The Upstart Guide to Owning and Managing a Restaurant by Roy S Alonzo PU B L I S H I NG New York FM_Restaurant.indd i 2/14/07 6:06:29 PM This book is dedicated with sincere thanks to Donald H Strickland for his wisdom and many years of friendship This publication is designed to provide accurate and authoritative information in regard to the subject matter covered It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service If legal advice or other expert assistance is required, the services of a competent professional should be sought Editorial Director: Jennifer Farthing Acquisitions Editor: Victoria Smith Associate Development Editor: Joshua Martino Production Editor: Karen Goodfriend Production Artist: International Typesetting and Composition Cover Designer: Kathleen Lynch © 2007 by Roy S Alonzo Published by Kaplan Publishing, a division of Kaplan, Inc All rights reserved The text of this publication, or any part thereof, may not be reproduced in any manner whatsoever without written permission from the publisher Printed in the United States of America April 2007 07 08 09 10 ISBN 13: 978-1-4195-8332-2 ISBN 10: 1-4195-8332-8 Kaplan Publishing books are available at special quantity discounts to use for sales promotions, employee premiums, or educational purposes Please email our Special Sales Department to order or for more information at kaplanpublishing@kaplan.com, or write to Kaplan Publishing, 888 7th Avenue, 22nd Floor, NY, NY 10106 FM_Restaurant.indd ii 2/15/07 11:42:59 AM C o n t e n t s Preface viii Acknowledgments x The Restaurant Business The American Restaurant Scene What Attracts You to the Business? Some Considerations Can You Start a Restaurant with Limited Capital? Types of Restaurants A Typical Day in a Restaurant Manager’s Life 10 Can Someone Else Manage Your Restaurant? 10 Is Restaurant Ownership for You? 11 Change and Innovation 13 Trends That Affect the Restaurant Business 13 Balancing Technology with Your Budget 15 Innovations That Are Changing the Restaurant Industry 16 Creative Solutions for Changing Conditions 19 Keeping It All in Perspective 20 Start-up Requirements 23 Financial Requirements 23 Personal Requirements 25 Location Requirements 26 Legal Requirements 26 Strategy for Success 35 Reasons Some Restaurants Fail 35 Don’t Assume Success Will Happen 38 Start from Scratch or Buy? 39 How Much Should You Pay for an Existing Restaurant? 42 How Much Should You Pay for Rent? 43 Evaluate before You Invest 43 Obtain Professional Assistance 46 Acquiring Additional Capital 49 iii FM_Restaurant.indd iii 2/14/07 6:06:30 PM iv Contents Selecting a Location and a Property 50 Naming Your Restaurant 50 Risk Management 53 Planning to Be Profitable 55 The Feasibility Study 55 Why Do You Need a Business Plan? 56 Accuracy Is Important 56 Estimating Your Start-up Costs 57 Business Plan Format 58 How to Construct a Business Plan 58 Developing Menus That Sell 67 Who Should Plan the Menu? 67 Types of Menus 68 Variety Is the Spice of Life—and Your Menu 68 Limitations on Your Menu 69 Format Is Important 70 Children’s Menus Sell Adult Dinners 72 Microniches Add Up to Good Business 73 Standards Are Necessary 73 Menu Pricing—a Marketing Tool 73 Pricing in General 74 Methods of Pricing a Menu 74 Old-Fashioned Specials Still Draw People 77 Will Your Restaurant Serve Alcoholic Beverages? 77 Pricing Alcoholic Beverages in General 79 The Front of the House 85 Ambiance and Decor 85 Your Message Must Be Clear 86 Organization and Training 87 Allocating Space 88 Laying Out an Efficient Floor Plan 89 How to Select Table Sizes 91 Designing a Dining Room Service System 92 Customer Service 96 How to Deal with Difficult Customers 96 The Take-out Business: Another Front-of-the-House Profit Center 98 FM_Restaurant.indd iv 2/14/07 6:06:31 PM Contents v The Bar and Lounge 101 Locating the Bar 102 Bar Layout 102 Designing Your Bar 103 Construction of the Bar 105 Acquisition of Equipment 105 Stocking the Bar 106 Bar Glassware 107 Staffing the Bar 108 Inventorying and Control of the Bar 108 Food Service in the Bar 109 Sales Promotion 109 Wine and the Dining-Out Experience 109 The Secret to Selling a Lot of Beer 114 The Back of the House 117 Analyze Your Needs 117 Working with Vendors 118 Allocating Kitchen Space 119 Selecting Equipment 119 The Production System 121 How to Size Equipment 124 Should You Buy or Lease Equipment? 