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Table of Contents:

see also our discusson on:  Franchising

Recent events/ trends:

Restaurants face an uphill battle in a recession. Particularly the casual guys, meaning sit-down chains with higher-than-fast-food price points (think Applebee's, Red Lobster, Olive Garden, Outback Steakhouse).

PE Activity in restaurants:

This brand of restaurant operator (casual restaurants), thanks to hefty cash flows and mass market appeal, was a coveted acquisition target in the recent buyout boom.  Look no further than the buyouts OSI Restaurant Partners, Cheddar's Holding Corp, Logan's Roadhouse, or Del Frisco's for proof.

Restaurant business models 

Try something...next time you go to a local restaurant, instead of just eating and paying...why not try to guess how many sandwiches or plates of spaghetti that they need to sell just to cover their rent. Then, try to guess how much money would be left over for the owner after they are done paying for the ingredients, rent, salaries, insurance, and so on.

Because rent prices vary considerably from city to city, I suggest that we should orgainize this section based on geography. If you have any other suggestions, please feel free to type them here.

Entrepreneur's stories

starting up a Pizza franchise for organic Pizza

Analysis

Bianca's Sandwich shop in Surfside, FL 33154.

The average bill is approx $8-10 usd per person (they call them "gourmet" sandwiches), but the ingredients are fairly simple. This does include a coke and a bag of chips. For ingredients, I guess that the sandwich costs about $2 if they bought the indredients from Publix, a local grocery chain. To give them the benefit of the doubt, lets assume $3 per sandwich, which they mark up to $9...a 3x markup. So, on a $9 customer, they profit $6.

Expenses For the fixed monthly expenses, I guess $4000 usd for rent + $1000 for electricity, water, and insurance. (is that enough?). There are 2 employees there all day, with a 3rd during rush hour (lunch). So, assume $10 per hour * 8 hours *2 = $160 + $40 = $200 per day for workers, and $6000 per month. Total = $11,000, which Ill round up to $12,000 per month in costs.

Breakeven analysis. If they make gross profit of $6 per customer, and they need $12,000 per month, then they need 2,000 customers per month, or 66 customers per day (just to breakeven). 10 hours a day means they need to average 6-7 customers per hour, or one customr every 10 minutes. Any less than that, and I guess they are losing money, any more, and its money in the bank.

Prima Pasta, Miami, Fl

Mid priced Italian restaurant Miami Beach Florida

Capacity = 100 people. Turnover = 2 x per night = 200 customers per day

Average bill = $30 per person

Revenue = $6000 per day

What are expenses? $30 per square foot for rent / month + all employees + insurance + ingredients / supplies

The owner probably works 29-30 days per month to pay his expenses

Then has 1-2 days at the end to profit

$6000 x 1.5 x 12 = $108,000 profit for the owner

(if he can keep the restaraunt mostly full, most days of the week)

It goes down quickly if not full

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Wikipedia on Restaurants:

The Types of restaurants Restaurants range from unpretentious lunching or dining places catering to people working nearby, with simple food served in simple settings at low prices, to expensive establishments serving refined food and wines in a formal setting. In the former case, customers usually wear casual clothing. In the latter case, depending on culture and local traditions, customers might wear semi-casual, semi-formal, or even in rare cases formal wear.

Typically, customers sit at tables, their orders are taken by a waiter, who brings the food when it is ready, and the customers pay the bill before leaving. In finer restaurants there will be a host or hostess or even a maître d'hôtel to welcome customers and to seat them. Other staff waiting on customers include busboys and sommeliers.

Restaurants often specialize in certain types of food or present a certain unifying, and often entertaining, theme. For example, there are seafood restaurants, vegetarian restaurants or ethnic restaurants. Generally speaking, restaurants selling "local" food are simply called restaurants, while restaurants selling food of foreign origin are called accordingly, for example, a Chinese restaurant and a French restaurant..

