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CHAPTER 12 PRICING

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CHAPTER 12 PRICING Powered By Docstoc
					                 CHAPTER 4
              Food and Beverage
                      &
    Design & Planning Criteria for Hospitality 
                   Industry
§   Introduction.
§   The name and logo
§   menus.
§   Categories Production Specification (CPS Form)
§   Menu planning
§   Menu planning calculation
§   Outlets around you
§   F&B calculations
§   Employment 
§   Food Cycle 
  Cost Control – and Menu Planning
§ Menu Planning Is The First Control Point In The 
  Restaurant Operation
§ Other Control Points Are:
§ Purchasing
§ Receiving
§ Storing
§ Issuing
§ Preparing
§ Cooking
§ Holding
§ Serving
§ Guest Interaction, Cash Collection; Customer 
  Satisfaction; Etc
Major Factors Affecting Menu
Planning
§ Layout And Design Of The Facilities
§ Availability Of Food And Beverage 
  Ingredients
§ Type Of Equipment
§ Labor
§ Budget
§ Customer Needs And Desires/Trends
Menu Pricing, subjective methods
§ When pricing items, there are many methods to choose 
  from. Although these may not be the most effective 
  methods….
§ ¨ The reasonable price method – what you may think is
  ‘reasonable/ acceptable for the item
§ ¨ The highest price method – highest price you THINK you
  can charge successfully
§ ¨ The loss-leader method – some items, you may lose
  money on them, but they are popular
§ ¨ The competitive method – in line with the competitions’
  prices
§ ¨ The intuitive (wild guess) method – just guessing the
  price to charge!
Objective Method Used To Price The Regular Restaurant
  Menus - “Multiple” Method
§ Cost Out Menu Items -- use ingredients method, prime 
  ingredient method, or mark-up + method 
    l   Ingredient Method= each ingredient  is costed & added together
    l   Prime Ingredient Method=The formula is to add the cost of labor 
        and cost of food, add a percentage for profit. This method is good 
        for dishes that require a lot of preparation. 
    l   Mark Up Method=each ingredient has food cost percentage added 
        to it or cost is just multiplied by three (factor method) not 
        including labor or other costs
§   Multiply Cost By 3 to 7
§   Check Out The Competition
§   Adjust Multiple, If Necessary
§   Do Menu Engineering Analysis
Objective Method Used To Price Catering
  Menus - “Thirds” Method
§ 1/3 Cost Of Food, Beverage, Other Supplies
§ 1/3 Cost Of Labor, Overhead
§ 1/3 Profit
§ Aggravation Factor?
§ Shoulder Periods/Down Time?
    Mark-Up Pricing Method

§   Step 1: Determine the food costs (chicken dinner with cost of $3.32).
§   Step 2: Determine the multiplier.
§   ú Budgeted food revenues: $875,000
§   ú Budgeted food costs: $325,000
§   ú Budgeted food cost %: 37.1% (food cost ÷ food revenues)
§   A multiplier can now be calculated:
§       1                                                       1
                                                       =              = 2.7 (rounded)

