F&B Spending in 1Y2013 Grows more than F&B Cost Percentage

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Guest spending for food and beverage rose to 7.31 percent in the first half of 2013 from the same period last year, indicative of how the boom in domestic economy and spending power is affecting sales of hotels.

 

Based on the Cost Controllers Association in the Hospitality Industry’s (formerly Hotel and Restaurants Cost Controllers Associations of the Philippines) report provided to HNM, industry-wide average checks increased from PHP767.43 in January-June 2012 to PHP823.56 in the same period this year.

 

Metro Manila reported a more significant gain than outside the capital region at 5.15 percent. Respondents from outside Manila region are mainly hotels in key destinations in Luzon.

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“The factors…were due to the increase in volume of business caused by the improving tourism industry in the Philippines,” said the association.

 

The rise in spending surpassed that of F&B cost, which sees regular annual hikes because of inflation and fluctuations in market prices caused by more frequent natural calamities.

 

Industry-wide, food cost rose by 0.85 percentage-points in the first half of 2013 from 35 percent last year. Food cost is defined as the average cost of goods for food revenue of a certain outlet. It is measured in terms of the share of cost to sales.

 

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Beverage cost, on the other hand, saw an insignificant rise in general because of two different trends seen in Metro Manila and outside of the region. Within the capital region, beverage cost increased by 0.65 percentage points, a different scenario outside of Manila where hotels saw a 1.24-percentage point drop in cost.

 

The association said the improvement of the group market and foreign tourist arrivals helped lower down beverage cost. –(Twitter) @PaoAbellanosa

 

Critical measures in F&B industry
Cost controllers look at three measures to see trends in costs. In the revenue side, average check is the average amount spent by a guest for his food and beverage requirements in a certain establishment. In the cost side, there is the F&B cost percentage (often referred to only as F&B cost) that pictures how the revenue pie is divided into profit and cost. Since price hikes and rise in spending power can often be normal for a booming economy, management finds it highly useful to look at the relationship of cost, revenue, profit, and even foot traffic for strategies.

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