UNIT- 2

SALES CONCEPTS
Sales can be defined as the revenue resulting from the exchange of products and services for a
value. In the F& B industry, the dishes and drinks served are products and services of both bar
and restaurant which are served for value.
There are two group of terms used in F&B operations to express sales concept i.e Monetary
and non- monetary:
Monetary Term:
In this category the food and beverage sales are expressed in financial or cash
related style .

Example:
1. Total sales: Is total cash sales during a particular trading period which
may be day, a week, a month or a year. This term can also be
expressed as Total cash sales.

USES:
 Shows how a department is functioning.
 Whether there is a need to revamp the menu and
menu prices.
 Whether contribution margin or the profit level is
as desired by the management.
2. TOTAL SALES BY CATEGORY:
Refers to the Total Cash Sales of all items belonging to a particular
category compared to total sales volume.

HELPS TO FIND OUT:

 To find out eating trend of the customer.
 To promote other categories of food items.
 To find out the fast / slow moving items.
3.TOTAL SALES BY SERVER:
Total cash sales by a server during a given period of time.Calculated for a meal
period or for a day.

Uses:

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  Find out which waiter is getting max. cash sales.
 Find out which waiter is getting Min. cash sales.
 Determine training need for the waiter.
 Gives a chance to waiters to showcase their skills.
SALES PRICE :
Amount charged to a guest ordering one unit of a particular item such as a soup or a thali etc.

4. AVERAGE SALES PER COVER: Also called Average Check.

=Total Cash Sales/ Total Number of Covers.
It is calculated only for food items.

5.AVERAGE SALES PER SERVER:

=Total Cash Sales by a Waiter / Total sale made by server during a certain period
6.TOTAL SALES BY SERVER:

Total cash sales by a server during a given period of time.

It is calculated for a meal period or for a day.

Uses:
 Find out which waiter is getting max. cash sales.
 Find out which waiter is getting Min. cash sales.
 Determine training need for the waiter.
 Gives a chance to waiters to showcase their skills.

7. TOTAL SALES BY CATEGORY:

Refers to the Total Cash Sales of all items belonging to a particular
category compared to total sales volume.

HELPS TO:
 To find out eating trend of the customer.
 To promote other categories of food items.
 To find out the fast / slow moving items.
8.TOTAL SALES BY SERVER:

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 Total cash sales by a server during a given period of time.
Calculated for a meal period or for a day.

Uses:
 Find out which waiter is getting max. cash sales.
 Find out which waiter is getting Min. cash sales.
 Determine training need for the waiter.

 Gives a chance to waiters to showcase their skills.

NON_MONETARY TERMS :
1.TOTAL NUMBER SOLD: It means that the total number of a menu item sold during a
given period of time. Helps to find out how many portions of a particular item is sold during
lunch or dinner or in a day.

Uses:
 Helps in purchasing near accurate quantity of ingredients.
 If a particular menu item is consistently low then may think of replacing.

.2. TOTAL COVERS :

Total Covers served in a outlet in given time.
Uses: Helps to compare the figures of the similar period in the past to understand business
trend.

3. AVERAGE COVERS:
•Avr.cover per hour:
Total no.of Covers Sold in a meal period
No of hours of operations.

Avr.cover per day:

Total no.of covers sold
No of days of operations.

Avr.cover per Server: Total No.of Covers /No of Servers

Uses :

 Helps to find out efficiency of service.

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  Effectiveness of a waiter.

4.Seat turnover

Total no. of guests served in a meal period/ Total no.of seats in the restaurant.

Uses It helps to find out.

 If any more seats are to be added .

 Whether seats are lying idle.

 Whether restaurant space can be used for other purpose.

 Time of max/ min sales.

5. Sales Mix

The sales mix is a calculation that determines the proportion of each product a business sells
relative to total sales. The sales mix is significant because some products or services may be more
profitable than others, and if a company's sales mix changes, its profits also change.

For example:

Example 2: Sales mix of Revenue producing outlets:

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Example 3: Sales mix of various dishes in a restaurant.

The other various sales concepts in use are:

1. Advertising
2. Public Relations
3. Merchandising
4. Sales Promotion

1. Advertising
Advertising is concerned with contacting and informing a market of an operation’s product,
away from the point of sale and is involved with influencing the customers’ behavior and
attitude to the product before they enter the service operation.

