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, and the array on the Value Line page is the same as that of a standard industrial company. 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 players in this industry (especially among fast-food purveyors), no one 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 discretionary purchases, and the industry tends to be highly cyclical.
Top-line growth is divided into two different ways, opening locations sales and boosting same-store sales. Opening new doors 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, lest they cannibalize 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 dollar value of the average guest check, as this can shed additional light on what exactly is driving sales.
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 federal or state minimum-wage laws can have a noticeable impact on a restaurant’s costs and margins.
Difference between Fast Food and Casual Dining
Restaurants can be loosely broken down 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 niches, 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.
Restaurant stocks have a number of attractive attributes. Their business models are easy to understand, as are the factors that affect their performance. Most are cyclical, so broad economic conditions often play an outsized roll in the group’s overall performance. However, fast-food retailers can sometimes provide more shelter in a down economy. Conservative investors might find the stocks of mature operators appealing as growth-and-income holdings. Conversely, fledgling companies, with new or unique formats, use most of their cash flow for expansion, and their stocks may offer attractive 3- to 5-year appreciation potential to the more ventures.
Best restaurants in Ludhiana
ü Bistro 226
ü Yellow Chilli
ü Barbeque Nation
ü Baba Chicken
ü Indian Summer
ü Aman Chicken
ü Sagar Ratna
ü Rishi da dhaba
ü Bistro Flamme Bois
ü Friends Dhaba
ü Hawai Adda
ü Basant Vegetarian Restaurant
ü Kitchen At 95
ü Red Mango
ü Ghanta Ghar
ü Wadi Haveli Restaurant
Review of literature
Nasir et al (2014), our research is on the things that are considered as most important before visiting a restaurant. The selected variables are price, quality, environment, security and exceptional service. We have find out that the price is the most important factor for people. Price is ideal determinant for increasing the satisfaction level of restaurant consumers. A model for customer satisfaction is proposed that tells the major factors in determining customer satisfaction. So these five factors should be considered when formulating a marketing strategy. However priority of one factor over another would be diverse for different regions.
Sabir et al (2014), customer satisfaction is very important for every organization; either they are service sector or the privet sector. Customers are the actual agents or stakeholders for determining or best judging the success of any product or service. The Service quality, physical design, product quality and price, if they think customer satisfaction as part of their marketing strategy yet among all these four variables they should take service quality as the most important tool of customer satisfaction.
Deivanai (2013), In today’s world, Fast food is something that almost everyone, right from kids to the oldies, loves and talks about fast food. Fast food is one of the world’s fastest growing food types. Mostly competes on price, location and food quality. An adult play an important role in the buying process reasons such as tasty, cleanliness. Convenience, family outings and celebration of special occasions are considered important.
Khan et al (2012),All types of business organization customer satisfaction is the most important issue, and considered as most reliable feedback, for the excellence of any business organization. Customer satisfaction is the part of marketing and play important role in the market. And for measuring the customer satisfaction this study was conducted and to examine the relationship between the customer satisfaction to Promotion, Service quality, Customer expectations, Brand, Physical Environment, Price, and Taste of the product. Brand, Service quality, physical environment and promotion are the key determinant of customer satisfaction in the fast food industry.
Nezakati et al (2011), with the changing lifestyle of consumers, more educated people and affluent, people tend to eating-out especially in fast food restaurants. Along with the heavily promote through media and information technology exposure, customers has variety choice of fast food pattern and restaurants. Therefore, local fast foods restaurants have to be sensitive to these changing trends and to be innovative and get prepare to change accordingly to avoid from losing their existing and future potential customers. The aim of this study is to examine how the respondent’s perception will be influenced by factors of customer loyalty towards preferred fast food restaurants. Besides, this study will provide important information for local fast food restaurant business to become more competitive in the current business practices circumstances.
Ubeja , Bedia (2011), with the help of factor analysis we have found new factors are Product conscious-ness, comfort with entertainment seeker, Extra Service Conscious, Store and Hygiene consciousness, Price consciousness, Billing Flexibility & Facility, Sales People Consciousness, and Con- fused by Over Choice of Store, Employee Con-sciousness and Taste consciousness. In addition, this study shows that the average customer was very conscious about organized retailing, people are very conscious about extra facilities and services provide by personal selling; they also want hygiene and clean atmosphere.
