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                                                             International Journal of Hospitality Management 30 (2011) 701–707
                                                                     Contents lists available at ScienceDirect
                                             International Journal of Hospitality Management
                                                       journal homepage:www.elsevier.com/locate/ijhosman
               Amodelforwinelistandwineinventoryyieldmanagement
               J.E.(Joe) Barth∗,1
               University of Guelph, School of Hospitality and Tourism Management, 50 Stone Road East, Guelph, Ontario, Canada N1G2W1
               article info                                     abstract
               Keywords:                                        Finediningrestaurantswithextensivewinelistsoftenhavehigh-valuewineinventoriesandlowinven-
               Fine dining                                      toryturnoverratiosthatreducetheowner’sreturnoninvestment.Therestaurantmanagementliterature
               Wine                                             doesnotprovide“nediningrestaurantmanagerswiththetoolsthatenablethemtoevaluateandmake
               Inventory                                        changes to wine list selections, pricing and inventory levels in order to improve the returns from the
               Yield management                                 investment in wine inventory. This paper contributes to the literature by drawing concepts from yield
               Retail                                           management, retail science and menu engineering to develop a yield statistic and analytical model for
               Menuengineering
                                                                managing wine list and wine inventory productivity. WINSPID (wine sales per inventory dollar) is the
                                                                productofwinemark-upandinventoryturnoverratio.Graphsofwinesalesandinventorydata,mark-up
                                                                andinventory turnover ratio enable the restaurant manager to analyse, improve and monitor the wine
                                                                list, wine inventory and wine supplier performance.
                                                                                                                               ©2010ElsevierLtd.Allrightsreserved.
               1. Introduction                                                               agers of “ne dining restaurants holding large inventories of “ne
                                                                                             winesreducedpricestoimprovesales(Frank,2009).
                   Duringtheglobalrecessionof2009,“nediningrestaurantman-                        Inventory management has always been an important compo-
               agers in North America were challenged due to steep reductions                nentofobtaininggoodreturnsoninvestedcapital,andtheef“cient
               in demand. The recession focused managers’ attention on ways                  use of assets. Managing inventories of wine is more complicated
               to operate more ef“ciently. Some long-standing restaurants were               than reducing the investment because wine lists serve both as a
               being closed and experts predicted 12–15% sales reductions in                 menuandasastatementofa“nediningrestaurant’s quality and
               the “ne dining segment (McLaughlin, 2009). Restaurants that had               commitmenttogastronomyatthehighestlevels(Giletal.,2009).
               beenenjoyingthepre-recessionconsumptionboomsuddenlyhad                            In the hospitality “eld, substantial work has been done in the
               to evaluate their business model and develop new strategies. In               controlofinventory(GreenandWeaver,2008),howeververylittle
               response to customers that were reducing both the frequency                   has been done regarding inventory turnover and the productiv-
               of visits and the amount spent, “ne dining restaurant managers                ity of capital invested in inventory. Academic research to assist
               changedmenusandofferednewpromotionstodefendagainstthe                         “nedining managers with the construction of wine lists based on
               reduction in revenues (Carter, 2009).                                         pairingwithfood(forexampleHarrington,2007),winemenuchar-
                   In particular, “ne wine sales were affected as customers who              acteristics (Yang and Lynn, 2009) and as a differentiation strategy
               werebuyingpremiumselectionsswitchedtolowerpricedoptions.                      (Berenguer et al., 2009) is available. No research has been done
               Inanindustry-commissionedstudyof300restaurantindustrypro-                     to assist restaurant managers with the task of managing the wine
               fessionals, Bell (2009) reported that 60% of restaurant managers              list, pricing and the “nancial return on the capital invested in wine
               observed a marked decrease in wine sales after the recession and              inventory.
               61% felt that customers purchased less expensive wines than in                    This article contributes to the restaurant management litera-
               2008.Thestudygoesontoreportthatcustomersweremorelikely                        turebydevelopingayieldstatisticandanalyticalmodelthathelps
               to purchase wine by the glass than previously and 75% of the                  “ne dining managers improve turnover and the return on wine
               respondents were making changes to their wine lists. Some man-                inventory investment.
