HILDA SAMDEN

R1806D5522255
SECOND ASSIGNMENT ON FOOD AND BEVERAGES
CONTROL FOR THE HOSPITALITY INDUSTRY (UU-HOM-4080)
Introduction
Profitability is something that all businesses aspire for. People who are
just getting started must take extra precautions as they set the
groundwork for long-term growth. Understanding business's profitability
is critical for gaining a competitive advantage. According to Friedman,
M. (2007), “profitability is used to evaluate a company's capacity to
create earnings in comparison to its expenses and other relevant costs
incurred during a given time”. As such, businesses must understand their
profitability and how it compares to the competition to be viable. When
comparing a company's profitability to that of another, they must be in
the same market and throughout the same time to ensure an accurate
comparison. To better characterize a company's profitability, multiple
measurements known as profitability ratios are employed to calculate the
company's success.
The company with the greater profitability ratio for a certain time period
has a competitive edge in that area of profitability. There are four major
areas that can help drive profitability of a business. They include cost
reduction, increased turnover, increased productivity, and increased
efficiency. Others believe that increasing revenues is sometimes the
most effective way of boosting profitability. Yet, one can also diversify
into new market segments or create new products or services. This
report aims at discussing the various steps a management might take at a
mid-range table service restaurant to cut existing costs (food and
beverage and labor) as well as the numerous approaches a manager
might take to boost revenues.
Firstly, lets begin with on cutting the existing costs. One of the most
major issues that restaurants face is cost control. You cannot afford to
compromise on food quality or customer service for your business to
survive. Because restaurant margins are typically thin, it is critical to
plan, review, and monitor the restaurant operation to reduce expenses
and enhance revenues. As a result, you must always evaluate and
analyze your restaurant margins and revenues to maintain track of your
entire expenditures and profit. If taken into account, the following could
be the steps a management might take at mid-range table service
restaurant to cut existing costs in accordance with Walker, J. R. (2021);
Step 1. Manage your food costs.
Try employing these restaurant meal cost-cutting tips.
 Establish a Budget: Before you go out to buy raw materials for
your inventory, make sure you are up to date on current food prices
to avoid being tricked or overcharged by the vendor. Establish a
budget and conduct thorough market research ahead of time; stick
to it, with the exception of an occasional tiny variation for exotic
ingredients.
 Recipe Costing: Recipe costing keeps track of the costs incurred
when preparing a certain item. It calculates the exact amount of
raw materials required for the recipe's preparation as well as the
cost of each item.
 Control Portion Size: Another way to save money is to control the
amount of your portions. While too tiny servings result in
consumer unhappiness and unfavorable reviews, excessively large
meals result in rising food expenses. To keep portion sizes
consistent, use a portion control tool, or simply decide on the
number of spoon serves each item. Preparing portions and orders
helps to avoid overproduction of foods, which either increases food
costs or results in wasted food. The following section describes
strategies to reduce waste in restaurants.
Step 2. Reducing wastage
mid-range table service restaurant may prevent food waste and limit
food expenditures at your restaurant by keeping regular track of your
inventory - estimate the current supply of raw materials, menu items to
use those materials, and how much to order. Choose POS software that
has a stock closing feature that automatically calculates remaining stock
and allows you to order supplies from. You can create reminders to
notify you when supplies are about to run out so that you can purchase
more, maintain stock, and avoid out-of-stock problems or over-
purchased supplies.
Step 3. Controlling pilferage
It is difficult to detect on-counter thefts and pilferage unless you are
sitting behind the cashier's counter and keeping track of the inventory
yourself. In restaurants, this can take numerous forms. It is tough to
monitor thefts, which range from having the wrong number of raw
materials delivered and thefts in inventory to unrecorded orders. Earle,
M. D. (1997) hinted that CCTV cameras, tight rules, and warnings have
all been known to be ineffective in the absence of manual action. POS
software with a theft control tool can assist you in resolving this issue
and controlling restaurant expenditures. It will enable you to assign,
control, and manage permissions to your restaurant workers for various
jobs. The program keeps track of each member's activity as well as the
status of the assignments assigned to them. As a result, thefts can be
reduced by 3-5 percent. This is an excellent food cost-cutting strategy
for your business.
Step 4. Analyzing daily reports
It is critical that you assess your business on a daily basis. You must
review your restaurant's sales data daily and make informed decisions
based on it. Utilize POS software that provides a detailed report of all
transactions as well as profit and loss (P&L) reporting. You may use the
data to plan your restaurant's operations and create reports for daily,
weekly, monthly, and annual reviews. This allows you to keep track of
your expenditures and keep your restaurant prices under control.
Step 5. Reducing labor costs
Food costs and labor costs are the two key running restaurant costs in a
food business. By automating the entire process, you may reduce labor
costs. Employ POS software with automated features like online table
booking, meal ordering, and automatic invoicing to substantially cut
effort and free up significant time for your personnel to give excellent
customer service. As a result, you limit the possibility of human error.
The high employee turnover rate in restaurants raises labor expenditures,
which in turn raises your restaurant costs. As a result, having a
professional taskforce that is loyal and dedicated to your company will
assist you in controlling labor expenditures. Cutting food prices in
restaurants may appear to be a difficult chore, but it is doable with
monitoring.
On the side of numerous approaches a manager might take to boost
revenues, most businesses place a great value on increasing sales and
revenue. Revenue, according to Akitoby, B. (2018), is “the amount of
money that a business brings in, including sales income and any
additional income from bank interest or investments”. Focusing on your
customers and how they react to different sales and marketing strategies
may assist you in determining the ideal way to increase sales and
revenue. Your marketing and promotion efforts can bring in new
customers while keeping existing ones, so improving your earnings. In
this next discussion, I am going to discuss numerous approaches a
manager might take to boost revenues.
