How to create a hotel

Par Stock Sheet

Many hotels use par stock sheet to provide menu details, and menu ingredients. Par stock sheet is important for planning purposes by providing specific guidelines on menu items and the required quantity. Hence, feedback from the customers menu choice provide managers a better understanding of the customers’ needs. Moreover, customers can acquire the adequate knowledge about food contents and its health benefits from par stock sheet, thus, attracting them to the hotel. In addition, businesses can accurately calculate its competitiveness level.
The pers stock sheet order provides a clear guideline on the specific item nad the quantity needed thereby helping in planning. Further the details are used in cost estimation and allocation to ensure that the hotel offers competitive value for money compared to other firms in the industry. Also, it is used during evaluation process to determine the performance and financial implications. The information captured is used during budgeting and audit process to predict the progress and estimated outcomes. The order of items enables the management keep track of the inventory and facilitates smooth acquisition of raw materials required to make the meals. Moreover, it gives the reflection of the business and reduces wastage of materials. The packaging of the products is important to help in managing the time to ensure that the product and services meet the customer’s expectation thereby increasing their satisfaction leading to business growth.
The factors considered when creating the par stock sheet include the budget, the available infrastructure, the size of the facility, services offered, target market, the industry standards, competitors/rivals, estimated revenue and the business objectives. The budget available determines the amount of materials that should be purchased in a period and their value. The infrastructure includes the storage, preservation materials, the cooking items, the utensils and the hotel facilities such as the siting space that affects the volume of items that can be used and made at a particular time to prevent overstocking and compromising other factors such as space, quality and luxury. The size of facility determines the number of customers that can be served at a single instance, the size of store, the organization of seats and tables, and the floor design thereby affecting the amount of meals to be made to accommodate a particular number of customers. Also, the services available determines the quantity to be offered and the prices per item. The target market regulates the ingredients in the items therefore affects the choice of a product and this affects the sales volume. Moreover, the industry standards and competition affects the volume and composition or content of the meals of the hotel to give it competitive advantage over their rivals. Lastly the business objectives affect the choice of items, the quantity and the prices to ensure they achieve the set goals.

The Menu Structure

Minimum Menu Pricing

The price of a commodity affects the sales volume and the target market for the commodity. The price is associated with the value of acquisition of the item at a particular time. Individuals usually enquire the price of a commodity before making a purchase. The constituent ingredients and the market rates determines the prices of commodities in the food sector. A recipe in a hotels menu and the price affects the growth performance either positively or negatively. The minimum menu pricing is critical strategy that is used to deal with competition in the market. hotels apply various strategies to set prices of their commodities to help attract or retain customers and still make profits.

Minimum Pricing

Minimum menu pricing is a strategic plan that an organization undertakes to promote their products and make them affordable to the customers. The model involves study of the existing market rates and the competitors and conducting analysis of the best prices. Further, there is the evaluation of the target customers to understand their needs and the financial power. The analysis includes determining the lowest possible price that a product can be sold and still make substantial profit. The averages are computed and contrast made versus the level of sales for the competitors to determine the best outcome and arrive at the minimum price.

Factors Affecting Pricing

The internal and external factors that affect pricing include the cost, the organizations objectives, image of the firm, the credit period, the product Lifecyle, competition, consumers, intermediaries, economic conditions and government control. the variable and fixed costs that are incurred in the production or creation of a meal will affect the final price decision to ensure that the costs are recovered and profit margin made. Further, the predetermined objectives of a firm influence the price fixation to enable the business achieve the set goals e.g. increasing return on investment, capturing a particular market share and achieving a set volume of sales. Also, the prices may be fixed depending on the image of the firm and the reputation in the market either as a high cost firm or low cost brand to achieve the market goodwill and preference. In some situations, the product lifecycle affects the pricing depending on the level to help in attracting and retaining customers example the low pricing model that may be applied in the introductory stage of a product. Firms that offer products on credit usually have various prices depending on the duration of credit and the value. Moreover, the amount of resources invested in promotion or a product may affect the final price due to the financial implications of the advertising and market awareness campaigns.
The external factors that affect pricing include the activities occurring in the industry and the business environment. Businesses usually consider the levels of competition in an industry when fixing their prices to ensure they remain competitive through changing the prices depending on the competitor’s rates by keeping them either high or low. The consumers in the market vary depending on the needs, sensitivity of buyer and purchasing power amongst others thus the price is determined by study of the customers. Moreover, the prices set must comply to the government rules and regulation to ensure that there is fair business and prevent exploitation of the buyers. The economic conditions in the region such as recession affects the buying decisions thereby affecting the price rates due to the variations of the currencies available for usage in purchase of commodities.

