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# Food service sales

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A proposed food service facility in Countryville will have 100 seats and be open for breakfast, lunch and dinner, Monday through Saturday. The owner believes its seat turnover(ST) by meal period and average food service check(AFC) will be s follows:

Breakfast Lunch dinner
Day ST AFC ST AFC ST AFC
Monday 1.5 \$3.20 1.7 \$6.80 0.8 \$9.50
Tuesday 1.4 3.20 1.8 6.90 0.7 9.50
Wednesday1.5 3.20 1.8 6.90 0.7 9.50
Thursday 1.5 3.20 1.8 6.90 0.7 9.50
Friday 1.2 3.50 1.6 6.70 1.6 11.50
Saturday 0.7 2.80 0.5 6.20 1.5 11.50
Assume a year has 365 days, and the first day of the year is a Monday.

Question.
1. Calculate the estimated food service sales for the year.
2. Recalculate the estimated food service sales for the year assuming the AFC is .15 lower per meal and the ST is .1 percentage point lower for each meal period (for example, the ST for Monday breakfast is 1.4 rather than 1.5).
3. What is the difference between the total revenues calculated in numbers 1 and 2 above?

#### Solution Preview

A proposed food service facility in Countryville will have 100 seats and be open for breakfast, lunch and dinner, Monday through Saturday.
The owner believes its seat turnover(ST) by meal period and average food service check(AFC) will be s ...

#### Solution Summary

The solution calculates food service sales for a proposed food service facility.

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## Functional Area Interrelationships paper (Kudler Fine Foods)

Based on the Virtual Organization (please see BELOW), I need help with a 250- to 300 word paper in which I need to complete the following:

Identify and explain the steps of the collaboration process among the functional areas that needs to be employed to achieve organizational goals, and prepare an action plan to implement the collaboration process.

-----------------------

Kudler Fine Foods
Kudler Fine Foods is a local upscale specialty food store located in the San Diego metropolitan area. The company has three locations (La Jolla, Del Mar and Encinitas). Each store has approximately 16,000 s.f. of retail space located in a fashionable shopping center. The stores are stocked with the very best domestic and imported foodstuffs and divided into the following departments:
? Fresh Bakery and Pastries
? Fresh Produce
? Fresh Meat & Seafood
? Condiments and Packaged Foods
? Cheese's and Specialty Dairy Products ________________________________________

________________________________________
History
Our founder, Kathy Kudler, was the Vice-President of Marketing for a large defense contractor. Weary of the constant travel and the pressures of corporate life, Kathy was looking for other opportunities. As it happened, Kathy relieved her stress through gourmet cooking and on a shopping trip for ingredients for a gourmet repast, she suddenly realized that there was an opportunity for an upscale epicurean food shop in La Jolla.

Kathy developed a business plan, obtained financing and six months later, on June 18, 1998, the first Kudler Fine Foods opened. Within nine months the store was at break-even and was profitable for the year.

In 2000, a second store was opened in Del Mar and in 2003 our third shop opened in Encinitas.
Kudler Fine Foods has experienced significant growth and is now focused on expanding the services, improving the efficiency of its operations and increasing the consumer purchase cycle as a means to increasing the loyalty and profitability of its consumers.

Strategic Objective: Increase Loyalty and Profitability of Consumers
? Expanding Services (Revenue Increase) - Kudler is offering parties in the store to show customers how to prepare specialty foods. The draw for the consumers is to be trained by world-renowned chefs, local celebrities, other food experts, and even Kathy Kudler herself, and to be invited to exclusive, upscale events. The anticipated outcomes will be to increase the customer purchase rate of high margin food and beverage items and to get consumer to make an evening at Kudler Fine Foods part of their social network. This increased time in the store will increase the overall revenue per visit and increase the frequency of visits to the store. Consumers will receive multiple entries in high-ticket item contests by bringing a friend to the parties. While the firm's preference is to have the events in-store, guests can have Kudler cooking classes at their home for a price premium. Programs such as this encourage consumer loyalty and word-of mouth marketing.
? Frequent Shopper Program (Revenue Increase) - Kudler's new initiative is tracking purchase behavior at the individual customer level and providing high value incentives through a partnership with a loyalty points program. The customer purchase behavior patters will help Kudler refine its processes and offerings to best satisfy their valued customers. Price is not the primary differentiating factor for Kudler consumers; these consumers are focused on quality and finding specialized items. Therefore, rather than providing everyday discounts to the customers for their purchase frequency like lower end markets, Kudler has partnered with a loyalty points program to provide customers with points which can be redeemed for high end gift items, airline first-class upgrades, or other specialty foods.
? Increased Efficiency (Cost Reduction) - Kudler's is now in a position to focus on internal (both front line and behind the scenes) processes, and how those can be improved to deliver increased value to the customer. From a service perspective, Kudler is benchmarking Nordstrom department stores. In addition, the firm is developing employee training programs and integrating new software systems to facilitate the effort. Marketing has encouraged the purchasing department to find ways to reduce costs of ordering foods and minimize the amount of food to be stored, while also having a zero stock out policy. In response, purchasing has developed a supplier relations program and has solicited the help of marketing to help roll out the program.