The first approach is of setting well defined goals. Management must
create measurable targets for how much income they want to increase.
They can then decide how to pursue their goals and which techniques to
use. By tracking their progress and accomplishments, the manager can
use these goals to drive themselves and their sales staff. The second
approach is to seek repeat clients. Managers must cultivate relationships
with devoted brand customers. Improved communication can assist you
in reminding customers about your business while also regulating the
message they receive. Management may try emailing or texting
customers to increase sales or notify them of new products. Many email
platforms also provide metrics such as the number of recipients that
opened your email or clicked on a link, which can help you determine
how effective your communication options are. The third option is to
improve their (managers') pricing strategy. Managers must rethink their
pricing strategy in order to increase revenue while keeping the same
number of sales. Price is the most important factor in purchase decisions.
Product and service pricing should be changed to reflect your market
position and revenue goals. A rapid price increase will increase revenues
and business profits only provided it does not reduce sales. Business
executives should make an effort to study how their competitors'
products are priced and how their product compares to similar products
from the buyer's perspective. This would allow them to optimally place
their prices in the market. Instead of a major price increase, managers
should try raising interest rates monthly. While a small price rise may
not appear to be substantial when compared to the full price, it has a
direct impact on profit margins and the bottom line. Management in
businesses may sell more products by lowering their prices and
snatching market share from competitors, or they may raise their prices
if their brand is strong, and customers believe the value they provide. If
they provide a subscription service, they may offer a pricing structure
with only a few levels to appeal to customers by giving a simpler
purchasing experience. Another technique proposed by Wirtz, J., Kimes,
S. E., Theng, J. H. P., and Patterson, P. (2003) is the use of effective
marketing tactics. Marketing is a well-known approach for increasing
sales and revenue. Managers must evaluate data on client purchases and
product preferences. Make targeted promotions based on strategic
strategies in order to reach out to certain clients with ad messaging and
promotional offers. A manager can use a variety of marketing methods
and venues to get their product or service acknowledged. This includes
websites, pay-per-click advertising, social media, email marketing,
public relations, content marketing, and traditional marketing methods
such as fliers and billboards. It can also be useful to study and analyses
marketing data from previous years to see which tactics and channels are
most productive for you as a company manager. Discounts and a price-
cutting strategy. Discounts may work wonders and be magnetic if used
correctly. Companies entice customers to buy by providing an
exceptional buying opportunity. Managers might provide a variety of
discounts and unique product categories such as office supplies, school
supplies, or all products with a varying discount on all of them.
Seasonal, conditional, or quantity-based discounts are all possibilities.
Seasonal discounts are those that are only available for a limited time,
whereas conditional discounts are those that are only available on
reconditioned products. Quantity-based discounts, such as Buy One Get
One Free, are common.
Managers must also remodel their sales collateral in order to boost
revenue. The manager's sales collateral could be excellent equipment for
carrying out the company's sales effort and simplifying the job for the
entire sales force. Product sheets, brochures, catalogs, presentations,
and, most importantly, your website are examples of collaterals. Do not
allow it to mislead or provide misleading information to your customers.
This might drastically affect the manager's consumer base and reduce
sales. Managers must verify that their website, as well as all other
collateral, is up to date and only contains accurate information about
their firm, products, and services. Also, make sure to upload new and
active content as this could be a significant pull for more customers. Last
but not least, in order to boost revenue, managers must establish a
reputation as a high-quality service provider. They must consider
building a professional image for the superiority of their brand or the
knowledge of their team in the sector. They should explore using
independent sponsorships from media, well-known celebrities, and
influencers to sell the identity of their brand. This can help them gain
new clients. Successful modes, such as podcasts or fruitful blog entries,
can also assist them in establishing an unrivaled name in the industry for
providing substantial services and great products. Lastly, the managers
should employ the approach of maintaining constant contact with past
consumers and customers. We already know that acquiring new clients is
more difficult than selling to existing ones. Hence, contact the customers
and clients who have previously purchased from you. Such prior
purchases may now require assistance or repair. Managers must extend
their services and make employees feel like they are an important part of
their company. Contact them via e-mail, phone calls, or messaging,
whichever mode is most convenient for them and which they believe is
the most likely to be responsive.
Conclusion
Having come this far, we can clearly infer that revenue is more
important than ever in running a successful and profitable business. As a
result, businesses must prioritize their customers, improve their
marketing and sales activities, evaluate their pricing strategies, and
extend their market in order to increase income. According to the article,
regardless of budget, small business managers can use a range of ways
to increase revenues and improve bottom lines. Maintaining a balance
between short-term and long-term goals, on the other hand, is critical for
increased revenue and success. In an unpredictable environment where
every penny counts, even the slightest gain in sales or expense cutting
can have a significant impact on firm profitability. The good news is that
a large-scale company revamp is not required. It is typically basic,
common-sense actions within a cost-saving strategy that boost the
bottom line, especially for small businesses, and it is important to note
that lowering expenses in business can be difficult, especially if you
don't know where to begin. As a result, managers must continue reading
to learn how to decrease business expenditures to save money in the
long run.
References
Akitoby, B. (2018). Raising revenue. Finance and Development, 55(1),
18-21.
Earle, M. D. (1997). Innovation in the food industry. Trends in Food
Science & Technology, 8(5), 166-175.
Friedman, M. (2007). The social responsibility of business is to increase
its profits (pp. 173-178). springer berlin heidelberg.
Walker, J. R. (2021). The restaurant: from concept to operation. John
Wiley & Sons.
Wirtz, J., Kimes, S. E., Theng, J. H. P., & Patterson, P. (2003). Revenue
management: resolving potential customer conflicts.