SALES CONTROL

Chapter 6 : SALES CONTROL

SALES CONTROL
 Sales – ways of expressing selling,
 determining sales price,
 Calculation of selling price,
 factors to be considered while fixing selling price
 Matching costs with sales
 Billing procedure – cash and credit sale
 Cashier’s Sales summary sheet

SALES CONTROL
Sales is defined as revenue resulting from exchange of products & services for value.

Two groups of terms used in F & B to express sales concepts –

a) Monetary

i) Total sales – Refers to total volume of sales expressed in Rs. terms.
ii) Total sales by category – eg total food sales, total beverage sales.
iii) Total sales per server – It is the total Rs. volume of sales for which given server
has been responsible in a given time period. Mgmt uses this to evaluate performance.
iv) Total sales per seat – Total Rs. sales for a given time period divided by number of
seats in the restaurant generally period is one year. To compare sales results of
one unit c another.
v) Sales price – refers to the amount changed from each customer purchasing one
unit of a particular item.
vi) Average sale – Determined by adding individual sales to defter a total and then
dividing that total by number of individual sales.

1. Average sales per customer – divided Rs. sales by number of customers.
Average sale per customer =
Total NoCover
Total Rs.
2. Average sales per server – Total Rs. sales for an individual divided by
number of customers served by him. Used for perform evaluation.

b) Non monetary terms -

i) Total numbers sold – Total no. of a specific item sold. Helps to determine the
food items popular. Historical records of total no of ............... a sold are useful for
fore casting. Sale – decisions about in vendor purchasing & production.
ii) Covers – Cover is term used for any person who has a meal in the restaurant.
iii) Total covers – refers to total number of customer served in a given period to
hindge business trends.
iv) Average covers – An average number of covers is ........ by dividing total number
of covers for a given time period by the number denoting the time period.
Cover per hour = Total covers / No. of hours of operation
Lovers per server = total covers / No of server
v) Seat turn over / Turn over – Refers to number of seats occupied during a given
period / No of customers served. generally calculated per meal.
vi) Sales mix – Term used to describe relative quantity sold of any menu item as
compared with other items in same category. Relative gtyies are % ages of total
mint sales.
Cost per % = 100
Food Sales
Food Cost
Ber Cost % = 100
Bev Sales
Bev Cost
Labor Cost % = 100
cos

Total Sales
Labour t
Use of cost percents
(1) Use of cost percents Provide a means of comparing cost relative to sales for two or more
periods of time.
(2) Provide a means of comparing two or more similar F & B opens.
100%
sales
Cost
( )
cos %
sales salling price
t
Cost
(Expected) sales × cost % = Expected cost

Industry & Cost percents –
Two basic type F & B operations –
1. Those that operate at a low margin of profit per item served & depend on relatively high
business volume eg fast out lets.
2. Those that operate at a relatively high margin of profit per item mind in do not require
such a high business volume eg fine dining restaurants.
Food cost % are higher as they low period menus. They hire unskilled semiskilled people pay
lower wages, keep number of employee at a minimum, this balance high food cost % c low
labor cost%
Food cost % is lover because of higher menu prices and party because foods purchased in
raw form are less expensive than proportioned convenience food items. Need highly skilled
personnel and high labor cost?
Sales control
3 objectives
1. Optimizing number of customers
2. Maximizing profit
3. Controlling revenue
1. Optimizing number of customers –
Assuming that there are sufficient members of potential customers available within a
reasonable distance from a particular restaurant i.e. the target market is large enough for the
establishment to operate profit steps are taken to maximize customs who will patronize the
restaurant. For this advertising is done, discounts, special offers as given keeping in mind factors
which influence a customers –
1. LocationChapter
6
If we take a pop centre and draw concentric circle around it and place a restaurant on each of
these concentric circles the effect of location in relation to pop is understood. Other things being
equal, customers would choose most conveniently located restaurant taking into A/C time and
distance involved in reaching a particular restaurant. Hence expected business would be as
follow
A > B > C > D
All restaurants need to be local as the closer a restaurant is to its target market, more business it
will do.

2. Menu Item Differentiation-

Economists divide goods and services into 2 categories-

(a) Homogeneous – A product or service that is so similar to another that customers don’t
have a preference and will purchase whichever is cheaper. This they have a general
market price eg grains, pulses etc.

