Howard Johnson's: Rise and Fall of an American Icon

The Howard Johnson’s restaurant chain was one of the first franchise success stories in the United States. Climbing in size to be over 1,000 restaurants, the chain today boasts fewer than 30 units. How could such a successful company spiral downward to virtually nothing? This article examines the history of the chain and offers reasons for its success and demise.

Examining Technology Adoption and Management Perception of Inventory Management Systems: The Case of Aruba Restaurants

The purpose of this paper is to explore the use of automated inventory management systems (IMS) and identify the stage of technology adoption for restaurants in Aruba. A case study analysis involving twelve members of the Aruba Gastronomic Association was conducted using a qualitative research design to gather information on approaches currently used as well as the reasons and perceptions managers/owners have for using or not using automated systems in their facilities. This is the first study conducted using the Aruba restaurant market. Therefore, the application of two technology adoption models was used to integrate critical factors relevant to the study. Major findings indicated the use of an automated IMS in restaurants is limited, thus underscoring the lack of adoption of technology in this area. The results also indicated that two major reasons that restaurants are not adopting IMS technology are budgetary constraints and service support. This study is imperative for two reasons: (1) the results of this study can be used as a comparison for future IMS adoption, not only for Aruba’s restaurant industry but also for other Caribbean destinations and the U.S., (2) this study also provides insight into the additional training and support help needed in hospitality technology services.

Past, Present, and Future: The Food Service Industry and Its Changes

In the article - Past, Present, and Future: The Food Service Industry and Its Changes - by Brother Herman E. Zaccarelli, International Director, Restaurant, Hotel and Institutional Management Institute at Purdue University, Brother Zaccarelli initially states: “Educators play an important role in the evolution of the food service industry. The author discusses that evolution and suggests how educators can be change agents along with management in that evolutionary progression.” The author goes on to wax philosophically, as well as speak generically about the food service industry; to why it offers fascinating and rewarding careers. Additionally, he writes about the influence educators have on students in this regard. “Educators can speak about how the food service industry has benefited them both personally and professionally,” says Brother Zaccarelli. “We get excited about alerting students to the many opportunities and, in fact, serve as “salespersons” for the industry to whoever (school administrators, legislators, and peers in the educational institution) will listen.” Brother Zaccarelli also speaks to growth and changes in food service, and even more importantly about the people and faces behind everything that food service, and hospitality in general comprise. The author will have you know, that people are what drive an educator. “What makes the food service industry so great? At the heart of this question's answer is people: the people whom it serves in institutional and commercial operations of all types; the people who work within it; the people who provide the goods, services, and equipment to it; the people who study it,” says Brother Zaccarelli. “All of these groups have, of course, a vested personal and/or professional interest in seeing our industry improve.” Another concept the author would like you to absorb, and it’s even more so true today than yesterday, is the prevalence of convergence and divergence within food service. For food service and beyond, it is the common denominators and differences that make the hospitality-food service industry so dynamic and vibrant. These are the winds of change presented to an educator who wants to have a positive impact on students. The author warns that the many elements involved in the food service industry conspire to erode quality of service in an industry that is also persistently expanding, and whose cornerstone principles are underpinned by service itself. “The three concerns addressed - quality, employees, and marketing - are intimately related,” Brother Zaccarelli says in stripping-down the industry to bare essentials. He defines and addresses the issues related to each with an eye toward how education can reconcile said issues.

