FOOD AND

BEVERAGES
SECTOR
 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 a liquor license. The
décor is bright. A combination of counters, table, and booths is common. Parking is necessary since
customers usually arrive by car. Family restaurants are normally located near a residential area and a
highway.

 The operating hours are usually from early evening to midnight. The staff are friendly and efficient.
The initial investment is medium to high.
 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. The
staff are often minimally trained. The peak periods of a coffee shop are lunch and coffee
breaks. Operating hours are from early morning to early evening. A takeout service may be
offered.
 3. CAFETERIAS

 Cafeterias are usually located in shopping centers and office buildings. Self-service is typical with
limited menus of soups, entrees, desserts, and beverages.

 Cafeterias often require a large preparation area. Their staff are minimally trained. Beer and wine
may be offered. Fast service is necessary to handle the traffic volume. The operating hours will
depend on the location as school, office building, airport, or highway.
 4. GOURMET RESTAURANTS
 Gourmet restaurants generally require a higher initial investment than other types of restaurants
because they require an expensive ambience and decor. They cater to those who want a higher
standard and are willing to pay the price.

 The price are higher at gourmet restaurants because of the high investment required. The menu and
wines are carefully planned and the staff are highly trained.

 The evening period is the main emphasis. The location is important but may not be critical since
discriminating diners look for quality gourmet restaurants. Word-of-mouth advertising and repeat
business are keys to success.
 5. ETHNIC RESTAURANTS

 Ethnic restaurants feature the food of a specific region or country. They can be Chinese or
classical French cuisine. The decor usually has an ethnic motif.

 In order to be successful ethnic restaurants must serve authentic cuisine of the region or country
they are featuring and those who prepare the food must be well-trained and knowledgeable.
Prices range form budget to high. Beer, wine, and liquor may or may not be served. The initial
investment is high because of the décor and staff training. The location is variable. Operating
hours are in the evening.
 6. FAST-FOOD RESTAURANTS
 Fast-food restaurants have increased in the past 20 years as people have become more mobile.
Franchising is common in this type of restaurant. The menu is limited with low prices. Because
of low prices, many customers patronize fast-food restaurants.

 Fast-food restaurants operate for long hours and generally for seven days a week. Alcoholic
beverages are not offered. A well-trained staff is required for franchise fast-food operation in
which the franchisor sets standards of service and food quality that must be maintained at all
times.

 Fast-food chains have been successful in the past two decades because they have offered a
limited menu. This has given them greater purchasing power, less waste, and lower labor cost
by using disposable paper, plastic, and styrofoam containers which save dishwashing costs.
These restaurants are pioneers in establishing more efficient food-operating systems.
 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. The are usually located in shopping areas or office buildings and are open
from 9 : 00 AM to 5 : 00 PM or 9 : 00 PM. Capital investment is low. Deli shops have low labor
costs because only one or two owners and employees are involved.
 8. BUFFET RESTUARANTS

 Buffet restaurants are established on a complete self-serve basis. However, if liquor,

beer, and wine are offered, table and service for these beverages are provided.

 The food buffet is usually an “all you can eat” hot and cold food for one price. Food
preparation and service staff are kept to a minimum. Buffet restaurants cater to the
family and therefore offer reasonable prices. They are open from 5 : 00 PM to 11 : 00
PM.
9. TRANSPORTATION RESTAURANTS
 There is a natural link between transportation and food service. Several restaurants are
generally found along auto and bus transportation routes. They are also found at bus,
rail, and air transportation buildings, as well as on transportation vehicles as trains and
ships.
 Some transportation restaurants cater to tour groups, particularly bus tour groups.
These restaurants can be quite profitable if the market can be maintained. The require
special cafeteria or buffet-type facilities so that arriving groups can be served quickly
and continue on their journey.
 FRANCHISING