                                                                                             2. Literature review
                 ∗ Tel.: +1 (519) 824 4120x54867.                                            2.1. The role of inventory in manufacturing
                   E-mail address: jbarth@uoguelph.ca
                 1 The author wishes to acknowledge two anonymous reviewers and the helpful      SincethestandardizationofpartsformedthebasisoftheIndus-
               communication and support from Michael Kwas, Madison, WI; Quentin Lewonas,    trial Revolution, inventory has been recognized as an important
               Bruce McAdams, William Predhomme and Jarrett Young, Toronto, ON; Anton
               Salameh,Carmel,CAandRonnWiegand,Napa,CA.                                      “eld of study. Henry Ford, among other industrialists of the early
               0278-4319/$–seefrontmatter©2010ElsevierLtd.Allrightsreserved.
               doi:10.1016/j.ijhm.2010.12.004
            702                                  J.E.(Joe) Barth / International Journal of Hospitality Management 30 (2011) 701–707
            20thcenturyrecognizedthatstocksofpartsandmaterialswerethe                 that wereopenforlunchanddinner.Casual“nedining(lunchand
            buffer to enable ef“cient production despite time delays between          dinner) had wine sales of 18–20% of the total.
            demand, production and supply. Investment in inventory was as                Restaurant operators promote wine sales to enhance their cus-
            important to ef“cient mass production as the investment in plant          tomer’senjoymentofthemealandtoincreasesales.Wansinketal.
            andequipment.                                                             (2006) reported that wine sales can be increased substantially by
               Managers recognized that there was a trade-off between the             suggesting wine with a meal (12%), assisting with wine and food
            holdingcostofinventory,ordercosts,leadtimesanddemand.The                  pairings (7.6%) and offering tasting assortments (48%). It has been
            EOQModel(Harris,1913)becamethebasisformoresophisticated                   foundthatthenumberofrepetitionsofwaitstaffwinetrainingpro-
            inventory optimization models that included stochastic demand,            gramsiscorrelatedtotheamountofwinesold(Gulteketal.,2006).
            safety stock, variable lead times and other complications involved        Thesommelierincreaseswinesalesusingknowledgeincombina-
            inthemanagementofinventory(Wilson,1934).Morerecently,the                  tion with adaptive and persuasive selling techniques (Manske and
            importance of inventory holding costs in the manufacturing pro-           Cordua,2005).Somerestaurantsoffersmallerbottles(splits),wines
            cess was highlighted by Toyota in the 1980s with the adoption of          bythecarafe and glass to patrons who wish to consume less than
            just-in-time production techniques whose goal was to minimise             a standard (750ml) bottle of wine. Smaller sizes of wine offerings
            inventory throughout the entire supply chain. Inventory is central        provide options to customers who prefer more than one kind of
            tothe“eldoflogistics,supplychainmanagementandplanningsys-                 wine with the meal. Some restaurants offer large format bottles
            temarchitectures such as MRP (Materials Resource Planning) and            suchasmagnumsforpatronswhowishtomarktheimportanceof
            MRPII(ManufacturingResourcePlanning).                                     aspecial event or occasion.
                                                                                         Winesalesmakeasubstantialcontributiontopro“tduetomenu
            2.2. The role of inventory in services                                    price mark-up and several cost ef“ciencies. Restaurant managers
                                                                                      use a variety of schemes and criteria to price their wine lists. Per-
               While the study of inventory has its roots in manufacturing            haps the most common method is to set the price equal to two or
            industries, it also has great impact in service industries. Pure ser-     three times the cost (Chung, 2008). Restaurateurs call this a mark-
            vices, such as airlines and car rentals de“ne their capacity in terms     upratio, which is not the same as the retail de“nition of mark-up.
