Applebee's Acquisition Of The IHOP Corp.

The fast food industry has played a role in America’s economy. Fast food restaurants are the leaders in so many different things. They lead in marketing and jobs employed. “The tremendous success of the fast food industry has encouraged other

1. Franchisees gain numerous advantage when they purchase a franchise. First, while a franchisee may be opening a new store, it is part of an already established business and system. This means a franchisee has access to turnkey operations, allowing an increased speed to establishing and growing the business. Franchisees also get support for management and training activities, as well as financial assistance. Going hand in hand with this, a franchise already has an established brand name, quality of goods and service which have been standardized across the franchisor’s larger company, and national advertising programs from franchisors. Franchises also have large-volume, centralized buying power. A franchise has proven products, and

* Interest rates – An increase in interest rates in the USA would result in plans for investment and expansion being deterred by the Starbucks resulting in decreased productivity of the company. Furthermore, increased expenses for the consumers such as rising mortgage repayments would result in decreased availability of income to spend on luxurious products such as coffee. Low interest rates should have the

Although the restaurant industry is perceived to have high risk of failure, the risk of a restaurant failing is not too different from other small businesses. Parsa et al. quantified the risk of failure at 26% in the first year and 57% by year 3. He also described several factors that can influence the risk of failure. Those include physical location, firm size, speed of growth, differentiation from other restaurants in the market, adapting to external trends, and management experience. In terms of location and differentiation, Paul’s bar will be located in a new development designed to attract affluent customers and with very few competitors. Paul’s small firm size increases risk because of barriers to attract partners (i.e. suppliers and bankers are prejudiced against smaller firms) and growth that may be too rapid to manage. On the other hand, Robert already has experience in the restaurant business and should know how to run the bar and subsequent restaurant. Their choice of a piano bar may be in response to local trends that favor success.

The reasons for these acquisitions are varied and include taking over poorly performing restaurants to protect the company’s brand name and to preserver the value of the local market. Reacquisitions also take place for strategic cash flow management purposes whereby investing current free cash flows in the reacquisition yields the expectation of replacing franchise royalties with the larger profits from the restaurants themselves. Company almost always pays some premium related to the contractual element of the franchise right that is capitalized as an intangible asset. However, it must be noted that the classification and nature of the intangible asset varies substantially.

Reflection: The interesting part of this PEST analysis is that it shown me how the restaurant business is a win situation for the economy, workforce and the technology sectors. It is able to be innovators in the health of people and the influence of having laws signed into legislation. Just as myself, I started washing dishes in a nursing home and because of the opportunities that was afforded to me, I became a regional district manager of several food

For the macroeconomic regressions that were ran to forecast the sales growth for the proforma data, it was very difficult to find variables that had a large effect on the quarterly sales growth of Red Robin. This could be attributed that the majority of the potential risks addressed in the 2014 10-K are unpredictable and uncontrollable. This elucidates that it is very difficult to predict the future of the restaurant industry as a whole, because the majority of restaurant companies are affected by changes in the economy.

The restaurant industry is said to be one of the oldest industries in the economy. As the economy and urbanization grow, so too does the industry of restaurants; it’s for this reason that the industry has been growing at a rapid pace. Even with the restaurant industry ebbing and flowing, there are still new entities entering the fray consistently. Some restaurants may close, but it will not be too long before a new restaurant opens in the place of the old one. Historically, the restaurant industry has contributed nearly 4 percent to the gross domestic product (GDP) of the United States (U.S.) economy. The most recent findings show that the restaurant industry employs more than 12.7 million people (which is approximately equal to 9 percent of the

The entrepreneur that I interviewed was Lydia Patterson. In 1989, Lydia and her husband, Lou, decided to start planning to open up a new Italian restaurant in Virginia. The restaurant industry, especially in the Washington DC area is very competitive. It is highly competitive with respect to price, value and promotions, service, location, and food quality.  There are a substantial number of restaurant operations that compete for customer traffic, some of which have significantly greater resources to aggressively market to consumers, which could result in losing market share.  Consumers are highly focused on value and if other restaurants are able to promote and deliver a higher degree of value, guest traffic levels

* Different owners/franchisers implemented own restaurant management systems * No standards = hard for corporate to analyze sales * Processes broken & communication worse * Different experiences at different Hard Rock Cafés, any bad experience from one might mean losing potential return customer

The company that I am writing about is Starbucks, the international coffee shop chain. The company's financial statements for this analysis are from the FY2011 Annual Report and 10-K. The company has 10787 stores in the United States, of which 38% are franchised and the remainder are company-owned. The franchise model is more common when the company operates internationally. There are 6216 Starbucks stores internationally and of these 63% are franchises, with just 37% company-owned. The franchise model for international expansion has been utilized to help Starbucks expand quickly in foreign countries and to mitigate foreign political risk and to ensure that the product/service offering is tailored to local tastes (Thompson, 2012). The company is now in the process of buying back some overseas franchise stores in order to retain more profits for itself (Franchise Press, 2011). This paper will take a look at the company's most recent annual report to analyze the financial statements.

External influences: When looking at the external factors that can impact my bar there are many, in the food and beverage industry it is highly competitive market. Price is a major factor you have to be able to produce high quality food and beverages to your guest at reasonable prices. The cost of food and beverages is always fluctuating you have to adjust for this, which may include searching out new vendors and may include adjusting our menu. The economy can be a factor, if our economy slows down and people start losing their jobs you as a business owner will feel the effects. If this were to be something that happens I would have to let, go of some of my staff. A factor that fits in with economy is sports, in BC. Restaurants highly depend

Franchisors are increasingly having to be more and more selective in the adoption of franchisees with factors such as economic climate and the potential difficulty with growth playing key factors in the decision making process. It is not simply an ability to grow which creates a successful Franchise and nor is it the desire of any franchisor to adopt every potential franchisee. Franchisors are becoming more and more scrutinising as the global economy declines. There is a general understanding within any franchised

• Risk of new entry by potential competitors: the risk is very high in the restaurant industry because of the low capital investments required to enter. Outback Steakhouse competes not only with the casual diners but as well as with fast food chains, and even supper markets. Many of the high-end grocery stores offer variety of complete meals. It costs the customer absolutely nothing to switch to a different restaurant; therefore companies in this industry cannot depend on locking in the customers. However, by establishing a brand loyalty customers will return. Established restaurants such as Outback Steakhouse have an advantage with the economies of scale in advertising and purchasing.

The paper presents an analysis of the different factors influencing the restaurant industry and how these factors increase or decrease the demand for such services. The hypothesis that will be examined is that the performance of restaurants is mostly based on the type of food chosen by customers when they decide to go out for dinner, lunch, breakfast, or simply for a snack. What type of food refers mainly the nationality or concept of the food, (traditional American, Italian, Indian, Latin, or from any other type of culture). This factor is important because when customers go out to for dinner; they decide what to eat before deciding where to eat. That is why this factor is considerably important according to the hypothesis.