• Subject Name : Management

## Significance of Location for Small Restaurants Business

CASE STUDY 1: Maison Hotel

Calculation of performance.

Revenue estimation.

Calculation of REVPAR..

Best Revenue Optimisation.

CASE STUDY 2: Charcoal Bar-B-Q restaurant – Food and Beverage Revenue.

Calculation of revenue estimation.

Tactical revenue data.

Reference List

### Case Study 1: Maison Hotel

#### 1. Calculation of Performance

i. Revenue estimation

Revenue estimation is referred to as the calculation of the money for the business, which the organisation is more likely to earn (Strauss, Klein and Steinhardt, 2018). The revenue estimation is being calculated for a fixed phase of the accounting period, which often involves the entire financial year of the quarter (Sierag and van der Mei, 2016). The correct estimation of revenue is much necessary for planning business operations (Tse and Poon, 2017). In addition, it also facilitates the management to forecast the future growth of the business (Gogolev and Ozhegov, 2019). In the context of the given scenario, the revenue estimation of the different options is drafted below:

 Revenue Calculation Option 1 Option 2 Option 3 Third-party merchant operator Hotel’s website Rooms 3240 3240 2500 740 RM/ Night 298 [360-(360*20%)]288 240 298 Revenue (Rooms * RM/ Night) 965520 933120 600000 220520 Total Revenue of 3240 Rooms 965520 933120 820520

Table 1: Estimation of revenue

The revenue that will be gained through various options is calculated by (Rooms * RM/ Night). The revenue stands to be 965520, 933120, and 820520 of option 1, 2 and 3, respectively. From the estimations, it stands observed that Option 1 is capable of yielding profound revenues as compared with the other options. The estimation of revenue further facilitated in determining the cost. The estimation of cost is drafted below:

 Cost Calculation Option 1 Option 2 Option 3 Third-party merchant operator Hotel’s website RM/ Night 298 288 240 298 Rooms 3240 3240 2500 740 Room Cost 104.3 100.8 84 104.3 Cost of Breakfast 14.9 14.4 12 14.9 Labour Cost 11.92 11.52 9.6 11.92 additional Costs 5.96 5.76 4.8 5.96 An additional set of breakfast 18 18 18 18 The total cost per room 155.08 150.48 128.4 155.08 Cost* Rooms 502459.2 487555.2 321000 114759.2 The total cost of 3240 rooms 502459.2 487555.2 435759.2

Table 2: Estimation of cost

From the table, the cost estimation of Maison Hotel is being represented. The cost is calculated as 502459.2, 487555.2, and 435759.2 of option 1, 2 and 3, respectively. It stands observed that the cost of option 1 is much higher than the other options. On the other hand, the cost of option three is much lower than the others. The estimation of revenue and cost further facilitated for determining the profitability of Maison Hotel. The profit estimation is drafted below:

 Particulars Option 1 Option 2 Option 3 Revenue Third-party merchant operator Hotel’s website Earnings 965520 933120 600000 220520 Total revenue of 3240 rooms 965520 933120 820520 Costs Total Costs of 3240 rooms 502459.2 487555.2 435759.2 Profit 463060.8 445564.8 384760.8

Table 3: Estimation of profit

The profit is calculated as 463060.8, 445564.8, and 384760.8 of option 1, 2 and 3, respectively. From the aforementioned estimation, it stands observed that Option 1 will facilitate the hotel to earn an effective amount of profitability.

From the estimation, that is being presented above; it stands observed that form the Option 1, Maison Hotel will be able to earn effective revenue. On the other hand, it is observed that the cost that should be incurred is also higher. Despite the higher cost, the profitability of Option 1 remains higher than the other options. Therefore, it is being recommended that the Maison Hotel should look forward to execute option 1 so that they can enhance organisational profitability and productivity in an effective manner.

ii. Calculation of REVPAR

REVPAR is considered as the metric “Revenue per Available room”, which is being used within the hospitality industry so that the performance of the hotel can be effectively measured (Freitas and Filipe, 2019). The calculation of RevPar of each option is drafted below:

 Calculation of RevPAR Formula (room Revenue/ Number of rooms available) RevPar Total RevPAR Option 1 298/ 80% 238 238 Option 2 288/ 80% 230 230 Option 3 Third-party merchant operator 240/ 80% 192 426 Hotel’s website 298/ 80% 234

Table 4: calculation of RevPar

From the aforementioned-table, it stands observed that the RevPar of Option 1is 238, and Option 2 is 230. At the same time, the RevPar of Option 3 is 426. RevPar helps the hoteliers to ensure the overall success of the hotel (Pop et al., 2018). Therefore, it stands observed that the company holds the effective ability to fill its available rooms with the help of Option 3.

