2015 DMC2523 Topic 14 Labor Cost Consideration

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Information about 2015 DMC2523 Topic 14 Labor Cost Consideration

Published on September 25, 2015

Author: LauraLaw1028

Source: slideshare.net

1. DMC2523 MENU PLANNING AND COST CONTROL LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

2. Employee Compensation Labor Cost and Percents LAURA LAW - PERAK COLLEGE OFTECHNOLOGY Handout Copy of Text Book

3. DMC2523 MENU PLANNING AND COST CONTROL LABOR COST CONSIDERATION LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

4. 4 Compensation: 1. Current Compensation a. Direct Compensation. b. Indirect Compensation. 2. Deferred Compensation

5. 5 Salary: Usually the fixed monetary amount as compensation for services of employment largely on a monthly or annual basis which follows a definite organizational structure.  The hours of work may not affect the salary structure.

6. Wages:  Take actual number of hours into account.  Usually referred to as the compensation given to employees on a daily, weekly basis.  The wages are also interpreted as hourly rate which as compensation to this then multiplied by the hourly wage rate and at the end of the week given e employee. 6

7.  Tips: Often referred in the America’s as gratuities.  These are under the federal law USA are considered as a legal income as long as it is processed by the company.  Bonus: Defined as a reward in monetary amounts over the employee’s regular wages and salaries largely related to the employees general performance. F&BCostControl/FBH

8. Commissions: Monetary compensation given to employees as a percentage of the sales. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

9. Sometimes referred to as benefits fringe benefits, perquisites, perks. They may include Paid Vacation, Health benefits, Life Insurance, Free meals, Free living accommodations use of recreational facilities. Certain resort properties have separate accommodations for staff and free meals. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

10. Deferred compensation is defined as compensation received by an employee at the conclusion of his period of employment. Pension benefits. Gratuity after 5 years of service in India. Provident fund India. Social security USA LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

11.  Labor Turnover Rate  Training  Labor Legislation  Labor Contract  Use old part time staff (Casuals)  Outsourcing  Sales Volume  Location  Equipment  Layout  Preparation  Service  Menu  Hours of Operation  Weather  Competent Management LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

12. Labor Turnover rate: A ratio relating the number of departing employees to the total number of employees. Usually expressed as a percentage. Commonly measures in the USA as 10- 20%. Usually managed by the human resource department. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

13. High turnover rates result in higher labor costs. Expenses incurred by the organization for replacing and employee are for advertizing, interviewing, background check, references and training. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

14. The total cost per employee in 1993 spent over recruitment was estimated to be $2500 so if a restaurant has 50 employees and the turnover rate is 100%.  The cost of recruitment could go up as high as $ 125000.00 per year. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

15.  Training is required at every phase of recruitment.  For a dishwasher it would be a one on one and observation of performance.  For a experienced cook training may involve meeting familiarization with the menu equipment and client expectations.  Training extends from Induction to on the job in all cases. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

16. Training helps in reducing labor turnover rate and shapes employee minds reduces attrition. Training may be done in-house or by an external agency. Results of training are done by evaluating performance of employees from the Knowledge, Competencies and Mindset. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

17. Labor legislation in the USA varies from state to state unlike India where there is minimal difference. The minimum wage is what mainly is contributory in minimum wage. The minimum wage in the USA is hourly while in India it is monthly. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

18. This is a modern day methods to reduce the effect of labor on the operational needs. The system exists in both types of Organizations unionized and nonunionized. How ever some of the benefits have to be extended to the contractual staff. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

19.  Has significant impact on the labor cost:  Example of Luvin’s Camp Slosh Bar and Restaurant  Luvin has 7 cooks and pays them $ 15 per hour.  Wages: 7 cooks x 35 hours x $15 per hour = $3,675 Benefits: 3,675 x 20% = $ 735 Total labor cost = $4,410 LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

20. Full - time cooks Wages: 4 cooks x 35 hours x $15 per hour = $2,100 Benefits: $2,100 x 20% = $420 Part - time cooks Wages: 15 shifts x 7 hours x $10 per hour = $1,050 Benefits: $1,050 x 10% = $ 105 New total labor cost = $3,675 LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

21. One of the main methods used these days by the IT industry and contractual hospitality. Reduces labor costs and organizational responsibility. Skills come as a package. Purchasing becomes easy like desserts. Cleaning services, Ice carving, desserts and baked goods are examples. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

22.  Peak hours and Weak Hours.  Scheduling staff using business hours as standard.  In short it is know as the complete utility of manpower during the weak hours of the operation.  Scheduling becomes easier when the operation is large because its easier to hire cooks and dishwashers on hourly basis. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

23. Labor Costs vary in place to place rural areas and economically backward area have lower labor rates. Labor costs hold a relationship with areas where the cost of living is high. They also relate to the sales figures as sales price of a particular item. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

24. Labor costs can be reduced by automation in the kitchen by using automatic peelers, slicing machines, Pulverize machines, accelerated dough fermenting machines and dough kneaders. Old and poor quality equipment actually increases cost of labor in man hours. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

25.  The amount of space used has a direct effect on the labor cost.  Such facilitating arrangement should me made at the planning phases.  The biggest difficult arises in a badly designed kitchen.  Also the distance between the kitchen and the dining area.  The proximity between the stores, Kitchen and Garbage disposal area is also of vital importance. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

26.  The comparative is made between restaurants making ready to eat foods and regular restaurants that have a standard kitchen brigade.  The ready to eat foods restaurant does not require extensive preparation storage and preparation time.  Another aspect can be useful where a mix of ready to eat and preparation items can be made. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

27. In restaurants like buffet types its easier to prepare items in bulk rather than À la carte restaurants. The large list of main courses will require larger manpower to execute. The most effective in this is ODC business. Fast food restaurants are another example of restaurants with reduced LC owing to the menu. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

28. Restaurants open all 24 hours will have a higher LC as compared to the others. Coffee shops in 5 * hotels face the similar problem. Fixed labor are independent of business volume. The following example will shed extra light: Chandni wants to extend the restaurant operation hours from 21h00 hrs to 22h00. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

29.  Additional wages from extension of one hours amount to $ 148.00  Heat and Electricity: $ 11.00  Variable costs estimated at $ 0.38 per dollar sale. FC Break-even = ————————— CR (equal to 1 — VR)  BE for 1 extra hour = $ 159  0.62  BE= $ 256.45 LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

30.  One of the determinants of labor cost which completely beyond the managers control.  However the manager can read the forecast of weather and schedule staff accordingly.  Consistency in weather may also boost the sales.  Weather reports may not be accurate, the managers projection is the best at such times. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

31.  The Labor cost is affected by the management ability to plan, organize, control, and lead the organization.  The following have a direct effect: 1. Measurement of suitable performance. 2. Scheduling employees for optimal performance. 3. Training facilities. 4. Equipment and material. 5. Resources, motivation, direct and lead. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

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33. Which restaurant has a higher SVC?  Which restaurants has a higher DVC?  What kind of restaurant do you think A and B are? What corrective action should be taken by restaurant A? What corrective action should be taken in which area for restaurant B? LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

34. A process used by managers to direct, regulate and restrain employee actions . Sometimes mistaken to suggest mere reduction of payroll costs to their irreducible minimum. Short term policies in minimizing immediate costs may have undesirable long term effects. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

35. 1. Establish standards and standard procedures for the operation. 2. Train all individuals to follow established standards and standard procedures. 3. Monitor performance and compare actual performance with established standards. 4. Take appropriate action to correct deviations. LAURA LAW - PERAK COLLEGE OFTECHNOLOGY

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