Pricing Strategies

A strategy may refer to the well-constructed set of activities or actions that are scheduled to assist achieve a goal. The pricing strategy is set by a business to help them attract and retain customers. The strategies differ depending on the value of the product, the business stage/level, the raw materials, target market and the competitor’s policies. The strategies help to increase sales volumes and compete for the customers in the market. organizations set their targets and implement strategic plans both in the short and long run. The formulation and implementation of a strategy considers the business situations and the environment. The marketing mix generates the turnover for a business and affects the pricing of commodities. The variable costs that affect price are constituted in the elements of product, place, and promotion.
The pricing strategy is important tool that helps in determining the point at which the cost of investment can be recovered and the duration when the profits on sales will be maximum during business. The strategies vary from one industry to the other due to the diversity of products and consumers. The strategies that the hotel may apply include premium pricing, pricing for market penetration, offering economy prices, price skimming, psychological pricing, bundle pricing, and competition pricing. Moreover, the hotel is in the development stage therefore some of the strategies will be changed as the business grows.
The premium pricing strategy involves setting commodity prices higher that the rates offered by the competitors. The style is most successful for small businesses in their early stages of growth due to the perception created to the customers and the higher price tag. The pricing is accompanied by investment in premium packaging and decoration to offer the high value. The model for strategic pricing for market penetration is set by organizations that target to attract clients through offering lower prices to draw attention of the buyers in a market. the plan helps in entry stage though the profit margins may be low. Further, the economy pricing is suitable for businesses and it helps to attract the price conscious consumers who prefer economical buying. The advantage is the huge sales volume and the high rate of customer retention. the price skimming model is suitable in competitive business and it helps maximise the sales of new commodities or services through setting high rates for products that are in the introductory stage and lowering prices gradually later when the products saturate the market. the strategy helps a business recoup its investment cost and create the illusion exclusivity and cost associated with the product. Notably, the bundle pricing, multiple products are sold at relatively lower prices than cost of individual item. The advantage is the value perception caused in the eyes of the customer and the opportunity to sell complementary products. Also, a business may apply psychological pricing strategy that involves a technique of allocating prices that create emotional attraction and convince people to respond thereby leading to purchase. The style involves emotional test rather than logical value through putting the attention to the first number on the price tag to create an illusion that the value for money is enhanced.

Factors Affecting the Pricing Strategies

The product pricing strategies apply tactics that are cost, competition and demand oriented. The choice of a particular strategy determines the performance and the success rate of a business. Moreover, the strategy affects the profitability and volume of investment an organization incurs to make the product available in the market. a hotel may apply a combination of strategies to maximise sales and attain high profits. The study of the market helps understand the environment and the contributing factors that an organization must analyse before selecting a particular strategy. Also, the competition varies from one market or industry to the other affecting the prices of commodities. The factors that affect pricing strategies include levels level of competition, perceived value of the products, product development costs, economic trends, levels of market demand, demographics, and the class of target customers.
The level of competition is a critical factor in the pricing strategy because it determines the margins of profit and the sales volume in a competitive industry. The flexibility of the prices is determined by the intensity of competition and pricing policies in an industry. A business must consider the costs of the competitors’ products before determining setting prices on commodities to ensure they are competitive and realistic. Further, the perceived value of products has significant impact on the price due to the perception of the buyers because some customers tend to associate cost with quality. There should be a balance between the clients perceived value and the price. Also, the product development factor incorporates all the price associated with production. The factor helps to recover the revenue spent in the production and prevent making loses. The economic trend is an unavoidable factor that influences strategic pricing through deducting the economy aspects such as taxation, labour, currency exchange rates, and the government fiscal and monetary policies that affect the currency valuation. Moreover, the level of market demand affects the prices through interference with the availability or scarcity of a commodity in the market for consumption. The supply and demand determined the volume available in the market thereby leading to inflation or reduction of prices. However, the quantities may be manipulated by the businesses artificially to cause the shifts in prices. The demographics of the buyers targeted by a business influences the pricing strategy thereby guiding in determining the segments and allocating the prices. Lastly, the class of the target buyers greatly determine their buying behaviours. The price strategies should consider the societal class and fit prices that are affordable to the diverse segments.

Calculations for Minimum Menu Price for Each Item

Findings

The prices are set at a value that the business is making profits. The aim of the hotel is to offer products at prices that are affordable and to make profits. The minimum menu prices are determined by the cost incurred in the production of the recipes and they are in levels that will ensure that the business does not make profit. The method of deducting the expected income helps to understand the level at which the business will break even. The pricing strategies will be combined to ensure there is maximum reach of the market and they will vary depending on the product. The application of various strategies will yield high revenues and maximise on profits. The products give different appeal to the target customers therefore it is significant to have variety prices to cater for all customer segments. Some items in the menu would earn higher revenues than other depending on the prices.
The process of allocating prices using different strategies ensures that the product is sold to the targeted customers. Further the model ensures the product lifecycle is prolonged and the value maximum benefit gained during the development of a commodity. Also, the prices ensure there is no loss and they increase sales volume. The application of different pricing models help to distribute the financial risk in the company. Also, the hotel will be able to test the outcome of the various strategies. A hotel targets customers from various societal status therefore it should apply various strategies in pricing of their menus. Moreover, due to competition a business may apply a combination of plans to increase competitiveness.

