Cost Control

1、 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerCost ControlChapter 1Managing Revenue and Expense 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerMain Ideas Profession

2、al Foodservice Manager Profit: The Reward for Service Four Major Foodservice Expense Categories Percentages Percentages in Foodservice Profit Formula Understanding the Income (Profit and Loss) Statement Common Percentages Used in a P&L Statement Understanding the Budget Technology Tools 2008 Joh

3、n Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerProfessional Foodservice Manager Management handles functions of product sales to product delivery. Management of foodservice is more difficult than for manufacturing or retailing management cou

4、nterparts. 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerProfit: The Reward for Service If management focuses on controlling costs more than on servicing guests, problems will certainly surface. Do not get yourself in the mind-set o

5、f reducing costs to the point where it is thought that “low” costs are good and “high” costs are bad. 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerProfit: The Reward for Service Efforts to reduce costs that result in unsafe conditi

6、ons for guests or employees are never wise. The question is whether costs are too high or too low, given managements view of the value. 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerProfit: The Reward for Service Revenue is the amou

7、nt of dollars you take in. Expenses are the costs of the items required to operate the business. Profit is the amount of dollars that remain after all expenses have been paid.Revenue - Expenses = Profit 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Ha

8、yes, & MillerProfit: The Reward for Service The following terms will be used interchangeably: revenue and sales; expenses and costs. All foodservice operations, including non-profit institutions, need revenue in excess of expenses if they are to thrive. Profit is the result of solid planning, so

9、und management, and careful decision-making. Revenue - Expenses = Profit 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerProfit: The Reward for Service Desired profit is defined as Profit that the owner wants to achieve on that predic

10、ted quantity of revenue. Ideal Expense is defined as Managements view of the correct or appropriate amount of expense necessary to generate a given quantity of revenue.Revenue Desired Profit = Ideal Expense 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson

11、, Hayes, & MillerProfit: The Reward for Service Revenue varies with Number of guests Amount of money spent by each guest Increase revenue by Increasing the number of guests served Increasing the amount that each guest spends Or a combination of bothRevenue Desired Profit = Ideal Expense 2008 Joh

12、n Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerFour Major Foodservice Expense Categories Food Costs Costs associated with actually producing menu items Largest or second largest expense category Beverage Costs Costs related to the sale of al

13、coholic beverages-beer, liquor, wine May also include ingredients, mixers and garnishes 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerFour Major Foodservice Expense Categories Labor Costs Cost of all employees, including taxes Labor

14、 costs are second only to food costs in total dollars spent Some include the cost of management in this category. Others prefer to place the cost of managers in the Other Expense category. Other Expenses Include all expenses that are neither food, beverage nor labor, such as utilities, rent, linen,

15、etc. 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerPercentages Numbers can be difficult to interpret due to inflation. Therefore, the industry often uses percentage calculations. You will be evaluated primarily on your ability to co

16、mpute, analyze, and control these percent figures. 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerPercentages Percent (%) means “out of each hundred.” There are three (3) ways to write a percent: Common Form “%” sign is used, as in 1

17、0% Fraction Form the part, or a portion of 100, as in 10/100 Decimal Form the decimal point (.), as in 0.10 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerPercentages Divide the number that is the part by the number that is the whole

18、. Part = Percent Whole 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerPercentages in Foodservice Percentage of revenue that went to pay for expenses:Expense Revenue = Expense % 2008 John Wiley & Sons Hoboken, NJ 07030Food and Bev

19、erage Cost Control, 4th EditionDopson, Hayes, & MillerPercentages in Foodservice As long as expense is smaller than revenue, some profit will be generated Modified profit formula: ProfitProfit % = Revenue Revenue - (Food and Beverage Cost + Labor Cost + Other Expenses) = Profit 2008 John Wiley &

20、amp; Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerProfit Formula Put in another format, the equation looks as follows:Revenue (100%)- Food and Beverage Cost %- Labor Cost %- Other Expense %= Profit % 2008 John Wiley & Sons Hoboken, NJ 07030Food and

21、Beverage Cost Control, 4th EditionDopson, Hayes, & MillerUnderstanding the Income(Profit and Loss) Statement Profit and loss statement (P&L) lists revenue, food and beverage cost, labor cost, other expense, and profit. The P&L is important because it indicates the efficiency and profitab

22、ility of an operation. 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerUnderstanding the Income(Profit and Loss) Statement The Uniform System of Accounts is used to report financial results in most foodservice units. This system was c

23、reated to ensure uniform reporting of financial results. Published by the National Restaurant Association. 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerCommon Percentages Used in a P&L Statement1.Food and Beverage Cost Revenue

24、= Food and Beverage Cost %2.Labor Cost Revenue = Labor Cost %3.Other Expense Revenue = Other Expense %4.Total Expense Revenue = Total Expense %5.Profit Revenue = Profit % 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerUnderstanding t

25、he Budget Budget An estimate of projected revenue, expense, and profit. The budget is known as the plan. All effective managers, whether in the commercial (for profit) or non-profit sector, use budgets. 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Ha

26、yes, & MillerUnderstanding the Budget Performance to budget is the percentage of the budget actually used. The 28-day-period approach to budgeting 13 equal periods of 28 days each 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerUn

27、derstanding the Budget Percentages are used to compare actual expense with the budgeted amount, using the formulaActualBudget= % of Budget 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerUnderstanding the Budget “in-line” with the bud

28、get vs. “significant” variation to the budget. A significant variation is any variation in expected costs that management feels is an area of concern. 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerUnderstanding the Budget If signifi

29、cant variations with planned results occur, management must:1. Identify the problem2. Determine the cause3. Take corrective action 2008 John Wiley & Sons Hoboken, NJ 07030Food and Beverage Cost Control, 4th EditionDopson, Hayes, & MillerTechnology Tools Most hospitality managers would agree that an accurate and timely income statement (P&L Statement) is an invaluable aid to their management efforts. There are a variety of software programs on the market that can be used to develop this statement.