Chapter 12 Controlling Food Sales Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Learning Objectives 12.1 List and explain the three goals of sales control. 12.2 List and describe eight determinants of customer restaurant selection. 12.3 Describe the two principal means of maximizing profits. 12.4 Explain the three most common methods of establishing menu prices. 12.5 Describe the two principal means of selling products effectively in a restaurant. 12.6 List and explain the five most important elements of menu preparation. 12.7 Explain management’s attempts to maximize profits by establishing proper sales techniques. 12.8 Describe how technology has affected sales techniques. 12.9 Explain the importance of revenue control. 12.10 List and explain the three standards established to achieve the goals of revenue control. 12.11 List and describe the standard procedures for controlling revenue. Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Introduction Control was defined as “a process used by managers to direct, regulate, and restrain the actions of people so that the established goals of an enterprise may be achieved.” Revenue control is only one important goal of sales control. An important maxim for any business is that “without sales it is impossible to control costs.” Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Sales Control Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition Discuss Sales Control concept: how to control revenue collection, optimizing the number of sales, and maximize profit through pricing and selling products

Goals of Sales Control Optimize number of customers Maximizing profit attract a sufficient number of customers Maximizing profit obtain the maximum gross profit from customers Controlling revenue all of the revenue resulting from sales is realized Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Optimizing the Number of Customers Location Menu item differentiation Price acceptability and value Décor and lighting Portion sizes Product quality Service standards Menu diversity Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Location Other things being equal, customers will choose the most conveniently located restaurant. The greater the distance from a population centre, the fewer the customers a restaurant can expect to attract from that centre. Having a good location is usually necessary for volume business. Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Menu Item Differentiation Homogenous products or services are so similar to another, customers have no preference, choosing whichever costs less. Differentiated goods and services are sufficiently different that customers develop preferences. Unique menu items are called signature items. Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Price Acceptability & Value If restaurants are alike in every way except menu prices, the one with the lowest prices will have the greatest sales volume. The more homogeneous an item, the more price sensitive it is. If menu items are price sensitive, a relationship exists between sales price and sales volume. Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Décor & Lighting Décor differentiates one restaurant from another. Décor that appeals to a large segment of the targeted market should be selected. Evaluate the decors of local restaurants. Professional help is recommended. Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Portion Sizes & Product Quality Portion sizes must be appropriate to a restaurant’s clientele. Large portions do not always attract the greatest number of customers. Various customer segments demand food products of various levels of quality. Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Service Standards Customers select restaurants offering a type and level of service that they find appropriate to the occasion. Managers must be able to adjust some aspects of service in order to increase customer satisfaction. Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Menu Diversity Most restaurants find it necessary to have a broad range of menu items. The number and range of menu items are governed by: cost considerations available equipment the culinary abilities of the kitchen staff Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Maximizing Profit 2 principal means to maximize profits: Pricing Products Properly Matching competitors’ prices Calculating prices from costs and cost percents Adding desired contribution margins to portion costs Selling Products Effectively The menu The sales techniques used by the staff Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Pricing Products Properly Cost is usually the most significant factor in establishing sales prices. Restaurants with differentiated products have more flexibility to change menu prices than those with homogenous products. The proper sales price for an item is that which will produce an acceptable number of sales. Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Setting Menu Prices Matching competitors’ prices Common by those with no idea of cost Calculating prices from costs and cost percents Create the price by using a fixed food cost % Use portion cost and forecast sales volume Adding contribution margins to portion costs Often used and equitable Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

The Importance of the Menu The menu is the primary sales tool. The five most important elements of menu preparation are: Layout and design Variety Item arrangement and location Descriptive language Kitchen personnel and equipment Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Sales Techniques Managers hold daily meetings with servers before opening time and benefit: Management Customers Servers Training servers: Suggestive selling Suggest specific menu items Empower = Total Quality Management Technology Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Controlling Revenue There are three standards for achieving the goal of revenue control: Documenting all sales Pricing all sales correctly Verifying that all sales are recorded and deposited Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Documenting Food Sales – Manual Using guest cheques: Helps servers remember orders Provides a written order for the kitchen Gives itemized bills to guests Maintains records for sales history Proves accuracy of cashiers’ work Verifies the accuracy of prices charged Records for tax purposes Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Using Numbered Cheques Using cheques numbered sequentially Signature book for control Dupes for follow-up Concerns with using hand-written guest cheques Legibility Accuracy Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Pricing All Sales Correctly Control is required to ensure: correct menu selection accuracy of prices accuracy of arithmetic accurate subtotal of menu prices tax calculated as a percentage of subtotal grand total for the cheque Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Recording Revenue Restaurant sales control sheet Using a register Breaking down sales into categories Errors Labour Consider benefits of electronic Touch screens, PDA Accurate Monitor Reports Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

Key Terms Control sheet, p. 325 Revenue control, p. 300 Data mining, p. 319 Sales control, p. 300 Differentiated product, p. 303 Signature book, p. 322 Dupe system, p. 324 Signature item, p. 304 Guest cheque, p. 322 Total Quality Management, p. 318 Homogeneous product, p. 303 Truth in advertising, p. 316 Price sensitive, p. 304 Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

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