stations, etc.)
 Increasing market for home-meal replacement
 Growth of trans-national restaurant concepts and brands
 Increased use of co-branding (Pizza and KFC in one location, YUM brands)
 Continued focus on food outlet clustering