Published on September 25, 2015
1. DMC2523 MENU PLANNING AND COST CONTROL LAURA LAW - PERAK COLLEGE OFTECHNOLOGY
2. 1. Definition of Control 2. Examine the various control method LAURA LAW - PERAK COLLEGE OFTECHNOLOGY Handout Copy of Text Book
3. 3 Introduction The control in the F&B industry really means controlling people action. These are the factors:- •Food does not disappear by itself, without help •Excess quantity of food and beverage into the plate and glass. •Employees’ wages calculation are not base on the wrong numbers of hours unless someone gives the wrong information. •Food are not consumed by pest unless made available by human •Customer seldom leave without paying unless make possible.
4. 4 Food Service Management It is important that the foodservice manager must be a talented individual. These criteria are true: The person must be able to grab opportunities & profit oriented A unique sales person Good personality with the guest Hard working person and most important The person is the controller or regulator of the operation to achieved maximized profits and minimize costs.
5. 5 INCOME Income can be managed in may ways thus to insure profit. Increasing income can be done by increasing the number of guest and the amount of money they spent. This goal can be achieved by suggestive selling, creative menu pricing and discount. Our main goal in this course is not to sale but controlling expenses. EXPENSES There are four major expense categories that must be controlled by management. They are… FOOD COST, BEVERAGE COST, LABOR COST & OTHER EXPENSES
6. 6 1.Definition of Control Control is a process used by managers to direct, regulate and restrain the actions of people so that the established goals of an enterprise may be achieved. 2.Cost Control Defined Cost Control defined as the process used by managers to regulate cost and guard against excessive costs. It is an ongoing process throughout the operation. Two principle of the principal causes of excessive cost are inefficiency and waste.
7. 7 3. Sales Control Sales Control is important to ensure that all sales results in appropriate income to the business. Therefore, it is important to require that each employees record each sales accurately. (Checks, duplicates, bills or etc.) 4. Responsibility For Control Responsibility is clearly falls onto the management, but the task on controlling differ due to the nature of the establishment. Small establishment the control responsibility usually taken by the management but for larger establishment it is delegated to the assistant manager or controller.
8. 8 5. Instituting Control Food & beverage establishment usually involves process of raw material purchased, received, stored and issued for the purpose of manufacturing products for sale and services. At each stage of operation, it is necessary to institute control in order to stop pilferage or problems. Each control must be suitable to each of the operation, depends on the nature of material and service requiring control and on the degree of difficulty inherent (fundamentals) in instituting the control.
9. 9 1. Establishing Standard • Standard are defined as rules or measures established for making comparisons and judgments. • Quality Standards are used to define the degree of excellence of raw materials, finished products and by extensions, work performed. • Quantity Standard are defined as measures of weight, count or volume used to make comparisons and judgment. • Standard Cost is defined as the cost of goods or services identified, approved and accepted by management in order to make judgment and comparisons of the effectiveness of the operation. Thus standard cost must be calculated as accurately as possible.
10. 10 2. Establishing Procedures Procedures are the method employed to prepare products or perform jobs. Standard Procedures are those that have be established as the correct methods, routines and techniques for day-to-day operations. Example: Production procedures must be standardized for several reasons. One of the most important of these is customer satisfaction. Any given item should be produced by the same method and with the same ingredients every time it is served. It should also be served in the same quantity each time, partly so that regular customers will be given the same quantity each time they order the item, and partly to maintain cost standards.
11. 3. Training Training is a process by which managers teach employees how work is to be done, given the standards and standards procedures established. Example; if management has established a standard 4 - ounce portion size for hamburgers, then all employees responsible for producing portions of hamburgers must be made aware that 4 ounces is the correct portion size.
12. 12 4. Setting Example Employees in an operation follow the examples set by the manager — the manager ’ s behavior, manner, responses to questions, and even a failure to speak or take action in some situations. The behavior of individuals in a group tends to be influenced by the actions, statements and attitudes of their leaders. Work Habits, attitudes, behavior, spirit of a manager are the evident. If the manager who has occasion to help employees plate food for the dining room serves incorrect portion sizes, employees will be more likely to do the same when the manager is not there. Similarly, if a manager is inclined to wrap parcels of food to take home for personal use, employees will be more likely to do so.
