Food and Beverage Management: Bellini Restaurant Profitability Report

This report examines the business strategies of Bellini Italian Restaurant, focusing on the implementation of an all-you-can-eat buffet to increase mid-week sales. The analysis includes an assessment of the buffet's potential impact on customer visitation and perception, along with the importance of monitoring food production processes to minimize waste and manage costs effectively. The report delves into the significance of analyzing contribution margins for both buffet and a la carte options, and the overall effects on sales volume and profitability. Strategies to improve the restaurant's overall profitability are also discussed, including cost reduction methods, feedback mechanisms, and advertising strategies. The conclusion emphasizes the importance of accurate cost computations, customer-focused menu design, and appropriate pricing to ensure the success of the buffet strategy. Finally, the report provides recommendations for the owner, highlighting the need for patience and adaptability in response to customer preferences.

Food and Beverage Management
Food and Beverage Management
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Food and Beverage Management
Executive Summary
The issue presented in the question is that the restaurant named Bellini Italian restaurant is an
authentic Italian restaurant located in Main Street, CBD, Capital City, Australia. The owner and chef of
the restaurant is concerned with the turnover generated by the restaurant and has observed that the
restaurant is very quiet during the mid-week period.
The owner is concerned with the decreasing trend of business and reckons the introduction of
new strategies like all you can eat buffet in order to attract more and more customers into business. He
also considers lowering the food costs in order to increase the revenue gained by the business.
This study particularly aims to discuss the effectiveness of the strategies implemented by the
owner of the business. It also looks into the effect of such implemented changes over the profitability of
business. Lastly, the study presents methods, to detect the probable issues that are resulting in such a
situation and methods implemented to improve the overall profitability of the restaurant.

Food and Beverage Management
Executive Summary.....................................................................................................................................1
Background..................................................................................................................................................1
All you can eat strategy and its likely effect................................................................................................2
Key information to be monitored to measure the results of this strategy..................................................3
Customer visitation and perception.........................................................................................................4
Food production process and how to deal with carry overs and waste.....................................................5
The different contribution margins (buffet vs. a la carte)........................................................................6
The overall effect on the sale volume and profitability............................................................................6
Strategies to improve the overall profitability of the restaurant.................................................................7
Conclusion...............................................................................................................................................8
Recommendations.......................................................................................................................................9
References.................................................................................................................................................10

Food and Beverage Management
Background
The background provided in the case study is that Bellini Italian Restaurant is a restaurant
located in Main Street, CBD, Capital City, Australia. It has the capacity to accommodate 78 seats and
promotes the food theme of authentic Italian. The chef and the owner of the restaurant is Francesco Del
Piero. The chef has designed the style of menu as A La Carte and has computed the average daily guest
turnover as 39. The major issue that currently concerns the owner of the restaurant is that the
restaurant seems very quite during the mid-week period. Francesco wants to utilize the management
and leadership skills that he possesses to restructure the restaurant and increase business. He has
proposed a new concept in terms of menu for the restaurant, that is, all you can eat buffet. The sole
purpose behind such a strategy is increasing the overall profitability and the volume of sales of the
business.
The owner feels that the reduction in some of the menu prices may lead to reduction in the
contribution margin per unit of food. Therefore, he resorts to the solution of increasing the sales
revenue from the beverages and expanding the associated client base. This study aims to provide an
overview into the profitability and effectiveness of the decision taken by the owner/chef.
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Food and Beverage Management
All you can eat strategy and its likely effect
The strategy undertaken by Francesco to introduce the style of the menu offered by the
restaurant, as all you can eat buffet is a wise and well thought plan by the owner of the restaurant.
Francesco implements the newly introduced menu style into the schedule of business and decides to
introduce the concept on Monday, Tuesday and Wednesday evenings at $28.90 per person and children
at $12.50 each.