The purpose of advertising is to influence a person’s knowledge, attitude and behavior in such
a way as to meet the objectives of the advertiser.

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The size of a food services advertising budget is dependent on a number of factors:

 Nature of the catering operation - whether it is commercial or non-commercial sector.

 Size of the operation - Generally speaking, the larger the commercial operation, the larger
the advertising budget available.
 Ownership of the catering facility - In a small, privately owned hotel or restaurant, the
responsibility for advertising may be in the hands of the owner or manager. In a large multi-
organization, the responsibility for advertising is either assigned to a specialist department
within the organization, or given to a professional outside advertising agency.
 Nature of the market segments being aimed
 The type of advertising to be used - Peak time national television coverage will obviously
cost considerably more than a local radio broadcast.

The objective and advantages of advertising are as follows:

a) To create awareness of the product. Making the maximum number of customers aware
of an operation’s products, utilizing the tools of advertising available to the particular
operation.
b) To create desire for the product. Customers purchase a product because of the benefits
they feel they will gain from that product. Advertising, therefore, needs to create a desire
for the operation’s product by stressing customer benefits.
c) To influence customers attitudes to the product. This may be in the short or long term.
Over a number of years, for example the organization may wish to portray a caring image
towards its customers. It may choose to do this by using repetitive advertising reinforcing
its caring attitude.
d) To create brand loyalty. In order to do this, a successful brand image must be created by
the company, so that when customers consider buying a certain type of meal, they
immediately think of a certain restaurant or fast-food operation.
e) To persuade customers to buy, this will only be achieved if the advertising campaign has
been directed at the appropriate level of the market. For example, if the advertising
campaign incorrectly portrays an image, average spending person will not choose to visit
the facility because of the high-priced image portrayed, equally, customers with a high
average spending power may be appointed with their choice of restaurant.
f) To remind customers to buy. The objectives of an advertising campaign alter during the
life cycle of the product. For example, in the introductory phase of a product launch,
creating awareness for first-time buyers is an important objective of advertising. When the

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 product enters it growth and maturity stages and the company is heavily reliant on repeat
purchases, the main objective of the advertising campaign may then shift to reminding
existing and past customers to buy
g) To inform the market about a product. For example, some fast-food chains now produce
nutritional guides about their products which are available to customers of their restaurant
and take –away outlets.
h) To provide reassurance about the product. This is particularly relevant in the catering
industry where a customer often leaves a restaurant without any tangible evidence of a
purchase. Customer’s worries and anxieties about a product need to be focused so that they
feel they made a good purchase and will therefore, feel disposed to make another. In the
example of the nutritional guides, as well as being informative, they also reassure customers
that the meals they are buying are nutritionally sound. This is particularly important with
the current interest in healthy eating and diets.
i) To be ethical. Form an ethical point of view, the operation’s advertising must portray a
truthful picture of the establishment. Customers may quite rightfully be disappointed and
annoyed if they read that a particular restaurant is offering a free glass of wine to every
customer, or features some specialty drinks, only to arrive and find that the establishment
has ‘run out’ or ‘sold out’ of these items.

The various forms of advertisement are as follows

 Direct mails
 Press advertising
 Broadcasting
 Signs and Posters
 Miscellaneous mode of advertising

Direct Mail

Direct mail involves communicating by post to specified customers; it may be directed at

new and potential customers or to past or well established customers. It involves the direct
mailing of personalized letters, brochures, pamphlets and leaflets, and as a form of advertising
offers a number of advantages:

o Specific customers can be targeted. For example, members of a specific profession within
a defined area, members of a particular club or society, residents on a housing estate, etc.
Repeat business in particular can develop by mailing personalized birthday, anniversary
and Christmas cards, details of special promotions, events and offers to regular and
occasional customers.

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o Direct mail is easy to introduce. It can either be initiated by the organization itself by
producing its own mailing lists or an external mail service agency or list broker may be
used. It can be used by both small and large operations.
o The feedback from targeted customers is relatively prompt and easy to appraise.
o It is a cost-effective method of advertising to specifically targeted groups of customers with
very little’ wastage’.

