Controlling food sales

Controlling Food and
Beverage Sales

BAC-5132 Food and Beverage Management-II-Controlling Food and Beverage Sales
Wednesday, October 19, 2011 Slide 1 / 37
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Recap of the previous session
• What are the 4 quadrants in the menu
engineering graph?
• What action is recommended on Puzzles.
• How are Plow horses repositioned.
• Menu Mix is equivalent to popularity what
index is taken to measure it.
• How is the average contribution margin
derived in Menu engineering.
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KCM of the Session
1. List and explain the three goals of sales
control.
2. List and describe eight determinants of
customer restaurant selection.
3. Describe the two principal means of
maximizing profits.
4. Explain the three most common methods of
establishing menu prices.
5. Describe the two principal means of selling
products effectively in a restaurant.

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Scope
• Goals of Controlling food sales.

• Optimizing # of customers.

• Maximization of profit.

• Controlling of Revenue.

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Goals of Sales Control
• The main goals of sales control are as
follows:
• Earlier the main goals were limited to
maximization of profits but currently have
changed due to trend:

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Three principal goals of sales
control

1. Optimizing the number of customers.

2. Maximizing profit.

3. Controlling revenue.

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Optimizing the number of
customers
• The following factors are responsible for a
repeat customer experience for restaurant:
1. Location
2. Menu item differentiation
3. Price acceptability
4. Lighting and décor
5. Portion sizes
6. Product quality
7. Service standards
8. Menu diversity
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Location

Figure 8.1

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Menu Item differentiation
1. Homogeneous: Most FMCG’s, and retail
level products fall into this category.
There is similarity between the a range of
products.
2. Differentiated: Are perceived as unique
clothing, designer wear, where the
segment of the population is able to
afford it.

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Characteristics of a Homogenous menu:
1. Items repeating in restaurants with more
or less similar price line.
2. Augmenting the products changing shape
and repositioning will help in changing to
differentiated.
3. Such a stand should be adopted by
restaurant D in making the menu unique.
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• Using Signature Items
1. Waldorf Salad.
2. Lobster Newberg.
3. Caesar Salad.
4. Sarah potatoes.
5. Peach pudding à la Cleveland
6. Marshall Ney.

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Price Acceptability
• As shown in Figure 8.1 Restaurant A will
have the highest sales volume unless
Restaurant C lowers its prices significantly.
• The relationship between Sales price and
sales volume which is also known as
Price sensitive.
• Making of a homogenous menu from the
price perspective.
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Price Acceptability
• An example of the is the price of an
Hamburger in National chains and table
service restaurants.
• Price acceptability is a customer judgment
of the value for money for the product and
services offered by the establishment.
• For a food service operator it’s a challenge
to establish menu prices targeted to the
segment.
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Lighting and Decor
• This is the creation of the designer. The
lighting corresponds and compliments the
décor.
• Family groups prefer informal, light, bright
and cheerful interiors.
• Nuclear families and couples prefer dim
and diffused lighting:
• The lighting at the façade is the biggest
marketing tool.
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Portion Sizes
• The younger generation prefers larger
portion sizes:
• Some older people prefer dry and smaller
portions:
• Certain communities will eat very little but
want a spread:
• A standard portion size is the one that
appeals all.
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Product quality
• Preference of fresh food rather than
frozen:
• Bodies like the AAA, Mobil travel guide.
• Zagat survey does not use professional
food critics like Michelin but direct ratings
from customers.

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AAA Ratings
# 1 Diamond - Affordable, good, casual dining
# 2 Diamonds - Informal, family oriented dining
# 3 Diamonds - Creative, upscale, adult-oriented
dining
# 4 Diamonds - Luxurious fine dining, excellent
service
# 5 Diamonds - World-class dining experience,
impeccable service

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Mobil Star Ratings
#One Star - Culinary specialty, local flair, considered
in this category.
# Two Star - Freshly prepared food, cordial, efficient,
and clean, often showcase a distinct cuisine.
# Three Star - Skillfully prepared food, specific style,
professional service, décor of excellent quality.
# Four Star - Exceptional, creative, complex, refined
personal service.
# Five Star - Elite, flawless, exceptional food,
superlative service, elegant décor, and exquisite
presentations.

