FAST FOOD OPERATIONS

                   FAST FOOD OPERATIONS

1. Expansion of fast food

Fast food represents the most rapidly growing sector of the food-service industry. While most of the system-based operations were developed in the United States many of the large corporations

have expanded into other countries either directly or by joint investment, licensing or franchising arrangements. In addition, many national com-
panies have set up their own fast-food operations using similar products or based on local foods

In the United States there were over 103,000
fast-food units in 1984, representing 26.4 per cent
of all commercial establishments and these
accounted for 30.7 per cent of all food and
beverage sales In Europe, fast-food development has varied greatly from one country to another depending on chain initiatives and life style. The main pen-etration has been in Great Britain and West Germany which together accounted for over 70 per cent of the total fast-food market in 1984. Fast-food sales in Great Britain were estimated to amount to between £1,800 and £2,200 million in 1984, one third of the total market for meals
outside the home.

2 Features

Fast-food operations are designed around sys-
tems of catering which provide a limited range of
highly standardised products. They rely more ^on

high volume sales and tight control over costs and margins to provide competitive prices. The key

requirements for fast-food systems may be summarised as follows:

Features                 Requirements

Food materials       Consistent, controllable quality,

Precisely specified, equally portioned

Type of products Suitable for quick cooking and retention for short periods without deterioration

Organisation          Highly organised routines with precise job specifications and pro-cedures

Operation               Usually planned for large through-put, high sales volume (including counter sales)

Cost control           Precise portion and cost control permitting relatively small margins and competitive pricing

Quality control      Standard preparation, cooking

and serving routines laid down, including the discarding of sub-
standard (e.g. maximum times for keeping food before serving).

Hygiene                  Exacting requirements emphasis

 as part of product reliability, including measures to reduce litter (in store and neighbourhood)

Packaging          Products distinctively packaged

(disposables), easy to handle
(usually finger held), suitable for
over-the-counter or table meals

Research             Product research and consumer

response testing essential. On-
going research into changing food
preferences and attitudes is
necessary to develop new concepts

Variety                   May be provided in product range

offered or by variations in one basic product (dressings, fillings, supplements)

Markets                  Usually targeted at wide, classless

society, primarily young or family group

Promotion              Emphasis is given to value for

money, consistent quality and
cleanliness. Particular products
may be differentiated by originality,

size, cost competitiveness, variety of choice or fillings, healthy eating, friendly service

3 Products

While many foods could be suitable for syste^m

I

States) or sushi (Japan) - and t^{here has been} based production, fast-food chains ^{usually con-}

centrate on products with universa l appeal s^uch
as hamburgers, chicken, pizza ^{and ice cream.}
National products are also promin^{ent - fish and}
chips in Great Britain, Mexican ^{tacos (United}

^a
growth in the popularity of ethnic ^{food (Chinese,} Indian, Turkish, etc).

Alternative products are constantly be ing re-
searched both in terms of market attractio^{n and} production needs. Many fast-food operators ^have extended their standard range to offer wid^er

variety in choice and to meet changing dem^ands, for example:

--   hamburger, chicken and fishburger options,
—   salad bars, baked potato counters,  health
foods,

—   alternative menus (for breakfast, at week-
ends),

—   national variations (such as German wOrst, Italian pasta, Danish smbresbrod. French crois-
santerie).

Decisions on the type of products are critical in deciding equipment to buy and operating require-
ments - see 1.05

Packaging provides a distinctive merchandis-
ing as well as functional role and a company's
style appears in napkins, containers and packs.
Containers for hot food may be of coated card or

Criteria                             Examples

paper, lamin^{, moulded plastics or alu}minium
foil. Tablewa re suitable for the oven has been

developed f^{or particular foods.}

2.04 Locatio^{n of premises}

Prime high street ^{locations are generally} necess-
ary for the large ^{company-owned units} generating high volume cou^{nter sales. Competit}ion for high street sites from o^{ther operators as we}ll as from retail stores is often intense and both capital

investment and rental charges are high.

The feasibility of city centre development de-
pends on large volume sales with extended

periods of use, typically over a fifteen hour day, seven days a week. Off-high street and urban traffic route locations are preferred by some chains to reduce rental charges and assist

franchise investment and operation.

In the initial stages of development or expan-
sion into a new region, units tend to be company owned in order to establish standards and

marketing information. Investment may also be channelled first into selected areas such as

capital cities, in order to concentrate media
coverage and establish a suitable image. Site
selection depends on the type and scale of

operation but invariably the following criteria are relevant:

Market catchment

Pedestrians
Vehicular traffic
Sales forecasts

Size of units

Average customer spend

Population and socio-economic structure of area. Local attractions for shopping,
work, leisure, tourism

Pavement flows of at least 500 persons/hr may be stipulated Parking facilities, garages, shops and activities in vicinity

Sales ouputs vary widely, depending on location and type of products. Take-away
sales are necessary to achieve high volumes

Location                                                                               Examples: sales/week

Large high street units (with daily variations from 750-3,000

sales)                                                                                       10-15,000/week

Large town centre units                                                            5-8,000/week

Smaller units                                                                        1,500-2,000/week

The largest company owned units in prime locations may have sales of 30,000/week
or more.