            of units of “perishable” inventory (for example rooms that are not           Some restaurant wine menus use a so-called “progressive”
            rentedareequivalenttotangibleinventoryitemswhoseutilityhas                mark-up:highermark-upratiosareappliedtolowerpricedwines,
            expired),andmuchofthestudyofyieldmanagementdealswiththe                   and lower mark-ups used as the cost of the wine goes up (Chung,
            joint optimization of perishable inventory utilization and pricing        2008). Higher mark-ups can be achieved by selling wine by the
            (WeatherfordandBodily,1992;Chiangetal.,2007).                             glass. A recent phenomenon is “bring your own” restaurants that
               The retail industry does not manufacture products but its              charge a “xed “corkage” or “set-up” (typically $25) for customers
            capacity to supply demand is based on stock-in-trade. Managing            whobringtheirownbottle(Elan,2009).Otherfactorsthataresig-
            stock-in-trade involves the ef“cient conversion of inventory into         ni“cantinthepricingofwinesincludethecountryoforigin,ageof
            gross margins while providing both a suf“cient number of items            thewineandwineratingscores(Arias-Bolzmannetal.,2003).
            for selection and a suf“cient quantity to meet variable customer             Restaurant operators are cognizant that wine consumers are
            demand(Sellers-RubioandMás-Ruiz,2009).                                    concerned over the large differences between the prices charged
               Otherserviceindustriessuchasrestaurantshaveamixedman-                  in restaurants and the retail cost. A few, value-conscious oper-
            ufacturing and service function. Restaurants prepare meals from           ators choose a standard margin added to the price of a bottle
            basic ingredients and serve them to customers. In the restaurant          (Wiegand,1998),effectivelythesamepricestructureas“bringyour
            business, inventory is both units of capacity (seat hours, Kimes,         own”. To avoid direct customer price comparisons, some restau-
            1999)andstocksofbasicingredients,partiallyprepareditemsand                rateurs choose wines or vintages that are not ordinarily available
            “nished menu items ready for service. Among the items in inven-           for purchase, simultaneously presenting an exclusive selection to
            tory,winesarepurchasedreadytouse,ofteninthesamecontainer                  discriminating guests.
            in whichit will be sold.                                                     Thesaleofwineinrestaurantshasnotablecostef“cienciesover
                                                                                      thesaleoffoodmenuitems.Wineinrestaurantshassimilaritiesto
            2.3. The importance of wine in restaurants                                retail sales. Unlike food, which requires preparation in specialized
                                                                                      facilities by skilled chefs, wine is ready to use and only needs to
               Wineplaysafundamentalroleintheenjoymentoftherestau-                    be drawn from the storage area. The direct cost of wine service is
            rant dining experience (Yuksel and Yuksel, 2002), consequently            smallincomparisontothecosttoservefooditems,whichinvolve
            manytypesofrestaurantsofferwineselectionstotheircustomers.                multiple trips to serve courses, fetch condiments and clear dishes
            Wine lists have been identi“ed as a factor that differentiates            overthecourseofameal.Finediningrestaurantsemployfarmore
            restaurants. Berenguer et al. (2009) found that the length of the         waiters and cooks than sommeliers.
            winelistdifferentiatedtop-quality“nediningestablishmentsfrom                 Wine in sealed, unopened containers is a stable product with
            those focussed simply on providing excellent food. The style of           a shelf life that exceeds most other food products. A few, high
            the wine menu was also a signi“cant factor in the categorization.         quality wine selections improve with age and increase in value.
            In many instances, owners of restaurants express their own pas-           Theycansometimesbeboughtasfutures(suchasBordeaux),pro-
            sion for wine by having wine lists that go well beyond what their         viding savings. However the majority of wines are ready to drink
            customersrequire.Nationalandregionalawardsrecognizerestau-                when purchased. In the longer term, some wines can deteriorate
            rants with exemplary wine menus, judged both on style and on              (particularly white wines), and be refused by the customer due to
            selection.                                                                perceived taints or faults. Faults may be due to poor storage con-
               Wineisanimportantcomponentofrestaurantsales.Ithasbeen                  ditions; however some wines are already faulted when purchased
            reportedthat31.5%oftheaveragecheckinValencia,Spainrestau-                 by the restaurant. Laube (2007) reports estimates of cork-tainted
            rants consists of wine sales (Gil et al., 2009). An informal poll of      wines range from 1.2 to 15%, suggesting that customer refusal of
            restaurantmanagersintheUSAandCanadabytheauthorrevealed                    wine served in restaurants may be a signi“cant cost factor. Wine
            a range of wine sales percentages that are related to the type of         suppliers may replace recently acquired product that is faulted,
            restaurantandwhetherthepropertywasopenforlunch.Finedin-                   however returned wines that have been in storage for a longer
            ing achieved wine sales of 29% (no lunch), and 22% for properties         period are likely to be a loss to the restaurant.
