Chapter 5 - Restaurant industry organization: chain, independent, or franchise? In this chapter students will be able to: Compare insights from various scholarly articles, prepare a clear and well organized literature review, make a case for your purpose statement and research questions, take notes in a manner useful to conducting a literature review. | Restaurant Industry Organization: Chain, Independent, or Franchise? Chapter 5 Copyright © 2010 by John Wiley & Sons, Inc. All Rights Reserved RESTAURANT INDUSTRY ORGANIZATION This chapter will focus on restaurant company organization—that is, how companies are organized This is important to know because there are significant differences between chains (corporate), independents, and franchises Currently, the industry growth is being driven by chains so we will start with them CHAINS Chains have strengths in seven areas: Marketing and brand recognition Site selection Access to capital Purchasing economies Centrally administered control and information systems New product development and Human resource development CHAINS Marketing and Brand Recognition Chains are able to achieve a high level of brand recognition by keeping their messages simple, large marketing budgets and the additive effect (repeating the message) The large cost of the marketing a national company is spread among a large number of units CHAINS Site Selection Expertise Much of a restaurant’s success is owed to choosing the proper site It has become much more competitive to identify suitable sites Choices are based upon a thorough examination of the feasibility of the site CHAINS Access to Capital This can be a challenge because of the rising costs of opening a restaurant coupled with lenders’ view that the restaurant business is risky Options include loans from banks, friends and family, personal savings, limited investors, “going public” CHAINS Purchasing Economies The power of purchasing large quantities for distribution among different locations or entering into a contract with a company for multiple individual purchases When one considers that food is a primary expense, the savings of 1% – 2% can be significant CHAINS Control and Information Systems Chains can also afford to purchase expensive systems with the justification that the cost will be spread across multiple units Contrast this with the | Restaurant Industry Organization: Chain, Independent, or Franchise? Chapter 5 Copyright © 2010 by John Wiley & Sons, Inc. All Rights Reserved RESTAURANT INDUSTRY ORGANIZATION This chapter will focus on restaurant company organization—that is, how companies are organized This is important to know because there are significant differences between chains (corporate), independents, and franchises Currently, the industry growth is being driven by chains so we will start with them CHAINS Chains have strengths in seven areas: Marketing and brand recognition Site selection Access to capital Purchasing economies Centrally administered control and information systems New product development and Human resource development CHAINS Marketing and Brand Recognition Chains are able to achieve a high level of brand recognition by keeping their messages simple, large marketing budgets and the additive effect (repeating the message) The large cost of the marketing a national company is spread among a .