#### 2. Best Revenue Optimisation

The revenue optimisation method is considered as the long term management of strategic pricing, distribution channels, as well as the inventory in order to maximise the growth of organisation’s profit (Björkqvist, 2017). In the context of pricing, Maison Hotel should look forward to involve the Price Skimming Strategy. It will facilitate the organisation to include new promotions and launching of latest and trendy services and products (Liu, Zhai and Chen, 2018). In addition, the Maison Hotel should focus on keep the price of the products and services high for the shorter period of time, and when the demand lowers, they should lower the price in order to attract the effective amount of customers. It will further facilitate the Maison hotel to build a high-quality perception as well as the image in the competitive market of Malaysia so that the organisation can enhance its profit margin.

On the other hand, considering the demand generation strategy, it can be stated that the Maison Hotel should focus on partnering with the webinars or superstars of the industry so that the organisation’s production can be ultimately increased. Partnering will help the organisation to increase the position of the company as well as increase brand awareness among the customers (Winarko and Mitsunita, 2020). In the context of the distribution channel strategy, it can be stated that Maison Hotel should look forward to involve the multiple distribution channels. It will facilitate the company by selling its products and services through different channels such as the third-party travel websites, company's website, social media and others. The multiple distribution channels will also help to reach among the large pool of targeted segment of customers and will enable the organisation to earn high profits (Burningham et al., 2020).

In the context of the inventory control strategy, it can be stated that Maison hotel should focus on involving the “Just-in-time (JIT)” techniques in order to effectively arrange the raw materials in an effective manner. In addition, it will also assist the hotel to integrate the systems in an effective manner so that the overall performance of the organisation is being enhanced (Chen and Chen, 2017). The involvement of aforementioned-strategies will help Maison Hotel to improve its process so that they can determine the right price or the hotel and enhance the profitability of the organisation.

### Case Study 2: Charcoal Bar-B-Q Restaurant – Food and Beverage Revenue

#### 1. Calculation of Revenue Estimation

 Particulars RM Revenue Revenue of Adults from Thursday to Sunday 6290 revenue of Kids from Thursday to Sunday 787.2 Total Revenue 7077.2 Inventories Additional Food up to 1 Kg 55 Cost food cost 24% 1698.528 Beverage Cost 3% 212.316 Labour Cost 3% 212.316 Additional Cost 5% 353.86 Total Cost 2477.02 Profit 4545

Table 5: Estimation of cost, inventory, Cost and Profit

From the estimation, it is observed that the cost that will be incurred by the firm is RM 2477.02. On the other hand, the total inventory is RM 55. The revenue from adults is calculated to be RM 6290, and from kids, the revenue that the firm will incur is RM 78.2. Therefore, the profit that the Charcoal Bar-B-Q restaurant will receive through the promotional strategy is RM 4545.

In order to increase business growth, it is much necessary for the business to implement additional strategies so that they can effectively increase the average size of its transactions (Shende and Sukhatmay, 2017). In addition, the additional strategy also helps in increasing the price of the offered products and services (Gregorash, 2016). In the context of the given scenario, Charcoal Bar-B-Q restaurant should focus on optimising its menu for the purpose of cross-selling. The cross-selling consists of the process of encouraging the buffet diners to purchase the complimentary food items. It will facilitate the organisation to boost its revenue. In addition, Billy should also look forward to encourage and train its servers to cross-sell, so that the menu of Charcoal Bar-B-Q restaurant can be used as the sales tool. The servers should be trained to listen to the customer’s demand so that they can deliver the recommendations of complementary food and beverage so that the customers can be influenced to buy the complementary items. For instance, Billy can look forward to pair the meal and desert by adding the recommendation of desert within the below description or the servers can also recommend it. In order to effectively execute the cross-selling approach, Billy should look forward to involve the below-drafted procedures:

Breed Trust: The relationship with customers is built over trust. Therefore, Billy should look forward to anticipate the needs of customers in the times of Pandemic so that the profound relationship with the customer is being maintained.

Tracking customer’s journey: The data of the customer’s journey will further help the restaurant to predict the likelihood of the customer's response. In addition, based on the interactions, the organisation can offer relevant food and beverages.

Become the sales consultant rather than salesman: becoming an expert of the needs of the customers will help the servers to suggest the food or beverages as per the client's need.

Being Proactive: It is necessary for Billy to keep updating the products and services. In addition, they should also look forward to brainstorm the latest or upgraded products and services to the customers, so the brand awareness of the company among the customer is enhanced.