125 Specialized Kitchens 126 Tableware 127 How Much Should You Buy? 127 10 Banquets and Other Catered Events 129 Function Guests May Become Regular Customers 129 Business/Luncheon Functions 130 Event Catering 130 In-House Versus External Functions 131 Outdoor Functions 132 Good Coordination Is Key to Successful Functions 133 The Competition Is Keen 133 Booking Functions 134 Cultivate Repeat Function Business 135 FM_Restaurant.indd v 2/14/07 6:06:31 PM vi Contents 11 Operating Profitably 137 The Menu 138 Controls 138 Purchasing Wisely 139 Receiving, Storing, and Issuing 145 Using Standardized Recipes 149 Food Production Planning 150 Supervision Is Important 151 Entertainment 154 Equipment Maintenance 156 12 Managing Your Personnel 159 What Keeps Customers Coming Back 159 Employee Retention and Turnover 160 How to Get the Most Out of Your Personnel 162 Reporting Tip Income 166 Initial Interviews 167 Exit Interviews 167 How to Gain Your Employees’ Cooperation 167 Ways to Improve Employee Morale 168 Keep the Lines of Communication Open 170 13 Maintaining Financial Control 173 Understanding the Income Statement 174 Comparisons Are Informative 174 Understanding Your Balance Sheet 176 Ratios—Valuable Analytical Tools 176 How Much Control Is Enough? 182 Supervision Reduces Undesirable Practices 183 Automated Systems for Restaurants 184 14 Marketing 187 Is a Marketing Plan Necessary? 187 Market Research Pays Off 190 Know Your Target Market 192 Recognize Your Customers’ Wants and Needs 193 Catering to Separate Markets 194 Strategies for Meeting the Competition 194 The Secret to Growth—Getting New Customers 195 FM_Restaurant.indd vi 2/14/07 6:06:32 PM Contents vii How to Make the Most of Your Grand Opening 196 Free Publicity Can Be Yours for the Asking 198 Give Customers Reasons to Come Back 200 Acquiring Your Desired Image 201 Should You Advertise? 202 Establishing Realistic Sales Goals 203 Use the Power of the Internet, and Don’t Forget the Phone 209 15 Sanitation, Safety, and Responsibility 211 What Is Food Sanitation? 212 Dealing with Pests 215 Planning for Good Sanitation 215 What Is HACCP Training, and How Can It Help Restaurants? 216 Employee Safety 216 Customer Safety 217 Fire Safety 217 Alcohol Responsibility 218 Liquor Laws 221 16 What If You Succeed? What Next? 225 Should You Stay the Same? 226 Should You Expand? 226 Should You Franchise? 227 Should You Sell Your Restaurant? 227 Appendix A: Sample Business Plan for a Restaurant 229 Appendix B: State Health Departments 261 Appendix C: State Labor Departments 267 Appendix D: State Alcoholic Beverage Control Boards 273 Appendix E: Directory of State Restaurant Associations 279 Index FM_Restaurant.indd vii 285 2/15/07 11:43:00 AM P r e f a c e Has the thought of becoming a restaurateur ever crossed your mind? If you enjoy dining out, entertaining guests, or cooking, that would not be an unusual thought Most people would like to earn their livelihood by doing something they enjoy America’s love affair with restaurants has never been greater With annual sales of approximately a half trillion dollars and its growth showing no signs of leveling off, estimates show that within the next ten years, over 50 percent of Americans’s budgeted food dollars will be spent in restaurants This growth promises many opportunities for people interested in entering the business The purpose of this book is to give you a sense of what the restaurant business is like, make you aware of what is required to enter it, and help you evaluate whether it is the right business for you It is also intended to acquaint you with a