Sizes of units depend on the type of service and produ^cts:

Type of franchised units                                                    Average sizes

Large counter and table service                                           325-465 m2

(3,500-5,000 ft2)

Small counter service units                                                    95-140 m2

(1,000-1,500 ft2)

For typical hamburger style units(a), ^{average spend (1984):}

Food                                   Drink £1.00—£1.50   30-35p

2.05 Cost^s

Investment ^{costs for fast-food units are usually} high, for a n^{umber of reasons:}

—  the de^{sign is part of an integrated product,} including det^{ailed specifications of the style of} decor, equip^{ment and uniforms,}

—  wear and ^{tear and obsolescence are high,}

Dispensers           For paper napkins, plastic cutlery,

trays, condiments. Usually built
into counter with additional self-
help points in restaurant area.

Disposable collection points pro-
vided near circulation routes with self-closing lids

Design                 Clean, bright decor emphasised

with practical considerations

giving relativel^{y short life cycles (3}

5 years),                                           (durability, cleaning, function). The

trend is towards natural wood,

—   equipm^{ent is usually specified to meet high}

standards of s^{ophistication with automatic timing}

and control, f^{ast heat recovery and high perform-}

decorative ceramic tiling and
softening with texture (in panels,
seating) using domestic substitute

ance requireme^{nts. Increasingly, computer con}                                                       designs

trols are incorpo^{rated both for production and}

accounting con^trol.

Typical develop^{ment costs (1984 prices) for}
large high street ^{units (325 m2) ranged from}
£300,000 to £500 ,000, with up to £2^{00,000 being}
spent on equipmen^{t, although some of the largest}
company units involv^{ed expenditures up to}
£740,000. The sma ller units (95 m2) typically
required capital invest^{ment of between £50,000}
and £100,000.0) These fig^{ures exclude the costs}
of acquiring property.

2.06 Operational requirements

Most fast-food operators aim for a door time
(entering to leaving) not exceeding 31/2 minutes
with a maximum queueing time of 21/2 minutes,
allowing 1 minute from placement of order to
service.

Typical features

Entrance             Wide, conspicuous. Large stores

may be open to a public thorough-
fare or concourse during service periods (with 'air curtain' con-

ditioning). Information clearly vis-
ible (photographs, signs, logos)

Counter              Set back from entrance with free

circulation/queueing area. Multi-
point service provided in large
stores.

Information displayed over coun-
ter area, (angled).

Counter normally 600 mm (24 in.)
deep.

Space for service: 600-750 mm (24-30 in.) width plus 600 mm (24 in.) for cash register

Serving area        Usually about 1,050 mm (42 in.)

deep to allow easy circulation

Production          Food holding units adjacent to

servery. Production area open to
view. Equipment details specified

Table seating       To one side of main circulation.

May be on upper or lower floor
level

2.07 Equipment

One of the basic concepts of fast-food operations is to be able to use non-professional workers with minimum training. To facilitate this, equipment

must be reliable, giving consistent and uniform cooking performance, rapid heat recovery with high output capacity and automatic control with the minimum of attention. In the larger units

conveyorised cooking equipment is often in-
stalled. For chain operations and franchising,

equipment is usually manufactured to company specifications and suppliers may be nominated as part of the agreement. The type of equipment

required will depend on the food products and
output involved. The following summary outlines

some of the main items used and current develop-
ments in equipment technology.

Equipment           Typical features

Service equipment

Counter dis-      Normally include coffee system,

pensers              milk shakes and carbonated

drinks dispenser (with python lines
from rear storage) ice dispenser
and dispensers for paper cups,

lids and napkins

Electronic cash Micro-computer driven manage-

registers             ment informatioh systems usually

installed providing inventory con-
trol, sales mix analysis, sales per labour hour, etc

Satellite trans-    In chain operations, teleprocess-

fer systems         ing transfer of data to central

computer (usually at night) for
group analysis and feedback

Closed circuit     For store security management

television, etc     control and information. Micro-

phone ordering and recording also used

Cooking equipment

Fryers                 High heat recovery and precise

control n^{ecessary. Usually micro-}
processor co^{ntrolled with self}

monitoring ^{programmes, auto-}
matic basket ^{raising and lowering,}

2.08 Storage and p reparation equipment

Food may be delivered ready portioned and
frozen or chilled, or supplied fresh requiring

