Food and Beverage Management

fifth edition
Chapter 3
Product Development
© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Chapter 3 covers:
 The food and beverage product
 Quality in the management of food and beverage
operations
 Creating the consumer–product relationship:
 Determining promotional channels
 Estimating profitability
 Planning product launch
 Offering product and appraising performance
 Sales promotion
 The consumer–product relationship as a dynamic process

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
The food and beverage product
 Is what operators construct and provide
 Marketers tend to identify the product as a central
consumer concept known as:
 the core concept
 a surrounding layer of tangible features, and
 and an outer layer of augmentation

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Core, tangible and augmented product
 The core product is, e.g. a wedding celebration
 The tangible product is a full wedding banquet
 The augmented product includes e.g. the
opportunity to pay by instalments

 It is helpful to apply this framework when

developing new concepts

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
The meal experience
 Concept first put forward in the 1960s (Campbell-Smith,
1967)
 The experience concept, across a range of service
industries, is often referred to as the ‘servicescape’ (first
introduced by Bitner, 1992), and broadened to include
social interactions (Line et al 2018)
 The ‘experiencescape’, is a holistic conceptualization
consisting of social, cultural, sensory, functional and
natural components that are all present in the dining
experience and work together to create the overall meal
experience (Pizam and Tasci, 2019)
© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
The five meal experience factors
1. Food and beverages on offer
2. Level of service
3. Level of cleanliness and hygiene
4. Perceived value for money and price
5. Atmosphere of the establishment

 The five elements meal experience provide for a broad

examination of service offer
 The importance of these factors to the customer changes
depending on the needs they have at the time

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Different meal experience rankings

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Food and drink
 Provision must focus on the needs and demands of
the consumer
 Customers construct a package to suit their own
needs
 Customer needs are diverse
 Trying to satisfy everyone leads to satisfying no
one

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Level of service
 Service is a part of the product
 Service includes the human interface between the
product and the consumer
 Human interaction delivers benefits to the
customer
 Service needs to be designed into the product

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
 Service dimensions framework

Adapted from Martin 1986

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Cleanliness and hygiene
 Premises, equipment and staff
 Increased media focus
 Customers are now more aware
 Essential to ensure proper levels maintained at all
times

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Price and value for money
 Price relates to value, and is directly related to
profitability
 Prices should create a quality and value perception
 Need to establish the price range:
 of potential customers

 in which the operator can provide the products

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Cost to a customer is not just the price
 Also includes:
 not being able to go somewhere else

 transport costs

 time

 having to look and behave certain way etc

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Value a personal judgement

 Good value is where the worth is perceived as

greater than the costs

 Poor value is where the costs are perceived as

greater than the worth

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Various pricing methods
 Cost plus
 Prime costing methods
 Backward pricing
 Rate of return
 Profit-per-customer
 Elasticity of demand
 Competition comparison

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Atmosphere
 Created through the combination of factors such as:
 Design
 Décor
 Lighting
 Heating
 Furnishings
 Acoustics and noise levels
 Other customers
 The staff and the attitude of the staff

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
British Standard EN ISO 9001
 Identifies the systems, procedures and criteria that ensure
that a product or service meets a customer’s requirements
 Based on an assessment: ‘in the fitness for purpose and
safe in use sense i.e. is the service provided or product
designed and constructed to satisfy the customer’s needs’

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
 Foundation for Quality Management

Adapted from EFQM Management Excellence Model, 2012

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Level of service : Standards of service
 Level of service
 very limited to complex with high levels of personal
attention

 Standards of service
 measure of how well the operation deliverers the
service level it is offering

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Level of customer service
 Written statements of both:
 Technical specification
 physical characteristics of the products
 Service specification
 procedures and the way they are carried out 
 Often called the ‘customer service specification’
 Need for balance between maintaining customer
service and resource productivity

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Providing customer service
 A combination of five characteristics:
1. Service level
2. Service availability
3. Level of standards
4. Service reliability
5. Service flexibility
 The ‘customer service specification’ must take
these into account

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Customer service/resource productivity

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Nature of service
 Providing service is not just about doing the job
 Need for emotional value to be added
 Has to be done with the right:
 attitude
 degree of sincerity
 amount of concern for the customers

