Sales of sandwiches represented 42.15% of the estimated $370.72 billion in revenue generated in 1999 by the food service industry. Besides sandwich sales, the food service marketing mix leading into January 2000 was:

Sandwich 42.15%
Contract Feeding 11.53%
Dinner House 9.83%
Pizza 8.84%
Family Restaurant 7.22%
Chicken 5.95%
Hotel 4.41%
Coffee shops, Theme Park Buffet 3.69%
Snack Bars 2.33%
Grill Buffet 2.18%
Fish 1.00%
Convenience store .87%

The nation's most profitable independent restaurants as noted by Restaurants and Institutions are:

It should be noted that Tavern on the Green, the nation's most profitable independent restaurant, was under the direct supervision for several years by the late Patrick Clark, the restaurant's first African-American executive chef, who died in February of 1998.

The Industry has numerous eating establishments opening yearly, each entrepreneur seeking to convince the public or target market that his/her new concept is unique. Despite high business failure rates, some new concepts look like winners and "catch on as what's in." This is mainly due to creativity, sound marketing, feasibility studies, and luck. This author has had the opportunity to dine at a few of the "hot concepts" winners as cited by Nation's Restaurant News and agrees they are unique.

As noted in the hospitality industry report for this magazine last year, theme restaurants by and large are "dead" and "high risk" for investors. Planet Hollywood filed for bankruptcy in August 1999 and the Fashion Café closed its doors in January, 1999, as did The Motown Café, also located in midtown Manhattan, in May, 1999. Some of the problems contributing to the lack of profitability of theme restaurants are:

1. Exorbitant rents (rumored to exceed $75,000 a month for the Motown Café).
2. Union scale wages to the entertainers/staff.
3. Employee theft.
4. Stagnant menu. A cycle menu is necessary in theme restaurants to keep the public's interest.
5. Inflated prices.
6. Most customers are one-time visitors; lack of repeat customers.

In 1997, the Motown Café opened a restaurant in Las Vegas that is still afloat and more recently opened a facility in Orlando, Florida, at Universal Studios' Island of Adventure. Plans for a Tokyo restaurant are in the making. The Tokyo Motown Café should be successful due to the large following of the Motown aura and mystique among the Japanese. Theme restaurants are basically built on today's crazes. "Wrestle mania" is "in," so a wrestling- theme restaurant is scheduled to open in Manhattan. It is hard to conceive that a chain of these restaurants nationwide will be around in 2005. To reiterate, do not invest in theme restaurants unless you are financially sound and have the patience to wait a substantial period of time for a return on your initial investment.

Due to the economic problems in Asia, as well as political unrest in Eastern Europe, India and Pakistan, caution is the key word for many chain restaurants as they seek to expand globally.

Asia once viewed as the most dynamic market for industry expansion, saw its once powerful economy collapse several years ago. Since the 1997 depression, European and American chains have either postponed or sharply curtailed their expansion in the Pacific Rim. However, there are some analysts who assert Asia is recovering, and it would be fiscally wise to take advantage of the depressed real estate markets. Prior to the depression, Asian real estate costs often would consume 15-20% of a restaurant's gross income. Comparatively, in key American markets, such as San Francisco, New York City and Boston rents usually do not exceed 4% or 5% of gross revenue. The second rationale analysts are suggesting is that companies may wish to re-invest in Asia, particularly Japan, in that the average Japanese citizen spends nearly $1,500 per year "dining out" or about $700 more than the average American. The third factor for reinvestment in Asia is the currency exchange rates have become stable and that the worst of the regions fiscal problems have been settled.

