Cash Investments are Required for Restaurant Purchases

An individual considering a restaurant purchase must look at a number of major items that require financing. An initial cash investment is also necessary. The author enumerates and discusses what the buyer must have to start in business.

Restaurant Service for the 90's

Much has been written about servicing the customer. In fact, every issue of Restaurants USA or Nation's Restaurant News offers an article designed to help restaurateurs more successfully service their customers. While the restaurant market has carefully zeroed in on the specific products and services customers require, no one has carefully addressed the heart of the issue. The authors discuss the "hospitality" in restaurant service.

Correlates of Non-Institutional Food Service Turnover

The high rate of restaurant employee turnover, particularly of the non-supervisory employee, is a continuing problem. The authors assess the possible correlates of this turnover and their relative strengths, ranking and comparing working hours, quality of supervision, chance for promotion, on-the-job training, pay, work of others, employees' attitudes, and management's interest in employees to present possible solutions for the high rate of turnover.

"Unfair'' Restaurant Reviews:To Sue Or Not To Sue

In their discussion entitled - “Unfair” Restaurant Reviews: To Sue Or Not To Sue - by John Schroeder and Bruce Lazarus, Assistant Professors, Department of Restaurant, Hotel and Institutional Management at Purdue University, the authors initially state: “Both advantages and disadvantages exist on bringing lawsuits against restaurant critics who write “unfair” reviews. The authors, both of whom have experience with restaurant criticism, offer practical advice on what realistically can be done by the restaurateur outside of the courtroom to combat unfair criticism.” Well, this is going to be a sticky wicket no matter how you try to defend it, reviews being what they are; very subjective pieces of opinionated journalism, especially in the food industry. And, of course, unless you can prove malicious intent there really is no a basis for a libel suit. So, a restaurateur is at the mercy of written opinion and the press. “Libel is the written or published form of slander which is the statement of false remarks that may damage the reputation of others. It also includes any false and malicious publication which may damage a person's business, trade, or employment,” is the defined form of the law provided by the authors. Anecdotally, Schroeder and Lazarus offer a few of the more scathing pieces reviewers have written about particular eating establishments. And, yes, they can be a bit comical, unless you are the owner of an establishment that appears in the crosshairs of such a reviewer. A bad review can kneecap even a popular eatery. “Because of the large readership of restaurant reviews in the publication (consumer dining out habits indicate that nearly 50 percent of consumers read a review before visiting a new restaurant) your business begins a very dangerous downward tailspin,” the authors reveal, with attribution. “Many restaurant operators contend that a bad review can cost them an immediate trade loss of upward of 50 percent,” Schroeder and Lazarus warn. “The United States Supreme Court has ruled that a restaurant owner can collect damages only if he proves that the statement or statements were made with “actual malice,” even if the statements were untrue,” the authors say by way of citation. And that last portion of the statement cannot be over-emphasized. The first amendment to the U.S. Constitution does wield a heavy hammer, indeed, and it should. So, what recourse does a restaurateur have? The authors cautiously give a guarded thumbs-up to a lawsuit, but you better be prepared to prove a misstatement of fact, as opposed to the distinguishable press protected right of opinion. For the restaurateur the pitfalls are many, the rewards few and far between, Schroeder and Lazarus will have you know. “…after weighing the advantages and disadvantages of a lawsuit against a critic...the disadvantages are overwhelming,” the authors say. “Chicago restaurant critic James Ward said that someone dumped a load of manure on his yard accompanied by a note that read - Stop writing that s--t! - after he wrote a review of a local restaurant.” Such is a novel if not legally measurable tack against an un-mutual review.

The Food Service Industry Environment: Market Volatility Analysis

In their dialogue entitled - The Food Service Industry Environment: Market Volatility Analysis - by Alex F. De Noble, Assistant Professor of Management, San Diego State University and Michael D. Olsen, Associate Professor and Director, Division of Hotel, Restaurant & Institutional Management at Virginia Polytechnic Institute and State University, De Noble and Olson preface the discussion by saying: “Hospitality executives, as a whole, do not believe they exist in a volatile environment and spend little time or effort in assessing how current and future activity in the environment will affect their success or failure. The authors highlight potential differences that may exist between executives' perceptions and objective indicators of environmental volatility within the hospitality industry and suggest that executives change these perceptions by incorporating the assumption of a much more dynamic environment into their future strategic planning efforts. Objective, empirical evidence of the dynamic nature of the hospitality environment is presented and compared to several studies pertaining to environmental perceptions of the industry.” That weighty thesis statement presumes that hospitality executives/managers do not fully comprehend the environment in which they operate. The authors provide a contrast, which conventional wisdom would seem to support and satisfy. “Broadly speaking, the operating environment of an organization is represented by its task domain,” say the authors. “This task domain consists of such elements as a firm's customers, suppliers, competitors, and regulatory groups.” These are dynamic actors and the underpinnings of change, say the authors by way of citation. “The most difficult aspect for management in this regard tends to be the development of a proper definition of the environment of their particular firm. Being able to precisely define who the customers, competitors, suppliers, and regulatory groups are within the environment of the firm is no easy task, yet is imperative if proper planning is to occur,” De Noble and Olson further contribute to support their thesis statement. The article is bloated, and that’s not necessarily a bad thing, with tables both survey and empirically driven, to illustrate market volatility. One such table is the Bates and Eldredge outline; Table-6 in the article. “This comprehensive outline…should prove to be useful to most executives in expanding their perception of the environment of their firm,” say De Noble and Olson. “It is, however, only a suggested outline,” they advise. “…risk should be incorporated into every investment decision, especially in a volatile environment,” say the authors. De Noble and Olson close with an intriguing formula to gauge volatility in an environment.

