Broadly speaking, restaurants can be divided into several categories:
1- chain or indy and franchise restaurants. McDonald's, Union Square Cafe, or KFC
2 – Quick Service (QSR), sandwich. Burger, chicken and so on; convenience store, noodles, pizza
3 – Fast random. Panera Bread, Atlanta Bread Company, Au Bon Pain, etc.
4- Family. Bob Evans, Perkins, friendly company, Steak Shake, waffle house
5- random. Applebee, Hard Rock Caf, Chili, TGI Friday
6- Fine dining. Charlie Trotter, Morton Steakhouse, Flemming, Palm, four seasons
7- Other. Steakhouses, Seafood, Ethnic, Dinner, Celebrities, etc. Of course, some restaurants fall into several categories. For example, an Italian restaurant may be casual and ethnic. Leading restaurant concepts in terms of sales have been followed for years by the Restaurants and
CHAIN OR INDEPENDENT
The impression that the restaurant business is completely dominated by a few gigantic fast service chains is misleading. Chain restaurants have some advantages and disadvantages compared to independent restaurants. Advantages include:
1- Market Recognition
2 – Increased advertising impact
3- complex systems development
4- Discount Shopping
Various types of assistance are available during the franchise. Independent restaurants are relatively easy to open. All you need is a couple of thousand dollars, knowledge of restaurant operations and a strong desire
succeeds. The advantage of independent restaurateurs is that they can & # 39; & # 39; do your own thing & # 39; & # 39; concept development, menus, designs, etc. Unless our habits and tastes change drastically, there is plenty of room for independent restaurants in some places. Restaurants come and go. Some independent restaurants grow into small chains and larger companies outsource small chains.
Once small chains have shown growth and popularity, they are likely to be bought out by a larger company or will be able to finance expansion. It is tempting for a budding restaurateur to follow the big restaurants in big cities and believe that their success can be duplicated in other cities. Reading reviews of restaurants in New York, Las Vegas, Los Angeles, Chicago, Washington, and San Francisco, one might get the impression that unusual restaurants can be replicated in Des Moines, Kansas City, or Main Town, US. Demographic data prevents these stylish or ethnic restaurants from clicking in small towns.
5 – Bottom to bottom training and covers all areas of the restaurant. Franchising involves the least financial risk, as the restaurant's format, including building design, menu and marketing plans, has already been market tested. Franchise restaurants are less likely to open up than independent restaurants. The reason is that the concept is proven and working procedures are established with all (or most) of the developed Kinks. Training is provided and marketing and management support is available. However, the increased likelihood of success is not cheap.
There are franchise fees, royalties, advertising fees and significant net worth claims. For those with no significant restaurant experience, franchising can be a way to start a restaurant business if they are ready to start from the bottom and complete a crash course. Restaurant franchisees are entrepreneurs who prefer to own, manage, develop and expand an existing business concept using a contractual business arrangement called this franchise.1 Multiple franchises have completed several stores and done a great deal of time. Of course, most aspiring restaurateurs want to do their own thing – they have a point and can't wait to find it.
Here are some examples of franchise costs:
1- $ 30,000 at a traditional Miami Subs traditional restaurant, 4.5 percent royalty, and requires at least five years & # 39; experience as a multi-unit operator, $ 1 million in personal / business equity and as a personal / business
net worth $ 5 million.
2- Chili requires a monthly fee based on the restaurant's sales (currently 4 percent of monthly sales) plus a (a) monthly rent or (b) a rent greater than at least 8.5 percent of monthly sales.
3- McDonald requires $ 200,000 in unpaid personal resources and a starting fee of $ 45,000 plus a monthly service fee based on restaurant sales (about 4 percent) and rent
monthly base rent or percentage of monthly sales. Equipment and opening costs range from $ 461,000 to $ 788,500.
4- The pizza factory express units (200-999 square feet) charge $ 5,000 in franchise fees, 5 percent royalty and 2 percent advertising. Equipment costs range from $ 25,000 to $ 90,000, miscellaneous costs from $ 3,200 to $ 9,000, and opening inventory $ 6,000.
5- The Earl of Sandwich has options at a net worth requirement of $ 750,000 and a liquidity of $ 300,000; 5 units requires $ million in net worth and $ 500,000 in liquidity; 10 units, net worth
$ 2 million and liquidity $ 800,000. The franchise fee is $ 25,000 per location and the usage fee is 6 percent.
What do you get for this money? Franchisors offer:
1- Help with choosing a site and reviewing all the sites it offers
2 – assistance in designing and preparation of construction
3 – help with preparation for unlocking
4- Training for managers and employees
5- Designing and implementing pre-opening marketing strategies
6- Unit visits and ongoing counseling
There are hundreds of restaurant franchise concepts and these are not risks. A restaurant owned or rented by a franchisee can fail, even if it is part of a well-known chain that is very successful. Franchisors also fail. An example is the highly regarded Boston market, located in Colorado Golden. In 1993, when the company's shares were first offered to the public at a price of $ 20 per share, it was bought enthusiastically, raising the price to a high of $ 50 a share. After the company was declared bankrupt, the share price fell to 75 cents in 1999. The content of many of its stores was sold at auction
a fraction of their cost.7 The fortunes were made and lost. One group that did not lose was the investment bankers who put together and sold the stock offerings and received a great reward for their services.