Canada, Latin America and the Caribbean have replaced Asia as the "Hot Markets" for expansion. Chains such as Wendy’s International and Outback Steakhouse plan to expand in the areas cited above. Latin America will account for about 50% of the international chains Wendy’s will likely open this decade. Outback is projecting to double its half dozen existing stores in the Latin America and Caribbean area within 18-24 months. Tricon Global Restaurants, Inc., the parent company of Pizza Hut, KFC and Taco Bell, plans to open 800 new international stores by the years end. Subway Restaurant currently has 750 stores in 70 foreign nations including four in China and projects 1,000 foreign units to be open by early 2001. The premier giant of the chain restaurant industry, McDonald's, anticipates opening 15 restaurants in the Ukraine and expects to have 85 restaurants in the area by 2005. Overall, the industry is slowing its expansion internationally and focusing on positive markets which possess economic and political stability.

The Black Culinarian Alliance (BCA), founded in 1993, "is a national, non-profit, educational and networking organization devoted to the enhancement of professional opportunities for minorities within the hospitality industry," according to board members Chef Alex Askew, co-founder of the organization, and Rochelle Brown, producer of "Emeril Live." They further asserted, "The BCA’s mission is to increase awareness, exposure and education of minorities by sponsoring hospitality scholarships, seminars, culinary training and creating media events." The organization is equally committed to establishing a strategic alliance with the Latino community and with Latino hospitality professionals."

The lodging industry expects continued growth in this century. Pursuant to PricewaterhouseCoopers' statistics, the 1999 lodging industry profits were estimated to rise 14%. The firm noted that this increase marks the sixth consecutive year of profitability wherein the trends expect to continue until next year.

 

RECORD PROFITABILITY Following is the actual and forecasted aggregate hotel industry profits:
1997		$17.3 billion
1998		$18.9 billion
1999		$20.1 billion
2000		$21.2 billion
2001		$22.3 billion
Source: PricewaterhouseCoopers

Industry leaders assert revenue derived from business travel will remain docile; however, due to the strong economy at the close of the last century, the new millennium will see leisure travel revenue continue to be strong. Travel industry analysts predicted a 4% increase in 1999. There was an increase in travel to the United States and a decrease in travel to Europe, partially due to the instability in Central Europe, particularly Kosovo. It should be noted that the overall occupancy rate was projected to fall from 63.9 in 1998 to 63.5 in 1999. However, the average room rates projected to increase from $78.62 in 1998 to $81.61 in 1999, actually had risen to $84.87, according to Smith Travel research consultants.

Once known as "quick, get rich" pyramid schemes/scams for unsuspecting travelers and investors, government regulators and industry officials have "professionalized and polished" the once-tarnished name of timeshares. The timeshare market reached record sales in1999. The American Resort Development Association, which monitors the timeshare industry, noted that annual worldwide timeshare revenue exceeded six billion dollars. Timeshare development projects have grown 24% worldwide since 1994. United States timeshare sales have increased 72% during the same time period.

Theme Parks

Theme parks are not opened for fun; they are opened for profits--big profits. Attendance in 1998 at America's 50 most successful theme parks was over 165 million people, with estimated revenues of 8 billion dollars just on admission tickets, not including food, merchandise, etc. If attendance from smaller parks is included, the number exceeds 270 million people or the entire population of the United States. It is predicted theme park attendance will increase 10% by 2010. There was a small decline in attendance in 1998 due to the forces of nature--El Nino in California and the major brush fires in Florida adjacent to I-95, the major highway to the Disney World Resort, coupled with the economic problems in Asia and Canada which curtailed international visitation. As noted above, theme parks grossed an estimated 8 billion dollars in admission fees. The average admission fee is about $34 per person and at major parks such as Walt Disney World, the price exceeded $45. The $50 one-day admission ticket is in the not too distant future. In addition, patrons will consume an average of three meals a day at these parks. Revenue from food and beverage sales for each guest averages $20.