Chart

The chart represents the actual cost of the items in the menu. The values indicated illustrates the sales values of the items. The chart will help in determining the sales targets for each product. From the chart, it is evident that some items are more expensive than others therefore the hotels will be able to forecast the estimated revenues in future. The items with the lower costs may attract more buyers both in short and long term in the lifecycle. The profit margins vary depending on the price of an item and the quantity purchased. Therefore, the hotel prices enable the business to compete with other businesses in the market to get customers.

Revenue Projection

The projection of revenue occurs on intervals usually monthly, quarterly and annually and they indicate the estimation of money in the period. The information used to make the projection arises from past sales experience, intelligence on customer needs and consumer trends. The accounting records may be used to project future sales or the scheduled operating budgets set by the management of a business. The hotel menu prices are predetermined therefore the projections will be approximated using the industry trends.

Budget 1. Revenue projection flow

Annual Revenue Projections

 
Budget 2

Impact of change in the variance

The management usually consider variance as a model through which a business can account or plan for changes in the business change. The variances can be in several aspects namely price, volume, cost and mix variance. The price variance refers to the value difference of the actual set price from the targeted prices that have been set by the management or forecast team. The volume difference indicates the range of difference realised from the total units sold and differs from the initial set targets. Moreover, the variances in cost incorporates the difference of the budgeted amount compared to the actual achieved costs. Further, the mix variance is realised in the scenario where the unit contribution margins vary from the budgeted proportions.
The change in the total revenue affects the overall business performance and profitability. The targeted income reduces due to the variance drop and affects the projected cashflow or the business. The alteration of the revenue due to variance drop has the effect of slowing the rate of business growth and may lead to reduction of operations or restructuring of the operations. Further, the management may decide to change the business strategies and the structures in attempt to recover the reduction in revenue. The hotel may also decide to increase their recipes and they may decide to diversify as a way of minimising the risks in the trade. Moreover, a change is an indicator of the market performance that triggers plans for creating new business locations to recover the losses. A business may decide to diagnose the business and conduct audit of processes and records to determine the causes of the shifts in performance. Also, the items in the menu will be changed and the prices may be increased to ensure there is rise in revenue. The models of recovering loses include changing increasing some prices, improving the procedures in the business, reducing overheads and expanding the market. the increase in consumers may lead to relative rise in revenue available to the business.

Results

The drop in the variance affects the business cashflow and the future projections of the hotel thereby affecting the targets and business objectives. The reduction in the receivable revenue creates a difference in the targeted outcomes. The estimated profits reduce thereby affecting the rate of growth of the business. Moreover, the finances available for expansion will be minimal therefore the business expansion will be slow prompting the managers to seek for alternative source of funds to expand the activities. The business functions depend on the levels of profits therefore some processes may be affected or stopped to reduce the costs. The products with high production and overhead costs may be reduced in the long run to help lower the capital expenditure. The products with low returns target the mass market and the people from low social status in the society and their prices should be increased gradually to enable the hotel to recover their investment.

Discussion

The variance drop represents a fall in the revenue for the business reflecting poor performance. The hotel business is highly affected by the changes in the economy and the business environment such as competition and customer trends. The items in the menu should be increased gradually to help serve clients with diverse tastes and preferences. The buyers expect continuous improvements in quality of meals and services therefore a business should invest in research and development to ensure they remain competitive. the pricing strategies in an organization affects the buying behaviour therefore it is important to conduct thorough study about the market before implementing any changes. A business should formulate strategies that ensure there is high customer retention and attraction of new buyers to secure constant sale.
The business projections are may not be fully achieved due to the changes in market and failure of some strategies. The target customers may fail to consume a product as estimated thereby affecting the sales targets. Moreover, some business processes may experience variations leading to changes in the costs of producing the items. The items in a menu and the taste of the items has effect of attracting or sending away customer. Therefore, business should start by offering free samples to get first hand response from buyers. A customer feedback and the frequency of purchase helps determine the levels of satisfaction in a product. The clients who make regular purchase should be rewarded as a strategy to help in retaining buyers and attracting new customers. The financial records indicate the performance of a business in the market and help in determining or forecasting future outcomes. The accounts data should reflect the actual figures to help in planning future progress and in the allocation of finances in business activities. The hotel should increase the sales volume to recover the cost of investment.