                                                                                      J.E.(Joe) Barth / International Journal of Hospitality Management 30 (2011) 701–707                                                                                     703
                             Somecustomers may also refuse perfectly sound wines. These                                                          Table1
                        returns are a “nancial loss to the restaurant, sometimes sold off                                                        Comparisonofselectedyieldstatisticexpansions.
                        as house wine by the glass, consumed by staff or owners, or rele-                                                                                                       Statistic=Price ef“ciency×Volumeef“ciency
                        gatedforuseincooking(Wiegand,1994).Despitetheseproblems,                                                                    ROI                                            Netincome     = Netincome × Salesrevenue
                        the contribution margin of wine sales is much higher than that of                                                                                                        Investedcapital     Salesrevenue     Investedcapital
                                                                                                                                                    REVPAR                                            Revenues       = Roomrevenue ×          #ofroomssold
                        preparingandservingfooditems.                                                                                                                                            #ofroomsavailable       #ofroomssold       #ofroomsavailable
                                                                                                                                                    REVPASH                                           Revenue         =     Revenue      × Seathoursused
                                                                                                                                                                                                 Seat-hoursavailable     Seathoursused       Seathoursavailable
                        2.4. Inventory turnover ratio                                                                                               GMROI                                          Grossmargin      = Grossmargin ×            Sales
                                                                                                                                                                                                 AverageInventory          Sales         Averageinventory
                             Inventoryturnoverisanimportantcomponentofon-siterestau-                                                             Note:REVPASHwasdevelopedbyKimes(1999);ROIisattributedtoPierreDupont,
                        rant management.Minimisingthestockheldininventoryreduces                                                                 GuerardandSchwartz(2007).
                        lossesthroughtheftandspoilage(Reynolds,1999).Manymanagers
                        are highly focussed on income statement line items such as sales,
                        costs and pro“t, but may ignore balance sheet items like inven-                                                          well,howeverthishasthesimultaneouseffectofreducingthewine
                        tory.Measuresof“nancialpro“tability(ROA,ROI)canbeincreased                                                               menuandmakingtherestaurant less attractive to discriminating
                        by improving net income; however these measures can also be                                                              customers. Reduced wine inventories sometimes require frequent
                        increased by reductions in asset investments such as the value of                                                        replenishmentinordertomeetoperationalrequirements,however
                        inventory. Wine inventories are a substantial investment in many                                                         manyhighqualitywinesarenotreadilyavailablefromsuppliersin
                        “ne dining restaurants and managers must consider their wine                                                             small quantities. Reducing margins by re-pricing some wines may
                        inventory turnover with care in order to maximise the “nancial                                                           improve turnover with a corresponding reduction in contribution
                        performanceoftheenterprise.                                                                                              margin. To this end, managers need a way to manage their wine
                             Reynolds (1999) reports that inventory turnover ratio (ITO),                                                        inventories,andoptimizetheproductivityofbothcapitalandwine
                        de“nedasthecostofgoodssolddividedbytheaverageinventory                                                                   sales. Wine inventory turnover and the “nancial management of
                        for the period, for on-site foodservice is in the range of 1–5 “turns”                                                   winelists have not been studied previously.