However, direct mail also has a number of disadvantages:

o The market must be specifically targeted or the mail shots are a complete waste of money.
o The production of good-quality mailing literature can be costly. Personalized letters should
ideally be used as duplicated material has little impact and is often discarded straight away.
The envelope too must encourage the recipient to open it rather than discarding it as a
circular. Once the initial mail has been sent out, careful monitoring of subsequent replies
is necessary.

Press Advertising

o Newspapers: Advertising national and local newspapers and magazines is probable one of
the most popular forms or media used by catering operations. Because restaurant
advertisements are generally featured together in a newspaper, it is essential that the design
of an advertisement featuring a particular restaurant is such that it will stand apart from the
others. As with the previously described direct mailing, advertising in the press must be
properly planned and organized. If an advertisement is placed in several newspapers,
records must be kept of those individuals or companies that respond to the advertisement
and whether they are from the type of market segments originally aimed at. Such
information is invaluable in forming a basis for planning future advertising campaigns.
o Magazines: The different types of magazines can be used to advertise including
professional journals and publications, business management magazines and the ‘social’
type magazines which are read by particular target market groups. The advantages of
advertising in specific magazines are that response may be measured; they have a longer
‘shelf life’ than newspapers and may be re-read many times.
o Trade advertising: Trade or ‘wholesale’ advertising is the selling of an operation’s catering
facilities through ‘middle men’ such as travel agents, package tour operators, etc. At
present, it is mainly the large hotel groups and restaurant chains who have utilized this form
of external selling although it is also available to small restaurants that are privately owned.
By approaching local tour operators, for example, a country restaurant may be able to
secure a regular weekend lunch time trade of between twenty and thirty covers throughout

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 the summer months. Such an arrangement not only has the advantage of increased sales for
the operation, but also aids in the planning of menus, food costing staffing levels, etc., for
several months in advance. A commission fee is charged by these middle men for the
provision of their services; this may vary up to 12.5% depending on what functions and
services they have provided for the catering operation.

Broadcasting

o Radio: Advertising on commercial radio is mainly limited to local radio stations that
broadcast within a specific radius. It may be used to advertise local take-aways, restaurants,
hotels, wine bars etc. Its main advantages are that it is a very up-to-date form of advertising,
not too costly and has the potential to reach a large percentage of local customer-people at
work, driving cars, using personal stereos, people at home, etc.
o Television: Television’s major advantage over radio is its visual impact. Its major
disadvantage is its high cost, particularly during peak receiving times. Its national use is
limited almost exclusively to the larger restaurant and fast-food and popular restaurant
chains and hotel groups, for example, KFC, McDonald’s, and Pizza hut. Some regional
television advertising may be undertaken but at present is very limited. The use of both
video cassette recorders and cable television are two further extensions of TV and their use
in private homes, clubs, hotels, shopping malls etc. is increasing annually.
o Cinema: Cinema advertising is also highly visual but also much localized. Catering
facilities such as fast-food and popular restaurants etc. open until late in the evening are
often featured, but are usually quite specific to a certain area.

Signs and Posters

Signs and posters advertising a catering facility may be positioned either very close to
it or some distance away. They are used along streets in towns and cities on hoardings, in
airport lounges, railway carriages and the underground subways. External signs on main roads
are particularly important for hotels, restaurants and fast-food drive-in operation that relies
heavily on transient trade and it is therefore, important for these advertisements to be easily
read and their messages understood quickly. Traffic travelling at high speeds must also be given
adequate time to pull in. Posters displayed in the street, in railway carriages etc. can afford to
be more detailed because passengers and passersby will have more time available to read them.

Miscellaneous Advertising Media

This includes other forms of advertising media that may be used in addition to the major
channels discussed above. For example, door-to-door leaflet distribution, theatre programmes,
shops windows etc.

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2. Public Relations

Public relations are a communication and information process, either personal or non-personal,
operation within an organization’s internal and external environment. It involves the creations
of a favorable environment in which an organization can operate to the best of its advantage.
An organization would typically be involved internally in communication to its customers and
employees, and eventually to list customers, suppliers, sales force, local community council
and government departments, etc.
In institutional catering, the role of public relations may be to explain to a staff committee
the need for certain price increases to be passed on the staff cafeteria, or why different products
have been bought to replace existing ones etc.

