YIELD MANAGEMENT (F & B PRACTICALS)
Yield management is a pricing strategy and a function
of the supply and demand economy. It’s particularly important and useful in the
hospitality industry. Essentially, by strategically editing prices on
hospitality goods, like hotel rooms, rental cars, plane tickets, and more,
businesses can find the right price to reach the customer during that period in
time. This reduces the likelihood of lost revenue and can help hospitality
businesses manage their product and revenue streams, even when demand varies.
Yield management is based on supply and demand. Prices tend
to rise when demand exceeds supply; prices tend to fall when supply exceeds
demand. Pricing is the key to profitability. To increase revenue, the
hospitality industry is attempting to develop new forecasting techniques that
will enable it to respond to changes in supply and demand with optimal room
rates.
In restaurant
operations, to have an effective control, the restaurant management must
establish the number of standard portions that are obtainable from all major
items that appear on restaurant's menu.
For example from a carcass of 8 kg lamb meat the number of
standard portions for mutton curry should be so many and each portion must weight
so many grams. The standard weight of fat, bone and other specific
joints should be so much and the following dishes and these many
numbers of portions should be taken out from the carcass.
After establishing the standard yield for all the major items,
it is possible to plan the menu costing and pricing. It also helps in volume
forecasting for specific items into raw material requirements.
The control department should weight the standard portion
size at random to maintain the portion standard.
Even the number of
portions taken out from a unit should also be calculating as this will help in
controlling the food cost and maintaining the standard portion size.
It should be also kept in mind that the exact yield of the
cooked food will be different from the raw food's yield.
In case of dry food
the weight of the dish will reduce after cooking as the moisture will
evaporate. For example a marinated portion of fish weight 250 grams before
frying will reduce to say 230 grams after frying.
Test to arrive at standard yield
This test determines how much usable and non usable product
an item yields.
Example; process a whole chicken to determine the weight for the breast,
legs, wings, bones, etc.
Yield % is the percentage of product you will have remaining after
cooking, trimming, portioning or cleaning.
what is waste %.
Waste % is the percentage of product lost due to cooking, trimming,
portioning or cleaning.
Product Loss
Waste % = ----------------
Weight
Yield % =
1Kg – Waste%
Benefits or Importance of Yield Management
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Improved forecasting
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Improved seasonal pricing
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Identification of new market segments for
restaurant
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Identification of market segment demands in
restaurant
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Determination of discounting activity
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Improved development of short-term and long-term
business plans for restaurant operations
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Establishment of a pricing for restaurant menus.
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Savings in labour costs and other operating
expenses
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Planned responses to guest inquiries regarding
pricing and other considerations for reservations.
How Proper Yield Management Helps You Control Restaurant
Food Costs
Yield management is an integral part of food cost control
as it gives you the idea of how much quantity of raw materials would be used to
prepare a particular food item. The raw materials should be ordered
and purchased keeping the yield of the items in mind.
For example, the quantity of potato delivered to your restaurant,
and the quantity of raw potato without the peel that can be consumed in a dish
is different. While placing the order, you should keep in mind how
many portions would a particular order of raw materials delivery.
Maintaining The Recipes Of All Your Menu Items
In YIELD MANAGEMENT, the recipes should include - item
name, quantity, unit, yield percentage, average price, and last price. This
will give you an understanding of the cost of the yield used in preparing an item
and consequently set your menu price to ensure that you have a stable profit
margin.
In short, yield management will help you know the exact
amount used in preparing a dish, which in a way will help you gauge the amount
of raw material you would need in a particular period, and also ensure that you
do your menu engineering right.