Field Course: Challenges and Opportunities in the Restaurant Industry - Harvard Business School MBA Program

Field Course: Challenges and Opportunities in the Restaurant Industry

Course Number 6540

Senior Lecturer Lena G. Goldberg
Visiting Lecturer Michael S. Kaufman

Spring: Q3Q4: 3 Credits
Wednesdays 3:30 to 6:00 pm
12 classroom sessions
Team work, in-class and project based learning

Course Overview:

This field-based course examines the various forces that are changing and disrupting the restaurant industry and provides an opportunity for students to use all of the skills honed during the RC year while working on projects in conjunction with restaurant industry participants. Working in teams, students will be given the opportunity to select from a list of curated projects with an identified industry partner or, subject to approval on a case by case basis, propose and pursue a self-designed project with an industry partner they have identified. Industry partners have included major restaurant companies (e.g., McDonald’s, Chick-fil-A, Lettuce Entertain You Enterprises, Sonic, Google), entrepreneurial and small scale ventures (e.g., Clover Food Labs, Flour Bakery, Cushman Concepts), private equity, food manufacturers, and technology companies, among others. A wide variety of projects will be proposed and considered. Central to all projects will be assessment, development and implementation planning to respond to challenges and take advantage of opportunities created by changes affecting and shaping the industry. In-class sessions will use a variety of materials including cases, analysts’ reports, industry association studies and white papers, as well as interviews with industry participants. Students may be required to sign an NDA in connection with projects for certain industry partners.

Background:

Everyone eats out. 9 in 10 consumers say they enjoy going to restaurants and half of consumers consider restaurants to be an essential part of their lifestyle. Restaurants are large and important employers: the industry is the 2nd largest private employer in the US, with nearly 60% of adults in the US having worked in the restaurant industry at some point in their life and 1 in 3 Americans having their first job experience in a restaurant. Restaurants provide significant management opportunities for women and minorities: in 2014, 56% of first-line supervisors/managers of food preparation and service workers were women, 15% were African American, and 21% were of Hispanic origin. The number of women and minority owned restaurants has been steadily increasing.
Restaurants are also big business, although approximately 70% of restaurants are single unit operations. The National Restaurant Association estimates US 2019 restaurant industry sales at nearly $863 billion representing a $2.5 trillion economic impact and approximately 4% of the US gross domestic product, with more than one million restaurant locations across the US, 15.3 million industry employees and a projected 1.7 million new restaurant jobs by 2026. The industry has a 48% share of the US food dollar.
The course explores the demographic, life style, health, technology, labor, real estate development, and general economic forces that are shaping the restaurant industry. For example, the course looks at the implications of the trend toward locally sourced, sustainably grown produce and humanely raised animal protein, as well as the phenomenon of fast casual restaurants-- a hybrid between fast food and casual dining restaurants and the industry’s strongest growing segment - that seek to offer more customized, freshly prepared, high quality food and more upscale ambiance, at higher price points, than traditional QSRs. The course considers successful strategies for scaling restaurant concepts and companies and the challenge/opportunity of large scale, the impact of culture in restaurant organizations, and the advent of delivery and other technology-driven innovations.
The “fast casual” boom has been attributed to, among other things: shifting consumer preferences toward healthier, sustainably grown and produced, locally sourced and freshly prepared foods; millennial preferences for informality, variety and authenticity; an increasing percentage of millennials’ food dollars being spent on restaurants; and heightened interest in and utilization of technology in all aspects of the restaurant business including supply chain management, food preparation (robotics), ordering, payment, marketing, carry-out, and delivery models. The course also explores the impact of these factors on the industry in general and, in the context of increasing wage and occupancy costs in high-growth urban areas, attempts to assess the viability of fast casual as the number of new concepts and new entrants continues to increase.
Fine dining establishments are also considered and projects may focus on developing creative approaches to the financial, marketing, and other challenges these restaurants face

Learning Objectives:

This course will provide students the opportunity to:

  • apply the diverse skills developed during the RC and first half of their EC year to analyze the relative importance and impact of these factors;
  • explore how established restaurants and start-ups in the “fine dining,” “family restaurant,” and QSR segments operate in and adapt to this fast-changing environment, focusing on differentiating between trendiness and fundamental changes that will be outcome determinative;
  • work across disciplines and prioritize approaches to planning and problem solving; and
  • work with industry participants on strategy, planning and problem-solving.

Course Requirements, Grading, and Enrollment:

Students will be expected to attend all classroom discussions and to spend the amount of time on their projects necessary to deliver a final presentation to their project partner. At the end of the course, all materials comprising part of the presentation will be submitted together with a summary and an assessment of the project. Grading will be based on these materials, class participation and peer and team member assessments. Enrollment will be limited to 60 students and, at this time, it is contemplated that the course will not be open to cross registration.