Food and Beverage Management
Food and Beverage Management HB 267
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This 12 page Class Notes was uploaded by Ms. Ambrose Hills on Saturday September 19, 2015. The Class Notes belongs to HB 267 at Michigan State University taught by Jeffery Elsworth in Fall. Since its upload, it has received 115 views. For similar materials see /class/207501/hb-267-michigan-state-university in OTHER at Michigan State University.
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Date Created: 09/19/15
Exam 1 Study Guide Chapter 1114 Food Industry Accordingto the NRA 604 billion in sales served 960000 locations employing 13 million 1 more than 45 have worked in food service b4 9 32 itwas firstjob Employees Female 55 Underage of30 53 Single 66 Parttime 253 hrswk Employ more minorities than any industry Operations more than 70 are single unit operations 30 are sole proprietorships orpartnerships 70 have less than 20 employees 93 have less than 50 employees Popular Eat ou Popular Day Birthday Popular Month August Popular Day ofthe Week Saturday Segments of Food Industry COMMERCIAL quick service quick casual fullservice NONCOMERCIAL offices hospitals clubs govnt schools HOTEL restaurants banquets catering Allied Industries consulting sales marketing wholesaledistribution manufacturing Table Service Trends Customerloyalty repeat customers local ppl value conscious offerings employees offsite preparation Fquot Chapter 2 Understanding the Customer Captive Market less about food than about how it39s served office ppl in a rush 0 Restaurant Restorative Broth Mass Market concern is with whom we will serve normal social setting sitdown Status Market see and be seen exclusive fine dining Average person 45 commercially prepared meals per week Mostlikely blacksHispanics residents ofsouth mothers Repeat Customers 6080 oftotal revenue Boomers spend more on dining Multicheck households Minorities Families with children Takeoutdelivery young mobile male Seniors 65 smallerportions lowerprices and more service oom rs demanding seek value for money fuller avors fullservice wide menu varietyhigher quality Millennials drive menu quick service tech decisions Increased Importance CONVENIENCE timeeffort VALUE depends at concept tastequality 0 Under 1 0 unique location hrs friendl 0 1 02 0 original food easy access no waiting entertainment 0 Over 20 server knowledge unique food easy access good parking Attitude Adventurous upscale educated urban Traditional diners suburban older prefer comfort foods Health conscious selective Carefree dingers enjoy dining males under 50 nutrition isn39t important Buying Decisions Celebration special occasion ids Ppl like to socialize togetherness Eating pleasure craving home cooking Lifestyle support Pressed for time kids involved No energy fatigue comfort foods Customer Expectations H llmarks of great service Timing Location Pricing Amentities Appeal to kids Dieter39s choices Chapter 3 Promoting the Operation TARGET MARKET OBJECTIVES life cycle stages MESSAGE CONTENT FORM consistency PROMOTIONAL MIX advertising selling sales promotion MEDIA SELECTIONPLANNING customer BUDGET define the objective RESPONSE measure the effectiveness Target Market What do my customers want What the marketplace wants Characteristics of the target market to attract Objectives Life Cycle A Growth sales increasing at increasing rate marketing customers aware of restaurant B Mature sales increasing at decreasing rate differentiate your operation from competitors C Declining sales decreasing action must be ta en D Rejuvenation new menu redesign new concept new market Smart Measureable Achievable Realistic Time bound Message and Content essage shouldbe o Desirable o Believable 0 Exclusive 0 Action orientated o Belong to your operation alone Message Consistency o Company39s image be consistence in styletone o What effects can an inconsistent message have on an operation 0 What should be involved in deicing upon an image 0 How can an operator ensure that the communications present a consistent message Promotional Mix 0 Need to determine how those elements t into your plan I Advertising I Personal selling I Sales promotion I Merchandising I Public relations publicity Budget 0 Bottom up approach best I Set objectives determine method determine the budget 0 Top down approach I Budget set and objectives determined depending on the amount of money availa Promotion investment NOT xtra expenseonly 2 Response 0 Promotion do what it39s supposed to 0 Impact on sales be tracked o Costbenefit analysis be applied 0 Effectiveness of promotionbe documented 0 Learn from and improve on Advertising Agencies when to use ad agenc 0 When don39t have experience or expertise 0 Market requires it for success How to select an ad agency 0 Interview the agenc 0 Use agencies that are familiar with food and the market 0 Check out competition and ads you like in other industries Types of Campaigns 0 National larger budgets 0 Local neighborhood marketing gorilla o Cooperative agreements 0 Media selection newspapers radio tv mag yellow pgs mail billboards Advertising Media Selection Market selectivity Geographic selectivity Source credibility Visual quality oise level 0 Life span Passalong rate 0 Timing exibility Personal Selling 0 Oral telephone facetoface 0 Outside operations 0 Inside operations Sales Promotion 0 Incentives coupons premiums patronage rewards contests sweepstakes OOOOOO Key Steps 0 Determine an objective 0 Select a Target Market 0 Develop a strategy for implementing 0 Explore ways to promote