Overview On The Restaurents Industry

Introduction:

Eating is the most essential activity of our everyday lives. With less time and a limited ability to prepare food at home, we look to food prepared outside the home. Whether it s breakfast, lunch, or dinner, the options abound. So how much do people spend on food?

The answer of this question depends on the average earning of each person.so the more you earn the more you can spend on food and as well the more you can go to the restaurants including all the types of restaurants from the highly expensive to the modest ones. But there are another question to be asked. What makes anyone prefer a restaurant more than any other restaurants? How does food affect our personality, health and decisions? What makes some restaurants preferable for the people more than the others?

In this report I will do a quick over view about the restaurants industry and I will try as much as I can to answer those questions. For me I love food so much and I hope someday I will be having one of the biggest restaurants chains in Egypt. This is why I have chosen to do the report in this topic.

How does Food affect the personality and the health

You are what you eat

What we eat and drink really do make us what we are, in that the foods we consume contain a mixture of chemicals, which can change our physical and mental state.

We are all aware of the disruptive effects junk food etc. can have on children, but we too often forget that food affects the moods of adults too. Although our genetics provides a blue print of how we may develop, it is the food we eat which ultimately determines our strength, size, short and long term health.

It could be argued that every meal we eat affects us in either a positive or negative way. For many people with known food allergies, this is an obvious statement, but it is thought that many people suffer reactions to food, which in turn affect their mental state without even realizing.

When children over consume sweets and soft drinks, there is often an almost immediate change in their behavior. They can become aggressive, demanding and throw tantrums. In schools where soft drinks and confectionery have been banned, teachers have said that their pupils show signs of improved concentration are better behaved and much easier to manage.

As adults we believe that we are mature enough to overcome the effects that food may have on our emotions. But are we right to think that?

If we get stressed in the afternoon, could other factors be at work? Could the food we have eaten cause a change in mood, increase aggression? One fact is certain, when blood sugar levels fall we become more aggressive, stressed and agitated. The brain starts to take control to try to get more food. Suddenly the most important thing for the human body to survive is to get sugar and this prompts the brain to release adrenaline which generally results in a person becoming hyper or angry. In nature the new energy from adrenaline will lead to a hunt but today we just argue and get stressed.

This is why we believe that a healthy diet is important for short-term mental health as well as long term physical health. For now we will just cover what we believe is important for good health as far as diet and nutrition is concerned.

But it is worth bearing in mind that the food we eat may be one of the causes of stress or anxiety in our life. So a change of diet may help us become a more adequate persons.

Let your food be your medicine, and your medicine be your food

Restaurants Industry

Hence the people noticed that how important is the food. And how the food can affect our daily life routine so from here the idea of restaurants industry came out.

Restaurant companies are essentially retailers of prepared foods, and their operating performance is influenced by many of the same factors that affect traditional retail stores. For the most part, restaurants have business models that are relatively easy to understand,. Nonetheless, there are a number of unique factors to consider when making investment decisions regarding this large and segmented industry.

Competition between restaurants is intense, since dining options abound. And, while there are certainly dominant important players in this industry (especially among fast-food purveyors), no company has the market cornered. Indeed, virtually every restaurant location must compete not only against other publicly traded chains, but also a wide array of small, local establishments. Competitors include everything from delis and pizzerias to fine-dining restaurants. And, of course, it is relatively easy to forgo prepared foods, altogether, in favor of home cooking, which is usually a less expensive option. Thus, restaurant meals are sweets purchases, and the industry tends to be highly cyclical.

Margins and constrains on management

Management`s execution and ability to deliver a menu that appeals to a wide range of palates go a long way toward determining a restaurant`s margins. Most companies in this industry have operating margins in the mid- to upper teens, and net profit margins in the mid- to high-single digits. Food costs are obviously an important line item and, at times, can fluctuate wildly. Prices for staples, such as corn, chicken, beef and dairy, can move greatly, depending on factors like crop yields, feed costs and other external demand factors.

