Food & Beverage Chapter (4-7)
Food & Beverage
continue from first lesson (Chapter 1 to 3)................
The pricing policy for the new drink list
Mere presenting attractive and well designed menus may not boost up beverage sale. Significantly important is adapting correct pricing policy. The beverage market is very competitive. Economic recession worldwide has to some extent worsened the situation.
5.1 The number of pubs has gone down but investment in the development of new premises has increased... £800 million has been invested in the restoration and renovation of premises in 1996. This industry forms approximately 3% of the UK gross domestic product. Pubs, clubs and bars sector is a largest employer in the UK. (Michael Flynn 2000) The sector is very competitive. Considering the realities, the Assistant Manager therefore lays emphasis on the following aspects regarding pricing.
a) The price should include the operation cost, setting-up cost, the cost of electricity, gas, washing, cleaning, the fixed cost such as staff cost, rates, loan payment, mortgages and VAT.
b) The pricing should be based on the target market of the operation. Pricing also determines the type of clientele the operation has. A premium price demands not only a high quality drink but also high quality service, furnishing, decor, ambience or entertainment.
c) The product and service, as received by the customers, must match the value of the money they spend, regardless of what the price may be.
d) Pricing policy should attract customers even though by lowering profit. Pricing should be targeted to work a promotional tool. Offering special lunch or dinner with alcoholic drinks and offering wine on discounts to target group of users should be made for larger sale.
e) The hotel management should aim at maximizing the number of customers. They should target the customers, they believes, they will have. The physical design of the premises, the human resources, the products themselves and the styles of service should meet the expectation of the customers.
f) To maximize numbers of customers, gaming, betting, casino, lotteries should be installed. Incidence of investment necessary in this regard should be included into beverage pricing.
g) Cost of storage and control of beverage should invariably from a part of price. (Michael Flynn et-al 2000)
Purchase of beverage stock
6.1 The Assistant Manager thinks that selling any beverage profitably largely depends how it is procured, stored and presereved from damage, miss-use and theft. He therefore thinks that the hotel management should adapt the following policy in relation to beverage purchase:
a) The hotel is tied up with a brewery company like Bass, Whitebread and Brains. Beers may be procured from the parent company and other beverages from nominated suppliers.
b) The drinks should be sometimes procured from nominated suppliers in bulk quality as to achieve significant discount. When beverage can be bought from a parent company at lesser price than supplier’s, it should be bought from them
c) The hotel being a part of national chain, the purchase of all business is conducted by the purchasing department which should independently choose any suppliers it likes by negotiating maximum discount
6.3 An item-wise strategy for purchases of alcohol is as follows:
Breweries are national, regional or local microbrewery. The hotel, even if tied to any brewery, should retain its option to source its purchase independently. When non-tied they can buy from any source by negotiating maximum discounts.
· Cash and Carry:
Specialist Supermarket, Cash and Carry sell in bulk. The hotel may use them in emergency following normal practice.
· General wholesaler:
The hotel may purchase alcohols or wines with competitive price from big wholesalers which buy from overseas and keep stock of beverage in their large warehouses.
· Wine wholesaler:
Like a general wholesaler, a wine wholesaler is specialised in supplying better quality wine. They can also sell premium spirits like Avery’s of Bristol. They may be used to procure wines for customers having higher socio-economic profile and disposable earning. Wine seller like Matthew Clarke may be used as a significant source.
They specialize in sales usually from a specific region. To sell to both small and big operations. Both of them may use the brokers when needed and convenient. Purchasing from brokers though complex with cost factors, should be used during expediency.
· Agency distributor :
As often cheaper and as they also offer after service they should be another source for beverage purchase. They are large wholesalers, often having licences to manufacture international brands (other than wine, cascade, deluxe spirits) within the UK.
(Michael Flynn et al 2000)
Chapter 6: Storage and control of Beverage
7.1 Procuring beverages at competitive price with satisfactory discount is an important skill in revenue earning from alcohol sale. Equally important is how the procured beverages are stored, preserved and their movement is controlled. If beverages are not properly stored, they will deteriorate and also may be stolen. This directly affects investment and revenue earning. As consumed by customers food and beverage should be stored, preserved, maintained in a manner that they remain fit for human consumption. The Assistant Manager therefore thinks that the following factors in storing and controlling the beverages stock should be taken care of in relation to:
· Spirit, liquers and some types of wines which have long shelf lives.
· Application of Food Safety Acts to control hazardous substances and beverages.
· Cleaning of beers pumps and lines area as beers are supplied through them. (pumps and lines area)
· The storage area should be clean as dry damp condition can harm label, cartoons etc.
· Lighting should be low (40watts maximum). A beer storage should be between 130C and 140C while a wine storage should have a temperature of 130C. A significant variation, let us say 30C to 40C either way can effect deterioration.
· All storage areas of all kinds of beverages should always be kept clean, tidy and be swept and washed. Empty containers must not be kept in the same place with the new stock as they are likely to accumulate bacteria from open containers.
· A financial involvement in the wet stock being big, security aspect of stock should be taken care of. Access to storage record and movements of stock both internally and externally should be controlled, specific and designated.
· Beverages beyond expiry dates cannot be sold. So it should be a regular practice to examine “the best before dates” to confirm when these are stored and when they need to be sold.
· IT based system on line information on stock control, electronic bar management, rapid order system point of sale, application of appropriate technology for control of beverages stores-all these are effective controlling method of beverage stock.
(Michael Flynn, Public House and Beverage Management, first published 2000)
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In order to extend the beverage provision of the 4star hotel, the Assistant Manager makes the following recommendations:
a. The bar room should be –
· refurnished and renovated with new furniture;
· well decorated to provide a soothing and ambient atmosphere;
· manned with trained good looking and well dressed and well behaved bar girls;
b. The menus of the bar should be –
· Well designed
· Accurate regarding pricing and bar stock
· Prepared in clear and easy language.
c. Procurement of beverage-
· All out efforts should be made to procure good quality beverages at most available discounts;
· The hotel should have freedom of choice to procure beverages from any source they find convenient and competitive.
d. Storage of bar stock-
· Appropriate steps by use of right technology should be taken to preserve the quality of alcohol stock and protect them from misuse and theft.
· The concept of sale mix should be used;
· Through market intelligence, the price should be fixed as such that will promote larger sale and revenue earning in the prevailing competitive markets.
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