the promotion 0 Evaluation the promotion to determine its effectiveness Merchandising 0 Purpose retain loyal customers increase ofbusiness 0 Effectiveness menu changes displays samples PR and Publicity 0 Word of mouth implementation 0 Continuous activities charity be involved civically newsletter o Preplanned short term activities press releases conferences 0 Unpredictable undesirable events Chapter 4 Trends and Issues Planning a Factors The Menu Menu Based menu Where to start Most important things to consider The customer 1St and foremost Type of food service hotel ne dinging hospital school Kind of meal bfast lunch dinner Based on clientele Often forgotten fact Taste preference of customer must be given highest priority if business succeeds Operations ictates clientele With captive clientele will require a different menu than those with walk in customers Cater to special needs Hotels 0 Variety services for diverse customers 0 Include everything from ne dining to banquet Hospitals 0 Cater to dietary needs menu for employee and guest Schools 0 Varied needs ages of the students On site food service 0 Special needs and preferences of business employees Catering 0 Must be exible and creative in order to meet the customer39s demands Quick service take out o Requires limited menus and services 0 Food be easily prepared standard inexpensive o Takeout needs to travel well withstand heat Full service restaurants 0 meet customers needs concept demographics Coffee shops to be different from casual theme or ne dining 0 0 Customers expectations will differ depending upon price and value 0 Type of Meal 0 Breakfast I Prepared quickly bc fast consumption I Set menu items I Certain standards I Men older than 35 in the south Breakfast sandwich then eggsbacon then sausage I Speed fast sandwiches salads I Simplicity fewer courses quick prepservice I Variety daily specials repeat customers Leisurely meal I More selection courses I Quality and portion sizes important Factors Affecting Menu Pricing Financial considerations Food availability Production capabilities equipment employees work Kitchen Capabilities Equipment limitations Person limitations skills of staff work load evenly high quality prepared items Availability and Utilization of food items Food availability use foods in season local work with food service suppliers Food Utilization Avoid items that cant be fully used Plan production to avoid or use leftovers Avoid items that cant be used again Customers Preferences More variety value entertainment Taste gt nutrition Competition is intense esp in casual dining and ethnic Operators need to differentiate themselves Market being segmented along lifestyle characteristics Supply Chain Preprepare and value added products are being increasingly introduced into the market 0 Labor savings 0 Value 0 Consistent product 0 Add items Value products are being pushed back from the retail level to supplier level Food safety Niche markets room for smaller players as well as consolidation with large suppliers Provide innovative solutions to foodservice operators as a means of building competitive advantages Value added products will need to be added to supply the need Meal components not ingredients Used as a wide range of meal items Value Added Products onsumers are demanding more variety Foodservice operator wider variety of ethnic foods and avors Seafood increased Reconstructing of meats pork lamb poultry Key Points 1 Always keep customer in mind 2 Plan for variety 3 Plan for usual appearance 4 Plan for avor and texture contrasts 5 Keep in mind your limitations 6 Don39t repeat foods with same avors Menu Accuracy Certain menus aren39t labeled deceptively 0 Point of origin cooking method fresh homemade brand name size weight imported Menu Content Appetizers 7 seafood popular Entrees 15 pasta meat sh Salads increase in popularity Cover size materials placement specials pricing packaging pictures font accuracy municipalizing Menu Marketing too Pricing Demand orientedperceived value Competitive pricing Costorientated 0 Factors I Market Cost Type of Operation Customer 5 perception ofvalue priced to make pro t over costs Computer supported management system is used to determine the best menu price based on items contribution to profits or contribution margin CM Low CM High CM PLOWHORSE STAR DOG PUZZLE Chapter 9 Cost Controls Control process to restrict limit regulate verify and check Exercise authority over and to restrain Management with into to make daytoday decisions Monitors ef ciency of ppl and departments Informs management of expenses incurred incomes received with in standards of budgets PROVENTION NOT CORRECTION reduces theft fraud maximizes profits not minimizes losses Control Interpret info cost reports inventory costing out recipes ratios and percentages Reduction bring things with in standards weighing portions checking invoice printed ticket before order prepared Inputs resources needed to implement your system strategies and achieve goals foodbev purchases labor equipment menu design Transformation management process of planning organzing staffing leading controlling Input 9 output preprep cooking to or er Best Fit practices memory record keeping Outputs efforts yield from transforming inputs from raw materials to finished products Productivity quality quantity Controlling measure output and compare actual results with our goals and standards Feedback info collected assembled about our output menu sales mix food labor percentages Cost Control Program Advance planning Devices and procedures Implementation