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Multiunit restaurant management
F O C U S
ON
F O O D
S E R V I C E
"Reach Out and TouchYour Customers" by M i e h a d Lyma,Joseph-Mykal Le, and David Sherwyn, is a study with the surprising conclusion that minimal physical contact in a service business (e.g., between server and diner) may actually increase customer satisfaction. Beth C h u n g and K. Douglas H o f f m a n share their study of guest experiences in "Critical Incidents: Service Failures that Matter Most." Third in this group is an article from D e n n y Rutherford, "Lessons from Liebeck: QSRs Cool the Coffee," which measures the change in the Q S R segment's standards for customers' hot beverages since the "hot coffee" case a few years ago. This issue offers two international perspectives on the changing chain-restaurant world. In his presentation, Crist I n m a n takes a look at a regional leader in "A Central American Approach to Q S R Development: The Case ofPollo Campero." Rupert Spies and Gretel Weiss take an in-depth approach to tracking restaurant market shi~s in Europe's leading economy by investigating "Is Germany's Traditional Restaurant a Dying Breed?" Finally, we revisit a discussion I initiated five years ago. In my current article, "Endorsed Branding, the Next Step in P, estaurant Management" there is an explanation of some traditional brandmanagement techniques and an example of how an endorsed, or umbrella, strategy might be used by one leading restaurant chain to expand its market reach. ***
Multiunit IKestatwant
Management This issue of Cornell Quarterly can be considered something of a milestone. It is the fifth annual edition of the journal to feature writings on multiunit restaurant management. In the introduction that I wrote in 1994 for the first focus section, I noted that there were "profound changes in restaurant management...accompanying the shiR to economic rationalization and consumer branding that chain-restaurant operators present." That trend only intensified over the last five years, and few would argue with the accuracy of my closing prediction that, in the future, we would adopt a different perspective,"changing from'a view of the restaurant business' to 'a view of the business of restaurants"" Today the focus on the business of food service is seen in every corner o f the industry. N o longer are mergers, acquisitions, divestments, consolidations, or downsizing the activities of just other industries. In 1998 they are the stock and trade of senior restaurant executives. Two giants in the field, PepsiCo and General Mills, have le~ the industry through spin-ofl~ of their extensive restaurant holdings; McDonald's is experimenting with a Mexican subsidiary; AppleSouth has left behind its core, Applebee's franchises, and cut its revenues in hal~ while Marriott has joined with Sodexho to form a global managed-services conglomerate. In the U.S. alone, there are over 100 publicly traded restaurant companies. Where it was once only a special operator who could show average unit volumes in excess of $2 million, today there are hundreds ofbrand-narne restaurants with annual sales between $4 and 10 million. Meanwhile, Boston Market, the innovator behind the "home-meal replacement" boom and a once-upon-a-time darling of Wall Street, is teetering on bankruptcy. Nevertheless, it is predicted that by the end of the year there may be 1,000 restaurants
selling prime steak and red wine for $60 per person. What a complex environment the restaurant world has become! To try to make some sense of it all, and to challenge readers to think in new ways, the Cornell Quarterly offers its largest selection ever ofartides on a variety of dynamic multiunit food-service topics. Dennis Reynolds continues his series on the managed-services segment with "Productivity Analysis in the On-Site Food-Service Segment" an article with direct application for this growing area.
Sherry Kimes, Richard Chase, Sunmee Choi, PhilipY. Lee, and Elizabeth N. Ngortzi apply the concept of yield management to restaurants, offering a preliminary framework for the use of relevant theory in daily management in their essay "Restaurant Revenue Management: ApplyingYield Management to the Restaurant Industry?' Also following a finance theme are J o e H u t c h i n s o n and Greg Jewell, who look at managed services and offer information on the effects ofhyofl~ among contract firms' corporate clients in"The Downsizing of U.S. FoodService Companies?' Offering evidence that management compensation has changed over the past few years as the industry has become more sophisticated and labor markets have tightened is "Changes in Multiunit Restaurant Compensation Packages--What, Why, and Whether They Work;' by P a d m a Patil and Beth G. Chtmg. And lest anyone think that this compensation is going to a broad cross-section of the population, Gahriella Petrick shows us that women are still underrepresented in the industry's top ranks, in "Lonely at the Top: Women Food-Service Executives?' Service issues are an ongoing concern to multiunit managers, and so this section offers three operations-related articles.
