Return on Investment

1. Return on Investment “How profitable is the hospitality industry?”

2. Hospitality in Georgia • With over 176,000 hotel rooms, more than 56,000 direct jobs with $2.5 billion in direct wages in our state's lodging inventory, the lodging industry plays a critical role in Georgia's hospitality and tourism industry. • Tourism, the state's second largest industry has a: • $35 Billion overall economic impact for our state. • $10 billion in direct visitor spending in Atlanta alone. • $1.5 Billion in state and local tax revenues generated. • $6 Billion in resident wages for Georgia families and more than 270,000 jobs produced, directly or indirectly. • The hospitality industry saves each Georgia household $760 in state and local taxes. (Visitor taxes accrued to the general fund support Georgia programs that would have been required from Georgia taxpayers).

3. What is ROI? • Return on investment is a calculation used to determine the ability of a product to generate profits. • It is the amount, or percentage, that you have earned (or lost) on an investment you have made. • In the food-service industry, an operator can either increase sales or reduce costs to generate more profits, or receive a ROI.

4. Return on Investment Formula • ROI  =R - I x 100 R = Money received after making the investment. I = Original money invested. • Example:  John invests $100 in a mutual fund for one year.  At the end of the year he has $108.  What was his return on investment?

5. ROI Examples • Nikki invest $20,000 in her business. At the end of the year her business has earned $42,000. What is her return on investment. • Carl invest $100,000 into opening his business. He hopes his business will receive a 20% return on investment. What must his profits be in order to reach his ROI goal?

6. Increasing Profits • Increase the average check amount. • Raise prices of products/services. • Encourage additional sales (appetizers, desserts, etc.) • Boost sales through better advertising and marketing campaigns.