    Budgeted food cost percentage                             .371

§   Step 3: Establish a base selling price. Multiply the food cost for the chicken dinner by
§   the multiplier:
§   $3.32             (x) 2.7               = $8.96
§   (ingredient cost)    (multiplier)        (base selling price)
§ Contribution Margin Pricing Method
§ Ratio Pricing Method
§ Prime Cost Pricing Method
§ Maximize the Contribution Margin
   MENU ENGINEERING
§ MENU ENGINEERING IS A MARKETING 
  ORIENTED APPROACH TO EVALUATE 
  CURRENT AND FUTURE MENU PRICING, 
  DESIGN, AND MENU CONTENT
§ USES SALES MIX AND PRICING
§ MENU ENGINEERING IGNORES THE 
  QUESTION     “WHAT IS A SATISFACTORY 
  FOOD COST ?” AND ASKS INSTEAD “ARE WE 
  GETTING A REASONABLE CONTRIBUTION 
  TO PROFIT FROM THE SALES MIX?”
MENU ENGINEERING
         THREE ELEMENTS
§ CUSTOMER DEMAND
§ MENU MIX
§ CONTRIBUTION ANALYSIS
CLASSIFICATIONS
§ STARS
§ PLOW HORSES
§ PUZZLES (Challenge)
§ DOGS
§ Stars are extremely popular and have a high 
  contribution margin. Ideally Stars should be your 
  flagship or signature menu item.
§ Plow Horse or Cash Cows Plow Horses are high 
  in popularity but low in contribution margin. Plow 
  horse menu items sell well, but don’t significantly 
  increase revenue.
§ Puzzles are generally low in popularity and high 
  in contribution margin. Puzzle dishes are difficult 
  to sell but have a high profit margin.
§ Dogs are low in popularity and low in contribution 
  margin. They are difficult to sell and produce little 
  profit when they do sell.
MENU ENGINEERING
§ STEP ONE FIND THE AVERAGE 
  CONTRIBUTION MARGIN
§ THE AVERAGE CONTRIBUTION 
  MARGIN IS CALCULATED BY 
  DIVIDING THE TOTAL MENU 
  CONTRIBUTION MARGIN BY THE 
  NUMBER OF ITEMS SOLD
 MENU ENGINEERING
§ STEP 2 IS TO CLASSIFY THE MENU MIX AS 
  HIGH OR LOW.
§ TO DO THIS USE THE FOLLOWING 
  FORMULA:
§ (100/#OF ITEMS ON MENU]  X  70%
§ IN THIS EXAMPLE THERE ARE 22 MENU 
  ITEMS
§ (100/22) X .7 = 3.2%
§ ITEMS WHOSE MENU MIX IS GREATER THAN 
  3.2% ARE CLASSIFIED AS HIGH AND THOSE 
  LESS THAN 3.2% ARE CLASSIFIED AS LOW
MENU ENGINEERING
§ QUADRANT ANALYSIS
§ EACH MENU ITEM IS PLOTTED WITH 
  A QUADRANT OF A GRAPH 
  ACCORDING TO THE FOLLOWING:
§ MENU MIX
§ CONTRIBUTION MARGIN
         QUADRANT ANALYSIS
  16%

                                              • SMALL SODA
                                                   STAR
  14%
M
E 12%
         PLOW HORSE
N
U 10%                                           • OCEAN SPRAY
M
    8%
I
X 6%
%                        •  SM. COFFEE
   4%
                                               • LARGE SODA
          DOG                                     PUZZLE
   2%

                         • HOT COCO           • SM. TEA
          10   20   30       40    50    60      70   80      90   100
                CONTRIBUTION MARGIN
•Sales Mix

Days Sat Sun Mon Tue Wed Thr Fri                  Total Av



Average Daily Turn Over =  
       Av Total/No Of guests
Average Seat Turn Over= 
       Average Daily Turn Over/No Of Seats
Expected No Of guests=
      No Of Seats x Average seat turn over x working days
Sales Mix (Menu Items)


    Category    Sales     Q.S    I.P %
                Mix
       1        10 %      2222    30 %
       2        70 %      1111    50 %
       3        55 %      0000    20 %
                          3333   100 %
 Sales Mix (Items)
Item    Sales  Q.  P.I Cost/ per  Sellin   G.P    T.    T.  T.G. F. C 
        Mix Sold        Portion     g            Cost  Sales  P   %
                                  Price

 1



 2



Total               100
F & B Budget Summary
 Category    Total Cost   Total    G.P
                          Sales

