Tourism Economics - Niagara University
Download
Report
Transcript Tourism Economics - Niagara University
Tourism Economics
Chapter 4: Restaurant Economics
TRM 490
Dr. Zongqing Zhou
Chapter 4: Restaurant Economics
(1)
• Overview
– About 25% of the $254.9 billion of restaurant
sales in the US in 1992 can be attributed to
the travelers (fifty miles away from home).
– Restaurant depends heavily on tourists for
sales.
– Expansion abroad is the trend
– Restaurant chains dominate the restaurant
sales (about 47% of the sales)
Chapter 4: Restaurant Economics
(2)
• Classification of restaurants
– Fast food
•
•
•
•
Fast food chains
Convenient stores
Supermarket
Pizza take-out stores (can be part of the fast food chains)
– Other kinds
• Family restaurants (many of them offer fast food service like
a coffee shop)
• Dinner houses
• Fine dining restaurants
• Ethnic restaurants like Chinese and Mexico food
• Casual dining like Hard Rock Cafe
Chapter 4: Restaurant Economics
(3)
• Fast food restaurants:
– $75.6 million sales in 1992 as compared to $98.8 million sales for other
types of restaurants
– The big fortunes in the food service business have been made in fastfood.
• Fast-food franchising builds on three well-established business
phenomena
– Product standardization (cookie cutter approach)
– Economies of scale
– Mass marketing
• McDonald’s is a build-on system-a system for doing everything:
– High profile advertising
– Low labor costs (30% of the sales)
– Standardization (purchasing and portion control)
Chapter 4: Restaurant Economics
(4)
• Technology in the franchising management:
– Manually in the old days
– Network today: computers are linked from the franchisors to the
franchisees
• Efficiency in fast food chains
– McDonald’s is a build-on system: three well-established practice
– See P83 top of the page and P87, Fig.4-1 (profit before income
taxes)
– Competition to the fast food chains
• Food at home
– Factors: gas, time, health, taste, food cost at home
• Other kinds of restaurants
• Convenient stores and supermarkets
Chapter 4: Restaurant Economics
(5)
• Other types of restaurants
– Family: e.g. Denny’s
– Fine dinning (under 100 seats)
– Dinner house (considered luxury)
– Casual dinning (Hard Rock Café)
– Ethnic restaurants
• High Risk of Failure
– High failure rate
• Reasons
– Too many restaurants (supply outpaces demand)
– Easy entry
– Owners are typically not well-educated and know how to manage
• 27% fail during the first year
• 50% at the end of three years
• 60% by the end of five years
Chapter 4: Restaurant Economics
(6)
• Economic measures in restaurant operation
– Prime costs
• Food
• Labor
• Profitability: keep the prime cost below 60-65 percent of
sales. (see p. 86 for more details)
–
–
–
–
–
Breakeven analysis
Seat Turnover
Employee theft
Foresting restaurant sales
Restaurant Finance
Chapter 4: Restaurant Economics
(7)
• Breakeven Analysis: estimation of the
sales volume needed to break even and
the profit that can be made at various
levels of sales
– Identify various types of costs (see p. 87 for
examples)
• Fixed cost: not changed with sales
• Variable cost: changed with sales
• Semi-variable cost: partially fixed, partially variable
– Breakeven chart (see p. 89)
Chapter 4: Restaurant Economics
(8)
• Seat Turnover: the number of times a table is reoccupied
by a customer
– It is a widely used measure for the restaurant operator.
– Could be as high as seven times during the rush lunch hour and
as low as once or twice an evening in a luxury restaurant.
– The fast-food operator wants the customer in, served and out as
soon as possible
– The luxury restaurant, on the other hand, wants the customer to
linger, select expensive wine and order a complete meal.
– Serving speed correlates with check average; mid range priced
restaurants about 2-3 times of seat turnover in an evening. The
luxury ones may be just once or twice.
Chapter 4: Restaurant Economics
(9)
• Forecasting restaurant sales
– Varies with the week and season.
• Table service restaurants high on weekend; as
high as account for one-half of all weekly sales.
– Purpose of sale forecast
•
•
•
•
For food purchase
Labor scheduling
Revenue control
marketing
Chapter 4: Restaurant Economics
(10)
• Restaurant Finance
– Larger restaurant chains raise capital through
stock sales
– Independent operator gets funds wherever
possible.
– Restaurant buildings and equipment are more
often leased than purchased.