OHT 7.1 The effect of price and volume on revenue Table 7.1

OHT 7.2 Key points of revenue appraisal  Revenue is product of price and volume  Appraisal needs to take account of changes in both price and volume  Averages not always accurate and prone to misinterpretation  Allow for inflation and/or price rises  Need to compare like with like  Incorporate 12-month rolling totals to determine true trends and performance  Revenue cannot be fully appraised by itself

OHT 7.3 Calculation of change in costs and revenues Table 7.2

OHT 7.4 Examples of cost percentages for foodservice operations Table 7.3

OHT 7.5 Key points of cost appraisal  Structures vary, and change over time  Can be measured in cash or percentages  Proportional relationship between costs  Relationship between costs and inflation  Cross-sectional and time-series analyses useful  Incorporate 12-month rolling totals to determine true trends and performance  Operators with the lowest costs perceived as having a key advantage  Allocating indirect costs more complex than direct costs

OHT 7.6 Example profit and loss account Table 7.4

OHT 7.7 Comparison of gross profits Table 7.5

OHT 7.8 Comparison of operating profits Table 7.6

OHT 7.9 Yield comparisons Table 7.7

OHT 7.10 Relationship between revenue, costs and profits in foodservice operations Figure 7.1

OHT 7.11 Comparison of GP in relation to revenue Table 7.8

OHT 7.12 Comparison of GP and GP % Table 7.9

OHT 7.13 Sales mix example Table 7.10

OHT 7.14 Effect of changed sales mix Table 7.11

OHT 7.15 Sales mix example (beverages) Table 7.12

OHT 7.16 Example of profitability calculations Table 7.13

OHT 7.17 Example of popularity and profitability ranking Table 7.14

OHT 7.18 Menu engineering matrix Figure 7.2 Adapted from Kasavana and Smith 1999

OHT 7.19 Comparison of net operating profit measures Table 7.15

OHT 7.20 Key points of profit appraisal  Be clear how profit measures are contrived  Compare like with like  Appraise against objectives to give value  Setting objectives includes subjective judgements  Sales mix analysis determines real trends  Profit percentages measure efficiency, not profitability  Percentages allow for comparison only, cash contribution is what is being sought  Comparison with industry norms can be useful  Use rolling 12-month totals to determine true trends and performance  Take account of stakeholders ’ priorities

OHT 7.21 Customer importance/operation achievement matrix Figure 7.3 Achievement by operation Importance to customer

OHT 7.22 Customer importance/operation capability matrix Figure 7.4 Ability of operation Importance to customer

OHT 7.23 Customer importance/staff importance matrix Figure 7.5 Importance to staff Importance to customer

OHT 7.24 The three levels of strategy and the relationship between them Figure 7.7

OHT 7.25 SWOT matrix StrengthsWeaknesses List of strengths List of weaknesses Opportuniti es List of opportuniti es 1 Strengths to make use of opportunities 2 Weaknesses which prevent exploitation of opportunities Threats List of threats 3 Strengths to counter threats 4 Weaknesses which prevent countering threats

OHT 7.26 Eight possible strategic routes for foodservices operations Figure 7.9 Adapted from Johnson and Scholes 1999 Cost to the customer Perceived added value

OHT 7.27 Ansoff ’ s growth matrix with alternative strategies/directions Figure 7.11 Products Markets

OHT 7.28 Strategic means and assessing options  Strategic means  Internal development  Mergers and acquisitions  Joint development  Assessing options  Suitability  Feasibility  Acceptability