Q: Sales Mix
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.
Q: Intuitive pricing method
A: 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.
Q: Menu Analysis
A: Menu analysis is post operational procedure, where the acceptability of the prevailing menu is analyzed. There are various kinds of menu analysis such as Menu analysis is done by various methods in different organizations depending upon the situation and requirements namely (a) Popularity Index (b) Profitability Index (c) Goal Value Analysis (d) Menu Factor Analysis (e) Hurst’s Menu Scoring (f) Kasavana’s Menu Item Analysis etc
Q: Purchasing
A: Purchasing can be defined as “ a function concerned with the search, selection, purchase, recipe, storage and final use of a commodity in accordance with the catering policy of the establishment”.
Q: Cash and carry
A: Cash and Carry is a purchasing method where the purchase is done against cash. This type of purchase is usually done by small to medium sized establishments, whose orders not very large.
Q: Total supply
A: Total supply is a purchasing method where the purchase is done at only one supplier. This supplier supplies all the items necessary for the establishment. This has the advantage of only having to negotiate with one supplier; a reduced volume of paper work; and far fewer deliveries. The main disadvantage is that of being tied to one major supplier. Whose prices may not be as competitive as when using several suppliers and whose range of certain commodities may be limited.
Q: Centralized purchasing
A: Centralized purchasing is purchasing all items for both or all the units together at one point. Under centralized purchasing one central department makes all purchases for the whole organization.
Q: Standing orders
A: Certain raw materials, which have a good turnover and have to be regularly replenished due to either (1) less storage space or the (2) Perishable nature of the product, are purchased regularly from the supplier after a regular interval. There remains standing order of a pre assessed quantity, which is supplied over a long period of time.
Q: Economic Order Quantity
A: Economic Order Quantity is the optimum quantity of raw material to be bought at each order. It sets equilibrium between carrying costs and ordering costs. At this point cost of carrying and cost of ordering are equal and the total cost is the lowest.
Q: Kickback
A: Kickback is term used to denote the theft and fraud in purchasing. In several common types of kickbacks the buyer and the purchase works in collusion with each other to cheat the company.
(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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