Restaurant Management and Operations

Introduction

LEARNING OBJECTIVES

■ Discuss reasons why some people open restaurants.
■ List some challenges of restaurant operation.
■ Outline the history of restaurants.
■ Compare the advantages and disadvantages of buying, building, and franchising restaurants.

Restaurants play a significant role in our lifestyles, and dining out is a favorite social activity. Everyone needs to eat—so, to enjoy good food and perhaps wine in the company of friends and in pleasant surroundings is one of life’s pleasures.
Eating out has become a way of life for families. Today, more meals than ever are being eaten away from home.

The successful restaurant offers a reasonable return on investment. One restaurant, then two, then perhaps a small chain. Retire wealthy. To be a winner in today’s economy requires considerable experience, planning, financial support, and energy. Luck also plays a part. This book takes you from day one—that time when you dream of a restaurant—through the opening and into operation. What kind of restaurant do you want to run? Would you prefer quick service, cafeteria, coffee shop, family, ethnic, casual, or luxury? Most restaurant dreamers—perhaps too many—think of being in the middle of a restaurant with lots of guests; skilled, motivated employees; and great social interaction, food, service, and profits. The kind of restaurant concept you select determines, to a large extent, the kind of talents required. Talent and temperament correlate with restaurant style. Managing a quick-service restaurant is quite different from being the proprietor of a luxury restaurant. The person who may do well with a Taco Bell franchise could be a failure in a personality-style restaurant. The range of restaurant styles is broad.

Each choice makes its own demands and offers its own rewards to the operator.

This book shows the logical progression from dream to reality, from concept to finding a market gap to operating a restaurant. Along the way, it gives a comprehensive picture of the restaurant business.

Going into the restaurant business is not for the faint of heart. People con- templating opening a restaurant come from diverse backgrounds and bring with them a wealth of experience. However, there is no substitute for experience in the restaurant business—especially in the segment in which you are planning to operate.

So why go into the restaurant business? Here are some reasons others have done so, along with some of the liabilities involved. Figure 1.1 shows reasons for going into the restaurant business.

FIGURE 1.1: Reasons for going into the restaurant business

■ Money: The restaurant is a potential money factory. According to the National Restaurant Association (NRA) the restaurant industry totals $580 billion in sales. Successful restaurants can be highly profitable. Even in a failing economy the NRA is predicting restaurant-industry sales to advance 2.5 percent in 2010 and equal 4 percent of the U.S. gross domestic product.

Few businesses can generate as much profit for a given investment. A restaurant with a million-dollar sales volume per year can generate $150,000 to $200,000 per year in profit before taxes. But a failing restaurant, one with a large investment and a large payroll, can lose thousands of dollars a month. Most restaurants are neither big winners nor big losers.

■ The potential for a buyout: The successful restaurant owner is likely to be courted by a buyer. A number of large corporations have bought restaurants, especially small restaurant chains. The operator is often bought out for several million dollars, sometimes with the option of staying on as pres- ident of his or her own chain. The older independent owner can choose to sell out and retire.

■ A place to socialize: The restaurant is a social exchange, satisfying the needs of people with a high need for socialization. Interaction is constant and varied. Personal relationships are a perpetual challenge. For many people there is too much social interplay, which can prove exhausting. On a typical day in America in 2009, more than 130 million individuals will be food service patrons.

■ Love of a changing work environment: A number of people go into the restaurant business simply because the work environment is always upbeat and constantly changing. A workday or shift is never the same as the last.

One day you’re a manager and the next day you could be bartending, hosting, or serving. Are you bored of sitting behind a desk day after day?
Then come and join us in the constantly evolving restaurant world!

■ Challenge: Few businesses offer more challenge to the competitive person.
There is always a new way to serve, new decor, a new dish, someone new to train, and new ways of marketing, promoting, and merchandising.

■ Habit: Once someone has learned a particular skill or way of life, habit takes over. Habit, the great conditioner of life, tends to lock the person into a lifestyle. The young person learns to cook, feels comfortable doing so, enjoys the restaurant experience, and remains in the restaurant business without seriously considering other options.

■ A fun lifestyle: People who are especially fond of food and drink may feel that the restaurant is “where it is,” free for the taking, or at least available at reduced cost. Some are thrilled with food, its preparation, and its service, and it can also be fun to be a continuous part of it.

■ Too much time on your hands: A lot of people retire and decide to go into the business because they have too much time on their hands. Why a restaurant? Restaurants provide them with flexibility, social interaction, and fun!

■ Opportunity to express yourself: Restaurant owners can be likened to the atrical producers. They write the script, cast the characters, devise the settings, and star in their own show. The show is acclaimed or fails according to the owner’s talents and knowledge of the audience, the market at which the performance is aimed.

When restaurant owners were asked by the author and others what helped most “in getting where you are today,” the emphasis on steady, hard work came out far ahead of any other factor. Next in line was “getting along with people.”

Then came the possession of a college degree. Close also was “being at the right place at the right time.” Major concerns were low salaries, excessive stress, lack of room for advancement, and lack of long-term job security.

Opening and operating a restaurant takes dedication, high energy, ambition, persistence, and a few other ingredients discussed throughout this text. As Carl

Karcher, founder of Carl’s Jr., said, in America you can easily begin a restaurant as he did, on a cart outside Dodger Stadium selling hot dogs.