Employment Opportunities -- Salaries and Diversity

Three years ago, the NAACP issued the controversial "report card" on the lodging/hospitality industry's failure to hire and promote women and minorities. This is coupled with the fact that several lawsuits were filed against large chains such as Cracker Barrel, Denny's, Shoney's, Motel 6 and Pizza Hut for employment and accommodation discrimination. Ernestine Green, chairperson of the Statler Foundation, notes: "As the industry enters the new millennium, many of the employment barriers that were once prevalent during the last century, no longer exist. However, it is up to the next generation of hospitality workers to enjoin the possible resurgence of those barriers. This can be achieved if the prospective minority and non-minority employee adhere to the following tasks:"

1. Be dedicated to the profession.
2. Adhere to training procedures.
3. Establish positive work objectives.
4. Maintain a positive attitude toward one’s job.
5. Develop and reinforce the skills necessary to maintain suitable employment for all employees.
6. And most important, be a "people person."

In light of the above and the strong economy, corporations have actively recruited women and minorities for decision-making positions within their corporate structure

1994

Caucasian 71. %
Hispanic American 13.1%
African American 11.4%                  29% minorities
Asian American 4.5%

2000

Caucasian 68.5%
Hispanic American 14.4%
African American 11.6%                 31.5% minorities
Asian American 5.5%

2005

Caucasian 66.5%
Hispanic American 15.5%
African American 11.7%                33.5% minorities
Asian American 6.3%

The National Restaurant Association projected that in the 10-year period covering 1996-2006, the demand for management employees would increase by 35% or an additional 515,000 management-level personnel. In order to fill the need, major corporations are actively recruiting at Historically Black Colleges and Universities which have hospitality-related degree programs. According to Professor Gloria Tate, former coordinator of Hospitality at Morris Brown College in Atlanta, Georgia, "The recent surge in the economy has meant numerous employment opportunities for African Americans, both male and female, in the hospitality industry."

Associate Dean Donald Bishop at Cornell University's, School of Hotel Administration, Ithaca, New York, considered to be the world's premier academic institution for hospitality, asserts the previous year’s class received an "average of three job offers." Half of the student body accepted positions in hotels and resorts, the other half accepted positions with food service firms." One third of the class accepted employment in the areas of consulting, finance, and investment banking with brokerage firms that had hospitality divisions.

The average undergraduate starting salary for the 1999 Cornell hospitality graduates was $34,500 with a $2,500 signing bonus or a $37,000 package. One Cornell undergraduate demanded and received a $70,000 starting salary plus a signing bonus! Starting salaries nationwide for males and females were equal. Dean Bishop notes a number of major corporations, such as Marriott and Hyatt, are actively recruiting "protected class/minority" graduates to eventually move into corporate management. He emphasizes the prospective graduate who has aspirations of upper management should have a strong background in finance, real estate, and accounting.

As noted, the late 1990s finally saw female and male graduates receiving equal starting salaries. However, this was not always the case. "Female executives’ salaries," a phrase almost unheard of prior to 1980, still lagged behind male executives’ salaries. According to Working Woman, females armed with a college degree earned approximately $4,708 a year more than men who only possessed a high school diploma.

Betsy Brown, president of Hospitality International, in a recent interview for Hotel and Motel Management, noted a number of female employees were finally receiving recognition for their contributions to the lodging industry. Associate Dean Donald Bishop, of Cornell University’s School of Hotel Administration, notes 51% of the schools student population is female. Brown University has an undergraduate population that is 54% female. This follows a nationwide pattern wherein females are exceeding males on campus. As cited above, of the Ivy League schools, only Brown University and the Cornell University School of Hotel Administration have a female majority. Dartmouth College was the last of the Ivys to go co-ed in 1970. A decade and a half ago, they had a policy which required the student population to be a 3:1 male/female ratio. Men still outnumber females at seven of eight of the elite Ivy League schools in America. In the final analysis, all segments of the hospitality industry are prosperous. Prospective employees are entering a unique profession that anticipates continued growth throughout this decade. It is the responsibility of those who choose this industry to ensure its continued prosperity.

Professor Steven E. Campbell has taught college for the past 15 years and has conducted seminars in hospitality and law-related topics at conferences held throughout the United States and abroad. He currently teaches hospitality and legal study courses at Delaware County Community College in Media, PA.