2. THE RESTAURANT BUSINESS
The word “restaurant” covers a broad range
of types of operations, some of which
students may be unaware of
The term “food service” is even more far
reaching and will be more clearly defined in
later chapters
The most important thing for students to take
away from this module is how different
restaurant types are classified and
characterized
3. THE VARIED FIELD OF FOOD
SERVICE
Restaurants are those public places that specialize in
the sale of prepared food for consumption on- or off-
premise
Sometimes, it is not even easy to discern what is and
what is not a restaurant (e.g. Dream Dinners)
Restaurants (and the larger food service industry)
represent an important part of North American society
– for most of us it is an everyday activity
Think of your last “restaurant occasion” Breakfast?
Lunch? Dinner? Coffee? Snack?
4. THE VARIED FIELD OF FOOD
SERVICE
Together, Americans spent over $500 billion
in food service establishments in 2006. This
amount has doubled just since the early
1990s
That translates to well over $1 billion each
day and 47.5% of the “food dollar”
This amount is expected to increase into the
foreseeable future as Americans continue to
seek convenience and activities that suit our
lifestyles
5. THE VARIED FIELD OF FOOD
SERVICE
There have been some recent “dips” in food
service performance but overall the industry
has shown steady growth for the last 10-15
years
Some of the major trends that are occurring
are increases in “off-premise” dining, new
and emerging segments (such as “fast-
casual”), and a blurring of the commercial
and on-site sectors
Overall, the industry continues to grow and is
striving to meet consumers ongoing needs
6. THE VARIED FIELD OF FOOD
SERVICE
Some segments of the industry with which
you should be familiar include:
Quick-service restaurants (QSR)
Fast Casual
Casual dining
Fine dining
Others include ice cream, coffee shops, food
courts, etc.
7. CLASSIFICATIONS
There are many ways to classify restaurants
in the industry. We can classify them by price,
service level (of type), menu, etc.
In the next segment, we will classify them into
“dining” and “eating”
8. THE DINING MARKET vs. THE
EATING MARKET
Restaurants serve both social needs (dining) and
biological needs (eating). Some restaurants serve
one or the other while some serve both markets.
There may be some overlap between the two
The dining market is defined as including those
restaurants that primarily serve our social needs
People will eat in restaurants (that makeup the dining
market) to escape from boredom, to socialize, to be
waited on, to have a different experience, and for
convenience
9. THE DINING MARKET
Certain elements of the dining market
distinguish these restaurants from the eating
market: the importance (and sophistication) of
service, the customer, and the occasion as
well as others
The most obvious example of a restaurant
type that makes up this market is fine dining
Fine dining restaurants tend to be
characterized as: full-service, small,
independent, high quality food and service,
nice ambience and expensive
10. THE DINING MARKET
In recent years, the demand for fine dining
has decreased, resulting in the increasing
popularity of “casual upscale” dining. Some
well known fine dining restaurants in some
cities have even closed
Casual upscale restaurants are characterized
by sophisticated menus, excellence in food,
strong management (typically run by chains),
and good wine lists but are slightly less
expensive and more casual than traditional
fine dining restaurants.
11. THE DINING MARKET
Examples of casual upscale chains would
include Houston’s, Mimi’s, Cheesecake
Factory, and the Chart House
Because of their ambience and the overall
experience that they provide, many of these
concepts appear as if they were independent
restaurants
Interestingly, because of the success of these
chains, they have been the targets for
acquisitions by other companies
12. THE EATING MARKET
The eating market is differentiated from the
dining market in that it caters more to meeting
biological needs
The best (and most obvious) example would
be quick-service restaurants or QSR
The other primary segment is the family
dining segment which offers table seating and
full service (examples, Denny’s, IHOP, and
Cracker Barrel)
13. THE EATING MARKET
The eating market can be sub-divided into (1)
on-premise and; (2) off-premise dining
Off-premise can be further classified into:
Takeout (or take-away
Drive through
Delivery
Together, these three areas have grown
tremendously as a result for customers’
demand for speed and convenience
14. CONTEMPORARY POPULAR
PRICED RESTAURANTS
When we use the term Contemporary
Popular-priced restaurants, we are referring
to the restaurants that cater to the eating
market
As you will recall, the two primary segments
in this market or QSR and Family Dining
restaurants
We will also include casual restaurants which
provide a bridge between the eating and
dining markets. We will discuss each of
these in turn
15. QSRs
The Quick Service segment is a very unique
segment for a variety of reasons. You have all
been consumers of “fast food.” Think about
why you go you QS restaurants…..
