Formula Restaurant

A formula restaurant is a type of formula retail business. It is characterized as a restaurant regulated by contractual or other arrangements to standardize menus, ingredients, food preparation, interior and exterior design and/or uniforms. The term refers to the characteristics of the restaurant rather than its ownership, following a business model controlled by an overseeing corporation. Most formula restaurants are chain restaurants, though this does not have to be the case.

In legal definitions, there may be a minimum number of "substantially identical" restaurants for them to be considered formula restaurants. This number varies across jurisdictions.McCall, ID proposal to amend restriction from "one or more" to "five"
(.pdf)San Francisco retail use
(11 or more)
(14 or more)

Formula retail

Formula retail is a type of sales activity required by contractual or other arrangements to offer a standardized array of services and/or merchandise, trademark, interior or exterior design and/or uniforms.Town of Jaffrey Planning Board Proposed Zoning Changes Summary
, Public Hearing January 22, 2018, Town of Jaffrey, New Hampshire (.pdf) This applies to the restaurant industry where menus, ingredients and food preparation may be standardized according to the overseeing corporation's business model, intended to maximize marketing potential.

Comparison with chain restaurants

Although there is considerable financial overlap, "chain restaurant" refers to ownership or franchise while "formula restaurant" refers to the characteristics of the business. A formula restaurant doesn't need to belong to a chain but it generally does. Nevertheless, most codified municipal regulation relies on definitions of formula restaurant or formula retail (although non-codified restrictions will sometimes target "chains").

Some chain restaurants are not considered formula restaurants because the chain does not maintain a formulaic or monolithic character at different locations, or has few enough locations that they are substantially dissimilar to what is commonly considered to be a formula restaurant. In addition, the term "chain restaurants" generically describes a business arrangement, whereas formula restaurants describe the aesthetic characteristics and customer experience.

Disguised formula restaurants

In some cases, a chain may establish a set of formula restaurants but attempt to present each venue as unique. This is common with hotel chains, which rely on centralized meal planning and management, but want to avoid the appearance of their in-house dining facilities being formulaic. Generally, the local manager is encouraged to modify the corporate menu so as to present the appearance of a unique character, while still building the menu around a corporate model (e.g., several entrees based on frozen chicken breast in accordance with a corporate formula).Building a Successful Hotel Restaurant
, ''Hotel F&B'', 4-Jul-2007First Hospitality Group's Justin Harkey wants hotels to create a new recipe
, ''Hotel Management'' 13-Apr-2017 Disguised formula restaurants may be recognized by marketing indicators: intense use of staged photographs on the menu, frequent use of marketing buzzwords (or marketing terms) such as "add" listed under multiple menu items.Restaurant menus and pictures: Yes or No?
, gritsandgrids.com

Criticism

Cultural

Concerns have been expressed that formula restaurants detract from the unique characteristics of cities and towns.The Impact of Chain Stores on Community
, Institute for Local Self-Reliance (ILSR)How do chain restaurants embody gentrification?
''Marketplace'' 5-Dec-2014 The standardization of menus can mean fewer choices for consumers. Formula restaurants tend to be marketing centric or based on perception.

Economic

Formula restaurants can harm local independent businesses.
, governing.com Formula restaurants accelerate gentrification but deteriorate quality of life.

Formula restaurants often rely on an economic model that encourages the use of disposable tableware. This can create a negative economy in waste and food distribution, in part to support the business model of the controlling corporation.

Response and regulation

Informal restrictions

* Ketchum, Idaho has traditionally restricted franchise restaurants through the zoning approval process. The city has no formal formula restaurant ordinances.
* Iceland has informal health restrictions that discourage some formula restaurants.webcam
of "the last McDonald's in Iceland"

Formal restrictions

* Malibu, California compiled a list of municipalities that restrict formula retail.Analysis of Cities with Formula Business Ordinances
, Malibu (.pdf)
* Bermuda has banned all franchised restaurants in the country (Prohibited Restaurant Act of 1997).

Legal challenges

In the United States, legal restrictions on formula restaurants (and formula retail in general) have been challenged as an impermissible restriction on interstate commerce, and as exceeding municipal zoning authority.The Park at Cross Creek v. City of Malibu
Calif. Ct. App., 2nd. Dist. Filed 21-Jun-2017 (.pdf)
, ''The Malibu Times'' 1-Nov-2017 Restrictions are generally held permissible if they are not arbitrary, and directed to the character of the business and not the ownership.California Appeals Ct. upheld San Diego ordinance restricting formula retail businesses in Coronado
from Vermont Planners Association (.pdf)Coronado challenge to Formula Business Restrictions
, Institute for Local Self-RelianceCoronadans Organized for Retail Enhancement v. City of Coronado
, 2003 Cal. App. Unpub. LEXIS 5769, Calif. Ct. App., 4th Dist. Filed 13-Jun-2003 (.pdf)

See also

* Chain store

References

{{reflist

Urban planning

Zoning
Real property law
Fast food