logical course of action for starting up a restaurant, should you decide to enter the business, and to give you insights and techniques for operating a restaurant successfully It covers the spectrum from the initial idea to the grand opening and beyond The very favorable response to the first edition of this book showed that an ongoing need exists for guidance on the process of starting up, owning, and managing a restaurant The contents of this book are presented as a source of ideas, methods, and strategies for improving your chances for success The National Restaurant Association, institutions of higher education, and restaurant and hotel chains have been very active in developing management systems and control procedures for the industry However, even with such well-developed resources available, many independent restaurants still function with inadequate controls, a shortcoming this book will address It should be noted that laws vary from state to state and among the various levels of government This book discusses laws only to make the reader aware of their existence Consequently, nothing in this book is offered as legal advice or an interpretation of a law, and it should not viii FM_Restaurant.indd viii 2/14/07 6:06:34 PM Preface ix be construed as such Information of that kind should be obtained from attorneys and the appropriate government officials, just as advice on accounting and technical matters should be sought from specialized professionals in those fields The mention of any product names in this book is done merely for illustrative purposes and should not be deemed an endorsement Likewise, where products are mentioned, the omission of any products is not in any way a reflection on such products Finally, this book is intended to stimulate thinking about the restaurant business, answer a variety of questions, and present an assortment of management tools that may be used to operate a restaurant To those of you who may become restaurant owners, we wish you a full plate of success and an overflowing cup of happiness as you pursue your goals FM_Restaurant.indd ix 2/14/07 6:06:34 PM 280 Appendix E Alabama Alabama Restaurant Association 61B Market Place Montgomery, AL 36124-1413 (334) 244-1320 Alaska Alaska Cabaret, Hotel, Restaurant, and Retailers Assoc 1111 E 80th Avenue, Suite Anchorage, AK 99518 (907) 274-8133 Arizona Arizona Restaurant and Hospitality Association Foundation 2400 N Central Avenue, Suite 109 Phoenix, AZ 85004 (602) 307-9134 Arkansas Arkansas Hospitality Association PO Box 3866 Little Rock, AR 72203 (501) 376-2323 California California Restaurant Association Education Foundation 1011 10th Street Sacramento, CA 95814 (916) 431-2747 Colorado Colorado Restaurant Association Education Fund 430 E 7th Avenue Denver, CO 80203 (303) 830-2972 Appendix_E_Restaurant.indd 280 Connecticut Connecticut Restaurant Association 100 Roscommon Park, Suite 320 Middletown, CT 06457 (860) 635-5600 Delaware Delaware Restaurant Association PO Box 8004 Newark, DE 19714 (302) 227-7300 Florida Florida Restaurant Association 230 S Adams Street Tallahassee, FL 32301 (850) 224-2250 Georgia Georgia Restaurant Association 480 E Paces Ferry Road, Suite Atlanta, GA 30305 (404) 467-9000 Hawaii Hawaii Restaurant Association 1451 S King Street, Suite 503 Honolulu, HI 96814 (808) 536-9105 Idaho Idaho Lodging and Restaurant Association 134 S 5th Street Boise, ID 83702 (208) 342-0777 2/14/07 6:34:02 PM Appendix E 281 Illinois Illinois Restaurant Association 200 N LaSalle Street, Suite 880 Chicago, IL 60601 (312) 787-4000 Maine Maine Restaurant Association PO Box 5060 Augusta, ME 04332-5060 (207) 623-2178 Indiana Restaurant and Hospitality Association of Indiana 200 South Meridian, Suite 350 Indianapolis, IN 46225-1076 (317) 673-4211 Maryland Maryland Restaurant Association 6301 Hillside Court Columbia, MD 21046 (410) 290-6800 Iowa Iowa Hospitality Association Education Foundation 8525 Douglas Avenue, Suite 47 Des Moines, IA 50322 (515) 276-1454 