                        per month(12–60turnsperyear).Thehighestturnoverratios are
                        reported in the healthcare and school cafeteria segments. Institu-
                        tional foodservice operations have cyclical menus that minimise                                                          4. Benchmarkingwithyieldmanagement
                        waste, enjoy more predictable demand and can negotiate more
                        frequent deliveries in comparison to “ne dining restaurants. All                                                               Yield management is a broad term describing various meth-
                        thesefactorsallowon-sitefoodservicemanagerstoachievehigher                                                               ods for managing capacity pro“tably. It has gained widespread
                        inventory turnover than “ne dining establishments.                                                                       acceptance in travel industries (airlines, car rentals, cruise lines
                                                                                                                                                 and hotels) and there is substantial evidence that it is effective in
                        2.5. Wine cellar inventory turnover                                                                                      improving revenues. Yield management methods are most com-
                                                                                                                                                 monlyappliedtosituations where capacity is “xed, variable costs
                             Wineinventoriesareexpensive,andturnovercanbeslow.The                                                                are low, demand is variable and sales can be made in advance
                        Pareto principle popularized by Juran (Phillips-Donaldson, 2004)                                                         (Kimes, 1989).
                        suggeststhat80%ofthesalescomefrom20%oftheitemsoffered.A                                                                        Givenadownwardslopingdemandcurve(morepeoplewillbuy
                        studybyCoad(2009)whichanalysedthecross-sectionalconsump-                                                                 if the price is reduced) a trade-off develops between the desire to
                        tion behaviour on a sample of 486 wines concluded the resulting                                                          obtainthehighestaveragepriceandsellallavailableunitsofcapac-
                        distributions are variants of the Pareto distribution. This suggests                                                     ity (rooms, seats, tee-offs, etc.). The manager’s problem is to know
                        that extensive wine lists involve a high proportion of items that                                                        whichcombinationofpricesandvolumeforthesameproductwill
                        do not sell in signi“cant quantities. The “ne dining restaurant                                                          optimize revenue. A yield statistic (for example REVPAR) is con-
                        managers polled by the author con“rm that this is true in their                                                          structedtocapturethejointeffectofpriceef“ciency(averageprice)
                        restaurants.                                                                                                             andvolumeef“ciency(capacityutilization).Hotelmanagersknow
                             In addition to extensive wine lists, “ne dining restaurants                                                         they are making better price and volume decisions when REVPAR
                        haveunpredictablecustomerdemandandirregularreplenishment                                                                 increases, and vice versa. Similarly, other yield statistics are con-
                        options in the case of many “ne wines. Such wines have limited                                                           structedwithameasureofpriceef“ciencymultipliedbyameasure
                        availability over time and must often be purchased by the case,                                                          of utilization (Table 1).
                        resulting in large amounts of product on hand.                                                                                 The yield obtained from an investment in wine inventory has
                             Aheuristicguidelineusedbymanagersinsomecasual“nedin-                                                                a conceptual similarity. Margins on wines are suf“ciently large to
                        ing restaurants is “wine inventory should be equal to one month’s                                                        permit discounting. Lower prices encourage guests to buy better
                        wine sales”. Using a mark-up ratio of two times the cost of the                                                          quality wines, or come more often. Unlike hotels and aircraft with
                        wine, this corresponds to a turnover ratio of 0.5 times per month                                                        “xed capacity, inventory is variable. Inventories can be increased
                        (6timesperyear);muchlowerthantheturnoveroffoodinventory                                                                  bypurchasingmorethanisused,orreducedbypurchasingless.If
                        items.Informalcontactswith“nediningrestaurantmanagerswith                                                                anitemheldininventorycanbereplenishedmorefrequently(for
                        award-winningwinelistsreportsomewinelistinventoriesvalued                                                                example, daily instead of weekly) the amount of that item kept in
                        at morethan1yearofwinesales.                                                                                             stockcanbedecreasedsubstantially.Thisisnotanoptionforsome
                                                                                                                                                 “ne, rare wines that must be purchased for future delivery, but is
                        3. Themanager’sproblem                                                                                                   possible for house wines and popular favourites available in good
                                                                                                                                                 supply.
                             Provided that the wine list is a true representation of the                                                               Pricing for restaurants is a longer term decision than the quick
                        inventory (all wines listed are available for sale), the restaurant                                                      pricing response to demand predictions and quantity available for
                        manager’s problem is a trade-off between a grand offering of                                                             saleinthecaseofhotelroomsandairlineseats.However,giventhat
                        wineswhichsignalquality and prestige against the investment in                                                           mark-ups do vary among wine list items, the restaurant manager
                        inventory, replenishment options and the margins earned. Wine                                                            can bene“t from a yield statistic that captures the simultaneous
                        inventory can be decreased by eliminating items that do not sell                                                         effects of price and volume ef“ciency.
