REVISION SESSION 2 Yield Management

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

Ø  Improved forecasting

Ø  Improved seasonal pricing

Ø  Identification of new market segments for restaurant

Ø  Identification of market segment demands in restaurant

Ø  Determination of discounting activity

Ø  Improved development of short-term and long-term business plans for restaurant operations

Ø  Establishment of a pricing for restaurant menus.

Ø  Savings in labour costs and other operating expenses

Ø  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.