Introduction
In the year 2006 there were over 60,000 new or newly opened restaurants started in the USA. A longitudinal study of restaurants in Ohio found the failure rate for restaurants was 57 to 61 percent for a three-year period (1996-1999) The highest failure rate was noted during the first year when about 26 percent of the restaurants failed. About 19 percent failed in the second year and 14 percent in the third year. Cumulative failure rate for the three-year period (1996-99) was 59 percent. Among franchised chains, the failure rate was 57 percent over the three years, and among independent restaurants, the rate was 4 percent higher — 61 percent. Countless others are losing money and on the verge of closing. These are, of course, only the failures actually reported. Although the reasons for these unfortunate statistics are many and varied, they can be pinpointed to one main fact; there hasn’t been any comprehensive source of information about the subject of restaurant management to guide the prospective restaurateur prior to the publication of this book.
Virtually everyone, at one time or another, has been tempted to run, or at least considered running, his or her own restaurant. This may be due to a number of reasons. Perhaps the prospective restaurateur is accomplished in the kitchen, or so his spouse and friends tell him. Perhaps the motivation was derived from an unfortunate experience at a local restaurant, and the “I can do this much better” syndrome has set in. Or, perhaps he feels his town could use a “good seafood restaurant.” The reasons for starting a restaurant are varied. However, most have one factor in common: they end in financial disaster due to a lack of pertinent knowledge about setting up, operating, and managing a financially successful restaurant.
Americans enjoy eating out, and the pace of development of the modern lifestyle indicates that they will continue to eat out more in the future. Higher economic levels, more mobility, and more women in the workforce will all lead to a continuing growth in the industry in the next decade. A preview of the 2007 Restaurant Industry Forecast available from the National Restaurant Association indicates the nation's 935,000 restaurants should hit $537 billion in sales in 2007, according to the NRA's 2007 Restaurant Industry Forecast. Restaurant-industry sales are forecast to advance 5% in 2007 and equal 4% of the U.S. gross domestic product. The overall economic impact of the restaurant industry is expected to exceed $1.3 trillion in 2007, including sales in related industries such as agriculture, transportation and manufacturing.
Food service continues to lead other industries, such as housing, auto making and electronics, in total sales. The food service industry continues to gain a greater share of all food dollars spent in America. Four out of five — consumers agree that going out to a restaurant is a better way to use their leisure time than cooking and cleaning up. The average household expenditure for food away from home in 2005 was $2,634, or $1,054 per person. Average unit sales in 2004 were $795,000 at full-service restaurants and $671,000 at limited-service restaurants.
As these figures clearly show, there is room for entry into the restaurant marketplace. Profits, however, can only be realized from the application of modern management procedures. Food service is a complex business. The preparation and the serving of food entails warehousing, manufacturing, and retailing. It is one of the few retail trades where the product is manufactured, sold, and consumed on the premises. Properly armed with the right information and entrepreneurial drive, you will find the restaurant business can be very rewarding both financially and through a sense of personal achievement.
This manual will arm you with the right information. Keep on your e-reader for constant reference. There is no other publication as comprehensive as Fourth Edition of The Restaurant Manager’s Handbook. This book truly is appropriately titled.
Good reading and good luck!
Sincerely,
Douglas R. Brown