Depending on local customs and the establishment, restaurants may or may not serve alcoholic beverages. Restaurants are often prohibited from selling alcohol without a meal by alcohol sale laws; such sale is considered to be activity for bars, which are meant to have more severe restrictions. Some restaurants are licensed to serve alcohol ("fully licensed"), and/or permit customers to "bring your own" alcohol (BYO / BYOB).

In economics, restaurants are the end of the supply chain in the foodservice industry. There is usually much competition in most cities since barriers to entry are relatively low, which means that for most restaurants, it is hard to make a profit. In most First World industrialized countries, restaurants are heavily regulated to ensure the health and safety of the customers.citation needed

The typical restaurant owner faces many obstacles to success, including raising initial capital, finding competent and skilled labour, maintaining consistent and excellent food quality, maintaining high standards of safety, and the constant hassle of minimising potential liability for any food poisoning or accidents that may occur.

Additionally, when economic conditions change—for example an increase in gasoline prices—households typically spend less on dining out.

In 2006, there are approximately 215,000 full-service restaurants in the United States, accounting for $298 billion, and approximately 250,000 limited-service (fast food) restaurants, accounting for $260 billion, according to the 2006 U.S. Industry & Market Outlook by Barnes Reports

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Links from KookyPlan:

• Restaurant business models
  Restaurant business models Franchising Try something...next time you go to a local restaurant, instead of just eating and paying...why not try to guess how many sandwiches or plates of spaghetti that th…
  brian edited 6 mos ago
• Mid priced Italian restaurant Miami Beach Florida
  Capacity = 100 people. Turnover = 2 x per night = 200 customers per day Average bill = $30 per person Revenue = $6000 per day What are expenses? $30 per square foot for rent …
  briandbutler edited 1 yr ago
• food and beverage industry
  transparency to restaurant kitchens: Only the most fastidious are likely to look up the health inspection records of restaurants before deciding on a place to dine. And even if they are curious enough to look, actually …
  brian edited 7 mos ago
• starting up a Pizza franchise for organic Pizza
  Jeremy White. Restaurant industry estimates put the failure rate at somewhere between 60 percent and 80 percent. ''It's a risky proposition to open a restaurant,'' White said. A furious four months fol…
  brian edited 6 mos ago
• retail industry
  world's largest restaurant chain with more than 31,000 restaurants in over 119 countries. Traditionally, McDonald's served hamburgers, french fries, soft... read more 848 views | Related: Beef Prices (US),…
  brian edited 9 mos ago
• local reviews
  store or restaurant has been reviewed favorably or unfavorably overall, its dot on the map will indicate that fact. Opt to see indicators for establishments that have only been reviewed by your friends, or choose to vie…
  Unknown User edited 2 mos ago
• yelp
  store or restaurant has been reviewed favorably or unfavorably overall, its dot on the map will indicate that fact. Opt to see indicators for establishments that have only been reviewed by your friends, or choose to vie…
  brian edited 9 mos ago
• caipiroska
  cane. Surry Hills restaurant Longrain was one of the first places to use the term stick drinks. "When we opened [in August 1999], we were making both caipiroskas and caipirinhas but after about a year there was no more…
  brian edited 6 mos ago
• beer industry
  Sing Chinese restaurant. Goes down great with or without food, i love it! The real taste of China! One of the most tasteful Asian beers ive tried reccently, real nice fresh Chinese beer middle range 4.5%, goes down well…
  Brian D Butler edited 1 mo ago
• Kitchen industry
  designer gourmet restaurants in Paris, food-preparation in the home is still often considered an art to be mastered backstage. Kitchen manufacturers are responding with a cool, harder-edged look, designed to ap…
  brian edited 7 mos ago
• Mobile Web
  businesses, clubs, restaurants, and so on. The main issue is privacy, and in coming up with creative ways in which to embed these ads into other content so that it doesn't become a bother for users. …
  Brian D Butler edited 3 wks ago
• peer review
  travel and restaurants in the future. …
  brian edited 8 mos ago
• service
  service- FedEx restaurants fast food - McDonalds Product vs Service. All products eventually are just commodities, and people dont pay a premium for a commodity....so, the question is....what …
  Brian D Butler edited 2 mos ago