Restaurant Business and Marketing Plans | Lecture notes Food Science and Technology

Chapter 5 Notes: Restaurant Business and Marketing Plans

Choice of Entity Affects:

Federal income taxes

Liability to creditors and other persons

Legal and/or personal relationships among owners

Legal life and/or transferal of the business entity

Sole Proprietorship

Simplest and most prevalent

Restaurant owner does not draw a salary for federal income tax purposes

Proprietor is not an employee, income is subject to self-employment tax

Advantages: simple and reasonable salary, funds can be withdrawn without tax consequences,

and business can be discontinued or sold with minimal tax consequences

Disadvantages: owner cannot participate in qualified pension and/or profit-sharing plans, owner

is liable for everything, and no legal existence

Partnership

Any venture where two or more persons endeavor to make a profit

General partnerships: complete liability but full management rights

Limited partnership: share limited liability with no services performed

Advantages: flexible, no double taxation, and choice of limited or general partnership

Disadvantages: some problems of legal liability, partner may create debts for the partnership,

difficult to divide assets if business fails, and partners always see the other as at fault

Corporation

Legal entity similar to a person

Can borrow, buy, conduct business, and must pay state and federal taxes on profit

Advantages: limited liability, ease of availability and affordability of insurance through group

plans, corporate fringe benefits, can sell and distribute stock, and investor friendly

Disadvantages: double taxation, usually requires legal and accounting advise, and can lose

control if too much stock is distributed

S Corporation

Permits business entity to operate as a corporation

oAllowed to avoid paying corporation taxes

oAvoids a double tax upon liquidation

Provides tax advantages for dependent children or parents

Benefits over 2% of annual salary cannot be deducted

Buy-Sell Agreement

Preserves continuity of ownership in the business upon sale

Made up of several legal clauses that control business decisions

State Registration

Plans to open a new business should be discussed with the secretary of state’s office

Fees run about $100 for registering a new business

Most states have income tax on wages; cities require permit to operate a business

State Department of Employee Compensation must be contacted

Sales Tax

New business is registered with the state revenue

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Chapter 5 Notes: Restaurant Business and Marketing Plans Choice of Entity Affects:  Federal income taxes  Liability to creditors and other persons  Legal and/or personal relationships among owners  Legal life and/or transferal of the business entity Sole Proprietorship  Simplest and most prevalent  Restaurant owner does not draw a salary for federal income tax purposes  Proprietor is not an employee, income is subject to self-employment tax  Advantages: simple and reasonable salary, funds can be withdrawn without tax consequences, and business can be discontinued or sold with minimal tax consequences  Disadvantages: owner cannot participate in qualified pension and/or profit-sharing plans, owner is liable for everything, and no legal existence Partnership  Any venture where two or more persons endeavor to make a profit  General partnerships: complete liability but full management rights  Limited partnership: share limited liability with no services performed  Advantages: flexible, no double taxation, and choice of limited or general partnership  Disadvantages: some problems of legal liability, partner may create debts for the partnership, difficult to divide assets if business fails, and partners always see the other as at fault Corporation  Legal entity similar to a person  Can borrow, buy, conduct business, and must pay state and federal taxes on profit  Advantages: limited liability, ease of availability and affordability of insurance through group plans, corporate fringe benefits, can sell and distribute stock, and investor friendly  Disadvantages: double taxation, usually requires legal and accounting advise, and can lose control if too much stock is distributed S Corporation  Permits business entity to operate as a corporation o Allowed to avoid paying corporation taxes o Avoids a double tax upon liquidation  Provides tax advantages for dependent children or parents  Benefits over 2% of annual salary cannot be deducted Buy-Sell Agreement  Preserves continuity of ownership in the business upon sale  Made up of several legal clauses that control business decisions State Registration  Plans to open a new business should be discussed with the secretary of state’s office  Fees run about $100 for registering a new business  Most states have income tax on wages; cities require permit to operate a business  State Department of Employee Compensation must be contacted Sales Tax  New business is registered with the state revenue

 Most states require an advanced deposit or bond PPACQ  The Patient Protection and Affordable Health Care Act, and Other Regulations Business Plan  Assist in obtaining financing, communicate to potential investors, and define operational purposes  Key ingredient: sustainability  Elements: cover sheet, description of business, description of concept and lease, market analysis and strategy, competitive analysis, pricing strategy, advertising and promotional campaign, other information, financial data, existing restaurant balance sheet, and appendices  Mission statements generally do not change Marketing Philosophy  Fairness, honesty, and moral conduct  Finding out what guests want and providing it at a fair price Marketing  Broad concept  Includes sales and marketing  Determines who will patronize the restaurant  Ongoing effort  Gets into psyche of present and potential patrons  About solving guest problems Sales  Part of marketing  Focuses on seller needs  Activities that stimulate the patron to want what the restaurant offers  Sales mentality exists  Related to advertising, promotion, and public relations Marketing Plans  Must have realistic goals while leaving a reasonable profit margin  Guest satisfaction, market share, sales, and costs SWOT Analysis  Strengths, weaknesses, opportunities, and threats  Strengths and weaknesses: internal factors  Opportunities and threats: external factors Market Assessment  Analyzes community, potential guests, and competition Demand Factors  Population in the catchment area; demographic split of this population Segments  Geographic  Demographic

Social Media  Potential for attracting customers  Twitter, Facebook, Pinterest, Tumblr, Instagram Travel Guides  Mobil Travel guides  AAA Tour Book pages Free Advertising  Yellow Pages Advertising  Local telephone director  Mailing lists  Develop guest loyalty and increase sales by regular mailings

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