S Corporations Can Benefit Many Closely-Held Hospitality Firms

In his discussion - S Corporations Can Benefit Many Closely-Held Hospitality Firms - by John M. Tarras, Assistant Professor, School of Hotel, Restaurant & Institutional Management at Michigan State University, Assistant Professor Tarras initially offers: “Organization as an S corporation has many advantages for hospitality firms since passage of the Tax Reform Act of 1986. The author discusses those advantages and lists the disadvantages as well.” In the opening paragraphs Tarras alludes to the relationship between hospitality firms, S corporations, and the Tax Reform Act of 1986, and then defines what an S corporation is. “An S corporation is a form of business entity that combines many of the tax advantages of partnerships with the legal attributes of a corporation, including limited liability for its shareholders. Its name is obtained from a subchapter of the Internal Revenue Code. Except for tax purposes, the S corporation is treated in the same manner as any regular corporation. Like a partnership, income and losses for an S corporation are generally passed through directly to shareholders for inclusion on their individual returns. An S corporation thus avoids the double tax problem facing regular corporations.” There are certain criteria to be met and caveats to be avoided in qualifying for S corporation status. Tarras lists and cites these for you. “Due to the complicated nature of S corporations, the election may be inadvertently terminated if the eligibility requirements are violated,” Tarras expands and cites. As the article suggests at the outset, there are advantages and disadvantages to S corporation status; the author outlines some examples for you. “Traditionally, the S corporation has been used by hospitality firms wishing to avoid the "double tax" problem of a regular corporation,” Tarras informs you. “Regular corporations are taxed once at the corporate level, and again at the shareholder level when income is distributed to shareholders in the form of dividends.” Tarras advises you as to why an S corporation is an advantage in this situation. “Since the S corporation generally is not subject to any corporate taxes, it generally makes no difference whether distributions to shareholders of S corporations are characterized as compensation or dividends,” thus the double tax is avoided. This is just one such positive illustration. Assistant Professor Tarras wants you to know: “Perhaps the most important reason to consider the S corporation has to do with the downward revision of tax rates for both individuals and corporations.” He highlights a case study for you. Some of the disadvantages of S corporation affiliation are the caveats alluded to earlier. They include, “the limitation of an S corporation of 35 shareholders,” Tarras cites. “Also, there are limits as to who may own stock in an S corporation.” These are but two of the limitations of an S corporation. Tarras closes with a further glimpse of the down-sides of an S corporation.

Participative Budgeting and Participant Motivation: A Review of the Literature

In their discussion - Participative Budgeting and Participant Motivation: A Review of the Literature - by Frederick J. Demicco, Assistant Professor, School of Hotel, Restaurant and Institutional Management, The Pennsylvania State University and Steven J. Dempsey, Fulton F. Galer, Martin Baker, Graduate Assistants, College of Business at Virginia Polytechnic Institute and State University, the authors initially observe: “In recent years behavioral literature has stressed the importance of participation In goal-setting by those most directly affected by those goals. The common postulate is that greater participation by employees in the various management functions, especially the planning function, will lead to improved motivation, performance, coordination, and functional behavior. The authors analyze this postulate as it relates to the budgeting process and discuss whether or not participative budgeting has a significant positive impact on the motivations of budget participants.” In defining the concept of budgeting, the authors offer: “Budgeting is usually viewed as encompassing the preparation and adoption of a detailed financial operating plan…” In furthering that statement they also furnish that budgeting’s focus is to influence, in a positive way, how managers plan and coordinate the activities of a property in a way that will enhance their own performance. In essence, framing an organization within its described boundaries, and realizing its established goals. The authors will have you know, to control budget is to control operations. What kind of parallels can be drawn between the technical methods and procedures of budgeting, and managerial behavior? “In an effort to answer this question, Ronen and Livingstone have suggested that a fourth objective of budgeting exists, that of motivation,” say the authors with attribution. “The managerial function of motivation is manipulative in nature.” Demicco, Dempsey, Galer, and Baker attempt to quantify motivation as a psychological premise using the expectancy theory, which encompasses empirical support, intuitive appeal, and ease of application to the budgetary process. They also present you with House's Path-Goal model; essentially a mathematics type formula designed to gauge motivation. You really need to see this. The views of Argyris are also explored in particular detail. Although, the Argyris study was primarily aimed at manufacturing firms, and the effects on line-supervisors of the manufacturing budgets which were used to control and evaluate their performance, its application is relevant to the hospitality industry. As the title suggests, other notables in the field of behavioral motivation theory, and participation are also referenced. “Behavioral theory has been moving away from models of purported general applicability toward contingency models that are suited for particular situations,” say the authors in closing. “It is conceivable that some time in the future, contingency models will make possible the tailoring of budget strategies to individual budget holder personalities.”