Makela (2011), a major public health threat in Nordic societies is the increasing rates of overweight. The fast food sector is an important arena to study in order to open up for changes in this trend especially among children and the young. The aim of the project Nordic Young health: possibilities and barriers for new, healthy concepts in the fast food sector were to produce new knowledge on the personal, socio-economic and structural determinants influencing young people’s fast food practices and preferences. New knowledge was gathered through surveys in four Nordic countries and qualitative fieldwork in two Nordic countries. Furthermore, young people’s attitudes towards products on the current fast food market were investigated and translated into innovative concepts through the testing of an improved menu. Attention was paid to dissemination of results as an integral part of the project. Similar barriers for healthy eating were revealed by the studies: only few healthy options were found, healthy options we are too expensive for young people, some choice was found in city centers, but hardly any in the outskirts. Suggestions for how to increase the consumption of healthy fast foods included, that it should be made the standard and not something special you have to ask for. Furthermore, healthy fast food should taste good and be reasonably priced. In particular, young people hoped for fast food with less fat or that is less processed, with more fruit, vegetables and wholegrain.
Lim (2010), Customers ultimate satisfaction may have significant affect of atmosphere. Physical surroundings are helpful to create image in the mind of customer and to influence their behavior. Physical atmosphere of the restaurants have the significant impacts on the customers satisfaction. Lightning, furnishing, sent, music and different other atmospheric factors among them influence on customer satisfaction.
Zyl et al (2010), A In the current study, the top five fast foods consumed by the participants, in descending order, were burgers, pizza, fried chicken, fries and grilled chicken. These findings coincide with findings globally, with the exception of fried chicken, which has been shown to be a popular item of choice in the South African population. The most popular food items consumed by adolescents and young adults in New Delhi were pizza, burgers, ice cream, French fries and sandwiches. There were similar findings in an American study, with Mexican food also being a popular choice. The finding that fries (potato chips) were not often chosen by individuals in the current study may be due to the participants in this group not viewing fries as a separate entity when buying fast foods. Fast food items like burgers or fried chicken are often served as part of a value meal or a so-called ‘combo’ meal, and therefore the participants might not have selected it as a separate option.
Cabral (2010), this study assisted not only the technological world but also the psychological world. The younger generations are changing how society communicates on a variety of levels. Assessing addictions that are not necessarily common knowledge develops a basis for the future. The brains of the younger generations are growing and developing differently from those above them, and because of this more research should be conducted on how specific aspects of the technological world will continue to alter human development. The researcher hopes that this study will lead more people to study and assess the power of social media and its ability to change the world in various ways.
Goyal, Singh (2007), Results indicate that the young Indian consumer has passion for visiting fast food outlets for fun and change but home food is their first choice. They feel homemade food is much better than food served at fast food outlets. They have the highest value for taste and quality (nutritional values) followed by ambience and hygiene. Three dimensions (service and delivery dimension, product dimension, and quality dimension) of fast food outlets’ attributes are identified based on factor analysis results. The two fast food outlets’ rating differs significantly on the seven attributes. McDonald’s scores are higher on all attributes except “variety”. Further, consumers feel that fast food outlets must provide additional information on nutritional values and hygiene conditions inside kitchen.
Stevenson et al (2007), the final barrier to healthy eating discerned in the data concerns how young people actually understand the concept of ‘healthy eating’ itself and can be seen to follow from the preceding themes. Healthy eating was mainly mentioned within the context of sensible weight control and was predominantly viewed as a quick-?x solution to the problem of obesity, rather than a long term health strategy. While adolescents were aware of the long-term consequences of obesity, such as diabetes and cardiovascular disease, these consequences were linked to pathological obesity itself rather than unhealthy eating behavior.
Rachagan (2004), one of most effective strategies is to offer free toys with its children’s meals. McDonald’s has been surprisingly successful at this despite being heavily criticized for homogenizing tastes across the world. Usually in Asia about a third of the menu is made up of dishes you won’t find anywhere else like the Prosperity Burger in Malaysia during Chinese New Year or Pizza McPuffs in India.
