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The first task of the new Director of Food and Beverage is to choose a concept for a new outlet: either a fast service restaurant or a French fine dining restaurant. Both ideas have certain advantages and disadvantages for the Marina Bay Sands resort. A fast-food cafe may be a good option for the resort. The main disadvantage is that such establishments have relatively low average spending markets due to the low prices of their products (Davis et al., 2018). They can cater to more customers per day due to flexible mealtimes and clients consuming food on and off the premises. Fast service venues are highly standardized with little variations in the menu, leading to substantial savings in various operational costs, including labor and food (Davis et al., 2018). Contrastingly, a fine dining restaurant is profit-oriented with an extended and exclusive menu that presupposes a high average spending market (Davis et al., 2018). However, such establishments have high operating costs while the demand for them is lower (Davis et al., 2018). Thus, a drop in interest in fine dining can lead to significant financial losses for the resort.
In summary, the Marina Bay Sands resort would profit more from opening a fast service restaurant. Fast food venues are more manageable and economical to run, appeal to a larger customer pool, and offer flexible options. The startup cost for the establishment is also relatively low (Davis et al., 2018). Thus, a fast-food location with an appealing menu would be profitable while requiring minimal financial investment. It is the option the new Director of Food and Beverage will recommend.
There are several reasons behind the discrepancies in actual and budgeted food costs. They include mistakes in calculations, lack of control over the stock, inadequate purchasing, receiving, storing, and food control, lack of accurate recipes, and no accounting for staff meals (Davis et al., 2018). Mistakes in calculations can lead to the actual food costs varying significantly from the budgeted one. However, they are easy to correct and do not present a pressing concern. Overpriced goods of substandard qualities acquired by the restaurant can lead to more food not being accepted by the customers and being discarded. Similarly, failure to store goods properly is likely to lead to them expiring earlier than expected, resulting in the necessity to buy more stock. Finally, the lack of standardized recipes can increase the actual food costs as varying amounts of products are used for the same meals.
Various preventative measures can be implemented to lower the variance between the actual and budgeted food costs. Thus, the standardization of all recipes will help reduce the waste of materials by using identical measures and cooking methods (Davis et al., 2018). All staff meals should be accounted for and deducted from food costs (Davis et al., 2018). Another measure is evaluating all food suppliers and finishing the contract with those offering substandard quality products. The restaurant manager should also ensure all perishable and non-perishable goods are correctly stored and perform an inventory regularly.
The theft of products is one of the main reasons for discrepancies between the actual and planned food costs. Therefore, there is a need for several preventative measures to ensure the security of the materials. First, all employees must be aware of the restaurants policies, what constitutes theft, and the consequences of stealing food or equipment from the workplace (Reimer, 2020). The manager should control staff meals to avoid employees taking extra meals without reporting it or taking meals off the premises for someone else. Thus, it is recommended to prepare preplanned staff lunches to ensure each employee has a meal and no additional ones are available. This measure will also allow tracking the actual food costs. Regular inventory can also indicate what theft is taking place at the restaurant. The installment of an inventory management program to which only a few senior staff members have access will help prevent food theft (Reimer, 2020). If all employees are aware that all products are being carefully audited, they are less likely to take food from their workplace.
In addition, storerooms can be equipped with video surveillance to deter potential theft. The cameras must be fitted in line with the law in order not to infringe on the rights and privacy of the employees (Mealey, 2019). Their presence in storerooms is the quickest solution to find the culprit if the theft is ongoing. However, they show a lack of trust in the employees and may undermine them.
To effectively change the business model of The Prime Society restaurant, Peter advised employing the menu margin analysis to establish what items should be removed or reviewed. The analysis allows calculating the demand for individual dishes, customer preference, and contribution of each item (Davis et al., 2018). Overall, it helps establish what courses offered by the restaurants are profitable, which are too costly to make, and which are lucrative despite low sales. The analysis is the most appropriate method to evaluate the current list of options and make relevant changes to The Prime Society model.
The margin analysis shows several questionable items that have either low profitability or low transaction count. For example, pasta was sold only 440 times with a $14.11 contribution, compared to veal sold a relatively low number of 500 times for $16.2. It is advised to remove the pasta from the menu and lower the cost of production of the veal patties. The cost of lamb should also be reduced as the 60% margin translates into low profitability despite relatively high sales. As it is imported to Thailand from a foreign country, lamb can be offered as a seasonal menu item with the restaurant ordering it when the supply is higher and cheaper (Cousins, Lillicrap and Weekes, 2014). The cost of preparing the prawns should also be lowered. Fresh prawns are readily available in Thailand, and the 68% contribution margin is too low to be highly profitable. Similarly, the recipe for roast beef can be revised to cost lower than 34%. However, the duck should be removed from the menu as it is not profitable despite its relatively low cost.
Two items should remain unchanged: fish and salad. Both articles have a low production cost, with 20% and 21% respectively, and both dishes were sold more than 1500 times. They are highly profitable and have a high transaction count, meaning the interest in those items is unlikely to decrease. Furthermore, the new menu can be developed to include more salads and dishes with fish.
Food Average Margin Food Average Orders
Reference List
Cousins, J., Lillicrap, D. and Weekes, S. (2014) Food and beverage service. 9th edn. Bookpoint.
Davis, B. et al. (2018) Food and beverage management. 6th edn. Routledge.
Mealey, L. (2019) Here are tips on how to prevent food theft at a restaurant, The Balance Small Business. Web.
Reimer, J. (2020) Preventing internal theft in restaurants, Restaurant Insider. Web.
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