The introduction of a buffet concept is very likely to increase sales during the mid week. The
concept of a buffet menu itself will attract customers thus expanding the customer base as desired by
the owner of the restaurant. However, Francesco should determine the prices of the various food items
included in the buffet menu, more or less accurately. This is because the price tagged for an adult and a
child for selecting the buffet style of menu should be determined in such a way that even if a particular
customer exceeds the estimated consumption margin, the price paid by the other customers
compensate for this extra cost incurred (Dopson and Hayes 2015). Now, if Francesco determines the
prices wrongly then this particular turnaround strategy may ultimately be the major reason for the
downfall of business. The prices determined should not only cover for the cost of production of food but
also for the cases of excess consumption in relation to the budgeted estimates. A well-known technique
applied in case of a buffet menu is the ABC inventory approach. This particular approach states that A
items, that are the most expensive in the menu should not comprise of more than 20% of the total
available product. B items, which belong to the mid price range should not comprise of more than 30%
of the total available product and C items, which are the least expensive should account for 50% of the
total offerings (Tse and Poon 2017)
Therefore, provided all the proceedings are carried out accurately and with exact precision, the
buffet style of menu is likely to be a success.
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Food and Beverage Management
Key information to be monitored to measure the results of this strategy
The key information to be monitored to measure the results of the implemented strategy is that
the owner of the business should be vigilant towards developing a pattern or trend as to the nature of
customers that visit the restaurant on the respective days of Monday, Tuesday and Wednesday.
For instance, it is being assumed that the scheduled day of practice for the local football team is
on Monday and after practice, the team visits the restaurant for all you can eat buffet. Now, Tuesday
observes a gang of high school goers who seem to stop at the restaurant in the evening for a quick bite
at the all you can eat buffet. Again, on Wednesday the restaurant receives a random crowd comprising
mostly of people between the age group of high thirties to low forties. This implies that the amount of
food consumed by the members of the football team will definitely be more than the amount consumed
by the gang of high school goers (Alonso and Mariani 2017).
Therefore, proper monitoring on the part of the owner or the management of the restaurant
will help in determining the amount of food made available (in accordance to the ABC inventory
approach) and the prices to be determined according to the rate of consumption by the different
categories of the customers. Monitoring should be primarily related to customer visitation and
perception; food production process and how to deal with carry over and wastes; the contribution
margin of the different menu styles and the overall effect on the sales volume and profitability (Heo
2016).
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Food and Beverage Management
Customer visitation and perception
Customer visitation and perception regarding the newly introduced menu is very important. An
important part of the service sector is feedback. Feedback from the targeted band of customers is the
foundation on which any industry in the service sector thrives. The feedback by the customer should
encompass the areas, in regards to the entire buffet experience; the quality of the food offered; and the
quality of the experience, on the whole. Monitoring all these trends and feedbacks related to business
should be what about which Francesco should be vigilant. The nature of the customers that visit the
restaurant after the implemented change and their perception in regards to the new style of menu
should be monitored and analyzed (Heo et al.,2013).
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Food and Beverage Management
Food production process and how to deal with carry overs and waste
As mentioned in the case study, the monthly reports show the actual food cost to be 32%. Food
costs refer to the costs that are associated with producing the food items that is ordered by a particular
customer. Thus, it is apparently evident that the food costs are high and continuous monitoring of these
costs may highlight the exact location where the extra cost is incurred by business. These may be
reasons like excess price of the raw materials, economic inflation, lack of optimum utilization of the
available resources (Ivanov 2014).
The amount of food that is included in each session of the buffet, the amount to be added, if
required and food left to waste at the end of each buffet menu should also be monitored in order to
determine the optimum production amount (Kim et al., 2015).
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Food and Beverage Management
The different contribution margins (buffet vs. a la carte)
The monitoring of the contribution margin obtained by the buffet and the old menu style, that
is, a la carte, should be compared within a regular interval of time in order to determine whether the
adoption of the new strategy is turning out to be a success for business. This means that the
contribution margin generated by each style of menu has to be computed. The contribution margin
must be calculated by deducting the variable costs from the respective revenue generated (Kim, Li and
Brymer 2016).
