What is Volume Efficiency Ratio

Research on profit optimisation in the travel sector of hospitality industry has been dominated by the development of effective revenue management techniques to help managers in situations where demand is variable, variable costs are low, assets are fixed and perishable. These techniques have been extended to the restaurant sector, with recognition that variable costs are a larger proportion of total costs and not fixed. In fine dining restaurants substantive wine and spirit inventories present operators with the challenge of how to optimise the sales per dollar of inventory. Theoretical foundations of yield management, retail inventory optimisation and menu engineering are reviewed with direct application to the development of the WINSPID model of wine list and wine inventory optimisation. Data from a successful fine dining restaurant are used to illustrate how the model can be used to improve the sales efficiency of the wine list and inventory. Opportunities to extend the model to spirit inventories are proposed.