QSRs have a very long history, are among
the most productive types of restaurant
operations in the entire industry and have a
history of leading in industry in new
developments
16. The Eating and Dining Markets
E
Fine Dining
Casual
Dining
Fast
Casual
QSR
Upscale
Casual
Family Dining
Vending
17. QSRs
Even though many believe that QSR begins
and ends with McDonald’s, it is generally
believed to have begun in the 1920s with
White Castle and then began to develop in
the 1940s with Carl’s Jr. and In-N-Out.
Others also started around this time including
McDonald’s.
The industry has undergone many changes in
the past 60 years including the domination by
chains and the emergence of McDonald’s as
the leader
18. QSRs
The QSR industry is characterized by a
variety of things including:
Location
Limited menus
Sales volume
Fast service
Types of employees (many part-timers)
19. QSRs (continued)
The QSR industry is characterized by a
variety of things including:
Use of unskilled labor
Key roles for unit managers
Highly competitive menu prices
Chain domination
Simple unit, complex system
20. QSRs
Some changes have occurred over the last
few years including:
Going more “upscale”
Companies diversifying (changing again?)
Introduction of healthy items
Expansion of menus
Nontraditional locations
21. MIDSCALE RESTAURANTS
Midscale restaurants include those
restaurants that have simplified production
systems (requiring lesser skilled employees),
specialized menus and moderately priced
food
This category of restaurants include:
Family restaurants
Cafeterias and buffets
Pizza (sit-down)
22. CASUAL RESTAURANTS
Casual restaurants are a “step-up” from
Midscale Restaurants
These restaurants have become more
popular in recent years driven by their
popularity with a number of demographic
groups
These restaurants are characterized by a
relaxed atmosphere, more varied menus and
reasonable prices
23. CASUAL RESTAURANTS
Casual restaurants include:
“Mainstream” casual restaurants such as
Applebee’s, Chili’s, Ruby Tuesday, and
Friday’s
Specialty restaurants such as those focusing
on steak (Outback), seafood (Red Lobster) or
pasta (Semolina’s)
Ethnic restaurants include, among others,
Chinese, Italian and Mexican
Theme restaurants including Hard Rock Cafe
24. HIGH CHECK AVERAGE
RESTAURANTS
“High Check Average Restaurants”, also
known as fine dining restaurants, have a
special place in American society
Fine dining restaurants are solidly established
as serving the dining market
The “average check” begins at about $30.00
and goes up from there – a notable $200
meal in New Orleans comes to mind
25. HIGH CHECK AVERAGE
RESTAURANTS
These restaurants are typically found in high
income and densely populated areas
(although there are exceptions)
Several large US cities are known for fine
dining including New York, Chicago and LA
They are also typically found in large tourist
areas such as New Orleans, Vail and Las
Vegas
26. HIGH CHECK AVERAGE
RESTAURANTS
Although this type of restaurant is in decline, some
are as popular as ever: Excelsior, Restaurant L,
Seasons, Aujourd’hui, Julien, and L’Espalier
They cater to people going out for special occasions
(birthdays and anniversaries), celebrations (end of
the school year) and business meals
Even some of these have become more casual
(although not necessarily less expensive)
27. RESTAURANTS AS PART OF A
LARGER BUSINESS
The restaurants in this category do not really
fit neatly into another category.
These restaurants exist to serve another
business or businesses
Examples include: restaurants in retail stores
such as Nordstrom and Lord and Taylor, and
restaurants in shopping malls. We
differentiate these because they are not “free
standing”
