Cost Control in Foodservice Operations
1st Edition
Published on 31. January 2024
Book
Paperback/Softback
352 pages
978-1-394-20804-3 (ISBN)
Description
Cost Control in Foodservice Operations Control operating costs and move your foodservice business forward
The key to a foodservice business surviving and thriving is to properly understand the relationship between revenue, expenses, and profits. Controlling operating costs-that is, controlling expenses without reducing revenue-is a key tool in creating a profitable business. Owners, managers, and staff all play an essential role in controlling operating costs, and it's critical for every member of a foodservice team to understand how to be successful.
Cost Control in Foodservice Operations outlines key mechanisms and tools in a clear, accessible presentation. Emphasizing the importance of the subject before moving to specific methods for managing and reducing costs, it's an indispensable tool for anyone in the foodservice industry looking to gain a competitive edge.
The book also includes:
A thorough introduction to controlling food and beverage product costs
Detailed coverage of effective cost management methods including creating a sales forecast, controlling labor costs, pricing menu items, and more
Advice based on the authors' decades of combined experience in both foodservice business and education/research
Cost Control in Foodservice Operations is ideal for students in foodservice-related courses, as well as professionals and owners looking to take their business to the next level.
The key to a foodservice business surviving and thriving is to properly understand the relationship between revenue, expenses, and profits. Controlling operating costs-that is, controlling expenses without reducing revenue-is a key tool in creating a profitable business. Owners, managers, and staff all play an essential role in controlling operating costs, and it's critical for every member of a foodservice team to understand how to be successful.
Cost Control in Foodservice Operations outlines key mechanisms and tools in a clear, accessible presentation. Emphasizing the importance of the subject before moving to specific methods for managing and reducing costs, it's an indispensable tool for anyone in the foodservice industry looking to gain a competitive edge.
The book also includes:
A thorough introduction to controlling food and beverage product costs
Detailed coverage of effective cost management methods including creating a sales forecast, controlling labor costs, pricing menu items, and more
Advice based on the authors' decades of combined experience in both foodservice business and education/research
Cost Control in Foodservice Operations is ideal for students in foodservice-related courses, as well as professionals and owners looking to take their business to the next level.
More details
Series
Language
English
Place of publication
New York
United States
Target group
College/higher education
Dimensions
Height: 226 mm
Width: 152 mm
Thickness: 23 mm
Weight
408 gr
ISBN-13
978-1-394-20804-3 (9781394208043)
Copyright in bibliographic data and cover images is held by Nielsen Book Services Limited or by the publishers or by their respective licensors: all rights reserved.
Schweitzer Classification
Persons
David K. Hayes, PhD, has taught hospitality courses at Purdue University, Texas Tech University, The University of Houston, and Lansing Community College. He has served as the Vice President of Broadcast and Video Training for the American Hotel & Lodging Educational Institute.
Jack D. Ninemeier, PhD, is an Emeritus Professor in the School of Hospitality Business at Michigan State University. He has many years' experience developing and providing training and resource materials for commercial and non-commercial foodservice operations. He has also written several hundred articles for trade journals and created training monographs.
Part of Wiley's Foodservice Operations: The Essentials series.
Jack D. Ninemeier, PhD, is an Emeritus Professor in the School of Hospitality Business at Michigan State University. He has many years' experience developing and providing training and resource materials for commercial and non-commercial foodservice operations. He has also written several hundred articles for trade journals and created training monographs.
Part of Wiley's Foodservice Operations: The Essentials series.
Content
Preface ix
Book Features xi
Instructional Resources xiii
Acknowledgments xv
Dedication xvii
1 Cost Control in Foodservice Operations 1
The Importance of Cost Control 2
The Foodservice Profit Formula 3
The Uniform System of Accounts for Restaurants (USAR) 4
The Process of Effective Cost Control 6
Responsibility for Cost Control 8
Owner's Responsibilities 9
Manager's Responsibilities 9
Production Staff Responsibilities 10
Service Staff Responsibilities 10
Essential Cost Control Tools 11
The Operating Budget 12
Standardized Recipes 16
The Income Statement 18
Sales (Revenue) 19
Total Cost of Sales 21
Labor 22
Prime Cost 23
Other Controllable Expenses 24
Non-Controllable Expenses 25
Income Before Income Taxes (Profit) 26