    1
    2
    3
§ Column P: Profit Category is LOW if the menu item 
  profit is less than the menu’s Average item profit ($4.16 in 
  this example). Conversely, enter HIGH in the cell if the 
  menu items profit is greater than average for the menu. 
§ Column R: Popularity Category is LOW if the menu 
  item's menu-mix percentage (e.g. the total number of the 
  item sold divided by the total number of items) is less than 
  80% of the average. Conversely this means that we are 
  considering an item to be popular, and placing the word 
  HIGH in the column, if it sells at least 80% of an average 
  item’s popularity. In the example below, the average menu 
  popularity equals 8.3% (100% divided by 12 items = 
  8.3%). Therefore we consider an item popular (HIGH) if it 
  sells 80% of 8.3% or 6.7%. 
§ Column S: The Menu Item Class is determined by the 
  results of Columns P and R. If an item is both profitable 
  and popular then it’s a STAR. It it’s profitable but 
  relatively unpopular then enter the word CHALLENGE. 
  If the item is relatively unprofitable but popular then enter 
  the word WORKHORSE. Finally, a DOG is an 
  unprofitable and unpopular menu item. 
                    CHAPTER 5
                   FOOD CYCLE
§     Introduction.
    ￿￿                  Forecasting of production volume.
                      ￿￿
§     Stores.
    ￿￿                  Volume of purchase.
                      ￿￿
§     Ordering.
    ￿￿                  Purchasing.
                      ￿￿
§     Receiving.
    ￿￿                  Storing.
                      ￿￿
§     Issuing.
    ￿￿                  Pre-preparation & portioning.
                      ￿￿
§     Preparation.
    ￿￿                       ￿￿ Packaging.
§     Assembling.
    ￿￿                       ￿￿ Holding.
§     Loading &delivery.
    ￿￿                       ￿￿ Washing up.
§     Sales &cashing.
    ￿￿
 Design & Planning Criteria for 
 Hospitality Industry

§ Room Area
  Room areas can be calculated based upon the 
  hotel grad economy hotels necessarily have 
  smaller room areas than those of exclusive 
  facilities. To calculate room area , this done 
  by adding the area required for the room itself 
  plus the areas needed for the bathroom, public 
  area, and circulation area devoted for the 
  room
*Public Space include area for corridors, lobbies
**Circulation refers to support service area


Area Needed                 ****                *****
      Room                   21                     26
   Bath Room                  6                     7
  Public Area                19                     25
   Circulation                9                     11
      Total                  55                     69
    Minimum                  51                     65
Kitchen and preparation area Design
§ Storage Phase
§   Deep Freezer, from 20 to 50 F Meat
§   Chilled Store from 2 – 38 F Made Up dishes
§   Cooled Stores, fresh vegetables
§   Dry Stores
    The allocation for the stores could be Calculated 
    based on 0.2 M²/ Meal/Day
 
Kitchen Area
 Total Area M²   No Of Meals At
                  peak period
      85              100
     116              200
     171              400
Maintenance Costs
 Ratio of Av      Repairs and   Heat, Light,
  Amount          Maintenance     Power
Ratio To room       10.3 %        11.8 %
     sales
Ratio to Total      10.3 %        11.8 %
    Sales
Av Increase in       4.5 %         5.1 %
 Costs/ Year
   ANALYSIS OF HOSPITALITY FACILITIES

       Category            Percentage to total Area

 Lobby + Front Office              11.9 %
    Administration                 11.9 %
   Function rooms                   28 %
      Restaurants                   21 %
Cocktail bars and lounge            8.3 %
  Public Circulation               11.9 %
      Rest Room                     4.6 %
     Rented Space                   2.4 %
          Total                    100 %
       ATTENTION
   PROJECTS DEAD LINE
   “THE DRAFT COPY OF THE
 PROJECTS WILL DELIVER ON THE
        FIRST OF MAY”.

“THE FINAL COPY OF THE PROJECT
  WILL DELIVER ON 15TH, OF MAY”

				
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posted:7/12/2013
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Jun Wang Jun Wang Dr
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