Historical Sales Data and Financials
Historically, Kudler Fine Foods has tracked information such as dollar value and profit margin per transaction, dollar sales and profit levels by day, and dollar sales and profit margins by item. However, in an effort to leverage the information to create a more intimate relationship with their customers, the firm is integrating a system to track customer purchase behavior over time. The firm is in the process of developing this system now.
Marketing Budget
The marketing budget is primarily comprised of new initiatives, marketing communications, and marketing research.
New Initiatives
? Research, development, and rollout of new programs
? Cooking Classes
? Supplier relations program
Marketing Communications activities include:
? Public relations, events, and sponsorships
Marketing Research expenditures include:
? Market size / opportunity studies
? Food marketing trends studies
? Services benchmarking study
Growth Strategy
Within the next 12 months, Kudler plans to increase customer loyalty by offering added high-margin services, leveraging the firm's better understanding of customer purchase patterns, and providing more efficient operations. Profitability will also be increased by cost reductions accomplished through supplier partnering programs. New customers will be acquired through social network marketing and word of mouth.
Sales Plan
2007
The purpose of this sales plan is to help Kudler's managers prioritize and focus resources in a way that reaches the organization's objectives. During 2007, Kudler plans to increase customer loyalty by offering added high-margin services, leveraging the firm's better understanding of customer purchase patterns, and providing more efficient operations. New customers will be acquired through social network marketing and word of mouth. The selling function will support the expansion of services and programs to increase loyalty and profitability of existing customers and to gain new high-margin customers. The theme for this year is outlined below. Let's make it a great year!

Kudler Sales Plan 2007
Theme: Delight Our New and Existing Customers Through -
&#61607; New Customer Focused Programs
&#61607; Better Information Management
&#61607; Targeted Awareness Building
&#61607; Increased Behind the Scenes Efficiency and Cost Containment
________________________________________
Sales Plan Contents
Part 1: Strategic sales objectives with corresponding financial goals and roll-out schedules
New Customer Focused Programs
Better Information Management
Targeted Awareness Building
Increased Behind the Scenes Efficiency
Part 2: Tactics by marketing mix, timing, and relationship to strategic sales objectives
Product (existing products and new offerings)
Pricing (pricing, promotions, and discounts)
Promotions (customer and sales)
Place (expansion, emphasis on locations or customer regions)
Part 3: Customer Relationship Management Strategies and Tactics

________________________________________
Part 1: Strategic sales objectives with corresponding financial goals and roll-out schedules
Strategic Sales Objectives
The objective of the sales organization is to successfully implement programs designed to increase revenue and decrease costs. The sales group will support the rollout of new customer focused Programs, leverage customer information to support sales growth of existing customers, initiate targeted activities to recruit high-profit new customers, and support operational cost-cutting efforts taking place company-wide.
This section will review the following strategic initiatives:
? New Customer Focused Programs
? Better Information Management
? Targeted Awareness Building
? Increased Behind the Scenes Efficiency
New Customer Focused Programs: Cooking Class Socials
We will initiate specialty cooking classes as a way to increase the consumption of high-margin items among existing customers and to build awareness, trial, and regular shopping among new customers.

Kudler is offering parties in the store to show customers how to prepare specialty foods. The draw for the consumers is to be trained by world-renowned chefs, local celebrities, other food experts, and even Kathy Kudler herself, and to be invited to exclusive, upscale events. The anticipated outcomes will be to increase the customer purchase rate of high margin food and beverage items and to get consumer to make an evening at Kudler Fine Foods part of their social network. This increased time in the store will increase the overall revenue per visit and increase the frequency of visits to the store. Consumers will receive multiple entries in high-ticket item contests by bringing a friend to the parties. While the firm's preference is to have the events in-store, guests can have Kudler cooking classes at their home for a price premium. Programs such as this encourage consumer loyalty and word-of mouth marketing.