 Franchised restaurants are a major component of the food service industry, particularly
in the fast-food sector. The reason for the popularity of franchising in the restaurant
industry are very similar to those in the hotel industry. Franchises are beneficial to the
franchisees because they provide operational, training, layout and design assistance,
location assistance, managerial expertise, group purchasing power, and most
importantly the identification of a well-known brand supported by regional, national,
and international advertising and promotion. Franchised restaurants can easily get
financing from lending institutions than independents.
 In the early days of franchising, the common practice was to sell individual franchise
rights for a single restaurant. At a present, a regional franchise has become popular with
franchisees and franchisors. A regional franchise allows a franchisee to develop multiple
outlets within a specific geographical area. The area could be a city, a state, a province, a
major part of the country, or the whole country. For example, Wendy’s in the United
States gave private Canadian Country the territorial rights to all of Canada for Wendy’s
restaurant operations.

 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 off
restaurants such as Wendy’s and Pizza Inn and carry-out establishments like Orange
Julius. The fast-food franchise is the most common. Table-service restaurants such as
Denny’s Steak and Ale and Victoria Station, and buffet-style restaurants such as
Bonanza are also franchised. These table-service and fast-food restaurants have spread
from the United States to other countries throughout the world.
 RA NT PR O F I TA BI L I T Y
RE S TA U
 FOOD COST PERCENTAGE
 Food cost percentage is often used to measure a restaurant’s marketing success. It is
determined by dividing the food cost for period ( a day, a week, a month ) by the
sales for that same period and then multiplying it by 100. For example, if the cost of
food for one month is $40,000 and sales is $100,000, the food cost would be:

 Many restaurant operators strive for a 40% food cost to make the restaurant more
profitable.
 GROSS PROFIT
 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.

 In this table, it would be better to sell item 1 rather than item 2 since item 1 has a
higher cost percentage and a higher gross profit; hence, a contribution to net profit
than the item 2. For each of them 1 sold 50% food cost, there is a $4 gross profit
compared with $3 with item 2.
 LABOR COST

 Labor cost are controlled by expressing them as a percentage of sales on a daily, weekly, or
monthly basis and comparing the actual cost with the standard desired.

 Instead of treating labor cost as separate from food costs, many successful restaurants look
at these two as a combined cost. For instance, they set a standard of 75% above in which
food costs plus labor costs must not increase. As long as the operation maintains the
combined cost below this level, the restaurant will be profitable.
 In a large restaurant, the organization of the labor force is important to labor cost control.
The food service structure is illustrated in Figure 4.
 AVERAGE GUEST CHECK

 Another profitability measure used in restaurants is the average guest spending or

average check. Average guest spending is calculated by dividing the total revenue
received for a particular period ( a day, a week, a month or a year ) by the total number of
guest served during that period.
 BREAK EVEN POINT
 Breakeven is the point at which business will make neither a profit nor a loss.

 The operation for determining the break even point is:

 Fixed costs are those costs that remain the same regardless of the volume of business.
Examples are salaries, interests, depreciation, insurance rent, and the like. The
contribution margin is average check less variable costs. For example, if a restaurant has
annual fixed cost of $125,000 and an average guest spending of $10.00 and its variable
cost such as food labor, and others is 75% of revenue or $7.50% guest served, its
breakeven point is:

 The contribution margin is average check less variable costs or $2.50 less $7.50. The
breakeven number of costumers is $50,000.
 The proof of this is:
 MENUS
 The menu is the basic planning document for a successful restaurant. Several aspects of the
restaurant’s operation depend on the menu. The menu contains what the restaurant offers,
the range of the 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.
 The menu also determines the equipment needed and the investment required. In general,
the more the extensive the menu is, the more varied the needed equipment will be. If a
restaurant sells only hamburgers, hotdogs, fries, and soft drinks, its required equipment will
be less compared to those restaurant with 20 or 30 menu items which require different
cooking methods and more specialized equipment.
 In addition, the menu identifies the labor costs of a restaurant. It can determine the number
of staff required and the cost of staff training for food preparation and service. The more
items are contained in the menu, the more complex the service will be.
 Lastly, the menu estimates the cost for uniforms, purchases, storage and space, and actual
food costs. The menu also helps emphasize, by means of bolder prints, which menu items
the restaurant would prefer customers to order.
 AIRLINE CATERING