The choice of public relations tools to be used depends largely on the target audience, the
suitability of one media over another and the budget available. They would include:

 Press media: Newspapers, magazines, trade journals, brochures, leaflets, guides, press
conferences, press releases.
 Broadcasting media: Television, radio, cinema, promotional video.
 Community media: Sponsorship of local events, companies, exhibitions, talks, free gifts,
samples.

Depending on the size of the organization, the public relations function may be the
responsibility of the owner, or manager, it may be an individual’s task in a medium-sized
operation, a separate department within the organization consisting of a number of employees,
or an external public relations company may be used.

3. Merchandising

The merchandising of catering operations involves the point of sale promotion of their
facilities using non-personal media. Unlike advertising it is not a paid form of communication,
but like sales promotion is more concerned with influencing customer behavior in the short
term.

Once customers are inside a restaurant they have already made their decision as to the
type of establishment they wish to eat in; their subsequent decisions are concerned with what
particular aspects of the product they will now choose. Customers may decide to eat at a
restaurant because they have seen it advertised, and will therefore bring to the restaurant pre
conceived ideas as to the standard of food, level of service etc., that they will receive. It is
important at this stage that the point of sale merchandising of the restaurant should support its

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advertising campaign in order to achieve a sense of consistency and totality. For example, if
the restaurant has been advertising specialty dishes for a particular week, these must be
available when the customer arrives at the restaurant.

The major types of merchandising that may be employed by a catering operation include the
following:

Floor Stands

Floor stands or bulletin boards are particularly effective if used in waiting and reception
areas to advertise special events, forthcoming attractions, etc. In public areas in hotels,
restaurants and clubs, people may be waiting in a queue or for the arrival of other guests and
therefore have the time to read the notices on these stands. In the work place, they can be placed
in general locations like beside coffee machines. The announcements on these stands must be
kept attractive and up to date. Some self-service operations use floor stands at the head of the
waiting line to show the menu in advance and selected specialties of the day.

Posters

Posters have a wide circulation then the previously described floor stands. They may
be displayed in reception areas, elevators, cloakrooms, in the restaurant dining area itself; in
fact they may be placed in any strategic positions where people have the time available to read
their messages. Consideration must not only be given to the area in which these advertisements
should be placed, but also their positions within these areas. In elevators for example they are
often placed at the back when the majority of people face forwards or look upwards as soon as
they enter a lift and therefore only give a poster at the back a momentary glance. Similar
thought should be given to the position of posters in reception areas; for example, their height
should be at eye level and they need to be placed away from the entrance and exit doors which
people tend to pass through quickly.

Wall Displays

Illuminated wall displays are used extensively by fast-food operations showing

enlarged color photographs of the food and beverages available. They are also used by wine
bars, cocktail bars and lounges and look particularly attractive at night. Blackboards are often
found in pubs, bars, school cafeterias and theme restaurants where the dish of the day and other
specials can be changed regularly along with their prices. Tent cards are often placed on
restaurants dining tables to promote special events, attractions, etc. They are a valuable
merchandising tool because guests will almost inevitably pick the card up and read it at some
point during the meal, and they may even take it away with them. They may be used to advertise

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special dishes or wines, or announce forthcoming events such as a Christmas Day menu or
New Year party. Again these cards should be changed regularly to hold interest and must
always be up to date and clean. In hotels or other operations which have a variety of catering
outlets, these tent cards are very useful in advertising the other facilities within the same
establishment. In a cocktail bar, for example, tent cards may be used to advertise the a la carte
restaurant, and in the restaurant the customers’ attention may be drawn to special function
arrangements the operation offers. This type of merchandising can help to make customers
aware of the operation’s alternative facilities and hence boost sales in these areas.

Children’s Menus

Children’s menus and portion sizes are particularly applicable to those catering
operation that attract family custom, for example resort hotels, fast-food units, medium-priced
restaurants etc.
Some restaurants offer a reduced price for children’s portion sizes while others produce a
separate children’s menu which also contains games and puzzles to keep the children occupied
while the parents are having their meal .This is particularly applicable to those operations who
rely heavily on family trade, and even if children’s menus are not offered throughout the year,
they may be worth. While considering during the outings.