The Real Failure Rate of Restaurants

A common assumption in the restaurant industry is that restaurants fail at an exceedingly high rate. However, statistical research to support this assumption is limited. The authors present a study of 10 years in the life of three markets and offer new data for managers to consider.

Sales Promotion in Hotels:A British Perspective

In their article - Sales Promotion In Hotels: A British Perspective - by Francis Buttle, Lecturer, Department of Hotel, Restaurant, and Travel Administration, University of Massachusetts and Ini Akpabio, Property Manager, Trusthouse Forte, Britain, Buttle and Akpabio initially state: “Sales promotion in hotels is in its infancy. Other industries, particularly consumer goods manufacturing, have long recognized the contribution that sales promotion can make to the cost-effective achievement of marketing objectives. Sales promotion activities in hotels have remained largely uncharted. The authors define, identify and classify these hotel sales promotion activities to understand their function and form, and to highlight any scope for improvement.” The authors begin their discussion by attempting to define what the phrase sales promotion [SP] actually means. “The Institute of Sales Promotion regards sales promotions as “adding value, usually of a temporary nature, to a product or service in order to persuade the end user to purchase that particular brand as opposed to a competitive brand,” the authors offer. Williams, however, describes sales promotions more broadly as “short term tactical marketing tools which are used to achieve specific marketing objectives during a defined time period,” Buttle and Akpabio present with attribution. “The most significant difference between these two viewpoints is that Williams does not limit his definition to activities which are targeted at the consumer,” is their educated view. A lot of the discussion is centered on the differences in the collective marketing-promotional mix. “…it is not always easy to definitively categorize promotional activity,” Buttle and Akpabio say. “For example, in personal selling, a sales promotion such as a special bonus offer may be used to close the sale; an advertisement may be sales promotional in character in that it offers discounts.” Are promotion and marketing distinguishable as two separate entities? “…not only may there be conceptual confusion between components of the promotional mix, but there is sometimes a blurring of the boundaries between the elements of the marketing mix,” the authors suggest. “There are several reasons why SP is particularly suitable for use in hotels: seasonality, increasing competitiveness, asset characteristics, cost characteristics, increased use of channel intermediaries, new product launches, and deal proneness.” Buttle and Akpabio offer their insight on each of these segments. The authors also want you to know that SP customer applications are not the only game in town, SP trade applications are just as essential. Bonuses, enhanced commission rates, and vouchers are but a few examples of trade SP. The research for the article was compiled from several sources including, mail surveys, telephone surveys, personal interviews, trade magazines and newspapers; essentially in the U.K.

Corporate Recruiters and Alumni: Perceptions of Professional Courses

Corporate recruiters and alumni of the School of Hotel and Restaurant Management at Northern Arizona University were asked their perceptions of hospitality professional courses. The study investigates the importance that these groups attribute to 22 professional courses commonly offered in institutions of higher education.

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.