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Service Quality Management

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Consumer product relationship
 Final stages of development:
 Determine promotional channels
 Estimate profitability
 Plan product launch
 Offer product and appraise performance

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Possible message and media

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Websites
 An organisation’s website is often the first stop for
consumers
 Operators need to ensure that their websites are:
 Easy to use
 Intuitive
 Presentable
 Communicative
 Current
 An honest reflec­tion of what is offered

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Websites are also platforms to:
 Stay contact with customers through blogs and
comments
 Receive reservations

 Third-party booking sites (restaurant marketing

portals) provide the opportunity to source
bookings and to promote and monitor customer
experiences. See for example: Opentable.com

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Web-based applications
 To distribute, promote, monitor and keep in touch
with customers and potential customers.
 Includes:
 User-generated content on website such as: Tripadvisor,
Facebook and Twitter, blogs, social networks,
metaverse, podcasts, custom apps and RSS

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Challenges
 No way to govern what happens externally
 Operators constantly have to be there
 Anything can be posted and users expect
operations to do the same
 Very customer driven

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Essential considerations
 Develop robust social media policy
 Follow agreed response protocol
 Encourage contributions
 Review content
 Remember legacy of content

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Example response protocol

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Customer relationship management (CRM)
 CRM is an essential tool for business to:
 Manage customers’ contact information, customer relationships
and retarget past customers
 Help to segment customers based on their previ­ous interactions,
membership of a loyalty programme, or other demographic data
 Provide a comprehensive way to monitor email campaign data

 Some CRM tools can also monitor what people

are saying about the business.

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Estimating profitability
 When launching new products, and changing
existing ones, the art of predicting outcomes is
extremely imprecise, although methods used can
be very sophisticated
 Applying ‘profitability on sales percentage’
approach will determine the budgeted profit but
cannot be guaranteed to be correct
 Best and worst scenarios should be considered

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Types of costs
 Fixed costs, such as rent, rates and insurance
premiums, have to be paid even if there is no
business
 Variable costs, such as meal ingredient and
beverage costs, increase as the level of business
increases
 Semi-variable costs (or stepped costs) have no
direct relationship between the level of business
and the variable costs

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Costs, sales and profit
 Total costs are the fixed costs plus the all variable
costs
 Total sales is the total cash revenue
 Break-even point is where the sales revenue
exactly equals the total costs
 Net profit is sales less total costs.
 Level of safety increases when proportion of
variable costs is greater than the fixed costs

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Profitability: Break-even analysis

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Planning the product launch
 Operationally, the new food and beverage product
needs testing
 Promotional opportunities include:
 Offering the product free, or at reduced prices, to selected groups
on a one-off basis (shake out events’ or ‘soft openings’)
 Introducing special offers to attract customers
 Other considerations are:
 Taking account of potential fluctuations of demand
 Delaying a launch rather than offering a sub-standard product
 Appraising the performance (covered in Chapter 9)

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Sales promotion
 Short-term incentives designed to change the
buying habits of customers and increase the
revenue of the operation

 To directly encourage the customer to purchase,

often through short-term improvements in the
cost–value ratio

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Sales tactics
 Ensure all pricing is clear
 Never discount - package instead
 Create special promotions
 Have well trained staff so they can sell
 Apply standard customer procedures
 Seek customer loyalty and feedback
 Concentrate on promoting value
 Cash profit maximisation
 Reposition

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Merchandising activities
 Marketing
 Advertising
 Point-of-sale selling
 Aimed at improving profitability
 Staff recognition of customer needs
 Using design
 Making the customer feel distinctive and unique
 Making customers feel valued and encouraging loyalty
 Achieving customer satisfaction

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Personal selling
 Staff should be able to:
 Describe the food, wines and drinks on offer in an
informative and appealing way
 Use opportunities to promote specific items or deals when
taking customer orders
 Seek information in a way that promotes sales
 Provide a competent service
 Seek customers’ views

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
Consumer-product relationship
 Process has to be dynamic
 Customer needs change
 Market research needs to be continual
 Need to review current concept against new ideas
and concepts
 Business and product life cycles are becoming
shorter
 Managing change is complex
 Businesses must have a clear vision

© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers
© 2019 Cousins et al: Food and Beverage Management, 5th edition, Goodfellow Publishers