Kansas Kansas Restaurant and Hospitality Association Education Foundation 359 S Hydraulic Wichita, KS 67211 (316) 267-8383 Kentucky Kentucky Restaurant Association 133 Evergreen Road, #201 Louisville, KY 40243 (502) 896-0464 Louisiana Louisiana Restaurant Association Education Foundation 2700 N Arnoult Road Metairie, LA 70002 (504) 454-2277 Appendix_E_Restaurant.indd 281 Massachusetts Massachusetts Restaurant Association Hospitality Institute Southborough Technology Park 333 Turnpike Rd, Suite 102 Southborough, MA 01772-1775 (508) 303-9905 Michigan Michigan Restaurant Association 225 W Washtenaw Street Lansing, MI 48933 (517) 482-5244 Minnesota Minnesota Restaurant Association 305 E Roselawn Avenue Saint Paul, MN 55117 (651) 778-2400 Mississippi Mississippi Restaurant Association 130 Riverview Drive, Suite A Flowood, MS 39232 (601) 420-4210 2/14/07 6:34:03 PM 282 Appendix E Missouri Missouri Restaurant Association 1810 Craig Road, Suite 225 Saint Louis, MO 63146 (314) 576-2777 Montana Montana Restaurant Association 1537 Avenue D, Suite 320 Billings, MT 59102 (406) 256-1005 Nebraska Nebraska Restaurant Association PO Box 83086 Lincoln, NE 68501-3086 (402) 488-3999 Nevada Nevada Restaurant Association 1500 E Tropicana Avenue, Suite 114-A Las Vegas, NV 89119 New Hampshire New Hampshire Lodging and Restaurant Association 14 Dixon Avenue, Suite 208 Concord, NH 03301 (603) 228-9585 New Jersey New Jersey Restaurant Association 126 W State Street Trenton, NJ 08608 (609) 599-3316 Appendix_E_Restaurant.indd 282 New Mexico New Mexico Restaurant Association 9201 Montgomery Boulevard NE, Suite 602 Albuquerque, NM 87111 (505) 343-9848 New York New York State Restaurant Association 409 New Karner Road Albany, NY 12205 (518) 452-4222 North Carolina North Carolina Restaurant Association 204 West Millbrook Road Raleigh, NC 27609-4304 (919) 844-0098 North Dakota North Dakota Hospitality Association PO Box 428 Bismark, ND 58502 (701) 223-2284 Ohio Ohio Restaurant Association 1525 Bethel Road, Suite 301 Columbus, OH 43220 (614) 442-3535 Oklahoma Oklahoma Restaurant Association 3800 North Portland Oklahoma City, OK 73112-2948 (405) 942-8181 2/14/07 6:34:03 PM Appendix E 283 Oregon Oregon Restaurant Association Education Foundation 8565 SW Salish Lane, Suite 120 Wilsonville, OR 97070 (503) 682-4422 Tennessee Tennessee Restaurant Association 720 Cool Springs Boulevard, Suite 150 Franklin, TN 37067 (615) 771-7056 Pennsylvania Pennsylvania Restaurant Association 100 State Street Harrisburg, PA 17101-1024 (717) 232-4433 Texas Texas Restaurant Association 1400 Lavaca Austin, TX 78701 (512) 457-4100 Rhode Island Rhode Island Hospitality and Tourism Association 832 Dyer Avenue Cranston, RI 02920 (401)223-1120 South Carolina Hospitality Association of South Carolina 1338 Main Street, Suite 505 Columbia, SC 29201 (803) 765-9000 South Dakota South Dakota Retailers Association—Restaurant Division 3612 Landmark Drive, Suite B Columbia, SD 29204 (605) 224-5050 Appendix_E_Restaurant.indd 283 Utah Utah Restaurant Association 420 E South Temple, #355 Salt Lake City, UT 84111 (801) 322-0123 Vermont Vermont Lodging and Restaurant Association 13 Kilburn Street Burlington, VT 05401 (802) 660-9001 Virginia Virginia Hospitality and Travel Association 2101 Libbie Avenue Richmond, VA 23230-2621 (804) 288-3065 Washington Washington Restaurant Association Education Foundation 510 Plum Street SE, Suite 200 Olympia, WA 98501-1587 (360) 956-7279 2/14/07 6:34:03 PM 284 Appendix E District of Columbia Restaurant Association of Metro Washington, Inc 1200 17th Street NW, Suite 110 Washington, DC 20036 (202) 331-5990 Wisconsin Wisconsin Restaurant Association Education Foundation 2801 Fish Hatchery Road Madison, WI 53713 (608) 270-9950 West Virginia West Virginia Hospitality and Travel Association PO Box 2391 Charleston, WV 25311 (304) 342-6511 Wyoming Wyoming Restaurant Association 211 West 19th, Suite 201 Cheyenne, WY 82001 (307) 634-8816 Source: National Restaurant Association, Educational