Broilers

Pressurised
fryers

(broasters)

Pressurised steamers

Griddles

Special ovens

Soup kettles

Microwave

ovens

automatic inte^{gral oil filtering}
For grilling ha^{mburgers. In larger}
units, convey^{or driven equipment}
installed with spe^{ed and tempera-}
ture adjustment. C^onveyorised
equipment is also use^{d for toast-}
ing buns

For chicken, barbecued rib^{s, fish}
fillets, beef specialities, etc. Pro-
vided with automatic temperature
and pressure controls and saf^ety
devices

May be used for shellfish and
other foods. Usually with free-
venting-pressure option. Pro-

grammed temperature-time con-
trol and steam regulation essential
For shallow frying (hamburgers,

onions, etc). Specifications require high output, uniform surface heat, sensitive thermostatic control,

rapid response and non-stick sur-
faces

For pizzas, etc. Similar require-
ments to allow intensive use with evenly distributed temperature control. Process controlled rotary ovens may be installed

Usually designed for heating and
holding soup ready for service.

Uniform and sensitive temperature control essential

For quiches, pies and prepared
composite foods. Back-bar sited
microwave ovens with automatic
controls may be installed as a

main or supplementary service

preparation on site (for trimming, portioning, dressing or coating the food). Essential require.. ments include:

—   deep freeze and refrigerated stores: usual
with separate compressor systems for noise

reduction and heat recovery,

—   deep sinks and drainers: for washing equi
ment and utensils. Specialised equipment may incorporate self-cleaning water lines,

—   handwashing facilities: for staff, sited ad-
jacent to staff toilets and to the preparation servi
areas.

2.09 Organisation

The job descriptions and titles traditionally used i
food services do not apply in fast-food services.
Employees may be service-till operators, backer
and crew with specific allocated duties. Employ-
ment is usually scheduled to enable shifts to

overlap at peak periods (usually midday) and a
high proportion of part-time staff may be used.

For a typical hamburger-style operation, equiv-
alent full-time employees would be about thirty in
a provincial town, up to fifty in a busy high street
unit.

2.10 Feasibility

Projects may not be considered viable unless the are likely to achieve suitable operating ratios

averaged over the first five years. Two examples are quoted:

Operating ratios     % of total   Notes

revenue

Holding and merchandising equipment

French fry        Specifically designed with heated

dumps             well, perforated scooping insert,

infra red lamps and associated storage. Automatic dispense units may also be used. Products are
rejected after a set time limit

Merchandisers   Combined holding and merchan-

dising equipment which may be
heated or chilled, and provide a

static or rotating (carousel) display

Bains-marie      May be fitted in back counter

equipment for sauces, vegetables,
stews, etc. Indirectly heated and thermostatically controlled

Salad bars

Chilled displays of salads in spe-
cially designed trays fitted with transparent guards

Turnover               100 Food and bever-

age cost                 35

Gross profit            65

Labour costs         20

Overheads               5

Rent and rates       12

Franchise fees

Net profit (before
tax, interest and
depreciation)        20

100

38   Hamburger — 38%
        Pizza, etc, 35%

62

20   Tightly controlle^d.
        Crew rostering e^ssen-

tial.

9   Energy, utilitie^{s, dis-}
      posables, cleanin^g,

10    Relatively hig^{h (prime}

sites), includ^{es insur-}
ance.

8   Depends o^{n agree-.}
      i m ngent, group a^dverbs-

15   Typical ra^nge

2.11 Fra^{nchising agreements}, based on 1984 figures,

Typical agprovide few r the follo^wing:

Starting up ^fran-chise fee

Annual franch ise
fee

Franchise period

Varies from 22,000 to £10,000, depending on the services and
capital costs involved

Usually provides for a 4-5 per
cent royalty and 3 per cent adver-
tisement fee. In some cases fees
may be covered by a mark-up on
products

Specified by agreement. In some cases ten years (renewable) is
stipulated

Most franchisers estimate the potential profita-
bility per annum (before interest, tax and depre-
ciation) to be in the range of 15-20 per cent.(2)

2.12 Trends in fast-food development

Fast-food operators are constantly looking to-
wards innovative designs, new products and diversified outlets.

Products are increasingly being targeted to-
wards adult and health-conscious markets by featuring side salad, fresh orange juice, whole-
meal buns and low-fat products.

Diversification is being achieved by agree-

ments with breweries, retail stores and other

establishments for joint development of fast-food chains, thus obviating one of the difficulties of site acquisition.

New designs include the introduction of mini-
bar units to reduce franchise capital investment and allow the siting of units in shopping con-
courses, malls and places of work