(b) Differentiated – A product or service that is sufficiently different from other in their class
that customers develop preference from them. Such products are considered unique (real/
imagined) and customers are ready to pay a higher price for the same eq. clothing.
Greater the degree of differentiate greater the degree of customer that can be detected
among customers to the extent a foodservice operator can develop & include in the menu
products that are differentiated patent customers seeking those products are likely to be
A
B
C
D
Pop Centre

willing to travel greater distances & pay higher prices to obtain them. Unique menu items
created for this purpose are called signature its often specially named for a restaurant chef
or locality eg dal Bakhara of Murya Sh ................ hence has to have greatest menu
differentiation.

(3) Price Acceptability

If all other factors are equal the restaurant with lowest menu with get max customer. C, D
prices have to have lower prices
Restaurant menu items are price Sensitive i.e. sales price ×
sales volme
1
in F & B the
more homogenous an item is more price sensitive it more differentiated less prices for a
menu item to sell the menu sales price must be acceptable to the customer the customer
must judge that the value received, including too & other items that go to make up the
restaurant product, is sufficient to justify acceptance of stipulated menu price the food
service operator has set prices that will be acceptable to his target market.

(4) Lighting & Decor – They help to differentiate one restaurant from another. Vary acc to
diff types of customers. Hence the target ..... influences lights decor. Family gps –
informal, brightly lit and cheerful interiors
Fine dining rest – formal setting
Bar/Discotheque – Dark, less light with discotheque lights

(5) Portion sizes -

It must be appropriate to the target market. Young & active people prefer large portions.
Order Adults – smaller portions
Customer wants value for money with no wastage

If portions are too small, business will be lost. If they are larger than regd. food wasted,
food cost and profits.

(6) Product Quality

Different Sections
A. Gourments – (High wastage to quality)
1. All ingredients must be fresh.
2. Soups be prepared from freshly made stocks etc.
3. If qlty std. is not met they will not patronize the restaurants.
B. Majority customers – less Right on quality
C. No concerned about quality
Hence target market’s preference about quality must be considered

6. Service Stds. -

Fast food outlets – American service find dining – silver service
Customer takes into a/c
a) Occasion
b) Time available
c) Practice of tips.
8. Menu diversity – Refers to choices offered in different courses
Most restaurants need to ........ a board range of menu items and frequents variations.
The number & range of items on any menu are decided on basis of
a) Equipment available in kitchen
b) Culinary ability of kitchen staff
c) Cost considerations due to leftover food.

As a general rules, the greater the scope of the menu consistent with above factors, the large
segment of the market to which the menu will appeal and more likely the restaurant will succeed.

II. Maximizing profit
2 means
1. Pricing Products Properly
For establishing selling price following factors are to be taken into a/c :-
a) Cost – Higher Cost – Higher Selling Price
b) Desire to maximise sales through greater differentiation of products.
3 Basic Methods of Deciding Selling Price-
(i) Matching Competitor’s Price-
This is also called ‘Follow the leader’ Approach i.e., as rhe price that meet competitor’s
prices. Most common method and used by those who have no idea of costs of that items sold.
Restaurants believe that if they don’t do so they will loose business to the competition.
True in case of price sensitive homogeneous products requires an in price which in business. this
may lead to volume to retain profits.
(ii) Calculating price from Costs and Cost Percents-
First portion Cost is calculated
2 Variations-
(1) Given portion cost for any menu item one can calculate menu price so that portion cost
will be sound fixed of that price. This is successful where staff follow all stds of cost
control.

(2) With portion costs known, a mg gets tentative menu prices and the forecasts dales vol for
the up coming period. If projected cost percent is unsatisfactory then portion costs menu
prices, forecast can be adjusted till correct level is achieve (Hit and Trial Method)
(iii) Adding Contribution Margin to portion Costs-
This approach requires a food service operation to determine average contribution margin
required to cover costs other than food and to yield the desired level of profit at expected
level of sales volume. This average to the portion costs of menu items to determine their
menu prices.
In April 2007
eg. No. of customers = Rs. 3000
Food Sales = Rs. 500,000
- Cost of Sales (FC) = Rs. 200,000
Gross Profit = Rs. 300,000
- All Other Costs = Rs. 250,000
Rs. 50,000
Average Sale per customer = Rs.
3000
500,000
= Rs. 166.67
Contribution per customer
costs other than food + Profit =
3000
300,000
= Rs. 100
Thus each menu item should be

priced Rs. 100.......... above portion cost.
If this approach is adopted and if sales volume matched or exceeded fore costs the min accepted
Rs profit would be assured, provided costs are strictly controlled.

3. Selling Products Effectively –

Two principal means
a) The Menu
b) The sales techniques used by the staff
a) The Menu
Those that are best presented will sell the most and vice versa. One must maximise sales
volume for those items which are the most profitable i.e., have highest contribution margin.