                 704                                                    J.E.(Joe) Barth / International Journal of Hospitality Management 30 (2011) 701–707
                 4.1. Benchmarkingwithretail management                                                                     Table2
                                                                                                                            TheWINSPIDstatisticexpansion.
                     AsmentionedinSection2.3,winesalesinrestaurantssharesev-                                                                                                     Price ef“ciency×Volumeef“ciency
                 eral similarities with retail. Retail managers spend a great deal of                                         WINSPID                       Winesales            = Winesales        × Costofwinesold
                 time managing sales volume, gross margins and stock turnover. A                                                                        Avg.wineinventory            Costofwinesold    Avg.wineinventory
                 goodexampleisfurnitureretail.Customersareattractedbyawide                                                                                                       =Mark-upratio×Inventoryturnover
                 selection of different items with a range of prices. The inventory
                 is not perishable, but is a major investment. The store becomes                                            differences, a new statistic that “ts restaurant industry norms has
                 lessattractivetocustomersasinventorydeclines.Marginsaresub-                                                been adapted from GMROI. The Wine Sales Per Inventory Dollar
                 stantial, and discounting stimulates the sale of slow moving items,                                        (WINSPID)statistic is provided in Table 2.
                 albeit at the expense of margin earned. Ultimately, every item is                                               WINSPID uses the mark-up ratio de“nition in common use
                 sold.                                                                                                      among restaurant managers (sales divided by cost of goods sold)
                     It is common for furniture store managers to walk through the                                          as the price ef“ciency factor, and inventory turnover ratio (cost of
                 store and discount items that have not been sold within a period                                           goodssolddividedbyaverageinventory)asthevolumeef“ciency
                 of time after they were acquired. These managers are increasing                                            factor (Table 2.) A WINSPID example consisting of hypothetical
                 stock turnover (de“ned as sales divided by average inventory) at                                           winelist data and calculations is provided in Table 3.
                 the expense of reduced gross margin ratio (de“ned as gross mar-
                 gin divided by sales). Using the retail de“nition of gross margin                                          5.1. WINSPIDapplication
                 makessenseforretailers,becauseeverydollardiscountedreduces
                 themarginonthesaleofthatitembythesameamount.Discounting                                                         Three“levers”areavailabletomanageawinelistandthereturn
                 mayhavethesecondaryeffectofincreasingsales,becauseshoppers                                                 onwineinventoryinvestment.Managerscan(1)expandorreduce
                 whosavemoneyonadiscounteditemmaybemotivatedtobuyan                                                         the size of the wine list, (2) increase or decrease the inventory, or
                 additional item, or a more expensive item.                                                                 (3) change the mark-up (prices). Making changes to one “lever”
                     In order to jointly optimize gross margins and stock turnover,                                         will affect one or more of the others. For example, changes to the
                 retail managers use a statistic called GMROI (gross margin return                                          wine list will eventually affect inventory value; changes to mark-
                 on inventory). GMROI is similar in construction to other yield                                             upwillaffectsales,andthusinventory.WINSPIDenablesmanagers
                 statistics: the product of a measure of price ef“ciency (margin on                                         toevaluatetheneteffectofanycombinationofchangesinthisone
                 sale) and a measure of volume ef“ciency (inventory turnover). If                                           statistic.