Labor is another major cost for service-oriented restaurants. Typically, workers earn modest salaries, often at or just slightly above government-mandated minimum wages. Employees that fall into this category are usually fast-food workers, dishwashers and bus boys. Servers, who make the lion`s share of their money through tips, are usually paid even less. Consequently, changes to minimum-wage laws can have a noticeable impact on a restaurant`s costs and margins.

Top-line growth is typically generated in two ways, opening locations and boosting same-store sales. Opening new doors (franchising) is a straightforward strategy, and usually the main driver of revenue when a company is in its early stages. As a chain grows in size, however, it becomes increasingly difficult to capture benefits. The best, most profitable locations are established first, and then managers must be careful not to place restaurants too close together, or they will decrease each other`s sales.

Comparable-store sales, or "comps", is a valuable metric to examine when analyzing restaurants. Comps are particularly important once a company reaches maturity, since they become the primary driver of growth. Product innovations and menu-price increases are two of the most common ways to increase same-store sales. Remodeling existing locations is another way to boost guest traffic. Furthermore, promotions and limited-time offers are widely used to attract diners. Investors should also pay attention to trends in the currency value of the average guest check, as this can attract additional light on what exactly is driving sales.

The four Ps and more

Place, product, pricing, and promotion (the four Ps) are key points that restaurant owners have to deal with regularly on top of meeting food safety standards. This means owners must understand their competitive landscape.

Investors should also know that running an independent restaurant is different from managing or operating a restaurant chain, which invites additional complications like incentive alignment, growth strategy, and operational guidelines.

Fast Food vs. Casual Dining

Restaurants can be loosely classified into two broad categories: fast food and casual sit-down establishments. The same general factors discussed above dictate the performance of each group, but

Sit-down restaurants tend to be more expensive, making them even more sensitive to consumer budgets and the health of the economy.

Fast-food restaurants, being less dependent on macroeconomic conditions, are better defensive investment plays. In a recessionary environment, their convenience and value make them attractive options for diners seeking inexpensive meals or for those trading down from casual-dining establishments.

Convenience is a major part of the fast-food business model, so a vast network of stores is essential to success. In addition to expansive hamburger chains, there are a number of large players that focus on aspects, such as sandwiches and pizza.

Fast food is responsible for most of the industry`s international sales. Foreign markets offer vast growth potential for companies willing to take on the challenge of finding a successful formula that appeals to a wide array of customs and tastes. A well-known brand name provides a huge leg up when expanding overseas, which is one reason why fast-food makers dominate the international arena. The convenience of these restaurants and their typically inoffensive menus, which appeal to most diners, are other pluses.

The food quality at fast food synonymous with junk food restaurants is average is high in calories and low in nutritional value. Food items usually include cheeseburgers, fried chicken, French fries, chicken nuggets, wraps, and pizza.

The nutritional quality of fast food scored 48 points. Compared to the USDA s average recommended American s Diet score of 55

People tend to believe that the low-income population is the biggest customer for fast food restaurants.

Top brands

McDonald s (MCD) is the biggest player in the fast food restaurant space, with a market share of 17.8%. McDonald s (MCD) annual sales were $28.10 billion in 2013. Yum! Brands (YUM), which owns KFC, Pizza Hut, and Taco Bell, had annual sales of $13.1 billion. Burger King (BKW) had annual sales of just $1.14 billion over the same period.

Many analysts consider this segment of the industry to be in a mature stage. This means small restaurants will have to differentiate themselves from large brands like McDonald s (MCD), while large chains focus on international expansion.

Branding

Nowadays most of the restaurants are focusing on branding their trademarks and to create some memories between them and their customers which will make the customers loves to come to them even if the quality of the food is not good enough sometimes and the most popular example on applying this idea is McDonald s using the slogan of I love it however there are so many restaurants are having higher quality more than them but they succeed doing BRANDING

Conclusion

Restaurants industry is one of the strongest and the most profitable industries across the world this is why so many investors invest their money on it. As well I believe that one meal can make the person happy or sad, healthy or sick, when we decide to hang out with our family members or our friends the first thing we will think about is where will be eat during the holiday. Although the competition is so aggressive and the possibility of failing and losing so much money is so high but having a good and successful restaurants chain can make you not only money maker but as well happiness maker.