Foundation, 2006 Appendix_E_Restaurant.indd 284 2/14/07 6:34:03 PM I n d e x A Abbreviations, 95 Accountant, 33 Acid test ratio, 180–81 Acorn’s Restaurant, 86 Adoption, 196 Advertising, 197–98, 202–3 Airlines, À la carte menu, 68 Alcoholic beverages control boards, state, 269–73 pricing, 79–83 serving, 77–79 serving responsibility, 218–21 Ambiance, 85–86 Annual payroll, 240 Annual Restauraznt Operations Report, 203 Aroma, wine, 113 Assets, 176 Associations, state, 275–80 Attention getters, 19 Attorney, 33, 47 Attractants, business, 3–4 Automated systems, 184–85 Automobile liability insurance, 54 Average guest check, 181, 207, 245 Average menu price, 207, 245 Awards, 162 Awareness, 195 B Back bar, 103 Back of the house equipment buying, leasing, 125–26 equipment selection, 119–21, 128 equipment sizing, 124 kitchen layout, 122–24 needs analysis, 117–18 Back of the house (continued) specialized kitchens, 126–27 tableware, 127–28 vendors, 118–19 Balance sheet, 173, 176, 185 partner, 253–54 ratios, 176, 178–82 285 Chapter_Index.indd 285 2/14/07 6:32:11 PM 286 Index sample, 177 understanding, 176 Banquet bar, 102 Banquet, 129 bar, 102 booking, 134–35 catering, 131 function guests and, 129–30 prospecting, 135 sales promotion, 134 Bar, 101–2 construction, 105 designing, 103–4 equipment acquisition, 105–6 food service in, 109 glassware, 107–8 inventory, control of, 108 layout, 102–3 location, 102 sales promotion, 109 service, 131 staffing, 108 stocking, 106–7 Bar manager, 133 BATF See Bureau of Alcohol, Tobacco and Firearms Beer bar, 101 pricing, 80–81 rules for handling, 114–15 sales, 113–14 Beer-clean glass, 114 Behavioral changes, 14 Billboards, 205 “Blue-plate special,” 77 Bonds, 54 Book value, 43 Booking functions, 134–35 Bottle-for-bottle exchange, 148–49 Boulanger, chef, Break even Chapter_Index.indd 286 analysis, 252 entertainment, 155–56 Buddy system, 93 Budget, technology and, 15–16 Buffet lunch, 130 Building permits, 29–30 Built-in technologies, 17 Bureau of Alcohol, Tobacco and Firearms (BATF), 32, 33, 61 Bureau of weights and measures, 30 Bush, Barbara, Bush, George, 5, Business background, 233–34 concept, 234 entity, 47–49, 53 function room, 130 luncheon functions, 130 name, 50, 52–53 objectives, 61–62, 236 practices, 220–21 risk tolerance, 11 Business interruption insurance, 54 Business plan, 37 accuracy of, 56–57 business description, 60–64 constructing, 58–64 cover page, 58 format, 58 necessity of, 56 outline of, 59 sample, 229–55 start-up cost estimation, 57–58 statement of purpose, 60 table of contents, 58–60 C Cafeteria kitchen, 126 Capitalization acquiring additional, 49–50 limited, 4–9 2/14/07 6:32:11 PM Index Car cards, 205 Cash flow statement, 251 Cashiering, 37 Cash tips, 166 Catering, booking, 134–35 events, 129 prospecting, 135 sales promotion, 133 Cell phones, 19 Champ d’Oiseau, Change, 16, 226 Check list, for inspections, 156–57 Chef job description, 172 Cherry picking, 143 Children’s menu, 72 Clip-ons, 71 Color, wine, 113 Colors, 69 Commission on handicapped, 30 Communication, 170 Comparable valuation, 42 Competition, 63, 238 Competition-based pricing, 77 Competitive buying, 142–43 Competitive strategies, 194–95 Concentration, 195 Construction, 24 Control states, 32 Control system, 138, 182–83 Cooking equipment, 18, 19 Coordination, 133 Coordination loss, 219 Coppola, Francis Ford, 110 Corporation, 49 Cost, 69, 174 cutting programs, 20 estimation, 33 Cost of food consumed, 144 Credit, 235 Credit memo, 146, 147 Chapter_Index.indd 287 287 Current ratio, 180 Customer, 63, 238–39 decision-making process, 195–96 difficult, 96–98 knowing, 37–38 reasons to come back, 200–201 returning, 159–60 safety, 217 service, 96 wants, needs, 193–94 D Daily quotation market sheet, 142, 143 Datamonitor, 15 Deal closing, 47 Décor, 85–86 Delivery schedules, 141 Delmonico’s, Demographics, 190 Department of Labor, 32, 33 Department of revenue, 30 Desired image, 201 Differentiation strategy, 195 Digital ordering stations, 