Pancake World (PW) is a franchise food service company with over 2,000 restaurants world-wide. A unit of PW located in Largo, Florida is the focus of this case. Louis Devaroe owns this unit under franchise rights. A brief history of the company will get us started on our understanding of this particular operation. Company History As the name suggests, the main focus for PW is the breakfast menu, notably pancakes. The company started in 1950 as a single unit operation in northern California. The insight by investors took this single unit operation to its prominence today. The initial philosophy was "anytime is a good time for breakfast." Now, the philosophy has changed to "come hungry, leave happy." This change in philosophy has come about by the evolution of its menu. Still offering breakfast anytime, lunch and dinner items have been incorporated to help PW compete in the ever-changing, competitive restaurant industry. Creating value and offering quality products led to success in tough markets. These markets have a high concentration of families and senior citizens. The image as a gathering place adds to the ambience. Growth at PW in the beginning was slow. This was due to top managements' commitment to replicate the original restaurant, keeping the atmosphere and feeling of a gathering place. Now PW is stronger than ever. This, in part, is due to other corporations that have bought exclusive rights to territories. PW has accountability systems that ensure integrity and high standards are maintained. Exhibit 1 is a customer profile analysis used by PW to aid in demographic study of the potential market. Tracking Costs, Payroll, and Inventory With the aid of software specifically designed for the restaurant industry, tracking costs is not difficult. Also, outside service companies handle the company's payroll and marketing. The benefit of outsourcing these services is that it enables the company to keep its overall costs down to manageable levels, and to focus on strategy and day-to-day operations. It also allows companies such as PW to focus on improving customer service. Payroll and inventory are the two main costs in foodservice operations. Discussion on these topics and the accounting procedures used to track them follow. Pancake World has found that outsourcing the payroll function to a payroll service is cost effective. Payroll data is transferred directly to the payroll service via the internet. ADP Corporation handles payroll for small restaurants with fifteen employees to multi-unit franchise service corporations with thousands of employees. ADP provides this service at a cost of $3.00 per employee per paycheck. A cost comparison was done to see if rates charged were any different between this multi-unit franchise and a single unit with 25 employees. The findings concluded no difference in cost per employee. Inventory One area of foodservice operation that has advanced significantly in recent years is inventory management. This has been made possible by internet-based software that links the restaurant to the vendor and also to corporate headquarters. This data transfer system has cut out many steps in the ordering process. Multi-unit franchise operations enter into a relationship with a food service vendor. In this particular case, PW buys its product from U.S. Foodservice Inc. Both companies know the value of a good relationship.