13. 13 5. Observing and Correcting Employee Actions One of a manager ’ s important tasks is to observe the actions of all employees continually as they go about their daily jobs, judging those actions in the light of the standards and standard procedures established for their work. If any employees are failing to follow the standards, it is a manager’s responsibility to correct their performance to the extent necessary at the appropriate time.
14. 14 6. Requiring Records and Reports Recording and reports is an important element in control as these information helps in decision making, judgment & comparisons of the operations. One such report is the statement of income. Example ; it is important to recognize that managers need timely information to determine whether primary goals and sub goals are being met. If timely records and reports are not available, opportunities for taking corrective action may be lost.
15. 15 7. Discipline Employees Discipline is defined as action taken to give a warning, punish or telling off an employee for work performance or personal behavior incompatible with established standards It is seldom practice but only used as a deterrent or if corrective action failed. By selecting the right people for the various jobs — those with the experience, skill, and personal characteristics that match the job requirements the number of individuals requiring some level of discipline can be reduced to a bare minimum. However, every manager must face the fact that, at times, an individual staff member must be disciplined.
16. 16 8. Preparing and Following Budgets Preparing and following budgets may be the most common technique for controlling business operations Budget is defined as a financial plan and may be describe as a realistic expression of management’s goals and objectives expressed in financial terms. (Cash flow budget, capital equipment budget and advertising budget.) Operation Budget is the most important budget for F&B manager. It is a forecast of sales activity and an estimate of cost that will be incurred in the process of generating those sales.
17. 17 PREPARING AN OPERATING BUDGET 1. An operating budget is normally prepared using historical information from previous budget and other financial records. 2. The second step is to calculated the percentage and analysis of the previous records. 3. Then making assumption or judgment base on all the influencing factors that might effect the business operation during the forecasted period, and computing into the new budget. Flexible budget normally prepared for levels of business volume above and below the expected level. (See Illustration)
18. 18 Golden Dragon Restaurant Statement of Income for the year Ended December 20XX SALES RM % of Sales Food 786,250 85.0% Beverage 138,750 15.0% Total Sales 925,000 100.0% COST OF SALES Food 275,187 35.0% Beverage 34,688 25.0% Total Cost of Sales 309,875 33.5% GROSS PROFIT 615,125 66.5% CONTROLLABLE EXPENSES Salaries and Wages 185,000 20.0% Employee Benefits 46,250 5.0% Other Controllable Expenses 138,750 15.0% Total Controllable Expenses 370,000 40.0% INCOME BEFORE FIXED EXPENSES 245,125 26.5% OCCUPANCY COST 78,625 8.5% INTEREST EXPENSES 13,875 1.5% DEPRECIATION 46,250 5.0% RESTAURANT PROFIT/LOSS 106,375 11.5%
19. 19 Consist of the following four steps: 1. Establish standard and standard procedures for operation. 2. Train all individual to follow established standards and standard procedures. 3. Monitor performance and compare actual performance with established standards. 4. Take appropriate actions to correct deviations from standards.
20. 20 1. What is the purpose of cost control? Of sales control? 2. Define: Flexible budget Standard cost Operating budget Standard procedures Procedures Standards Quality standards Quantity standards Training Sales control Budget Control system Control Cost control Control process
21. 21 3. The following information has been prepared by the manager of the Market Restaurant. Using this information, prepare an operating budget for the Market Restaurant for the coming year, following the illustration provided in this chapter. Food sales: $820,000 Beverage sales: $290,000 Cost of food: 36 percent of food sales Cost of beverages: 24 percent of beverage sales Salaries and wages: $102,000 Employee benefit: 25 percent of total salaries and wages Other controllable expenses: $95,000 Depreciation: $65,500 Interest: $55,000 Occupancy costs: $56,000
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