Employee compliance Management appraisal and enforcement Relevant timely easy to interpret Chapter 10 Cost Control Ratios and Definitions A B C Food Cost MSP FC Food Cost FC MSP MSP xFC Food Cost Beg Inventory purchases total food for sale Ending inventory cost food consumed Employee meals Food transfers comp meals known waste discounted meals etc cost of food sold Beverage Cost Bev Cost Bev Sales Labor Cost that labor payroll taxes employee bene ts is to total food and beverage sales Beware of labor plateau Prime Cost Ratio food bev labor cost total sales Average Gust Check total sales of customers Seat Turnover of covers of seats Inventory Turnover Cost of Food Consumed average inventory Menu Sales Mix sold of each menu item Break Even Point cost volume profit dependent upon impact of fixed cost Contribution Margin cost of raw ingredients vs the sales excess of sales over variate costs incurred on generating the sale MSP FC CM Chicken cost 250 Selling Price 675 CM 425 Chapter 11 Food Cost Controls Analysis Fastestmost efficient way to increase S ort run reduce costs Long run sales increase Sales Increase Bring in new customers Get present customers to spend more Get regular customers to come more often Raise prices You need to I Advertise discount prices spend 53 to make 53 Reduce Costs Shop around for lower prices Reduce waste Control portioning Reduce leftovers Schedule leaner Reduce payroll Factors that in uence food cost As purchased price of ingredients Portion size Menu price Steps for food cost control recast what how much will you sell of each item Purchase prepare according to forecasts Portion effective y Control waste and theft 4 standards of Food Cost Control 1 Standardized purchase specifications 2 Standardized recipes 3 Standardized portions 4 Standardized yields Food Cost Food cost original Maximum allowable food cost operating budget 0 Express laboroverhead costs as values o Impute a minimum pro t o 9 o Subtract total of expenses and profit from 100 to arrive at MPC Actual Food Cost income statement 0 Food Sold Food Sales Potential Food Cost sales mix 0 Weighted food cost weighted food sales Standard Food Cost Potential Actual Cost Problems Inventory paddling will cause cost to decrease Ignoring in process inventories may allow manager to hide theft Transfers can be hidden Cost Calculations AC should be for food beverage nonfood supplies Monthly actual cost for food non food Biweekley cost calc for beverage Daily Cost Issues Directs Adjustments that occur To Date cost every tenth day is close to the actual cost Why F C important Bottom line job Setting price too high no customers Setting price too low no pro t no job 0 Purchasing portioning tracking sales control theft rotate recycle FC Controls Purchase only what39s needed 0 Inventory should be less than 3 days worth of sales Smart buying decisions Push items with low FC Get paid for what is sold Eliminate waste Staff involved know what things cost Supplier Location Quality Technical ability of supplier39s staff value price vs quality relationship compatibility honest fairness quality of delivery personal Spec 5 should include Quality description Size requirement Weight requirement Value designation Brand Purchase too much Cash ow tied up in inventory Increased storage cost Quality decrease Increased chance of theft EthnicalSecurity Issues Kickbacks Fake companies Reprocessing of Inventory Errors changes Credit memo problems Substitutions Purchasing manager staff theft Cost Reduction Techniques Negotiate review convenience value discontinue unneeded stuff purchase larger quantity pay cash credit terms discounts trade Chapter 12 Fundamental Principles of Beverage Cost Control All alcoholic beverages beverage sale GAAP Generally Accepted Accounting Practices all keep our records USAR Uniform system of Accounts for Restaurants accounting language Beer and wine the beverages commonly consumed with food have a lower markup than mixed drinks Case price 1450 9 per bottle 145024 count 60 9 Desired Cost 33 9 Selling price 60 33 182 Selling Tiers recognizing not specific brands House Brand 9 Call Brand slightly more expensive better quality 9 premium call brand No need to shop around for best price because 1 Specific brands are sold by speci c dealers only 2 Wholesaling of alchbev is state regulated and controlled 3 Retail prices are published in monthly journals and there is little change from month to month 4 Only quantity discounts are available 5 Purchase is done by brand name Factors that determine the number of brands of the country 1 Customer preferences in the area of the country 2 Class of clientele and operation 3 Well brands house brands lowest quality 4 Drink price structure cheaper prices fewer brands This strategy is not used in hotels and restaurants 5 Volume of the Operation Cost of beverages sold Beg Inventory Purchases Bar to Food Transfers Food to Bar Transfers Employee Beverages promotionscoupons Ending Inventory Cost of Beverages Margin Analysis Program drink name selling price number sold and drink cost To control for determining dispensing costs recording sales and accounting for beverage consumed 1 Automate 2 Ounce or drink controls 9 standardize glassware recipes record each drink sold for sales analysis determine cost of beverage consumed compare actual use levels to potential compare actual to potential beverage cost 3 Par stock or bottle control Dram Shop ActsLaws person drunk is held liable but so is establishment and the individual who served the person Key Concepts Principles of food cost control