Types of Hospitality Businesses

Question 1

What are the 14 sub-industries?

Answer 1

• Hotels / B+Bs
• Restaurants
• Pubs and Bars
• Membership Clubs
• Nightclubs
• Events Management
• Hospitality Services (catering managed in house within a non-hospitality industry)
• Casinos
• Travel Services
• Visitor Attractions
• Youth Hostels
• Holiday Parks
• Self-catering Accommodation
• Contract Catering (catering ‘outsourced’ to another business)

Question 2

Name the different types of restaurants.

Answer 2

• Fine dining (luxury)
• High street (mid-range)
• Chains and franchises
• Cafes
• Coffee shops
• Fast food / Quick service
• Ethnic restaurants
• Carvery
• Bistro / Brasserie
• Self serve ‘all you can eat

Question 3

There are three ways that pubs can be owned. What are they?

Answer 3

• Managed Pubs
• Tenanted/Leased Pubs
• Free House

Question 4

What is a managed pub?

Answer 4

A pub that is owned by a brewery. The manager and the staff are employed by the brewery.

Question 5

What is a tenanted/leased pub?

Answer 5

A pub that is owned by a brewery but leased to a licensee, who manages and runs the pub independently. The pub has to sell the brewery’s beer.

Question 6

What is a free house?

Answer 6

A pub that is owned and managed by a licensee who is allowed to sell drinks from any supplier they choose.

Question 7

What is a brewery?

Answer 7

A place that makes beer, usually on a large scale, and then distributes/sells it to pubs, bars and restaurants etc.

Question 8

What is a licensee?

Answer 8

The person who hold the license to legally sell alcohol. This person usually manages the business.

Question 9

Give advantages of a managed pub.

Answer 9

• Staff are employed by the brewery, so if the pub goes out of business, employees still have a job. The brewery will employ people in another pub.
• The brewery will train staff and provide everything they need to run a successful business. Managers do not put any of their own money into the business - so there is no financial risk

Question 10

Give disadvantages of a managed pub.

Answer 10

• You do not get to keep any of the profits.
• You are unable to make decisions on how the business is run – you have to do what the brewery tells you.
• You may be relocated to another pub in a different area against your will.

Question 11

Give advantages of a tenanted/leased pub.

Answer 11

• Low start-up costs, as everything is already in place for the licensee.
• The brewery is usually responsible for any expensive maintenance or repairs to the structure of building.
• Licensees have job security because they cannot be asked to leave, unless they are in serious breach of their contract.
• The brewery will provide ongoing help and support.

Question 12

Give disadvantages of a tenanted/leased pub.

Answer 12

• The licensee has to buy beer from the brewery, usually at a high price than elsewhere.
• They may even have to have fruit machines and share the profits with the brewery.
• Greater responsibility, which can be stressful and if the pub business fails the licensee will lose money.

Question 13

Give advantages of a free house.

Answer 13

• You do not have to share your profits with anyone else.
• You can buy your supplies from anywhere you like, saving a lot of money.
• You have equity in your property and if your pub business does well, the property price will rise.
• You can employ your own staff and make all your own decisions as to how the business is run.

Question 14

Give disadvantages of a free house.

Answer 14

• High start-up costs. The average freehold pub costs £725,000.
• More stressful because there is no brewery to help and support you and if the business fails, you can could lose everything, including your home.
• You will be responsible for all repairs and maintenance costs on the property.

Question 15

What is outsourcing?

Answer 15

A business employing another business to provide catering for their own employees.

Question 16

What is a commercial business?

Answer 16

A business set-up to make a profit.

Question 17

What is a non-commercial business?

Answer 17

A business that provides hospitality services and not interested in making a profit.They only need to cover costs so they don’t.’t lose money.

Question 18

Give advantages to in-house catering.

Answer 18

• Your business keeps any profits.
• The business retains control over the catering and it is easy to change menus or systems of work etc.
• Staff could take on other roles within the business.
• Catering staff feel more united with the business, so may be more motivated to do well.

Question 19

Give disadvantages to in-house catering.

Answer 19

• Your business could lose money if costs are not managed effectively.
• Managers of the business may have a lack of expertise in catering, so they will have to trust the catering staff entirely.
• Lack of central support for things like purchasing and innovation which could impact upon profitability.

Question 20

Give advantages to outsourced catering (contract catering).

Answer 20

• Costs are controlled so the business is not in danger of losing money.
• Contract caterers bring expertise to a business that does not know anything about catering.
• Contract catering companies take all the responsibility for food hygiene law.
• Businesses will not have to spend time recruiting staff as contract caterers provide their own staff.

Question 21

Give disadvantages to outsourced catering (contract catering).

Answer 21

• Contact caterers are more expensive than catering in-house.
• Profits have to be shared with the contract catering company.
• Managers of the business will need to spend time monitoring the performance of the contract.
• A business may have disagreements with the contract provider and fall out with them. It is difficult to change a provider once a contract has been signed and this could incur a financial penalty.