The Cornell Hotel School's executiveeducation oflace is offering a new weeklong program for senior managers. The "R.estaurant Executives Program: International Brand Strategies" will run from September 20-25 on the CorneU University campus (see facing page). This program promises to expand on the issues presented in the Cornell Quarterly over the last five years. As the collector of those articles for the past half decade, I thank you for your interest and support during this exciting period of industry transition.--C C.M. The Cornell Quarterly editors appreciate the inspiration and assistance of Cornell assistant professor Christopher C. Muller in soliciting, collecting, and reviewing the articles that appear in the following special section.Written by industry observers, consultants, and academics, the articles examine trends and innovations in the restaurant business and explore the how, what, and why of the chain-restaurant industry. To participate in next year's special section, please contact Professor Muller or the editors by November 1998.--Ed. June 1998 • 21
ON
F O O D
S E R V I C E
"Reach Out and TouchYour Customers" by M i e h a d Lyma,Joseph-Mykal Le, and David Sherwyn, is a study with the surprising conclusion that minimal physical contact in a service business (e.g., between server and diner) may actually increase customer satisfaction. Beth C h u n g and K. Douglas H o f f m a n share their study of guest experiences in "Critical Incidents: Service Failures that Matter Most." Third in this group is an article from D e n n y Rutherford, "Lessons from Liebeck: QSRs Cool the Coffee," which measures the change in the Q S R segment's standards for customers' hot beverages since the "hot coffee" case a few years ago. This issue offers two international perspectives on the changing chain-restaurant world. In his presentation, Crist I n m a n takes a look at a regional leader in "A Central American Approach to Q S R Development: The Case ofPollo Campero." Rupert Spies and Gretel Weiss take an in-depth approach to tracking restaurant market shi~s in Europe's leading economy by investigating "Is Germany's Traditional Restaurant a Dying Breed?" Finally, we revisit a discussion I initiated five years ago. In my current article, "Endorsed Branding, the Next Step in P, estaurant Management" there is an explanation of some traditional brandmanagement techniques and an example of how an endorsed, or umbrella, strategy might be used by one leading restaurant chain to expand its market reach. ***
Multiunit IKestatwant
Management This issue of Cornell Quarterly can be considered something of a milestone. It is the fifth annual edition of the journal to feature writings on multiunit restaurant management. In the introduction that I wrote in 1994 for the first focus section, I noted that there were "profound changes in restaurant management...accompanying the shiR to economic rationalization and consumer branding that chain-restaurant operators present." That trend only intensified over the last five years, and few would argue with the accuracy of my closing prediction that, in the future, we would adopt a different perspective,"changing from'a view of the restaurant business' to 'a view of the business of restaurants"" Today the focus on the business of food service is seen in every corner o f the industry. N o longer are mergers, acquisitions, divestments, consolidations, or downsizing the activities of just other industries. In 1998 they are the stock and trade of senior restaurant executives. Two giants in the field, PepsiCo and General Mills, have le~ the industry through spin-ofl~ of their extensive restaurant holdings; McDonald's is experimenting with a Mexican subsidiary; AppleSouth has left behind its core, Applebee's franchises, and cut its revenues in hal~ while Marriott has joined with Sodexho to form a global managed-services conglomerate. In the U.S. alone, there are over 100 publicly traded restaurant companies. Where it was once only a special operator who could show average unit volumes in excess of $2 million, today there are hundreds ofbrand-narne restaurants with annual sales between $4 and 10 million. Meanwhile, Boston Market, the innovator behind the "home-meal replacement" boom and a once-upon-a-time darling of Wall Street, is teetering on bankruptcy. Nevertheless, it is predicted that by the end of the year there may be 1,000 restaurants
selling prime steak and red wine for $60 per person. What a complex environment the restaurant world has become! To try to make some sense of it all, and to challenge readers to think in new ways, the Cornell Quarterly offers its largest selection ever ofartides on a variety of dynamic multiunit food-service topics. Dennis Reynolds continues his series on the managed-services segment with "Productivity Analysis in the On-Site Food-Service Segment" an article with direct application for this growing area.
Sherry Kimes, Richard Chase, Sunmee Choi, PhilipY. Lee, and Elizabeth N. Ngortzi apply the concept of yield management to restaurants, offering a preliminary framework for the use of relevant theory in daily management in their essay "Restaurant Revenue Management: ApplyingYield Management to the Restaurant Industry?' Also following a finance theme are J o e H u t c h i n s o n and Greg Jewell, who look at managed services and offer information on the effects ofhyofl~ among contract firms' corporate clients in"The Downsizing of U.S. FoodService Companies?' Offering evidence that management compensation has changed over the past few years as the industry has become more sophisticated and labor markets have tightened is "Changes in Multiunit Restaurant Compensation Packages--What, Why, and Whether They Work;' by P a d m a Patil and Beth G. Chtmg. And lest anyone think that this compensation is going to a broad cross-section of the population, Gahriella Petrick shows us that women are still underrepresented in the industry's top ranks, in "Lonely at the Top: Women Food-Service Executives?' Service issues are an ongoing concern to multiunit managers, and so this section offers three operations-related articles.
The Cornell Hotel School's executiveeducation oflace is offering a new weeklong program for senior managers. The "R.estaurant Executives Program: International Brand Strategies" will run from September 20-25 on the CorneU University campus (see facing page). This program promises to expand on the issues presented in the Cornell Quarterly over the last five years. As the collector of those articles for the past half decade, I thank you for your interest and support during this exciting period of industry transition.--C C.M. The Cornell Quarterly editors appreciate the inspiration and assistance of Cornell assistant professor Christopher C. Muller in soliciting, collecting, and reviewing the articles that appear in the following special section.Written by industry observers, consultants, and academics, the articles examine trends and innovations in the restaurant business and explore the how, what, and why of the chain-restaurant industry. To participate in next year's special section, please contact Professor Muller or the editors by November 1998.--Ed. June 1998 • 21