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Service Standards
• Levels of service are defined in all types of
food service establishments.
• Diners look at service swift, Unobtrusive
and an art form.
• Diners are segmented they walk into a
restaurant for various reasons.
• Time, Convenience, curiosity, tip
conscious,
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Menu Diversity
• A limited menu can have a negative
impact on the repeat customer.
• A menu with a wider choice between the
entrée’s and a range of alternative
accompaniments emerges successful.
• The equipment in the kitchen also affects.
• Culinary abilities of the staff.
• Cost considerations and leftovers.
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Maximizing profits
MAXIMIZING PROFIT
• There are two principal means for
maximizing profit:

1. Pricing products properly.

2. Selling those products effectively.

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Pricing products properly
• Cost is one of the determinants of Pricing.
• The desire to maximize sales.
a. Differentiation or Homogenization.
b. Price sensitivity.
c. Changing conditions.
• Matching competitors prices.
• Calculating Prices from costs and cost
percents.
• Adding desired contribution margins to
portions.
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Matching Competitors Prices
• Follow the leader system and imitative
approach.
• This is an adoption of the subjective pricing
methodology.
• QSR’s are very much alike on the product
form décor is what makes the different.
• If the menu prices are low so the CM’s are
even lower therefore greater # of customers
are required to fill up and hence the level of
profit is grossly affected
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Calculating Prices from Costs and
Cost Percents
• We have studied the different approaches
in pricing methodologies.
• The most common are the simple
ingredient mark up methods using
multipliers.
• Mainly the ingredient mark up.
• Prime ingredient mark up.
• Ingredients with accompaniments costs
mark up methods.
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Using the Contribution Margin
• Adding contribution margins to portion
costs.

• Determine the average contribution
margin.

• Then add the average contribution margin
to the Standard portion cost.
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Selling Products effectively
• Essentially, a restaurant has two principal
means available for selling products
effectively:

1. The menu

2. The sales techniques used by the staff

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The Menu
• The primary sales tool.
1. Layout and design.
2. Variety.
3. Item arrangement, location & Positioning
4. Descriptive language.
5. Kitchen Personnel and equipment.

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The Sales techniques
• The servers role is to influence the
customers decision.
• Daily briefing to instill the menu in the
minds of the servers.
• It helps in customers to make realistic
decisions.
• Suggestive selling can eliminate slow
moving items and can also combat a short
supply of an item in the kitchen
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Controlling revenue
• The goal of revenue control:

1. To minimize the possibilities of errors in
recording of sales revenue.

2. Establish standards and procedure for
revenue control thru the 4 stage process.

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Establish Standards for
Revenue Control
• The three main standards for achieving
the goal of revenue in appropriate revenue
to the establishment:
1. Documenting all sales.

2. Pricing all sales correctly.

3. Verifying that all sales are recorded.
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Documenting all sales
(Manual Systems)
• Attributes of guest check record:
1. Help servers remember the specifics of
guest’s orders.
2. Provide a written food order to kitchen
personnel.
3. Give itemized bill to guests.
4. Prove the accuracy of cashiers work.
5. Verify the accuracy of prices charged.
6. Provide the record required for tax
purposes.
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Standardized Systems using
Manual Means

1. Using numbered checks.

2. Pricing all sales correctly.

3. Recording revenue.

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Use of numbered Checks

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Pricing sales correctly
(Manual Systems)
• Errors in billing.

• Using the Dupe or duplicate system.

• Adding the right tax.

• Putting the right number consumed.

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Recording Revenue
(Manual Systems)
• Use of barkers control sheet.
• Use of the cashiers control sheet.
• Upgrade the equipment like cash
registers.
• In the electronic POS see to it that tables
are closed.
• Document the information in the sheet as
on the next page.
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Questions
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Controlling food sales

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