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Hospitality Operating Ratios

Hospitality Operating Ratios. Hospitality Operating Ratios. Overview There are some key ratios used to calculate main operating costs in hospitality. These operating costs include food costs, labor and beverage costs Goal

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Hospitality Operating Ratios

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  1. Hospitality Operating Ratios

  2. Hospitality Operating Ratios Overview • There are some key ratios used to calculate main operating costs in hospitality. These operating costs include food costs, labor and beverage costs Goal • To examine the basic operating costs in detail and understand the key operating ratios for daily reports.

  3. OBJECTIVES At the end of this lesson students will be able to: • Define the main operating costs • Understand the difference between these main operating costs • Apply key operating ratios

  4. Food Costs • Beginning Inventory + Purchases - Issues = Ending Inventory • Inventory Issues is the food cost • Food Cost Ratio = Food Cost Food Sales • Typical food cost ratio is 28-32% Beginning Inventory + Purchases - Ending Inventory = Issues

  5. Labor & Beverage Costs • Labor Cost • highest single expense in the food & beverage division • $ amount of # employee hours department revenue • Beverage Cost (Pour Cost) • beverage issues beverage revenues

  6. Contribution Margin • Dollar differential between the cost and the sales price of a menu item • Example: Pasta Dish sells for $8.75 Pasta Dish costs 3.75 Contribution Margin $5.00

  7. Bars • Profit percentage for beverage is higher than food, profit center • Efficiency based on pour/cost percentage • 16-24% pour/cost percentage

  8. Key operating ratiosfor daily report • Percentage of occupancy = Number of rooms sold Number of rooms available for sale • Guests per Occupied Room = Number of guests Number of rooms sold • Average Daily Room Rate (ADR) = Room income Number of rooms sold • Room Revenue Potential % = Actual Room Revenue (Rooms sold X Rack Rate)

  9. Key Operating Ratios • RevPar Total Revenue Total Rooms Available • Rate Achievement Factor Average Rate Rooms Occupied • Yield Percentage Occupancy % X Rate Achievement Factor

  10. Average Daily Rate Rooms Occupancy Percentage Percentage of Potential Room Revenue Guest per Occupied Room Rev Par - Revenue per Available Room Rate Achievement Factor Yield * 900 Rooms Available

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