New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Hospitality Management Week 4

by: Brandon Notetaker

Hospitality Management Week 4 HOSP 1603

Marketplace > University of Arkansas > Hospitality > HOSP 1603 > Hospitality Management Week 4
Brandon Notetaker
GPA 3.5

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

Chapter 5 Notes and Vocab
Intro to Hospitality Mgmt
Kelly Way
Class Notes
Hospitality and Business Management
25 ?




Popular in Intro to Hospitality Mgmt

Popular in Hospitality

This 3 page Class Notes was uploaded by Brandon Notetaker on Sunday October 2, 2016. The Class Notes belongs to HOSP 1603 at University of Arkansas taught by Kelly Way in Fall 2016. Since its upload, it has received 3 views. For similar materials see Intro to Hospitality Mgmt in Hospitality at University of Arkansas.

Similar to HOSP 1603 at UA

Popular in Hospitality


Reviews for Hospitality Management Week 4


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 10/02/16
Hospitality Management Week 4 (Week of 9/11/16) Chapter 5: Restaurant Industry: Chain, Independent or Franchise  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  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  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  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”  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  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  challenge of an individual operator purchasing a system beyond his or her means  New Product Development • This is only becoming more important as competition increases •  Large chains can afford to staff and equip development kitchens  Human Resource Program Development • Again, the cost of recruiting, hiring, training, and  developing is spread across multiple units • Also, human resource expertise can be centralized •  There can also be disadvantages  • Largely as a result these strengths, chain domination (as measured by market share) has grown  over the last several years • The top 100 chains alone generate over 50% of all restaurant sales •  This domination has increased from just 33% in 1975 2015  Independent Restaurants    To survive independents must achieve differentiation that earn customer patronage.  Flexibility and highly focused operation are Mom and pop Small operations  • Marketing and Brand Recognition • Ronald McDonald • Colonel Sanders • Friendship with  customers • Word of mouth advertising is more important to independents  • Site Selection: ocation!  • Access to Capital: bank, support from Small Business  Administration (SBA) loans, venture capital groups, Initial Public Offerings (IPOs) • Purchasing  Economies: have advantage to get top­quality products consistently • Control and Information  Systems: purchase POS systems with complex software—generates reports that are equivalent to those of chains • Human Resources: having close personal ties can reduce turnover, have high  marketing to employees who are tied to community and family  • Advantage: Flexibility! • Having only one boss or small partnership • Fast decision­making— marketing changes, menu changes, sustainability, uniforms, etc.… • Differentiation: • Personal  identity of the owner • Reputation as a local firm • Choose a concept—menu, style of service,  ambience & atmosphere FRANCHISED RESTAURANTS • 45% of all restaurants are franchised • QSR serving hamburgers make up the largest category  of franchises • 2 kinds of franchises: – Product or trade name franchising (Coke, Toyota  dealership) – Business format franchising (use of product and service—access to and use of other systems and standards) – This franchisee has a substantial investment beyond that has day­to­day operating control and responsibility – The essence is an agreement between the franchise and  franchisee to follow the franchise business system  • Characteristics of a franchise agreement: – Use of trademark – Location of franchisee – Term  of franchise – Franchisee’s fees and other payments – Obligations and duties of the franchisor –  Obligations and duties of the franchisee – Restrictions on goods and services offered – Renewal,  termination, and transfer of franchise agreement – Also: operating procedures, advertising and  promotion, training and accounting services  • A well­developed franchise minimizes risk • Offers the following services: – Screening –  Financing – Site selection and planning – Preopening training – Operations manuals  FRANCHISE SERVICES….  • Once a unit is up and running for a year or so, advice and assistance are most crucial • Such  services are: – Operating and control procedures – Information management – Quality control –  Training – Field support – Purchasing – Marketing – Advertising – New products – New  concepts  FRANCHISEE’S VIEW  • Drawbacks from owning a franchise: – Loss of independence – Payment of substantial  advertising assessments – Franchise fees • Advantages: – Recognizable brand – Attested product  & service concepts – Technical assistance  FRANCHISOR’S VIEW • Advantages: – Investment in a new unit – Expand rapidly w/out use of its own capital – Good  source of know­how • Disadvantages: – Find their own stores yield higher sales and profit  margins – Higher profits from stores they own  Chapter 5 Vocab 1. Publicly Traded Companies – Stock is traded can gain from investors 2. Small Business Administration – Helps small business get bank loans 3. Initial public offerings – Sale of stock through underwriting firm of stockbrokers 4. Business format Franchise – franchise used in hospitality. Requires use of product and  any other services of the company 5.


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Janice Dongeun University of Washington

"I used the money I made selling my notes & study guides to pay for spring break in Olympia, Washington...which was Sweet!"

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."

Parker Thompson 500 Startups

"It's a great way for students to improve their educational experience and it seemed like a product that everybody wants, so all the people participating are winning."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.