The bidding group also did well; they were able to sell their shares when the shares were large. Fast-food chains, known as Hardee and Carl Jr., have also undergone red ink. Both companies, now under the name of one owner, CKE, experienced four-year periods when the company's real profits were negative. (However, during the sales periods of individual stores, business-owned or franchised dealers, things may have gone well.) There is no certainty that the franchised chain is booming.
At one time in Farmington Hills, Michigan, in the mid-1970s, A&W Restaurants had an Inc. 2400 units. In 1995, the chain numbered more than 600. After the redemption that year, the chain expanded by 400 stores. Some expansions took place in non-traditional locations, such as kiosks, truck stops, colleges and convenience stores, where the experience of a full-service restaurant is irrelevant. The restaurant concept may work well in one area but not in another. The working style can be very compatible with the personality of one operator and not the other.
Most franchised operations require a lot of hard work and long hours that many people perceive as fraudulent. If the franchisee does not have enough capital and leases the building or land, there is a risk of paying more for the rent than the company can support. The relationship between franchisors and franchisees is often strained, even in larger companies. The goals of both are usually different; franchisors want maximum fees, while franchisees want maximum support in marketing and providing franchise services, such as employee training. Sometimes franchise chains are involved in litigation with their franchisees.
As franchisees have established hundreds of franchises throughout America, some regions are saturated: there are more franchise practices that the region can support. Current franchise owners complain that the addition of franchises will only help to reduce the sales of existing stores. For example, Pizza Hut stopped selling
franchises, except for well-heeled buyers, who can take many units. Overseas markets are a major source of revenue for several high-speed service chains. As expected, McDonald has led overseas expansion with units in 119 countries.
With about 30,000 restaurants serving about 50 million customers a day, about half of the company's profits come from outside the United States. Many other high-speed service chains also have many franchise companies overseas. While a budding restaurateur rightly focuses on a successful venture here and now, many bright, ambitious and energetic restaurateurs are thinking about future opportunities abroad. Once the concept has been developed, the entrepreneur can sell to the franchisor or use a lot of guidance through the franchise abroad format. (Buying or buying abroad is silly without a partner who is financially insured and knowledgeable of local laws and culture.)
McDonald's success story in the US and abroad illustrates the importance of adapting to local conditions. The company opens units in unlikely locations and closes those that are not doing well. Abroad, the menus have been adapted to local customs. For example, during the Indonesian crisis, French fries that had to be imported were removed from the menu and rice was replaced. Reading the life stories of big franchisees, it can be concluded that once the franchise is well established, there is a clear way to sail. Thomas Monaghan, founder of Domino Pizza, tells another story. At one time, the chain had $ 500 million in debt. Monaghan, a proud Catholic, said he changed his life by giving up his greatest sin, pride and devoting his life to & # 39; & # 39; God, family and pizza. & # 39; & # 39;
Meeting with Pope John Paul II had changed his life and his feeling of good and evil as & # 39; & # 39; personal and enduring. & # 39; & # 39; In the case of Monaghan, the reduction worked well. Worldwide, there are 7,096 Domino's Pizza stores with annual sales of approximately $ 3.78 billion. Monaghan sold most of his billion-dollar interest in the company and said he plans to use his fortune for further reasons for the Catholic Church. In the recent past, most food service millionaires have been franchisees, but a large number of prospective restaurateurs, especially those studying university and restaurant management university courses, are not particularly enthusiastic about the fast-food franchisee.
They prefer to own or operate a full service restaurant. Prospective franchisees should review their food experience and access to money and decide which franchise is right for them. If they have little or no food experience, they may consider starting their restaurant career with a cheaper franchise that offers start-up training. For those with experience and wanting a proven concept, the friendly chain that started franchising in 1999 may be a good choice. The chain has more than 700 units. Restaurants are family-friendly restaurants serving ice cream, sandwiches, soups and fast food.
Let's emphasize this point again: work in a restaurant you like and maybe imitate your restaurant. If you have enough experience and money, you can knock it out on your own. It's even better to work at a successful restaurant where you might have a partnership or ownership circle, or where the owner is considering retirement and may be willing to make payments over time for tax or other reasons.
Franchisees are in fact entrepreneurs, many of whom create chain bracelets.
McDonald's had the fastest system-wide service chain sales, followed by Burger King. Next came Wendy, Taco Bell, Pizza Hut and KFC. Subway, as one of hundreds of franchisees, generated sales totaling $ 3.9 billion. There is no doubt that the list of top-selling companies will be different in 10 years. Some current executives are experiencing a decline in sales and some are joining or buying out other companies – some of whom may be financial giants who have not been in the restaurant business before.