Key Concepts in Food and Beverage Operations for Hotels

Posted on Feb 2, 2025 in Business Administration and Innovation Management

Financial Metrics

  • Minimum net profit: 14%
  • Maximum food cost allowance: 30%
  • Maximum labor cost allowance: 22%
  • Maximum overhead cost allowance: 20%
  • Minimum food gross profit (GP): 70%
  • Minimum beverage GP: 75%
  • Maximum food and beverage (F&B) cost allowance: 33%
  • Maximum beverage cost allowance: 25%

Competitors and Partnerships

  • Competitors providing the guest with exactly the same offerings are classified as direct competitors.
  • A joint venture occurs when a hotel and an external party collaborate to develop a new concept.
  • In a hotel scenario, the F&B department is considered a non-core but essential department.

F&B Strategy

  • In the F&B strategy, P.O.C3 stands for: Planning, Organizing, Controlling, Coordinating, Commanding.

Pricing Models

  • The pricing model that only considers the raw cost of ingredients is called cost-plus pricing.
  • The pricing model where prices are copied from competitors is called competition pricing.
  • To decide on the imposed price, consider: location, competitors, and industry trends.
  • When pricing items for a menu, guarantee profitability and value for money.

Menu Engineering

  • A menu card is a marketing, selling, and communication tool.
  • Menu engineering is a control system used to evaluate the menu’s performance as a selling tool.
  • Menu mix percentage evaluates the popularity of an item.
  • Menu engineering classifications:
    • Puzzle: Low in popularity, high in profitability.
    • Star: High in popularity, high in profitability.
    • Dog: Low in popularity, low in profitability.

Outsourcing and Leasing

  • Leasing is renting space to an external operator for their concept.
  • Outsourcing involves an agreement with an external party to conduct an activity on your premises.
  • The outsourcing strategy based on renting space for others to operate is called leasing.
  • The main disadvantage of outsourcing an F&B operation is the loss of operational control.
  • Franchising is bringing a well-known, successful operation to your premises.

Procurement and Inventory

  • The specification form includes all details about the products being ordered.
  • The specification form is used during the ordering function.
  • Complete an internal requisition to obtain products from the main storeroom.
  • In bar inventory control, the value of stocks is calculated using the unit cost price.
  • Bar inventory control helps to:
    • Track stock levels
    • Identify discrepancies
    • Calculate costs
  • Discrepancies in bar inventory are found by comparing usage and registered sales in units.
  • If the beverage cost percentage exceeds 25% in bar inventory control, it may indicate:
    • Waste in the operation
    • Pilferage
    • Inaccurate cost-plus pricing calculations

Operations and Menu Merchandise

  • The three pillars for the success of an F&B operation are layout, menu, and staff.
  • The edible yield is the usable portion of a product after preparation (not considered waste).
  • Menus can be classified as set or à la carte.
  • Menu merchandise are items used to draw guest attention to specific menu offerings.
  • The wall display is a menu merchandise mainly used in fast-food operations.
  • A tent card is a menu merchandise placed on the table, often used to promote items ordered at the beginning of a meal.
  • USP stands for Unique Selling Point.

Concept Feasibility

  • The document that helps determine if a concept is viable is the feasibility study.

Standard Operating Procedures

  • SOP stands for Standard Operating Procedures.

Guest Types

  • The three types of guests for the F&B department in a hotel are hotel guests, employees, and local patrons.

Calculations

  • The raw cost of a dish is the cost to prepare one portion using raw ingredients.
  • In cost-plus pricing, calculate the selling price by determining the raw cost and applying a standard multiplier of 3.