Important elements of menu Preparation

(i) Layout and Design- Acc to clientele style and decor of restaurant.
(ii) Variety – suitable variety of foods, preparation methods and prices.
Variety – largest no. of customers minimum 5 choices
Menu should reflect various cooking methods eg boiling, poaching, roasting, grilling, frying,
pleasant & appropriate contrasts in colour, texture, ingredients. Appearance of dishes should be
excellent
(iii) Item arrangement & Location -
(1) First Focus is on centre of menu
(2) Items listed first & at the top are seen earlier. The dishes listed as above will have
higher sales.
(3) Feature a particular menu item by printing it in larger type or in different type
face.
(4) Use of coloured pictures, drawings or photographs can capture attention.

The items featured should be the ones mgmt wants to sell the max i.e. ones which are in
supply to max extent on that day items that have a favourable cost to sales ratio ..... have a high
contribution margin.
High cost, high priced items will be featured items.
(iv) Descriptive Language -
The menu itself & language used to described menu items make a good impression
&induce customer orders. in addition to descriptive adjectives, a good menu description
should include indication of portion size method of cooking majoring gradients, garnishes
& presentation.
(v) Kitchen personnel & Equipment
(1) Mgrs brief service staff about day’s menu to be sure that they known descript of main
ingredients cooking method of each item, Day’s specials and also identify dishes
which servers must make effort to sell.
(2) Servers should suggest menu items or courses to customers that they might not
othewise consider orders eg order of drinks before meals eg appetizers, salads,
desserts.
(3) Severs suggest specific menu item
(4) Up selling

III. Controlling revenue

3 stds for achieving goal of revenue control –
1. Documenting all sales
2. Pricing al sales correctly
3. Verifying that all sales are recorded

Manual means of revenue control

1. Documenting all sales
One of the most basic steps in manual food sales control is to require that each menu item
ordered be recorded in some way. Traditional method servers record guests menu
selections and menu prices of those selections on paper forms called guest/sales checks.
They form 7 functions
(a) helps servers remember specifics of guests orders
(b) Provide a written food order to kitchen personnel
(c) Give itemised bills to guest
(d) Maintain written records of portion sales to add to a sales history
(e) Prove the accuracy of cashiers worth
(f) Verify that accuracy of prices charged
(g) Provide the records regd for tax purposes.

2. Using numbered checks
(a) Guest checks must be sequentially numbered checks. 2 kinds of numbered of 25 or 50
or etc. one pad is assigned to a single server who will be help accountable for all
checks in that ..... used in restaurants which are less formal, where seat turnover is
higher and servers use a great many checks in a day / shift.
(b) Unpadded checks
These are assigned to servers on at a time. so server is held response for the specific
checks assigned to him or her used in restaurant with formal service style seat
turnover is low and server will use fewer checks during day / shift.

Numbered checks make it possible to assign responsibility for specify checks to
particular employees. Done by personnel signing for check server’s sign for a pad of
checks before serving period & to return it at the end recording serial nos. of checks.
Missing checks are indications that a ........ of cashier is dishonest, destroying check
and pocketing the money. It may be that the customer took the check and did not pay
for the meal.
Investigation is ordered and the server who was assigned the check pays the an
Server’s Signature book
Ate Waiter No Book No. From To Closing No. Sign
Cahier’s record of checks
Cashier’s ____________ Date
___________
Check No. Waiter No. No served Table No Waiter’s sign

2. Pricing all sales correctly
Busy servers / cashiers can make errors. Incorrect selections are incorrect prices may be
written checks. Now a days servers only wirte food orders on checks/ Is and a copy of it is
given to the cashier who prices it.
Menu prices must be accurate arithmetic must also be accurate.

3. Recording revenue
Cashiers are assigned the responsibilities for taking payments front customer and recording
sales as customer leave the restaurant. Usually stationed near restaurant exits.
(1) Sales are recorded in a register and guest checks may be endorsed in register as the sale is
recorded. If guest check is endorsed, each check has to be inserted in the cash register as the
sale is being recorded so that amount recorded is prints on the check. Thus all guest checks a
endorsed regardless of how they are settled. The printed endorsement help to differentiate
........ guest the that have been settled & those that are not cashiers record breakdown of
checks into appropriate categories (food sales, taxes, tips, cash sales, charge sales) in
restaurant cashier’s sales summary sheet.
This report provides mgmt with necessary sales into for a/c purpose s well as mgmt analysis.
Mgmt can determine popularity of menu items, food cost % age, individual server sales etc.

Restaurant cashier’s sales summary sheet.
Check
No.
Waiter
NO
Servers Food
Sales
Bev
Sales
Fax Tip Total Cash Charge details.