Restaurants and Fast Food

A restaurant lives on prime cost, food plus labour, which usually runs 60 to 65 percent of sales against rent and equipment that do not move with traffic, so small swings in covers decide the profit. Chains grow by franchising, where the parent takes a royalty on the franchisee's sales and often owns the site, which is why McDonald's earns more from rent and fees than from selling food itself. The cycle is one of unit growth until a format saturates, followed by remodels, menu extension and discounting that erode franchisee margins. The literature covers the founders in their own words, the operating detail of building a chain, the supply chain and labour investigation that Eric Schlosser wrote, hospitality as a service discipline, and the sociology of standardised production.

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