Understanding
Foodservice
Operations
2
Objective
• Recognize various foodservice segments.
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Foodservice Segments
• Commercial
foodservicebusinesses with a
primary goal of
preparing and
selling food for
money
continued
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Foodservice Segments
• Noncommercial foodservice-operations that
provide foodservice as a secondary activity;
also called institutional foodservice
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Commercial Foodservice
• Includes
– full-service restaurants
– quick-service restaurants
– hotels
– clubs
– catering
 What are some examples of commercial
foodservice in your area?
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Restaurants
• Full-service restaurants: span a range of
styles from fine dining to casual
• Quick-service restaurants: customers
typically place orders at counter; offer
speed, convenience, and reasonable
prices; often called fast-food restaurants;
some of the most lucrative operations in
the industry
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Hotels
• Hotel dining options
range from vending
machines to
numerous on-site
restaurants of varying
styles and cuisines
continued
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Hotels
• Hotel restaurants provide service to
registered guests as well as the community
• Many hotels operate room service and
banquet facilities
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Clubs
• Many private clubs provide their members
with clubhouses with restaurant and
banquet facilities
• Members expect fine cuisine and
excellent service
• Members of city clubs use the club’s
dining rooms for business and
entertaining purposes
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Catering
• Catered events are
often held in a hall
or banquet facility
• Off-premise
catering involves
catering locations
that do not normally
serve food
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Noncommercial Foodservice
Includes
• corporations
• schools
• colleges and universities
• hospitals and nursing homes
• military
continued
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Noncommercial Foodservice
(continued)
• travel
• parks and recreation
• stadiums and sports arenas
• convention centers
• prisons and correctional facilities
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Objective
• Compare and contrast the different forms of
business ownership.
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Legal Forms of Business
Ownership
• Free enterprise recognizes and promotes a
person’s right to own a business
• The three main legal categories of ownership
are
– sole proprietorship
– partnership
– corporation
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Sole Proprietorship
• The owner of a sole
proprietorship is
personally responsible
for all debts of the
business
• Sole proprietors have
final authority on all
decisions
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Partnership
• A partnership agreement spells out the
responsibilities of each partner and how
profits and losses will be divided
• Each owner is personally responsible for all
the debts of the business in a partnership
• Legally, the partnership is ended when one
or more partners dies or leaves the
business
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Corporation
• Ownership of a corporation is divided among
investors in parts called shares
• The corporation has most of the rights and
responsibilities of a real person, including
responsibility for its debts
• In general, corporations pay more taxes than
other forms of ownership
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Objective
• Summarize government’s involvement in
regulating foodservice operations.
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Foodservice Laws and Regulations
• Laws and regulations governing how a
foodservice business operates may be
enforced by one of three levels of
government—federal, state, or local
• Businesses must abide by the law or
regulation which is most strict
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Objective
• Explain the different ways foodservice
businesses are organized.
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Organization of Foodservice
Businesses
• Foodservice businesses can be
organized as
– independent restaurants
– chains
– franchises
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Independent Restaurants
• An independent restaurant is a restaurant
that is not a part of a group
• Each is a unique operation with different
ownership
 What are some advantages and disadvantages for
independent restaurants?
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Chains
• Chain restaurants are often referred to as
“multi-unit foodservice operations”
• A chain uses the same menu, décor, and
management practices in each location
 What are some advantages and disadvantages for
chain restaurants?
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Franchises
• The owner of a franchise restaurant pays for
the right to operate a franchise and is called
a franchisee
• The franchisee
– pays a fee for the right to use the brand name,
concept, logo, and advertising
– is required to use the franchise company’s
products and operate by its standards
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Objective
• Summarize the risks and rewards of
entrepreneurship.
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Entrepreneurship
• Many entrepreneurs
are attracted to
foodservice
businesses
continued
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Entrepreneurship
• Successful chef-entrepreneurs must have
– great culinary skills
– business management expertise
– the ability to see the larger business
environment and new opportunities
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Risks and Rewards
• Risks of
entrepreneurship
– Repayment of
debts if the
business fails
– Restaurants have
high failure rates
• Rewards of
entrepreneurship
– Being your own
boss
– Financial gain
– Personal and
professional pride
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Review
• Compare the two foodservice segments
– Commercial foodservice is businesses with a
primary goal of preparing and selling food for
money.
– Noncommercial foodservice includes
operations that provide foodservice as a
secondary activity; also called institutional
foodservice.
continued
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Permission granted to reproduce for educational use only.
Review
• Give examples of both commercial and
noncommercial foodservice
– Commercial: full-service restaurants, quickservice restaurants, hotels, clubs, catering
– Noncommercial: corporations, schools,
colleges and universities, hospitals and
nursing homes, military
continued
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Review
• Describe the difference between fullservice and quick-service restaurants
– Full-service: servers take the customer’s
order and bring the meal to their table; can be
casual or fine-dining
– Quick-service: customers typically place
orders at a counter; offer speed,
convenience, and reasonable prices
continued
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Permission granted to reproduce for educational use only.
Review
• Describe three forms of business ownership
– Sole proprietorship: one owner; responsible for
all debts of the business; makes all decisions
– Partnership: ownership shared by two or more
people; each owner is responsible for all debts
of the business; share business responsibilities
– Corporation: a separate entity with legal rights;
ownership is divided among investors; the
corporation is responsible for its debts
continued
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Review
• What level of government enforces laws
and regulations governing foodservice
businesses?
– Federal, state, or local government may
enforce laws and regulations governing
foodservice businesses
continued
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Permission granted to reproduce for educational use only.
Review
• Explain how independent restaurants,
chains, and franchises differ
– An independent restaurant is not part of a
group; a chain is a group of restaurants
owned by the same company; franchise
restaurants are independently owned
restaurants that are part of a larger restaurant
chain
continued
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Review
• What attracts entrepreneurs to
foodservice businesses?
– Most restaurants are small, independent
operations; small businesses have lower
start-up costs; small businesses are easier to
manage
continued
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Permission granted to reproduce for educational use only.
Review
• Describe the risks and rewards of
entrepreneurship
– Risks: having to repay debts if the business
fails; restaurants have high failure rates
– Rewards: being your own boss; financial
gain; personal and professional pride
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