Appraising Performance | My Assignment Tutor

Appraising PerformanceWeek 8 and 9Learning outcome• Understand appraisals performance methods and techniquesPerformance appraisal• Revenue• Costs• Profits• The productFundamentals of appraisal• Knowing goals and objectives• Placing a value on a measurement• Being prepared to make decisionsBasis of appraisal• Established aims and objectives• Existing budgets• Existing standards requiredEffect of changes in price and volumeSpend per head and average checkKey points of revenue appraisal• Revenue is product of price and volume• Appraisal needs to take account of changes in both priceand volume• Averages not always accurate and prone tomisinterpretation• Allow for inflation and/or price rises• Need to compare like with like• Incorporate 12-month rolling totals to determine truetrends and performance• Revenue cannot be fully appraised by itselfAppraising costs• Fixed costs• Variable costs• Semi-variable costsChange in costs and revenuesIndustry norms for cost percentagesKey points of cost appraisal• Structures vary, and change over time• Can be measured in cash or percentages• Proportional relationship between costs• Relationship between costs and inflation• Cross-sectional and time-series analyses useful• 12-month rolling totals identify true performance• Operators with the lowest costs perceived as having a keyadvantage• Allocating indirect costs more complex than allocating directcostsProfitability measures• Gross profit• Operating profit• Net profit• Net operating profit• Departmental and unit profit• YieldExample profit and loss accountComparison of gross profitsComparison of operating profits* Costs will include ingredient costs andstaff cost. The extent to which othercosts have been included needs to beestablishedYield comparisonsRelationship between revenue, costs andprofitsComparison of GP in relation to revenueComparison of cash GP and GP %Potential cash GP and GP %Effect of changed sales mixSales mix example (beverages)Example of profitability calculationsPopularity and profitability rankingMenu engineering matrixAdapted from Kasavana and Smith 1999Menu engineering matrixAdapted from Kasavana and Smith 1999Comparison of net operating profit measuresKey points of profit appraisal• Be clear how profit measures are contrived• Compare like with like• Appraise against objectives to give value• Setting objectives includes subjective judgements• Sales mix analysis determines real trends• Profit percentages measure efficiency, not profitability• Cash contribution is what is being sought• Comparison with industry norms us useful• Use rolling 12-month totals to indicate true performance• Take account of stakeholders’ prioritiesAppraising the product• Approaches include:• Measuring customer satisfaction• Complaint monitoring• Staff focus groups• Mystery shopper• Process reviews• Quality audits• Quality standards analysisCustomer importance / operationalachievement matrixCustomer importance / operationalachievement matrixCustomer importance / operational capabilitymatrixCustomer importance / operational capabilitymatrixCustomer importance / staff importancematrixCustomer importance / staff importancematrix


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