Buffet Spreads – Bundling Food and Beverage Items for Higher Profits

POWER TIPS SERIES

Power Tip 2 – Buffet Spreads – bundling food and beverage items for Higher Profits

If you have not read Power Tip 1, go here for it on RevPAR VS Average Daily Rate focus.

Buffet Spreads - bundling food and beverage items for Higher Profitability

Buffet Spreads – bundling food and beverage items for Higher Profitability

In any hotel food outlet and in particular when buffet spreads are offered, it is important to push beverage sales along with the food offering. Consider that a quality buffet offers you a soup, salad, entree, dessert and a drink all for a fair price. This strategy provides a balanced meal, enhances sales mix and revenues and boosts profitability. This is the Buffet spread philosophy.

It is predominantly a sales mix matter. The principle of bundling more than one product is an age old marketing strategy. Take for example the ubiquitous McDonald’s Value Meal Bundle – Fries and Soda are offered along with the main food item for a value bundle price. This is to the benefit of the customer. For the vendor, It helps push sales of 3 products instead of one. A classic Win Win situation.

In the case of hotel food and beverage items, there is similarly a silver lining. Selling four items (soup, salad, entree and dessert) instead of one has enormous benefits. Contribution margins are enhanced, service employees can be reduced with a buffet spread laid out and revenues are boosted. Moreover, beverage costs are much lower than food costs and tend to boost profitability through contribution margin.

The buffet spreads in hotels are their version of the McDonald’s Value Meal bundle. You get a soup, salad, entree, dessert and a drink all for a fair bargain price compared to an a la carte order of these items individually. In this case, there is something that even the McDonald’s bundle cannot offer – unlimited consumption of food and beverage items. You can always keep going back to the buffet for more helpings. A unique Win Win situation again.

Watch out for Power Tip 3 in the Power Tips Series.

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About S Lakshmi Narasimhan

I am the Founder of Ignite Insight LLC a New York City based consultancy, which specializes in Group Executive Training, Coaching and Consulting. I coach, train hotel non-financial managers how to optimize profits in the operation. I run my own online financial academy called Cloud Academy – Master Numbers without a Degree. Visit http://www.elearningcloudacademy.com for details on the courses that are offered. These courses are self-paced, easy to understand in an inter-active, blended learning environment. I teach Hospitality Finance Graduate class and Financial Management Under Graduate class during the Spring and Fall semestes as an Adjunct Faculty member at the New York University, Tisch Center for Hospitality, and Tourism in the School for Professional Studies.
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