can be applied to beverage cost control Beverage cost will always be higher in a foodservice operation than a bar Wine and beer have higher beverage cost lower markup than mixed drinks Recording of sales of liquor beer and wine needs to be done separately Pricing of beverage items are established and controlled by exclusive distributors Inventory levels for all bottles kept behind bar need to be standardized using pars Record all beverage transactions like you do food orders Prices and markup are not based only on bev Cost Chapter 13 Controlling Cost Gross Profit pro t after taking the cost of sales from total revenue Other Income any revenue taken in the sale of nonfood and no beverage items candy room rental Controllable Expenses Salaries wages employee bene ts direct operating expenses music entertainment marketing energy and utility service administrative and general repairs and maintenance Income before rent and other occupation costs Rent Depreciation Interest Income Tax Assets liabilities equity Operating ratio net income before taxes net sales Net Pro t to net equity net profit after taxes net equity Management pro ciency ratio net pro t after taxes total assets Accounts receivable turnover total sales average accounts receivable Average collection period 365 days accounts receivable turnover Number of days tied up accounts receivable daily sales Quiz 1 1 A franchisor is one who Grants the right to another to market the company39s concepts 2 Using convenience foods most likely will result in Higher food cost andlowerlabor cost 3 During a restaurant39s maturity stage Sales increase at a decreasing rate 4 The following are essential functional areas of a foodservice manager39s job Cost control organizing shift operations unit coordination and control employee development and customer relations 5 The traditional way to look at the foodservice industry segments are Commercial and noncommercial 6 Studies have show that 70 of all new restaurant ventures fail in their rst year of operations False 7 Which of the following would be considered to be a high utility foodservice Vending machine 8 One foodservice industry trend is that we are beginning to see partnerships between restaurants food service distributors food brokers and food manufacturers True 9 Changes in which the following will have the most impact on how food service mangers operate Demographic environment economic environment technological environment and political environment The typical net pro t for a food and beverage operation is Less than 20 The best way for a pizza chain to compete increase market share and increase profitable is trhough a price matching strategy False H O H 4 HB 267 Quiz 2 1 In terms of the buying process what two factors have taken on greater importance to restaurant customers C Convenience and value 2 Households with two or more people earning two paychecks spend more than more than households with one paycheck earner C 40 3 For control purposes promotion objectives should be B Specific measurable achievable realistic and timebound 4 When considering radio advertising market selectivity is and geographic selectivity is E Broad high 5 Newspapers are the primary advertising medium for most table service restaurants A True 6 In the article quotGeneration Revelationsquot the phrase quotGeneration Dining Outquot was used to describe which demographic group C Millennials 7 Proper selection of the parts of the promotional plan will consider A Media selection and planning C Budgeting E A and C 8 Which of the following statements is true B One in five of all takeout food customers are considered to be daily users accounting for 80 of all takeout business 9 The major market categories found in the restaurant industry include D Captive market mass market and status market 10 In the article about customers39 full service restaurant preferences from Nation39s Restaurant News it was stated that more than ever the customers39 need relates to D Variety and looking for something new or different 11 In the article about customers39 QSR preferences from Nation39s Restaurant News it was stated that more than ever the customers39 need relates to A Convenience 12 The purpose ofpromotion is to D Inform persuade and remind Quiz 3 1 Market skimming is a menu pricing method that would most likely be suited for c Fine dining restaurants 2 Important considerations when developing a lunch menu include b Variety of items c Simplicity d Both b and c 3 The most important thing to consider when developing a menu is c The customers 4 The Prime Cost of a menu item is de ned as the raw food cost plus d The labor cost involved in preparing the item 5 In menu engineering a puzzle is an item with b Low sales and high contribution margin 6 The function of a menu is a To list various product offerings b Serve as a contract with the customer c To provide an essential marking function d All of the above 7 One of the best methods to use for quantifying the overall strength of a menu or one item relative to another is c Menu engineering 8 The menu pricing principle of price rounding was a control method instituted by R H Macy the department store founder as a means of moving customers quickly through the checkout stand b False 9 According to the article The Psychology of Menu Designquot customers spend on average reading a menu c 109 seconds 10 The key to maintaining sales volume is to ensure that perceived value received by the customer is equal to or greater then the price charged A True
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