The overall effect on the sale volume and profitability
The overall effect on the sale volume and profitability should also be monitored. The
preparation of the essential financial statements and the significant ratios related to profitability of
business and the other related important factors like the revenue related to sales generated by
business after the implementation of the new strategy should be monitored regularly. The business
owner may assign the rigorous task of monitoring, to an employee, as this is the most crucial step in
assessing the success of the new strategy (Kimes 2016).
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Food and Beverage Management
Strategies to improve the overall profitability of the restaurant
The strategy to improve the overall profitability of the restaurant is that the owner of the
restaurant may consider ways to reduce the food costs. This will increase the percentage of revenue
earned by the restaurant without having to increase the prices of the food items.
The owner may also consider developing a feedback method which will create a proper channel
for receiving the backward communication that has been transmitted by the customers. Analysis of
business, especially in the restaurant industry, based on feedback by the customers is crucial (Kwok and
Yu 2013).
Francesco should also consider effectively utilizing the food that has been rendered unused after
serving all the customers in a particular buffet session.
The owner should look into the internal proceedings of business and should try to find out the
root cause for the increased food costs.
Lastly, the owner should also consider advertisement and promotion of the new menu style (like
publications on the social media) so that the existing client base gets expanded, ultimately leading to
increased revenue from business. The business owner may also consider increasing the price of the
beverages for gaining more revenues (Tse and Poon, 2017).
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Food and Beverage Management
Conclusion
Therefore, as concluded from the above information and analyses, the new
style of menu will successfully attract more and more customers, provided that all
the required estimations have been executed properly. The accurate computation of
the food costs and other profitability components; designing the menu according to
the pattern of customer visitation and perception and appropriate pricing of the
food items will surely result in increase in revenue generation by business.
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Food and Beverage Management
Recommendations
The particular recommendation in a situation as described in the case study
is that the owner of the restaurant should be patient with the results generated by
the strategic plan of buffet. This is because the modification of the buffet menu
may be essential in order to suit the changing tastes and preferences of the
customers. Thus, the owner should be patient with the returns generated by the new
style of menu, as it would take the stipulated time to be a success and generate
estimated revenues.
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Food and Beverage Management
References
Alonso, A.D. and Mariani, S., 2017. Complexity, change and the restaurant business: a case study from
Montevideo, Uruguay. International Journal of Leisure and Tourism Marketing, 5(4), pp.351-369.
Dopson, L.R. and Hayes, D.K., 2015. Food and beverage cost control. John Wiley & Sons.
Heo, C.Y., 2016. Exploring group-buying platforms for restaurant revenue management. International
Journal of Hospitality Management, 52, pp.154-159.
Heo, C.Y., Lee, S., Mattila, A. and Hu, C., 2013. Restaurant revenue management: do perceived capacity
scarcity and price differences matter?. International Journal of Hospitality Management, 35, pp.316-326.
Ivanov, S.H., 2014. Hotel revenue management: From theory to practice. Browser Download This Paper.
Kim, S., Koh, Y., Cha, J. and Lee, S., 2015. Effects of social media on firm value for US restaurant
companies. International Journal of Hospitality Management, 49, pp.40-46.
Kim, W.G., Li, J.J. and Brymer, R.A., 2016. The impact of social media reviews on restaurant
performance: The moderating role of excellence certificate. International Journal of Hospitality
Management, 55, pp.41-51.
Kimes, S.E., 2016. The evolution of hotel revenue management. Journal of Revenue and Pricing
Management, 15(3-4), pp.247-251.
Kwok, L. and Yu, B., 2013. Spreading social media messages on Facebook: An analysis of restaurant
business-to-consumer communications. Cornell Hospitality Quarterly, 54(1), pp.84-94.
Tse, T.S. and Poon, Y.T., 2017. Modeling no-shows, cancellations, overbooking, and walk-ins in
restaurant revenue management. Journal of foodservice business research, 20(2), pp.127-145.
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