Zairi (2000), the feeling of pleasure and expectation fulfillment is known as Satisfaction. If the product will not satisfied customer feelings they will be dissatisfied, and if product satisfied them after the use customer will be satisfied and become loyal to that product or brand. In other words customer satisfaction is goods or services which fulfill the customer expectation in terms of quality and service for which he paid. If Customer satisfaction develops they will become loyal to that product or brand and their loyalty will be good for the company in sense as a Profit. Customer satisfaction is the part of marketing and play important role in the market. In any organization satisfaction of customer is more important, because if your customer is satisfied with your services or products, your position will be good in the market.
· To learn consumer preference and perception about restaurant services.
· To know the awareness of peoples about restaurant services in Ludhiana.
· To know the trend about eating at restaurants among peoples.
· To analyze various factors affecting the behavior of the customers towards positive and negative words of mouth.
· To compare the perception of the consumers for the same brand
Every project work is based on certain methodology, which is a way to systematically solve the problem or attain its objectives. It is a very important guideline and lead to completion of any project work through observation, data collection and data analysis.
According to Clifford Woody,
“Research Methodology comprises of defining & redefining problems, collecting, organizing &evaluating data, making deductions &researching to conclusions.”
A research design is a framework or blueprint for conducting the marketing research project. It specifies the details of the procedures necessary for obtaining the information needed to structure and/or solve marketing research problem.
Descriptive research includes surveys and fact finding enquiries of different kinds. Descriptive research helps in knowing about Satisfaction of Consumers towards Fast-food Chains.
Sources of Data:
Data, facts, figures, other relevant material of past and present and surveying are the basis for study and analysis. Without an analysis of factual data no specific inferences can be drawn on the questions under study. Inferences based on imagination or guesses cannot provide correct answer to research questions. The relevance adequacy and reliability of data determine the quality of the findings of a study. For the purpose of the present study, data from two sources has been collected, namely primary data and secondary data.
Primary data is source from which the researcher collects the data. It is a firsthand data, which is used directly for the analysis purposes. Primary data always gives the researcher a fairer picture. In the present study primary data has been collected using questionnaires. For the purpose of collecting the same, 263 respondents have been selected. In this study, primary data plays a vital role for analysis, interpretation, conclusion and suggestions.
Secondary data is data which is collected and compiled for other purposes. Secondary data also plays a key factor in providing more information which will influence the analysis. Few of the main sources of secondary data include newspapers, business journals, magazines, internet and company reports, etc.
· Close-ended: These types of questions do not allow the respondent to give answers freely. If question is closed ended then it is in the form of ‘Yes’ or ‘No’
· Open-ended: These types of questions allow the respondent to give answers freely. If question is open ended then, likert scale (five point scale) representing strongly disagree, disagree, neutral, agree and strongly agree is there.
Data Analysis Technique
Analysis of data is done through quantitative method that is numerical figure.
Statistical Tools Used
Percentage Method: Percentage refers to a special kind of ratio in making comparison between two or more data and to describe relationships.
Number of Respondents
Percentage of Respondents = ——————————— X 100
The main statistical tools used for analyses of data in this project are:
· Pie Charts
The aggregate of all the units pertaining to a study is called the population. Population is the largest group to be studied. It’s the total collection of elements about which we wish to make inferences. The populations for this research are the people residing in Ludhiana City and visit fast food chain.
The part of the population is known as sample. The process of drawing a sample from a large population is called sampling. In this research convenient sampling technique is used to draw sample from population.
The sample size for the survey is 100.
One of the units into which an aggregate is divided or regarded as divided for the purpose of sampling, each unit being regarded as individual and indivisible when the selection is made. The definition of unit may be made on some natural basis for example households, persons, units of product and etc. Hence, in the study the sample unit is ‘Respondent from Ludhiana who is consumer of any fast-food chains’.
Limitations of the Study:
The limitations of the study are as follows:
Many consumers do not give the exact picture of their opinion.
The time period for conducting the survey is inadequate as the sample size covers Ludhiana city.
The opinion of the consumer depends on the geographical location of the chains this may include the service of the provider.
Since most of the consumers are teenagers it fails to give a general view of other age groups.