                 the retail manager’s pricing and product line decisions are more
                 effective, GMROI will increase. If these decisions are less effective,                                     5.2. Wine list inventory performance
                 GMROIwilldecrease. The value of the statistic is easily calculated
                 bybusymanagers:dividethegrossmarginbytheaveragevalueof                                                          Higher values of WINSPID indicate good “nancial performance
                 inventory.                                                                                                 fromtheinvestmentininventory.WINSPIDcanbeusedtoanalyse
                                                                                                                            the performance of the entire wine list on a periodic basis. Wine
                 5. WINSPID:astatisticformanagingwinelists                                                                  Sales, Cost of Goods Sold and Average Inventory are measured in
                                                                                                                            dollars, and the user may choose any convenient time period for
                     Restaurant managers can use the GMROI statistic using gross                                            gathering these “gures. Changes to a wine list can take some time
                 marginasthenumerator(saleslesscostofgoodssold)andaverage                                                   to take effect, particularly in the case of items with low inventory
                 inventoryvalueasthedenominator.However,unlikethefurniture                                                  turnover. Choosing a short time period (a week) exposes the user
                 retailmanagerwhogoesthroughacycleofpricesettingfollowedby                                                  to”uctuationsinvaluesthatmaynotberepresentativeofthenor-
                 discounting, the restaurant manager tends to set prices, and opti-                                         malbusiness situation. A longer period, such as a month or more,
                 mizesalesbypromotionalactivity.Thus,astatisticwithwinesales                                                has a smoothing effect on the highs and lows that provide a bet-
                 in the numerator is better suited to the restaurant manager. Fur-                                          ter indication of winelist performance.Theoverallperformanceof
                 thermore,inventoryturnoverintherestaurantindustryisde“ned                                                  thewinesinTable2isWINSPID=$0.93,slightlybelowthe“ruleof
                 asthecostofgoodssolddividedbyaverageinventory.Giventhese                                                   thumb”targetof$1.00.
                 Table3
                 Hypothetical wine list data.
                   Winename                 Inventory value                                                         Sales and costs                                       Ratio computation
                                                                                                        a                                                                     b                      c                       d
                                            This month               Last month               Average               Sales                Cost of goods sold               ITO              Mark-up                WINSPID
                   A                           $300                     $700                     $500                  $500                 $300                          0.60             1.67                   $1.00
                   B                           $500                     $700                     $600                  $600                 $400                          0.67             1.50                   $1.00
                   C                           $700                     $700                     $700                  $700                 $400                          0.57             1.75                   $1.00
                   D                           $,000                    $600                     $800                  $800                 $200                          0.25             4.00                   $1.00
                   E                           $100                     $100                     $100                  $100                   $40                         0.40             2.50                   $1.00
                   F                           $600                   $1,200                     $900                  $900                 $250                          0.28             3.60                   $1.00
                   G                           $200                     $100                     $150                  $150                 $100                          0.67             1.50                   $1.00
                   Ch. XX                    $1,000                     $400                     $700                  $600                 $300                          0.43             2.00                   $0.86
                   Ch. ZX                      $864                     $768                     $816                  $288                   $96                         0.12             3.00                   $0.35
                   Ch. ZY                      $800                     $800                     $800                    $50                  $25                         0.03             2.00                   $0.06
                   Ch. ZZ                      $500                     $500                     $500                $1,400                 $350                          0.70             4.00                   $2.80
                   Total                     $6,564                   $6,568                   $6,566                $6,088               $2,461                          0.37             2.47                   $0.93
                   a Average=(this month+last month)÷2. A more accurate value of inventory may be calculated using an n-period moving average, where n=the number of days in the
                 period.
                   b ITO=inventoryturnover=costofgoodssold÷averageinventory.
                   c Mark-up=sales÷costofgoodssold.
                   d WINSPID=sales÷averageinventory=mark-up×ITO.
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...International journal of hospitality management contents lists available at sciencedirect homepage www elsevier com locate ijhosman amodelforwinelistandwineinventoryyieldmanagement j e joe barth university guelph school and tourism stone road east ontario canada ngw article info abstract keywords finediningrestaurantswithextensivewinelistsoftenhavehigh valuewineinventoriesandlowinven fine dining toryturnoverratiosthatreducetheowner sreturnoninvestment therestaurantmanagementliterature wine doesnotprovidenediningrestaurantmanagerswiththetoolsthatenablethemtoevaluateandmake inventory changes to list selections pricing levels in order improve the returns from yield investment this paper contributes literature by drawing concepts retail science menu engineering develop a statistic analytical model for menuengineering managing productivity winspid sales per dollar is productofwinemark upandinventoryturnoverratio graphsofwinesalesandinventorydata mark up andinventory turnover ratio enable re...

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