Survivorship in International Chain Restaurant in Korea

Several western chains have done well in Korea, while others have withdrawn from the market. The authors summarize the current operational results of western chain restaurants in Korea, report positive impacts of western foodservice firms, and analyze the key elements leading to their survival and non-survival. Some lessons could be used as tools to establish entrance strategies of western chain restaurants in Korea as well as in other Asian markets

Bankruptcy Situation Model in Small Business: The Case of Restaurant Firms

The purpose of this paper is to describe and discuss the current bankruptcy prediction models. This is done in the context of pros and cons of proposed models to determine the appropriate factors of failure phenomenon in cases involving restaurants that have filed for bankruptcy under Chapter 11. A sample of 11 restaurant companies that filed for bankruptcy between 1993 and 2003 were identified from the Form 8-K reported to the Securities and Exchange Commission (SEC). By applying financial ratios retrieved from the annual reports which contain, income statements, balance sheets, statements of cash flows, and statements of stockholders’ equity (or deficit) to the Atlman’s mode, Springate model, and Fulmer’s model. The study found that Atlman’s model for the non-manufacturing industry provided the most accurate bankruptcy predictions.

Shopping for Computer Restaurant Management Systems

A myriad of computer management systems are available for the restaurant business. The author discusses all aspects of evaluating, purchasing, and using such systems for a restaurant operation.

Relationship between Changes in Cash Flow and Investments in Publicy Traded Restaurant Firms in the United States

This research investigated the relationship between investments in fixed assets and free cash flows of U.S. restaurant firms while controlling for future investment opportunities and financial constraints. It also investigated investment and cash-flow sensitivity in the context of economic conditions. Results suggested that investments in small firms (with higher financial constraints) had relatively weaker sensitivity to cash flows than investments in large firms (with higher sensitivity). Controlling for economic conditions did not significantly change results. While the debate over sensitivity of investments to cash flows remains unresolved, it has not been explored widely in industry contexts, especially in services such as the restaurant industry. In addition to its contribution to this literature, this paper provides implications for cash-flow management in publicly traded restaurant companies.

Agency Costs, Bankruptcy Costs and the Use of Debt in Multinational Restaurant Firms

The purpose of this paper is to understand whether multinational restaurant firms (MNRF’s) have higher agency and expected bankruptcy costs. Given this expectation, this may have an impact on the amount of debt incurred by MNRF’s. Overall, the findings are consistent with the existing literatue in terms of the positive relationship between MNRF’s and agency and bankruptcy cost. However, it was found that MNRF’s also have more total debt. This is surprising given the higher agency and bankruptcy costs. The importance of this research is that there may be considerations other than agency and bacnkruptcy costs affecting the capital structure decisions of MNRF’s.

Global Pricing Strategy for a Quick-Service Restaurant Chain

The purpose of this paper is to compare prices for a popular quick-service restaurant chain (i.e. McDonalds’) across countries throughout the world using the “Big Mac Index” published by “The Economist.” The index was originally developed to measure the valuation of international currencies against the U.S. dollar. The analysis in this study examines the relationship between the price of a Big Mac and other variables such as the cost of beef, price elasticity, and income. Finally, these relationships are reviewed to draw inferences concerning the use of demand, costs, and competition in setting prices.

Training Methods Utlilized by Independent Restaurant Managers

Formal, systematic training has always been cited as a major need for the future success of hospitality operations. However, one other aspect of the job might be the development of a train-the-trainer curriculum for hospitality management students. The author studies the relationship between training preparation and training methods utilized by restaurant managers and explores this need.

Would a Restaurant Menu Item by Any Other Name Taste as Sweet?

The purpose of this paper is to examine the use of words on a restaurant menu, and to evaluate the impact that they have on the selection of menu items. The research comprised two distinct parts. First, four focus groups were held examining responses to five menus, each with the same menu items but using different wording. The results from the focus group analysis were used to develop a survey which was more widely distributed. From the focus group it was revealed that the occasion and participants in the dining experience influence the wording for menu item selection. Respondents discussed the mystique of the menu and confirmed a desire for menu items that would not normally be prepared at home. It was also of interest the "mouthwatering" effect that the words haw on potential customers and what a strong persuader these words were. The survey reinforced the focus group research in many ways, also stressing the positive effect of descriptive words such as "Tender'; "Golden" and "Natural" to the choice of menu items. The research has identified the importance of the choice and use of words in the design of a menu that operations management need to be aware of

Gauging Employee Theft and Other Unacceptable Behaviors in Food Service Operations

Unacceptable employee behavior ultimately results in higher prices for consumers. Members of the Indiana Hospitality and Restaurant Association were surveyed about the practices being used to safeguard their assets and control employee deviance in food service. They were also asked to estimate the losses that result from employee theft. This information was used to investigate whether certain policies and procedures were more effective than others in limiting their losses.

Wellness and Obesity: Implications for Health Care Costs Among Restaurant Managers

Overeating, inadequate exercise, work-related stress, and long working hours are accepted issues among restaurant managers. The underlying question was whether such life styles affect employers' health care cost and restaurant managers' health and ability to cope with imposed business requirements. The author discusses strategies to help employers reduce health care costs, increase employee productivity, and improve job satisfaction.