16 Dining room layout, 90 service system, 92–95 Direct mail, 206 Disposable gloves, 214–15 Down payment, 134 Drivers License Guide Company, 222 Dry stories, 147 Du jour menu, 68 E Earnings multiple, 42–43 Educational Foundation, 15 Electrical codes, 29 2/14/07 6:32:11 PM 288 Index Employee cooperation, 167–68 orientation, 163–65 retention, 160–62 safety, 216–17 training, 165–66 turnover, 160–62 Employer Identification Number (EIN), 33 Employer’s Annual Information Return of Tip Income and Allocated Tips,” 166 Employer’s Tax Guide,” 33 Employment, 250, 251, 252 Entertainment, 154–56 Equipment, 244–45 acquisition, 24 acquisition, bar, 105–6 analyzing needs, 121 buying or leasing, 125–26 cleaning, sanitizing, 214 clearances, 29 maintenance, 156–58 selection, 119–21 sizing, 124 Estimated annual sales, 244, 245 Estimated weekly sales, 243 Ethnic growth, 15 Evaluation, 195 Event catering, 130–31 Existing restaurant, 41 evaluation of, 43–46, 53 professional assistance, 46–49 purchasing, 42–43 Exit interviews, 167 Exits, 29 Expansion, 226–27 Expected sales volume, 141 Expense percentage, 179 Chapter_Index.indd 288 Expenses, 174 External functions, 131 F Failure, reasons for, 35–38 Fair Labor Standards Act, 33 Feasibility study, 55–56 Federal requirements, controls, 32–33 Financial control, 173–74 Financial expectations, 61–62, 236 Financial projections, 64, 244 Financial requirements, 23–25 Financing sources, 24–25 Fire detection, 29 Fire extinguishers, 29 Fire insurance, 54 Fire permits, 28–29 Fire safety, 217–18 Fixtures, 244–45 Flammable liquids, 29 Floor plan, 259 laying out, 89–91 Food allergies, 73 and beverage sales, 206, 208 cost percentage, 144, 178, 183 handling, 213 inventory sheet, 144 production planning, 150–51 sanitation, 211, 212–15 service, bar, 109 service licenses, 27–28 serving, 213–14 Food and Drug Administration, 216 Forced issues, 139, 141 Form 8027, 166 Foster, Bill, Foster’s Downeast Clambake, 5–9 Franchise, 2, 15, 227 French Revolution, Frequency, 140, 203 2/14/07 6:32:11 PM Index Front bar, 103 Front of the house ambiance, décor, 85–86 customer service, 96–98 dining room service system, 92–95 equipment, 90 floor plan, 89–91 image message, 86–87 service, 87–88 table sizes, 91–92 take-out business, 98 Full bar, 101 Function guests, 129–30 Function manager, 133, 134, 135 Function menu, 68 Fund sources, 248 Furniture, 246–47 Fusion cooking, 19–20, 69 G General comprehensive liability insurance, 54 Generic wines, 110 Gen Yers, 193 Geographic information, 190 Get-well cards, 162 Gilley’s Diner, Goals, 11 Good life, 15 Gourmet dining, at counter seat, 20 GPS devices, 17 Grand opening, 196–98 Guest seating, bar, 103 H Handheld devices, 16 Hazard Analysis and Critical Control Point (HACCP), 216 Health Communications, Inc., 108 Health departments, state, 257–61 Chapter_Index.indd 289 289 Health maintenance, 14 Health permit, 27 Hidden agendas, 170–71 Historical commission, 31 Holiday party, 162 Hospitality association, 61 trade shows, 21 Host, 88 I ID checking, 221–22 Image message, 86–87 Incentives, 162 Income statement, 173, 185, 249 comparisons, 174, 176 estimated, 75 sample, 175 understanding, 174 Industry associations, publications, 21 research, 11 trends, 61, 235 Information accuracy, 56–57 Infrared scanning thermometers, 17 Inhibitions, 219 In-house functions, 131 Initial interviews, 167 Insurance, 53–54 Interest, 195 Internal Revenue Service (IRS), 32, 33 Internet, 20, 205 209–10 Interviews, 167 Intoxication, 218–20, 222 Inventory, 37 planning initial, 140–41 sheet, 144 turnover rate, 139–40 turnover rate calculation, 140 2/14/07 6:32:12 PM 290 Index IRS Publication 531 “Reporting Tip Income,” 166 Issuing, 37, 145–49 J-K Job descriptions, 172 Kitchen, 117 equipment selection, 119–21 flow scheme, 118 layout, 122, 123, 124 production system, 121–24 space allocation, 119 specialized, 126–27 state-of-the-art, 118 Kiwanis, 135 Knowledge, lack of, 36–38 L Labor cost percentage, 179 Labor departments, state, 263–67 