 Airline companies spend billions of dollars every year for food purchases. 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 passengers may be offered only non-alcoholic
beverage and a light snack. For longer trips in which two or three meals may be offered
including free alcoholic beverages, the amount is higher. Around 3 to 4% of an airline’s
total costs is spent on food.
 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
people with their own food preferences, and whose main motivation is to travel rather than to
eat.
 In 1992, airline passengers were served a sandwich and coffee from a vacuum flask on a
flight from London to Paris. At present, particularly on long flights, passengers expect hot
meals.
 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 reservations for each flight including an allowance for
standbys and last-minute reservations in order to have the correct raw materials, equipment,
and food production staff for each shift. Preliminary meal counts are usually prepared from 24
to 72 hours ahead so that food supplies can be bought.

 Menus must be carefully selected for each flight to avoid serving the same meal to a
passenger on two succeeding segments of a trip or on a round trip. In addition, trays and
serving utensils and supplies must be in the kitchen when the meal is prepared.
 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 onboard in their
galleys. The removable ovens are filled with hot food in the ground flight kitchen, moved to the
aircraft, and then plugged into electrical outlets.
 FLIGHT KITCHENS

 The first airline flight kitchen was opened in the late 1930’s 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 in the airplane. He approached Eastern Air Transport, now known as Eastern
Airlines, and offered to prepare lunch boxes in his restaurant Eastern‘s passengers. Eastern
agreed, so the first flight kitchen was established. At present, Marriott In-Flite Services has
approximately 100 flight kitchens around the world which cater to 150 different airlines and
serve 100 million meals a year.

 There is an ongoing trend at present in which Flight Kitchen operators lease their dining
equipment from other firms.
 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.
 E B E T W E E N
DIFFERENC
L I N E CA T ER I N G A N D
AI R
TA U RA N T C AT E R I N G
R E S
 Airline catering is different from restaurant catering because in the latter, the cooks can make last-
minute adjustments. For example, a steak might be prepared in the flight kitchen to be
accompanied by a sauce and vegetables to be served two hours later. During this time, it must be
kept hot. If there is a flight delay of one hour , the steak will be stringy, the sauce will be
congealed, and the vegetables will be mushy. 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
notice.
 RESTAURANT PROMOTION
 Many restaurants advertise their menu on newspapers. Local newspapers 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. Many restaurants try to foster good
relations with nearby hotel employees such as front office staff, bell desk personnel, and doorman
because they are often asked by hotel guests to recommend good nearby restaurants. Good public
relation and word-of-mouth advertising generate a lot of business.
S U M M ARY
There is considerable evidence in early history that primitive inns provided a crude menu. The
forerunner of the modern restaurant developed in Rome. Most of the early restaurant were
established in cities, near temples and government buildings. After the fall of Roman Empire, manors
and castles provided food to large numbers of people. In the sixteenth century, British inns and
taverns served a meal known as ordinary and dining rooms were called ordinaries. In the eighteenth
century, the word “restaurant was used for a Paris dining room that served light dishes. In early
American history, the tavern was thee birthplace of the American hotel industry. It was important in
the evolution of the American food industry. In the early 1900’s, the first hamburger and root beer
stands were established in the United States. In the 1960’s, establishments selling fast-food became
popular. At present, they are moving overseas in large numbers.

Restaurants are classified in different types. These are the family or commercial restaurants, coffee
shops, cafeterias, gourmet restaurants, ethnic restaurants, fast-food restaurants, deli shops, buffet
restaurants, and transportation restaurants.
T H E E N D
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