The IRS Collection Division: Contacts and Settlements

In his study -The IRS Collection Division: Contacts and Settlements - by John M. Tarras, Assistant Professor School of Hotel, Restaurant and Institutional Management, Michigan State University, Tarras initially states: “The collection division of the internal revenue service is often the point of contact for many hospitality businesses. The author describes how the division operates, what the hospitality firm can expect when contacted by it, and what types of strategies firms might find helpful when negotiating a settlement with the IRS.” The author will have you know that even though most chance meetings with the IRS Collection Division are due to unfortunate tax payment circumstances, there are actually more benign reasons for close encounters of the IRS kind. This does not mean, however, that brushes with the IRS Collection Division will end on an ever friendlier note. “…the Tax Reform Act of 1986 with its added complexity will cause some hospitality firms to inadvertently fail to make proper payments on a timely basis,” Tarras affords in illustrating a perhaps less pugnacious side of IRS relations. Should a hospitality business owner represent himself/herself before the IRS? Never, says Tarras. “Too many taxpayers ruin their chances of a fair settlement by making what to them seem innocent remarks, but ones that turn out to be far different,” warns Professor Tarras. Tarras makes the distinction between IRS the Collection Division, and IRS the Audit Division. “While the Audit Division is interested in how the tax liability arose, the Collection Division is generally only interested in collecting the liability,” he informs you. Either sounds firmly in hostile territory. They don’t bluff. Tarras does want you to know that when the IRS threatens to levy on the assets of a hospitality business, they will do so. Those assets may extend to personal and real property as well, he says. The levy action is generally the final resort in an IRS collection effort. Professor Tarras explains the lien process and the due process attached to that IRS collection tactic. “The IRS can also levy a hospitality firm owner's wages. In this case, it is important to realize that you are allowed to exempt from levy $75 per week, along with $25 per week for each of your dependents (unless your spouse works),” Professor Tarras says with the appropriate citation. What are the options available to the hospitality business owner who finds himself on the wrong side of the IRS Collection Division? Negotiate in good faith says Professor Tarras. “In many cases, a visit to the IRS office will greatly reduce the chances that a simple problem will turn into a major one,” Tarras advises. He dedicates the last pages of the discussion to negotiation strategies.

Planning Buy-Sell Agreements In The Hospitality Industry

In the article - Planning Buy-Sell Agreements In The Hospitality Industry - by John M. Tarras, Assistant Professor, School of Hotel, Restaurant and Institutional Management at Michigan State University, the author initially observes: “The vast majority of hospitality firms (restaurants, hotels, etc.) would be considered closely-held corporations. As such, they have unique planning problems compared to large, publicly-traded hospitality firms. One area of special concern to the closely-held hospitality firm is the planning and adoption of a buy-sell agreement.” The above thesis statement outlines the heart of the article; the buy-sell agreement in regard to smaller [closely held, as Tarras calls them] corporations. The theory is narrow and pro-active, spanning the gap between personal-to-corporate stock manipulations. “The primary purpose of a buy-sell agreement is to contribute to the orderly transfer of a shareholder's stock in a hospitality firm upon some future incident [typically retirement, withdrawal of a shareholder, disability, or death], as Tarras defines the concept. “The hospitality firm or the other shareholders would be committed to purchase the departing shareholder's stock at an agreed upon price and method, and to ensure that ample cash will be obtainable for such an impending sale. The buy-sell agreement provides a market for the shareholder or the shareholder's estate for the sale of otherwise illiquid stock,” the author further provides as canons of buy-sell agreements. In defining the buy-sell agreement with restrictive clauses, Tarras demonstrates, “…many closely-held hospitality firms desire to limit ownership to those individuals, either family or principal corporate employees, who are essential to the well-being of the firm.” Tarras says, another element of the buy-sell agreement is to furnish the departing shareholder with liquidity. “…there typically is some form of cash down payment with the remainder denoted by an interest-bearing promissory note [usually 5 to 15 years],” he informs. “The departing shareholders may require that the hospitality firm pledge the assets of the firm and that the remaining shareholders personally guarantee the promissory note.” “…the most frequent reason for establishing buy-sell agreements is for estate planning purposes,” Tarras says. There are tax advantages and liabilities for both the seller and buyer of stock via the buy-sell agreement, and the author enumerates many of these. One, big advantage of the buy-sell agreement is that it provides for the running of the company with a minimum of disruption through the stock-cash transition process, Tarras offers.

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.