Visual food and beverage display

It was once said that ‘We eat with our eyes’ and in few other situations could this be
more true than in the actual cooking and presentation of the food to the customer. Visual selling
in a catering operation can be enhanced by the use of several techniques:

 Displays: A good display of well- presented food can do much to increase sales. Impulse
buying is the purchasing of a product at a point of sale on the strength of its visual
presentation, with little or no preconceived thoughts of buying the product. Good displays
are necessary in any situation; customers may be encouraged to purchase more when they
actually see the food and beverages, for example at self-service restaurant buffets, vending
machines.
 Trolley or cart: The use of trolleys or carts is another method of selling food and beverages
by using display techniques. In a restaurant there may be a variety of trolleys used for hors
d’oeuvres, desserts, hot and cold meat joints liqueurs and cigars.
 Gueridon trolley: A gueridon trolley in restaurant may be used for ‘finishing off’ particular
dish before being presented to the customer , or it may be used to cook a complete dish, for
example crepes suzettes, banana o rum. This particular type of action presentation often
encourages other guests in the restaurant to also try these types of dishes.

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 Other display cookery: Some operations deliberately open up their kitchens so that
customers can see their food being cooked for example tandoor houses where kebabs are
openly grilled on a charcoal grill, and other operations which roast poultry and other meat
on rotating spits. In these types of operation special attention must be given to the balance
between this type of display cookery and the other items on the menu to ensure that any
additional expenses, such as staffing and food costs, are justified by the increase in custom
or taxes.
 Beverage display: The display of beverages, alcoholic and non-alcoholic, can also
contribute to impulse purchases, rather than being just a single coffee sale at the end of a
meal. In a self-service cafeteria bottles and glasses of cooled fruit juices, and wine can all
look inviting; in a restaurant, full wine racks, or full bottles at the side of the buffet or
carvery table have a similar visual effect.

Audial
Audial merchandising has fairly limited application, but can be used in situations with
a ‘captive’ audience, for example to promote a coffee shop, pizza bar, ice-cream parlor in a
shopping mall, to focus attention on a hospital’s cafeteria via the hospital radio, to inform
exhibition visitors in a conference center of the catering facilities available.

4. Sales Promotion

Sales promotion is a form of temporary incentive highlighting aspects of a product. It may

be aimed at customers, distribution channels and sales employees. It does not necessarily occur
at the point of sale, although in many instances it does.

Sales promotion is used by operations for a number of reasons including the following:

1. To increase the average spent by customers and thereby increase the sales revenue.
2. To promote a new product or range of products being featured by the operation, for example
offering a new flavoured milk-shake in a take away facility at a reduced price.
3. To influence impulse purchasers towards a certain product or range of products, for
example featuring Australian wine at a special discount price.
4. To help ‘level’ peak activities of business for example offering a free glass of wine to
customers during their meal before 18.30 hours.
5. To celebrate a special event for example the New Year, Thanksgiving Day Dinner etc.
6. To ‘package’ together menu items at an attractive price, for example burger and French
fries. Such ‘packages’ are seasonal in nature but aid in directing a high proportion of
customers’ choices towards items of a low preparation labour content.

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7. To clear slow moving stock, for example pricing specific cocktails at two for the price of
one.

The types of sales promotion used are influenced by the targets being aimed at:
1. Customer: Sales promotion aimed directly at customers include money-off coupons,
discounts or special prices, free chicken meals for families, a free bottle of wine for every
two adult meals ordered etc. Special events and promotions may be communicated to the
customer by advertising, by direct mail, by telephone or by posters and tent cards.
2. Distribution channels: Promotional techniques aimed to encourage third party agents
include free restaurant meals, free gifts, and the use of hotel’s leisure facilities.
3. Sales employees: Sales promotion incentives are similar to those listed above and include
commission related sales, competitions, token and points systems occurring over an
extended period to encourage an on-going sales commitment by the sales force.
Sales promotion is a marketing tool in its own right and should be planned, monitored
and evaluated as such. It can be initiated either by the operation itself or by an external
organization.

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