2 Sales Forecasts 31
The Importance of Accurate Sales Forecasts 32
Sales Histories 34
Fixed Averages 37
Rolling Averages 38
Average Sale Per Guest 40
Sales Variance 44
Sales Forecasts 47
Forecasting Future Sales 47
Forecasting Future Guest Counts 49
Forecasting Future Average Sale Per Guest 51
3 Cost Control in Purchasing 56
The Importance of Controlling Costs in Purchasing 57
Objectives of Professional Purchasing 57
Steps in the Professional Purchasing Process 57
Determining Needed Products 60
Determining Needed Product Quantities 64
Forecasting Menu Item Sales 65
Establishing Inventory Levels 67
Placing the Purchase Order 71
Choosing Suppliers 72
Understanding Suppliers 73
Recording Purchases 75
4 Cost Control in Receiving 80
The Importance of Controlling Receiving Costs 81
Receiving Essentials 83
Proper Location 83
Proper Tools and Equipment 84
Proper Delivery Schedules 85
Key Areas of Product Verification 86
Weight 86
Quantity 87
Quality 90
Price 93
Receiving Records 95
Supplier-Produced Delivery Records 96
5 Cost Control in Storage and Issuing 103
The Importance of Cost Control in Storage and Issuing 104
Storage Essentials 105
Quality Concerns 105
Security Concerns 111
Valuing Product Inventories 112
Issuing and Restocking Product Inventories 116
Issuing 117
ABC Inventory Control 120
Restocking Product Inventories 122
6 Cost Control in Food and Beverage Production 128
The Importance of Cost Control During Production 129
Managing Costs in Food Production 129
Managing Costs in Beverage Production 134
Controlling Cost Through Standardized Recipes 135
Adjusting Standardized Recipe Yields 136
Costing Standardized Recipes 140
Calculating Actual Cost of Sales 145
Calculating Actual Cost of Food Sold 145
Calculating Actual Cost of Beverage Sold 149
Calculating Actual Cost of Sales with Transfers 150
7 Cost Control in Food and Beverage Service 156
The Importance of Cost Control in Food and Beverage Service 157
Challenges in Professional Service Delivery 159
The Guest's View of Quality Service 162
The Operator's View of Quality Service 167
Controlling Service Costs 169
Controlling Indoor Dining Service Costs 170
Controlling Outdoor Dining Service Costs 170
Controlling Drive-thru Delivery Service Costs 171
Controlling Guest Pick-up Service Costs 172
Controlling Operator Direct Delivery Service Costs 173
Controlling Third-party Delivery Service Costs 174
Managing Service Recovery and Recovery Costs 178
On-Premises Service Recovery 179
Off-Premises Service Recovery 180
8 Labor Cost Control 185
The Importance of Labor Cost Controls 186
Total Labor Costs 186
Factors Affecting Total Labor Costs 188
Managing and Controlling Total Labor Costs 194
Types of Labor Costs 194
Controlling Total Labor Costs 195
Assessment of Total Labor Costs 199
Sales per Labor Hour 200
Labor Dollars per Guest Served 202
Labor Cost Percentage 203
9 Control of Other Operating Expenses 211
The Importance of Controlling Other Operating Expenses 212
Controllable and Non-controllable Other Expenses 213
Fixed, Variable, and Mixed Other Expenses 216
Monitoring and Controlling Other Expenses 217
Food and Beverage Operations 217
Equipment Maintenance and Repair 219
Technology-related Costs 222
Occupancy Costs 227
Calculating Other Expense Costs 227
Other Expense Cost Percentage 228
Other Expense Cost Per-guest 228
10 Profitable Pricing 233
Pricing for Profits 234
The Importance of Price 235
The Operator's View of Price 235
The Guest's View of Price 236
Factors Affecting Menu Pricing 238
Economic Conditions 239
Local Competition 239
Level of Service 240
Type of Guest 240
Product Quality 241
Unique Alternatives 242
Portion Size 242
Delivery Method 243
Meal Period 244
Location 244
Bundling 245
Methods of Food and Beverage Pricing 246
Cost-based Pricing 247
Contribution Margin-based Pricing 250
Evaluation of Pricing Efforts 252
Menu Engineering 252
Menu Modifications 256
11 Cash and Revenue Control 260
The Importance of Revenue Control 261
External Threats to Revenue Security 262
Internal Threats to Revenue Security 263
Developing a Revenue Security Program 268
Objectives of Internal Revenue Control Systems 268
Elements of Internal Revenue Control Systems 270
Implementing and Monitoring a Revenue Security Program 272
Verification of Receivable Revenue 273
Verification of Guest Charges 275
Verification of Sales Receipts 275
Verification of Sales Deposits 276
Verification of Accounts Payable (AP) 278
12 Budgeting and Analyzing Operating Results 282
The Importance of Operating Budgets 283
Types of Operating Budgets 283
Advantages of Operating Budgets 284
Creating an Operating Budget 285
Revenue Forecasts 288
Expense Forecasts 290
Monitoring the Operating Budget 295
Comparing Planned Results to Actual Results 297
Modifying the Operating Budget 307
Glossary G-1
Index I-1
Book Features xi
Instructional Resources xiii
Acknowledgments xv
Dedication xvii
1 Cost Control in Foodservice Operations 1
The Importance of Cost Control 2
The Foodservice Profit Formula 3
The Uniform System of Accounts for Restaurants (USAR) 4
The Process of Effective Cost Control 6
Responsibility for Cost Control 8
Owner's Responsibilities 9