Professionalism and Ethics in Hospitality

In their discussion - Professionalism and Ethics in Hospitality - by James R. Keiser, Associate Professor and John Swinton, Instructor, Hotel, Restaurant and Institutional Management, The Pennsylvania State University, Keiser and Swinton initially offer: “Referring to “the hospitality profession” necessitates thinking of the ethics of that profession and how ethics can be taught. The authors discuss what it means for the hospitality industry to be a profession.” The authors will have you know, a cursory nod to the term or description, profession and/or professional, is awarded to the hospitality industry at large; at least in an academic sense. Keiser and Swinton also want you to know that ethics, and professionalism are distinctly unique concepts, however, they are related. Their intangible nature does make them difficult, at best, to define, but ethics in contemporary hospitality has, to some degree, been charted and quantified. “We have left the caveat emptor era, and the common law, the Uniform Commercial Code, and a variety of local ordinances now dictate that the goods and services hospitality offers carry an implied warranty of merchantability,” the authors inform you. About the symbiotic relationship between ethics and professionalism, the authors say this: The less precise a code of ethics goes, the general rule, the fewer claims the group has to professional status.” The statement above may be considered a cornerstone principle. “However, the mere existence of an ethical code (or of professional status, for that matter) does not ensure ethical behavior in any group,” caution Keiser and Swinton. “Codes of ethics do not really define professionalism except as they adopt a group's special, arcane, exclusionary jargon. Worse, they can define the minimum, agreed-upon standards of conduct and thereby encourage ethical corner-cutting,” they further qualify the thought. And, in bridging academia, Keiser and Swinton say, “Equipped now with a sense of the ironies and ambiguities inherent in labeling any work "professional," we can turn to the problem of instilling in students a sense of what is professionally ethical. Students appear to welcome this kind of instruction, and while we would like to think their interest comes welling up from altruism and intellectual curiosity rather than drifting down as Watergate and malpractice fallout, our job is to teach, not to weigh the motives that bring us our students, and to provide a climate conducive to ethical behavior, not supply a separate answer for every contingency.” Keiser and Swinton illustrate their treatise on ethics via the hypothetical tale [stylized case study] of Cosmo Cuisiner, who manages the Phoenix, a large suburban restaurant. Cosmo is “…a typical restaurant manager faced with a series of stylized, over-simplified, but illustrative decisions, each with its own ethical skew for the students to analyze.” A shortened version of that case study is presented. Figure 1 outlines the State Restaurant Association Code of Ethics.

Selecting POS Systems for Table Service Restaurants

A point-of-sale system can enhance decision making, operational control, guest service, and revenues. However, not all POS systems offer the same features and potential for profit improvement. The author discusses those factors which are critical to POS system selection for table service restaurants

The Front Office Manager: Key To Hotel Communications

The Front Office Manager: Key to Hotel Communications is a written study by Denney G. Rutherford, Department of Hotel and Restaurant Administration, College of Business and Economics at Washington State University. In it he initially observes, “Since the front office manager is usually viewed as the key to the efficient and orderly operation of a hotel, the author has researched the job and activities of this individual in an attempt to provide data about an area which he says was "intuitively known" but never "empirically explored." “Current literature implies that the activities of the front office are so important to the daily operations of the hotel that it occupies a preeminent position among other departments,” Rutherford says. He also references, Gray and Liguori, who describe the front office as: “the nerve center of the hote1,” echoing an early work by Heldenbrand indicating that it “becomes a sort of listening post for management.” The quotes are cited. The primary stage of the article relies on a seven-page, two-part questionnaire, which was used to collect data regarding the FOM – front office manager - position. Even though the position is considered a crucial one, it seems there is a significant lack of pragmatic data regarding it. Rutherford graphs the studies. Good communication skills are imperative. “Other recent research has suggested that the skills of effective communication are among the most vital a manager at any level can bring to his/her endeavors in the service industries,” Rutherford notes. He provides a detailed – front office communications model – to illustrate the functions. In, Table 4, for example - Office Manager as Facilitator – Rutherford provides Likert Rating Scale values for a comprehensive list of front office tasks. Rutherford informs you that the communicative skills of a front office manager flow across the board, encompassing variables from guest relation exchanges to all the disparate components of employee relations. Not withstanding and compared to technical knowledge, such as computer and fiscal skills, Rutherford suggests: “The most powerful message derived from analysis of the data on the FOM's job is that communication in its various forms is clearly central to the successful mission of the front office.”