OHT 7.1 The effect of price and volume on revenue Table 7.1.

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OHT 7.1 The effect of price and volume on revenue Table 7.1

Transcript of OHT 7.1 The effect of price and volume on revenue Table 7.1.

Page 1: OHT 7.1 The effect of price and volume on revenue Table 7.1.

OHT 7.1

The effect of price and volume on revenue

Table 7.1

Page 2: OHT 7.1 The effect of price and volume on revenue Table 7.1.

OHT 7.2

Key points of revenue appraisal

Revenue is product of price and volume Appraisal needs to take account of changes in

both price and volume Averages not always accurate and prone to

misinterpretation Allow for inflation and/or price rises Need to compare like with like Incorporate 12-month rolling totals to determine

true trends and performance Revenue cannot be fully appraised by itself

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OHT 7.3

Calculation of change in costs and revenues

Table 7.2

Page 4: OHT 7.1 The effect of price and volume on revenue Table 7.1.

OHT 7.4

Examples of cost percentages for

foodservice operations

Table 7.3

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OHT 7.5

Key points of cost appraisal Structures vary, and change over time Can be measured in cash or percentages Proportional relationship between costs Relationship between costs and inflation Cross-sectional and time-series analyses useful Incorporate 12-month rolling totals to determine true

trends and performance Operators with the lowest costs perceived as having a

key advantage Allocating indirect costs more complex than direct

costs

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OHT 7.6

Example profit and loss account

Table 7.4

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OHT 7.7

Comparison of gross profits

Table 7.5

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OHT 7.8

Comparison of operating profits

Table 7.6

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OHT 7.9

Yield comparisons

Table 7.7

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OHT 7.10

Relationship between revenue, costs and profits in

foodservice operations

Figure 7.1

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OHT 7.11

Comparison of GP in relation to revenue

Table 7.8

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OHT 7.12

Comparison of GP and GP %

Table 7.9

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OHT 7.13

Sales mix example

Table 7.10

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OHT 7.14

Effect of changed sales mix

Table 7.11

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OHT 7.15

Sales mix example (beverages)

Table 7.12

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OHT 7.16

Example of profitability calculations

Table 7.13

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OHT 7.17

Example of popularity and profitability ranking

Table 7.14

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OHT 7.18

Menu engineering matrix

Figure 7.2Adapted from Kasavana and Smith 1999

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OHT 7.19

Comparison of net operating profit measures

Table 7.15

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OHT 7.20

Key points of profit appraisal

Be clear how profit measures are contrived Compare like with like Appraise against objectives to give value Setting objectives includes subjective judgements Sales mix analysis determines real trends Profit percentages measure efficiency, not profitability Percentages allow for comparison only, cash contribution

is what is being sought Comparison with industry norms can be useful Use rolling 12-month totals to determine true trends and

performance Take account of stakeholders’ priorities

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OHT 7.21

Customer importance/operation achievement matrix

Figure 7.3

Achievement by operation

Imp

ort

ance

to

cu

sto

mer

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OHT 7.22

Customer importance/operation

capability matrix

Figure 7.4

Ability of operation

Imp

ort

ance

to

cu

sto

mer

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OHT 7.23

Customer importance/staff importance matrix

Figure 7.5

Importance to staff

Imp

ort

ance

to

cu

sto

mer

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OHT 7.24

The three levels of strategy and the relationship between

them

Figure 7.7

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OHT 7.25

SWOT matrix

Strengths Weaknesses

List of strengths

List of weaknesses

Opportunities

List of opportunities

1

Strengths to make use of opportunities

2

Weaknesses which prevent exploitation of opportunities

Threats

List of threats

3

Strengths to counter threats

4

Weaknesses which prevent countering threats

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OHT 7.26

Eight possible strategic routes for foodservices operations

Figure 7.9Adapted from Johnson and Scholes 1999

Cost to the customer

Pe

rce

ive

da

dd

ed

va

l ue

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OHT 7.27

Ansoff’s growth matrix with alternative

strategies/directions

Figure 7.11

Products

Ma

rke

ts

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OHT 7.28

Strategic means and assessing options

Strategic means Internal development Mergers and acquisitions Joint development

Assessing options Suitability Feasibility Acceptability