Role of the sales group: The sales group will actively promote these programs to the existing customers and targeted potential new customers in key high-income zip codes. We anticipate that initially, the majority of participants will be existing customers, however, over time, new customers will participate in the programs. The projected mix of existing and new customers is outlined in the table below, along with the projected lift in revenue resulting from the programs.
Cooking Class Socials
Existing Customers New Customers Projected Revenue Lift
Q1 Direct mail re: classes.

18 Specialty Cooking Classes 90% 10% .75%
Q2< 24 Specialty Cooking Classes 75% 25% 1.25%
Q3< Direct mail re: classes.

12 Barbeque Buster Classes

18 Specialty Cooking Classes 65% 35% 1.75%
Q4< 12 Customer In-Home Parties

24 Specialty Cooking Classes 50% 50% 3.75%
Total 7.50%

Better Information Management: Frequent Shopper Program
Our new initiative is tracking purchase behavior at the individual customer level and providing high value incentives through a partnership with a loyalty points program. The customer purchase behavior patterns will help us refine its processes and offerings to best satisfy their valued customers. Price is not the primary differentiating factor for Kudler consumers; these consumers are focused on quality and finding specialized items. Therefore, rather than providing discounts to the customers for their purchase frequency like lower end markets, Kudler has partnered with a loyalty points program to provide customers with points which can be redeemed for high end gift items, airline first-class upgrades, or other specialty foods.
Role of the sales group: Sales will be trained on these programs, including in-depth training on data analysis. This is an important facet of our quest to delight the customer.
Frequent Shopper Program
Projected Revenue Lift
Q1 Employee-wide training session

Frequent shopper program rollout .25%
Q2 Assessment and refinement of program

Frequent shopper promotion, increased customer satisfaction .50%
Q3 Frequent shopper promotion, increased customer satisfaction 1.75%
Q4 Frequent shopper promotion, increased customer satisfaction 2.25%
Total 4.75%

Targeted Awareness Building: Direct Marketing and Word of Mouth
Direct mail promotional literature will be sent to high-income zip codes to solicit customers. These pieces will contain information about the array of products and services offered by Kudler. Kudler will be positioned as a place to interact with others interested in exceptional quality foods for entertaining and everyday use.
Role of the sales group: Provide input during the development stages. Participate in the training sessions. Support the roll out of the direct mail piece.

Increased Behind the Scenes Efficiency: Cost Cutting Initiatives
Kudler is now in a position to focus on internal (both front line and behind the scenes) processes, and how those can be improved to deliver increased value to the customer. From a service perspective, we are benchmarking Nordstrom department stores. In addition, an employee training program and new software systems will facilitate the effort. Marketing has encouraged the purchasing department to find ways to reduce costs of ordering foods and minimize the amount of food to be stored, while also having a zero stock out policy. In response, purchasing has developed a supplier relations program and has solicited the help of marketing to help roll out the program.
Role of the sales group: Support cost cutting efforts as needed.
________________________________________
Part 2: Tactics by marketing mix, timing, and relationship to strategic sales objectives

Product
The frequent purchase program will give us valuable data on customer purchase patterns. Beginning in Q1, sales will work with purchasing to adjust the product offerings on shelf to reflect the needs of our customers. This analysis will evaluate frequently purchased items with their corresponding profit margin and fit within the product mix.

Pricing
The promotions introduced during Q1 such as the frequent purchaser and the cooking classes are designed to be self-funding. We are using a cost-plus minimum pricing strategy to hit our minimum 5% margin threshold, combined with a market-based strategy to build in additional margin around what the market is willing to bear. Rather than offer discounts to our customer, we offer value added services.

Promotions
For the sales department, our bonus is contingent, in part, on the successful implementation of the customer promotion programs discussed in this plan. If we meet 100% of the targeted revenue each quarter for the cooking class socials and the frequent purchaser program, then we receive a 1.25% bonus above our base salary and standard commission. If we meet our targets for every quarter, we will earn an additional 2% bonus. This means we have the potential to earn a bonus of up to 7% of our base salary.
Place
At this time, we are focusing on improving our existing locations. However, sales is encouraged to actively consider new ways that we can expand our business geographically in the future.
________________________________________
Part 3: Customer Relationship Management Strategies and Tactics
Our emphasis this year is delighting our new and existing customers. As a sales organization, this means we must actively analyze our customer data to provide products and services that exceed customer needs. Every person influencing the sales organization will be expected to complete the course "Using Customer Data to Create Happy, Profitable Customers" within the first quarter of 2007.