Layout, 89–91 bar, 102–3 guidelines, 91 Leasehold improvements, 248 Leasing equipment, 125–26 Leftovers, 138 Legal requirements, 26–33 Liabilities, 176 License states, 32 Life cycle, 189–90, 237 Lifestyles, 2, 14 Lighter foods, 70 Limited menu, 68 Liquor laws, 221–23 iability insurance, 54 licenses, 31–32 storeroom, 147–48 Loan request, 64, 243 Local requirements, controls, 27–32 Chapter_Index.indd 290 Location, 43, 61, 234–35 requirements, 26 selection, 50, 51–52 Loss, 174 Lounge location, 90 Luncheon functions, 130 M Magazines, 205 Maintenance procedures, 157 program, 156–57 records, 156 Management, 236 Management team, 61 Market analysis, 62, 237–38 penetration strategy, 194 price, 76 research, 190–92 saturation, 15 Marketing, 187 Marketing plan, 187–88 business life cycle, 189–90 competitive strategies, 194–95 customer needs, wants, 193–94 desired image, 201 grand opening, 196–98 new customers, 195–96 sales goals, 203, 206–9 separate markets, 194 seven-step process, 188–89 target market, 192–93 Marketing strategy, 63, 239 Media analysis, 204–6 Medicare, 33, 166 Menu, 138 evaluation, 83 format, 70–72 limitations, 69–70 planning, 67–68 2/14/07 6:32:12 PM Index presentation, 209 pricing, 73–74 types of, 68, 83 variety, 68–69 Merchandise Received without Bill form, 146 Microniches, 73 Mission statement, 60, 234 Mixed drink pricing, 81–83 Modern lifestyles, 14 Money, 141 Morale, 168–70 Multitasking, 14 Murphy, Paul, 5–9 N Named peril insurance, 54 National Fire Protection Code, 28 National Licensed Beverage Association, 61 National Restaurant Association customer spending patterns, 194 industry statistics, 74, 174, 203 occupancy costs, 43 ServSafe Alcohol, 108, 216 trends, 15, 61 National Sanitation Foundation (NSF), 215 Net profit on sales percentage, 179–80 Newspapers, 204 O Objectives, 61–62, 236 Occupancy costs, 43 Off-premise license, 32 One-day liquor license, 132 Onion Oyster House, On-premise license, 32 Order taking, 95 Ordinaries, Chapter_Index.indd 291 291 Organization, 87–88 Outdoor functions, 132–33 P Par stock, 108, 148 Partner balance sheets, 257–58 resumes, 254, 255, 256 Partnership, 48–49, 50 Payroll analysis, 162–63 Percentage markup on cost, 75–76 Personal credit references, 250–52 Personal injury liability insurance, 54 Personal requirements, 25–26 Personal research, 191–92 Personnel, 63, 239–40 Personnel management, 159 communication, 170 employee cooperation, 167–68 employee retention, turnover, 160–62 hidden agendas, 170–71 improving morale, 168–70 interviews, 167 orientation, 163–65 payroll analysis, 162–63 tip income reporting, 166 training, 165–66 Pest control, 215 Phone, 209–10 Photographs, 198–99 Pick-up service, 98 Pilferage, 153 Place, 43 Plan review, 30 Planning, initial, 24 Point-of-sale (POS) systems, 18, 81–82, 95, 184 Poor judgment, 219 Popularity index, 150, 151 Portion control, 37 2/14/07 6:32:12 PM 292 Index Portion sizes, 20 Pouring cost percentage, 178–79 Preopening expenses, 24 Preparation method, 69 Pricing, 62, 237 alcoholic beverages, 79–83 generally, 74 menu, 73–74 methods of, 74–77 points, 76 Product, 62, 236–37 Production system, 121–24 Productivity, 163 Product liability insurance, 54 Product life cycle, 62, 237 Professional assistance, 46–49 Professional services, 235 Profit, 174 Profitability, 62, 237 Profit center, 137 Profit and loss statement, 173 Projected Employee Work Schedule, 241–42 Projected Income Statement, 250 Property damage insurance, 54 Property selection, 50 Prospecting, 135 Protein, 69 Psychographic information, 190 Publicity, 197–200 Purchase order, 143 Purchasing, 37 controls, 138 food, 212 wisely, 139–45 Purchasing, 37 Ratios, 176, 178–82 Reaction loss, 219 Receiver’s sheet, 145 Receiving, 37, 145–49, 212 Recognition, 162 Rejection, 196 Rent, 43 Replacement value, 42 Reproduction value, 42 Request for Credit Memo, 146, 147 Requisition form, 148–49 Reservations books, 135 Responsibility, assignment of, 158 Restaurant, background, 60 description, 60 history, 72 