According to Wyckoff and Sasser (1978, as cited in Reynolds & Dipietro, n.d.) chain restaurant defined as two or more eating establishments at separate locations under common ownership or related through other legal entities which provide food for consumption on or off premises. While foodservice by contract management is a part of the non-commercial or institutional segment of the foodservice sector (Haywood & Wilson, 2003). It is a business between owners of establishment and a management company that hired for coordinating and overseeing a contract of operation.
The similarities of the managing chain restaurant and foodservice by contract is both of the operations system have a contract. The chain restaurant has a contract between franchisor and franchisee. For example, restaurant franchise such as McDonalds that have many chain over the world. The foodservice management also has a contract between owners and management company. For example, a hospital in Malaysia such as Hospital Universiti Kubang Kerian (HUKM) hired BESTA as their management company to run their foodservice operation.
There are many different between chain restaurant and foodservice management contract. First different is the management of the operation itself. The chain restaurant manages their establishment by following their restaurant owner leveraging brand recognition. They must follow the standardized business methods and practices exactly as their owner. However, the foodservice management contract did not have specific business methods that same to the owner. They only need to meet owner obligations in order to deliver the objectives required from the contract.
Other than that, the different of both operations will see in owner’s contribution in the operation. The chain restaurant has more contribution of the owner in operation. This is because to ensure that the same identifiable physical attributes and service offerings. The chain operation also need follow the owner standards in product and service that provided to the customer. However, foodservice management contract has less contribution of the owner in the operation parts. The owner only aware about the objectives of the operation must achieved which is building good relationship between customer and provider.
The chain restaurant organization have the advantage of economies of scale regarding material and supplies, with vast market reach generated by brand recognition allowing for quick penetration into new markets (Muller & Woods, 1994). It also increase in customer preference and patronage, higher emotional ties to the brand, trusty and loyalty. But, for foodservice management contract has different benefit which is streamlined operations such as improvement in business process efficiency with automated workflow. Owner of the operation will get benefits from the management contract which is better performance management and risk mitigation. The management contract also will get benefit which is management fees that owner pay for them.
The last difference between both operations is the advantages of the operation. The disadvantage of chain restaurant are operating a chain restaurant can be more stressful, need a time to recover when particular chain restaurant experience negative publicity and the cost of a chain restaurant is expensive than set up our own business. However, the disadvantages of foodservice management contract are inadequate resources may occur, lack of experience in dealing with customer if false in hiring management company and failure to monitor and manage retained risks will lead to owner loss and bad image of organization.
Haywood, K. M. & Wilson, G. (2003). Chapter 3 – Contract Foodservice. Retrieved from http://www.download-it.org/
Reynolds, D. & Dipietro, R. B. (n.d.). Chain restaurant management. Retrived from http://webpac.lib.tku.edu.tw/lib/item