Chapter 1
The Food Service Industry
Managing Food and Beverage Operations
Fourth Edition
(241TXT or 241CIN)
© 2005, Educational Institute
Competencies for
The Food Service Industry
1. Distinguish between commercial and noncommercial
food service operations.
2. Outline the origins and development of food service in
hotels, restaurants, and institutions.
3. Describe various commercial and noncommercial food
service facilities and discuss the use of for-profit
contract management companies to run noncommercial
operations.
4. Identify trends likely to affect food service in the
coming years.
© 2005, Educational Institute
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Advantages and Disadvantages
of Chain Restaurants
Advantages:
• Ready access to cash and credit
• Ability to experiment without great risk
• Resources to hire staff specialists
• Greater access to useful comparative financial
information
Disadvantage:
• Bureaucratic rules and procedures can slow
response times to market changes
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2
Advantages and Disadvantages
of Owning or Managing
Franchise Restaurants
Advantages:
• Assistance in opening and operating the business
• Franchisor-sponsored training and materials
• Greater exposure and higher revenue because of
extensive advertising and name recognition
• Lower costs due to volume purchasing
• Tested operating procedures
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(continued)
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Advantages and Disadvantages
of Owning or Managing
Franchise Restaurants
(continued)
Disadvantages:
• Franchise contracts restrict style and methods
of operation, products served, services
offered, décor, and furnishings
• Franchise contracts usually favor the
franchisor
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Advantages and Disadvantages of Contract
Management in Noncommercial Facilities
Advantages:
• Large management companies have more
resources to solve problems
• Ability to negotiate better deals with suppliers
• Greater efficiency and therefore lower overall cost
• Allows food service to be operated by experts,
rather than institution administrators
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(continued)
5
Advantages and Disadvantages of Contract
Management in Noncommercial Facilities
Disadvantages:
• Management companies can affect the
institution’s public image
• Some people feel that profit-making operators
do not belong in noncommercial settings
• The institution may become dependent on the
management company
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