Manager's Responsibilities 9
Production Staff Responsibilities 10
Service Staff Responsibilities 10
Essential Cost Control Tools 11
The Operating Budget 12
Standardized Recipes 16
The Income Statement 18
Sales (Revenue) 19
Total Cost of Sales 21
Labor 22
Prime Cost 23
Other Controllable Expenses 24
Non-Controllable Expenses 25
Income Before Income Taxes (Profit) 26
2 Sales Forecasts 31
The Importance of Accurate Sales Forecasts 32
Sales Histories 34
Fixed Averages 37
Rolling Averages 38
Average Sale Per Guest 40
Sales Variance 44
Sales Forecasts 47
Forecasting Future Sales 47
Forecasting Future Guest Counts 49
Forecasting Future Average Sale Per Guest 51
3 Cost Control in Purchasing 56
The Importance of Controlling Costs in Purchasing 57
Objectives of Professional Purchasing 57
Steps in the Professional Purchasing Process 57
Determining Needed Products 60
Determining Needed Product Quantities 64
Forecasting Menu Item Sales 65
Establishing Inventory Levels 67
Placing the Purchase Order 71
Choosing Suppliers 72
Understanding Suppliers 73
Recording Purchases 75
4 Cost Control in Receiving 80
The Importance of Controlling Receiving Costs 81
Receiving Essentials 83
Proper Location 83
Proper Tools and Equipment 84
Proper Delivery Schedules 85
Key Areas of Product Verification 86
Weight 86
Quantity 87
Quality 90
Price 93
Receiving Records 95
Supplier-Produced Delivery Records 96
5 Cost Control in Storage and Issuing 103
The Importance of Cost Control in Storage and Issuing 104
Storage Essentials 105
Quality Concerns 105
Security Concerns 111
Valuing Product Inventories 112
Issuing and Restocking Product Inventories 116
Issuing 117
ABC Inventory Control 120
Restocking Product Inventories 122
6 Cost Control in Food and Beverage Production 128
The Importance of Cost Control During Production 129
Managing Costs in Food Production 129
Managing Costs in Beverage Production 134
Controlling Cost Through Standardized Recipes 135
Adjusting Standardized Recipe Yields 136
Costing Standardized Recipes 140
Calculating Actual Cost of Sales 145
Calculating Actual Cost of Food Sold 145
Calculating Actual Cost of Beverage Sold 149
Calculating Actual Cost of Sales with Transfers 150
7 Cost Control in Food and Beverage Service 156
The Importance of Cost Control in Food and Beverage Service 157
Challenges in Professional Service Delivery 159
The Guest's View of Quality Service 162
The Operator's View of Quality Service 167
Controlling Service Costs 169
Controlling Indoor Dining Service Costs 170
Controlling Outdoor Dining Service Costs 170
Controlling Drive-thru Delivery Service Costs 171
Controlling Guest Pick-up Service Costs 172
Controlling Operator Direct Delivery Service Costs 173
Controlling Third-party Delivery Service Costs 174
Managing Service Recovery and Recovery Costs 178
On-Premises Service Recovery 179
Off-Premises Service Recovery 180
8 Labor Cost Control 185
The Importance of Labor Cost Controls 186
Total Labor Costs 186
Factors Affecting Total Labor Costs 188
Managing and Controlling Total Labor Costs 194
Types of Labor Costs 194
Controlling Total Labor Costs 195
Assessment of Total Labor Costs 199
Sales per Labor Hour 200
Labor Dollars per Guest Served 202
Labor Cost Percentage 203
9 Control of Other Operating Expenses 211
The Importance of Controlling Other Operating Expenses 212
Controllable and Non-controllable Other Expenses 213
Fixed, Variable, and Mixed Other Expenses 216
Monitoring and Controlling Other Expenses 217
Food and Beverage Operations 217
Equipment Maintenance and Repair 219
Technology-related Costs 222
Occupancy Costs 227
Calculating Other Expense Costs 227
Other Expense Cost Percentage 228
Other Expense Cost Per-guest 228
10 Profitable Pricing 233
Pricing for Profits 234
The Importance of Price 235
The Operator's View of Price 235
The Guest's View of Price 236
Factors Affecting Menu Pricing 238
Economic Conditions 239
Local Competition 239
Level of Service 240
Type of Guest 240
Product Quality 241
Unique Alternatives 242
Portion Size 242
Delivery Method 243
Meal Period 244
Location 244
Bundling 245
Methods of Food and Beverage Pricing 246
Cost-based Pricing 247
Contribution Margin-based Pricing 250
Evaluation of Pricing Efforts 252
Menu Engineering 252
Menu Modifications 256
11 Cash and Revenue Control 260
The Importance of Revenue Control 261
External Threats to Revenue Security 262
Internal Threats to Revenue Security 263
Developing a Revenue Security Program 268
Objectives of Internal Revenue Control Systems 268
Elements of Internal Revenue Control Systems 270
Implementing and Monitoring a Revenue Security Program 272
Verification of Receivable Revenue 273
Verification of Guest Charges 275
Verification of Sales Receipts 275
Verification of Sales Deposits 276
Verification of Accounts Payable (AP) 278
12 Budgeting and Analyzing Operating Results 282
The Importance of Operating Budgets 283
Types of Operating Budgets 283
Advantages of Operating Budgets 284
Creating an Operating Budget 285
Revenue Forecasts 288
Expense Forecasts 290
Monitoring the Operating Budget 295
Comparing Planned Results to Actual Results 297
Modifying the Operating Budget 307
Glossary G-1
Index I-1