Broadly speaking, restaurants can be segmented into a number of categories:
1- Chain or independent (indy) and franchise restaurants. McDonald’s, Union Square Cafe, or KFC
2- Quick service (QSR), sandwich. Burger, chicken, and so on; convenience store, noodle, pizzaDo you want to learn more? Visit keedysfountaingrill.com.
3- Fast casual. Panera Bread, Atlanta Bread Company, Au Bon Pain, and so on
4- Family. Bob Evans, Perkins, Friendly’s, Steak ‘n Shake, Waffle House
5- Casual. Applebee’s, Hard Rock Caf´e, Chili’s, TGI Friday’s
6- Fine dining. Charlie Trotter’s, Morton’s The Steakhouse, Flemming’s, The Palm, Four Seasons
7- Other. Steakhouses, seafood, ethnic, dinner houses, celebrity, and so on. Of course, some restaurants fall into more than one category. For example, an Italian restaurant could be casual and ethnic. Leading restaurant concepts in terms of sales have been tracked for years by the magazine Restaurants and Institutions.
CHAIN OR INDEPENDENT
The impression that a few huge quick-service chains completely dominate the restaurant business is misleading. Chain restaurants have some advantages and some disadvantages over independent restaurants. The advantages include:
1- Recognition in the marketplace
2- Greater advertising clout
3- Sophisticated systems development
4- Discounted purchasing
When franchising, various kinds of assistance are available. Independent restaurants are relatively easy to open. All you need is a few thousand dollars, a knowledge of restaurant operations, and a strong desire to
succeed. The advantage for independent restaurateurs is that they can ”do their own thing” in terms of concept development, menus, decor, and so on. Unless our habits and taste change drastically, there is plenty of room for independent restaurants in certain locations. Restaurants come and go. Some independent restaurants will grow into small chains, and larger companies will buy out small chains.
Once small chains display growth and popularity, they are likely to be bought out by a larger company or will be able to acquire financing for expansion. A temptation for the beginning restaurateur is to observe large restaurants in big cities and to believe that their success can be duplicated in secondary cities. Reading the restaurant reviews in New York City, Las Vegas, Los Angeles, Chicago, Washington, D.C., or San Francisco may give the impression that unusual restaurants can be replicated in Des Moines, Kansas City, or Main Town, USA. Because of demographics, these high-style or ethnic restaurants will not click in small cities and towns.
5- Will go for training from the bottom up and cover all areas of the restaurant’s operation Franchising involves the least financial risk in that the restaurant format, including building design, menu, and marketing plans, already have been tested in the marketplace. Franchise restaurants are less likely to go belly up than independent restaurants. The reason is that the concept is proven and the operating procedures are established with all (or most) of the kinks worked out. Training is provided, and marketing and management support are available. The increased likelihood of success does not come cheap, however.