ownership, 11–12 selling, 227–28 types, 9–10 Restaurant Industry Operations Report, 15, 43 Restaurant manager hiring, 10–11 typical day for, 10 Retail dealer, 33 Revenues, 174 RFID (radio frequency identification), 17 Risk, 63 Risk management, 53–54, 240 Road houses, Robotic machines, 19 Rotary, 135 S Q-R Quotation sheet, 142, 143 Radio, 204 Rate of return on investment, 180 Chapter_Index.indd 292 Safety customer, 217 employee, 216–17 fire, 217–18 2/14/07 6:32:12 PM Index Salad bar, 90 Sales forecast, 151 Sales history, 150 Sales promotion banquets, catering, 134 bar, 109 Sanitation, planning for, 215 Scannable gift cards, 17 Seat turnover ratio, 182 Secretary of state, 30 SelfCooking Center, 18 Self-service kiosks, 17 Sensory fulfillment, 15 Separate markets, 194 Service bar, 102, 104 Service Corps of Retired Executives (SCORE), 26 Service, 62, 87–88, 236–37 Serving sizes, 69 ServSafe Alcohol, 108, 216 Shapes, 69 Short-order cooking, 127 Side work, 94 Signage commission, 30–31 Silent pagers, 16 Single working parents, Site analysis, 51–52 approval, 30 Skimming the market, 76 Small Business Administration, 26 Small business development loan, SmartBriefs, 15 Social Security (FICA), 33, 166 Sole proprietorship, 47–48, 49–50 Space allocation, 88–89 kitchen, 119 Special events, themes, 200–201 Special Occupational Tax Stamp, 33 Special requests, 20 Specials, 77, 78 Chapter_Index.indd 293 293 Specialty items, 70 Standardized recipes, 37, 149–50 Standards, 73, 138 Starlite Diner, 126 Start-up restaurant, 39–41 cost estimation, 57–58 requirements, 242 State alcoholic beverage control boards, 269–73 associations, 275–80 health departments, 257–61 labor departments, 263–67 requirements, controls, 27–32 Statement of purpose, 233 Stock record cards, 148 Storage, 29, 37, 145–49 Food, 212–13 space, 140–41 Storeroom, 147 Storeroom shelving, 148 Storeroom, 147 Stress relief, 14–15 Subchapter S election, 49 Subtitles, 70 Success, 225–26 Suggestive selling, 208 Supervision, 151–54, 183–84 Supplies acquisition, 24 Survey, 38–39 existing restaurant, 44–46 T Table d’hôte menu, 68 Table sizes, 91–92 Tableware, 127–28 Tacy, Kevin, 5–9 Take–out business, 98 Target market, 192–93 Taste, wine, 113 Taverns, 2/14/07 6:32:12 PM 294 Index Technology budget and, 15–16 changing consumers and, 19–20 innovations, 16–19 perspective, 20–21 Telephone booths, 19 Television, 204 Temperatures, 69 Textures, 69 Theme nights, 200–201 Time, 43 Tip income reporting, 166 Tongue zones, 114 Total costs plus profit, 75 Tour d’Argent, La, Traffic flow, bar, 103 Training, 11, 87–88, 165–66 Training for Intervention Procedures by Servers of Alcohol (TIPS) program, 108, 220 Trends, 13–15, 21, 61 Trial, 195 “Truth in menus,” 72 Twelve-month projected income statement, 252 Typoeface, 71 U Undercapitalization, 35–36 Unique concept, 61 Use of funds, 243, 246 Chapter_Index.indd 294 V Varietal wines, 110 Vendors, working with, z118–19 Video cameras, 17 W Wait station, 88, 94 Waterless urinals, 18–19 Weekly sales, 207 Wetlands commission, 31 WIFI networks, 16–17 Wine bar, 101 classification, 110–11 dining out experience and, 109–10 dispensing systems, 112 judging, 113 list, 77–79 pricing, 79–80 storage, serving, 111–13 tasting, 114 Women’s movement, Women in workforce, Work center, 122, 123, 128 Workers’ compensation, 54 Working capital, 24, 181 Working parents, World War II, 2/14/07 6:32:13 PM ... Chapter_3_Restaurant.indd 33 2/14/07 6:26:28 PM 34 The Upstart Guide to Owning and Managing a Restaurant Action Guidelines o Consult an accountant familiar with the restaurant business and an attorney... era, a hot dog stand might pop up on a roadside one year, Chapter_2_Restaurant.indd 15 2/14/07 6:26:11 PM 16 The Upstart Guide to Owning and Managing a Restaurant the next year an ice cream stand... there Chapter_1_Restaurant.indd 2/14/07 6:25:57 PM The Upstart Guide to Owning and Managing a Restaurant THE AMERICAN RESTAURANT SCENE In colonial America, the establishment of taverns and roadhouses