Cross-selling will help the restaurant to breed trust among the customers by representing them that the restaurant cares about addressing the needs and requirement of the customers (Lopez, 2018). In addition, it also facilitates the organisation to develop loyalty among the customers and financial wellbeing for the firm. It is much necessary for Billy to grow its sales by turning new leads within the marketing so that the revenue of the firm is being enhanced. In this context, it is noteworthy that Billy should not look forward to ignore the valuable prospect and opportunities available in the market. Cross-selling is an incredible opportunity that facilitates the business to enhance its current base of sales. It is often observant that acquiring a new range of customers is much expensive for the organisation that retaining the existing ones. Therefore, in the intense competition, addressing the goals of the revenues is of much importance. Billy should look forward to cross-sell its menu in a much useful manner so that it does not overlap the main product and services of the organisation.

Cross selling of the menu will help Billy to see a quick increase in profit so that the company can obtain return over the investment. Offering the products and beverages to the customers relevant to their needs facilitates the organisation to yield profound profitability.

#### 3. Tactical Revenue Data

The three tactical revenue data that is required by Billy in order to accomplish the objectives of revenue optimisation is drafted below:

Eating and drinking place: The eating and drinking place should be the tactical data so that Billy can determine the number of customers, which can be catered by the place. It also helps in determining the number of occupancy within the place.

Buffet dining: Buffet dining tactical data will help Billy to make the decision regarding the cost that should be incurred for the chefs and on inventory.

Availability of staffs: The availability of staff will also help Billy to analyse the overall staff that is required in order to cater to the need of the customers. In addition, the cost of salaries to the staff should also be determined so that the revenue generation capacity of Charcoal Bar-B-Q restaurant can be outlined profoundly.

### Reference List for Revenue and Profit Management

Björkqvist, A., 2017. Revenue management and its utilisation in the restaurant business. CHANGES IN THE HOSPITALITY INDUSTRY, p.33.

Burningham, W.J., Mosley, L.J., Burnham, G.K., Humes, D.S. and Condie, N.J., Qualtrics LLC, 2020. Recomposing survey questions for distribution via multiple distribution channels. U.S. Patent 10,547,709.

Chen, L.F. and Chen, S.J., 2017. A RFID-based JIT Application for Least Waiting Time for Dynamic Smart Diet Customers. In ITM Web of Conferences (Vol. 11, p. 03009). EDP Sciences.

Freitas, N.M. and Filipe, J.A., 2019. A note on the examination of Portugal’s hotels performance: a proposal for a new perspective’s approach. A note on the examination of Portugal’s hotels performance: a proposal for a new perspective’s approach, pp.59-67.

Gogolev, S. and Ozhegov, E.M., 2019, July. Comparison of Machine Learning Algorithms in Restaurant Revenue Prediction. In International Conference on Analysis of Images, Social Networks and Texts (pp. 27-36). Springer, Cham.

Gregorash, B.J., 2016. Restaurant revenue management: apply reservation management?. Information Technology & Tourism16(4), pp.331-346.

Liu, J., Zhai, X. and Chen, L., 2018. The interaction between product rollover strategy and pricing scheme. International Journal of Production Economics201, pp.116-135.

Lopez, M.O., 2018. Consumer buying behavior as loyalty antecedents at selected fast food chain restaurants. International Journal of Recent Innovations in Academic Research2(6), pp.186-201.

Pop, C., Coros, M., Georgescu, M.A. and Bonea, M., 2018. Romanian branded hotels: are they worth the effort?. Theoretical and Applied Economics25(4), p.617.

Shende, K. and Sukhatmay, M.V., 2017. To study the Significance of Location for Small Restaurants Business. CHANGES IN THE HOSPITALITY INDUSTRY. pp.1-93

Sierag, D. and van der Mei, R., 2016. Single-leg choice-based revenue management: a robust optimisation approach. Journal of Revenue and Pricing Management15(6), pp.454-467.

Strauss, A.K., Klein, R. and Steinhardt, C., 2018. A review of choice-based revenue management: Theory and methods. European Journal of Operational Research271(2), pp.375-387.

Tse, T.S. and Poon, Y.T., 2017. Modeling no-shows, cancellations, overbooking, and walk-ins in restaurant revenue management. Journal of foodservice business research20(2), pp.127-145.

Winarko, H.B. and Mitsunita, D.R., 2020, June. Restaurant Search Service Membership Program: Zomato Gold’s Case Study in Indonesia. In 23rd Asian Forum of Business Education (AFBE 2019) (pp. 425-429). Atlantis Press.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Management Assignment Help

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