A: Sales mix is a term referred to the proportion of the sale of items to each other in a food service organization. In a hotel serving different cuisines in different restaurants, sales mix will refer to the proportion of the sales of all the restaurants to each other.
Q: Contribution Margin
A: Contribution margin is the amount left in selling price after deducting the standard food cost. Contribution is the amount contributed to the profit. Contribution margin is equal to gross profit.
Q: What is a popularity index? What are its uses?
A: Popularity index is an index which shows the popularity of each menu item in relation to the other. Popularity index is calculated in percentages.
Q: Menu Engineering
A: Menu Engineering is the most popular method of menu analysis devised by Michael L. Kasavana and Donald L. Smith. Menu Engineering analysis is done by using Popularity index and profitability index of the menu items.
Q: Loss Leader
A: Loss leader is a subjective pricing method. In this method an unusually low price is set for a menu item. This pricing method is used to attract the guest with low pricing.
Intuitive pricing method
Intuitive pricing method is the wildest method utilized by a manager to set up the menu item prices as this method totally depend upon the institution of the manager, his fancies and guesses. This is a risky method of pricing and often results in huge losses.
Q: Reasonable price method
A: Reasonable pricing method is subjective pricing method where the manager guesses the most reasonable value of the menu item by keeping the restaurant’s service and decore. Here the manager may keep any price he feels will be fair to be charged.
Q: Standard Recipe
A: Standard Recipe is the written formula to produce a menu item. Standard recipe is considered as one of the cost control tool.
Q: Cost Factor
A: Cost Factor is a calculated value used to find out new cost per servable quantity whenever the market price changes. Cost Factor is used for adjusting the Standard Recipe Yield.
Q: Mark-up Pricing method
A: This is a type of Menu pricing method where the cost of ingredient is taken as a base to which a calculated amount is called the mark-up is multiplied to get the base selling price. It is important to keep in mind that the mark up should cover all the non-food cost and the desired profit.
Q: Ratio pricing method
A: Ratio pricing method is type of pricing method used by catering establishments. In this pricing method the ratio between the contribution margin and the food cost is calculated. The ratio developed is used to calculate the contribution margin, which is added to the food cost to reach the base selling price.
(Note: This blog is to provide some inputs to the students of hotel management. Additional referrence is suggested for the complete and indepth understanding of the subject.)
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