There is no purchasing department in any of the stores although standard purchasing procedures are in place. Each of the three department managers in each store determines requirements for the items their department sells and places purchase orders directly with suppliers using a purchase order form that is standard between the three stores. It is the responsibility of the Department Managers to obtain the best price, quality, and delivery possible. They also receive and verify all orders in terms of whether they received the correct items and quantities and in undamaged conditions. Received items are documented on an Order Received form and sent to Accounting so that invoices for the items can be paid.
The three department managers are encouraged to check with their counterparts at the other stores on the pricing, quality, and delivery of the merchandise they order. They are also encouraged to combine orders between their stores if they feel there would be a cost savings resulting from ordering a larger quantity of a particular item or multiple items.
Kathy also places purchase orders. Kathy's purchases relate mostly to unique, capital, or repair items that might be required by an individual store or for items used by all three stores, such as bulk Purchase Orders or Receiving forms.
Prepared purchase order forms are either mailed, handed to supplier salesmen, faxed to suppliers, or sent by E-mail if acceptable to suppliers. Whatever the method used, a purchase order form is always filled out initially and becomes the key tracking and financial document for an order.

Advertisements are prepared for local newspapers by Kathy. Advertised specials are offered at all three stores simultaneously. Kathy coordinates the items on sale with the store managers from each store during her weekly operations review meetings to make sure adequate supplies of merchandise will be on hand. Merchandise can be shifted between stores should one store have a higher demand of an item than another store, time permitting.

Accounting
Accounting data is collected by the point-of-sale terminals (cash registers) that are used in each store at check-out to record all items, quantities, prices, taxes and totals for all daily sales transactions.

Inventory Management
Excess inventory is always a concern since it represents company monies being tied up in merchandise that is not moving or generating further income. Excesses can also lead to write-downs of the merchandise.
The department managers are responsible for maintaining high customer service levels for the items they sell, which means carrying higher levels of inventory, but not excessive service levels. Kathy's policy is that adequate levels of inventory should be maintained to assure that stock-outs do not occur more than 2-3 times a year. This customer service level is discussed during Kathy's monthly operations review meeting and adjustments to merchandise stocking levels made if warranted. A customer service level of 95% has been a general goal for a number of items carried. 95% means that 95% of the time a customer will find merchandise available in a store. 5% of the time there will be no merchandise due to a previous stock-out. The store decides on an item-by-item basis whether a rain check will be offered customers if an item is out of stock.

Forecasting
Forecasting which items to carry and how much to carry in the future has always been a challenge. Kathy and her department managers utilize historical data on which items and what quantities were sold in the last 2-3 years, especially on holidays. This provides an indication of which items and what quantities to carry in the future. Forecasts are basically an extrapolation of past history to the future. In an increasing sales market, the trend extrapolating forecast works fairly well. The difficulty has always been in determining the forecast's turning points, from increasing sales to decreasing for example, since significant errors can occur at these points. This is a reoccurring topic in monthly operations review meetings in which monthly sales are reviewed for the last year and monthly forecasts prepared for the next three months, a quarterly forecast for the quarter after that, and for six months for the next six-month period after that. The accuracy of this forecasting method has not been as good as desired and has resulted in the obsoleting of some merchandise and in offering others at drastic discounts.

Merchandise Selection and Pricing
The Kudler stores are no different from any other store in that business success is geared to being able to provide total customer satisfaction. One way to satisfy customers is to offer a changing selection of gourmet foods as they become available since customers always appear to be demanding something new. Kathy considers one of her key responsibilities to be that of identification of new gourmet items that can be offered in her stores. To keep up with what's available, Kathy monitors what other gourmet foods stores are offering, what's being advertised in gourmet magazines, what is being shown at gourmet conventions, and what shows up on gourmet Web sites.
After finding some new and interesting items, Kathy usually obtains a small amount of each item and introduces them at one of her operations review meetings. The managers attending the meeting get to sample the items and to offer their comments, suggestions and recommendations on whether to offer the items or not.
In checking on all the new items, especially on what competitors are offering, Kathy is also in a position to determine what current selling prices for the items are. With this information, Kathy and her staff then discuss if and when merchandise prices should be changed and by how much

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