Analysis of the Profit Margins of the Hospitality Sector
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Added on 2020-05-08
Analysis of the Profit Margins of the Hospitality Sector
Added on 2020-05-08
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1Running head: Managerial ProjectAnalysis of the profit margins of the hospitality sectorName of the studentName of the university
MANAGERIAL PROJECT2Executive Summary This paper is mainly about the abnormally high price rises in the food and beverageindustries that have led to the reduced profit margins of the hospitality sectors. Hence the mainaim of this research paper will be to see, analyze and find out several means that can deal with allthe sources that are responsible for the abnormal rise in the operational and the maintenance cost.This paper will therefore aim to use different models and theories of dealing with the operationalcosts and help to check the high rise in the same and it will also recommend ways of dealingwith these problems thus helping the hospitality industries to increase their profit margins. Forthe report the secondary form of data collection has been used in the form of survey and then inthe form of 3 focus groups.
MANAGERIAL PROJECT3Table of Contents1. Introduction....................................................................................................................5Purpose.............................................................................................................................5Background and Significance..........................................................................................52. Research question and objectives....................................................................................5Research Boundaries........................................................................................................6Report Outline..................................................................................................................63. Literature Review............................................................................................................6Implications....................................................................................................................104. Methodology..................................................................................................................10Introduction....................................................................................................................10Sources of data and justification....................................................................................11Details of Specific techniques: -....................................................................................12Analysis of Results.........................................................................................................12Quantitative Analysis.....................................................................................................13Qualitative analysis........................................................................................................244. Conclusion.....................................................................................................................275. Limitation......................................................................................................................276. Recommendation...........................................................................................................27Appendix............................................................................................................................28
MANAGERIAL PROJECT4Questions for Survey......................................................................................................28Questions discussed in Focus Group.............................................................................29Reference list.....................................................................................................................30
MANAGERIAL PROJECT51. IntroductionPurposeThe purpose of the paper is to see the different reasons that have led to the increase in theoperational cost of the F&B industries and how it has led the profit margins of the hospitalitysector to fall. The other aim of the paper will be to suggest some ways of solving this problem.This research paper is mainly attempting towards finding out different ways and means thatwould enable the F&B industries to cut down their level of expenditures. Background and SignificanceThere has been a sharp increase in the operational cost of food and beverages in the pastfew years. As a result of which this is really becoming a very tough job for the facility managersin the different hospitality industries to maintain this high amount of expenditure which isinvolved in the operational aspect of food and beverage industry. As a result of which there is ahuge amount of problem that is being faced by the staffs and the several other members involvedin the entire food and beverage industries (Chen et al 2015). Being unable to work with this poorrate of profits, there are incidents of untimely and underpayment to the hotel and restaurantstaffs, poor services and not only this, but there is also a sharp fall in the quality of the food andbeverages that are being served in the restaurants and in the hospitality sectors as a whole. Allthese issues together pose a major threat to the management problem in the hospitality sector(Hashim etal 2015).
MANAGERIAL PROJECT62. Research question and objectivesResearch question: - How to deal with the increasing operational cost of the F&Bindustry in the hospitality sector?Objectives:- 1 To determine the contribution of food and beverages in the hospitality industry.2. To identify the factors that are affecting the food and beverage operation cost. 3. To explore how the management can cut cost in food and beverage operations.4. To determine the share of revenue generated from food and beverage operations.5. To explore the ways which the food and beverage operation can be made moreprofitable to cover the increasing cost.Research BoundariesLooking particularly at the increase in the operational cost of the F&B industries and howit has led to the fall in the profit margins of the hospitality sector in Australia.Report OutlineAfter the introduction, the literature review part will mainly deal with the three importanttopics of how the food and beverage industry generates revenue to the hospitality sector. Whatare the reasons that have led to the increase in the operational cost of the F&B industry and whatcan be the possible measures to deal with the problem? This paper will also talk about the kind ofresearch methodology that can be used by the researchers to gather data about the problem.
MANAGERIAL PROJECT73. Literature Reviewi.IntroductionA society has been developed based on the norms of the living standard of the humansand the various forms of the society. Possession of different branded items show the status theperson has in the society. However the use of brand trends helps in the satisfaction of theconsumer and helps in the development of a long term relationship between the consumer andthe organization. In the literature review we discussed about the income generated from food andbeverages in hospitality and then described the different factors which are responsible to increasethe operational cost. At the last explain the strategies which are helpful to make the food andbeverages more profitable in the hospitality industry.ii.Revenue generated from food and beverages in hospitality industryThe hospitality sector is largely supported by the food and beverage industry. This isbecause every year a huge amount of revenue is generated by them. In the present day scenario,the needs and demand of the customers are changing. There is an increasing demand for differentkinds of food and not only do the customers look for different kinds of food but they are alsolooking for a great amount of innovation in the ingredients that are present in the dishes. Apartfrom that, the customers in the present day scenario are in search for easy and better services thatis they need several additional facilities like home delivery, take away services. All of theseincrease public demands needs to be satisfied and in order to do so, there has to be an increasedamount of workforce appointed in the food and beverage industries. So, there is a large amountof employment generation done by these food and beverage industries. A huge number of peopleget recruited in the bars and cafes. F&B services employ almost 800000 of the Australians that is
MANAGERIAL PROJECT8roughly 7.4% of the total work force (Lin, 2016). Over the past few years, there has been asufficient amount of increase in the number of cafes, pubs, bars and takeaway services as wellwhich has recruited more than 558000 workers. As far as Australia is concerned, the largestnumber of café, restaurant and takeaway food services is located in Victoria. This has employedabout 200 employees. Apart from this, there are reasons like, an increasing demand in thenumber of banquets and luxury hotels and it is a known fact that a good food and beverageservice will automatically bring good business for the roomiii.Factors responsible to increasing cost of food and beverages in the hospitalitysectorThere are many reasons that have cropped up in the recent years that are responsible foradding to the sharp growth in the operational cost of food and beverages. One of the mostimportant and unavoidable reason responsible for the increase in the price of food and beveragesis the increasing population and the consequent increase in the demand of food and beverageproducts. Due to the sharp increase both in the qualitative and the quantitative aspects of the foodand beverage products, there has been a sharp increase in the price of the input materials as alarge and varied number of raw materials are to be procured. Increased demand also meansbringing in newer and costlier methods of production. This also creates a sharp rise in theprocess of production (Jensen and Ronit 2015). Some of the other reasons that are responsible forthe sharp increase in the operational cost of the food and beverage industries are discussedbelow: -1.Food cost: Over the past few years, there has also been a sharp rise in the price of preparing adish that is the food cost. This is the resultant factor of the cost of input factors or the raw
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