BSAD 322Charley Family Steak House (1).ppt
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8/10/2019 BSAD 322Charley Family Steak House (1).ppt
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CHARLEYS FAMILYSTEAK HOUSE
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Class Announcements
Traditional Assignment:
Assignment #3 due April 10, 2012; available on-line
Service Learning Assignment:
Final Report is due April 10, 2012
Cost of an Egg:
Assignment details on-line
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Class Objectives
1. Understanding performance measurementboth financial and non-financial effectiveness
2. Assessing performance and compensation in
context
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Charleys Family Steak House
Company Context:Charley Turners four steak restaurants
Located in a rapidly growing mid-size city in Texas
Restaurant goalbest steak house in the cityCharacterized by: Pleasant atmosphere
Fast and courteous service
High quality food Freshly prepared good
Reasonable prices
Innovative express lunch option
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8/10/2019 BSAD 322Charley Family Steak House (1).ppt
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Charleys Family Steak House
Company Context: Unit 2
Alex Pearson is the manager of Charleys
Steakhouse Unit 2 (since one year)
Seating for 150 customers Employs 18-20 people
Menu featured 4-6 items in each of fourcategories ranging in price from $1.99 (Smallsalad) to $16.99 (Lobster dinner)
Feature an express service for frequent lunchtime customers
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8/10/2019 BSAD 322Charley Family Steak House (1).ppt
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Charleys Family Steak House
Company Context: Customer Segments
Community
Located next to a shopping mall
Business communityOffices are nearby
No eating establishment within one mile radius
Hotel
100 room budget motel with no restaurant withinwalking distance
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8/10/2019 BSAD 322Charley Family Steak House (1).ppt
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Charleys Family Steak House
Company Context: Evaluation
Plans to implement a new bonus plan
25% of salary in bonuses
Specific performance measures not yet determined Suggestions from managers not solicited
Comparison between budget and actual
Original budget prepared was aggressive and
optimistic Profit is $46,490 less than planned
Severity of the recent recession
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Charleys Family Steak House
Issues: How did actual sales compare with planned
sales? Profit is $46,490 less than plannedActual sales vs planned salesvariance analysis Sales mix analysis Customer use of coupons
How well were costs and expenses controlled? Actual expenses vs planned expensesvariance analysis
Performance Evaluation Comparison of planned vs actual New bonus plan
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8/10/2019 BSAD 322Charley Family Steak House (1).ppt
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Charleys Family Steak House
Charley's Family Steak House
Operating Profit Statement
Actual % of Planned % of
1994 Sales 1994 Sales
Gross Sales 1,936,025 100.0% 1,861,860 100.0%
Net Sales (net coupo 1,726,725 89.2% 1,761,760 94.6%
Food 1,025,870 53.0% 1,024,020 55.0%
Labour 207,000 10.7% 220,000 11.8%
Expenses 152,450 7.9% 148,950 8.0%
Contribution 341,405 17.6% 368,790 19.8%
Advertising 78,625 65,165
Miscellaneous 3,320 3,000Depreciation 24,000 24,000
Insurance 9,780 9,400
Taxes and licenses 10,940 11,700
Rent (Base) 72,000 72,000
Rent (Overage) 26,980 23,275
Management 98,000 95,000 Operating Profit 17,760 65,250
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Charleys Family Steak House
Charley's Family Steak House
Operating Profit Statement
Actual % of Planned % of Variance
1994 Sales 1994 Sales 1994
Gross Sales 1,936,025 100.0% 1,861,860 100.0% 74,165
Net Sales (net coupo 1,726,725 89.2% 1,761,760 94.6% -35,035
Food 1,025,870 53.0% 1,024,020 55.0% 1,850Labour 207,000 10.7% 220,000 11.8% -13,000
Expenses 152,450 7.9% 148,950 8.0% 3,500
Contribution 341,405 17.6% 368,790 19.8% -27,385
Advertising 78,625 65,165 13,460
Miscellaneous 3,320 3,000 320
Depreciation 24,000 24,000 0Insurance 9,780 9,400 380
Taxes and licenses 10,940 11,700 -760
Rent (Base) 72,000 72,000 0
Rent (Overage) 26,980 23,275 3,705
Management 98,000 95,000 3,000
Operating Profit 17,760 65,250 -47,490
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Charleys Family Steak House
Charley's Family Steak House
Operating Profit Statement
Actual % of Planned % of Variance Flexible % of
1994 Sales 1994 Sales 1994 1994 Sales
Gross Sales 1,936,025 100.0% 1,861,860 100.0% 74,165 1,936,025 100.0%
Net Sales (net coupo 1,726,725 89.2% 1,761,760 94.6% -35,035 1,831,938 94.6%
Food 1,025,870 53.0% 1,024,020 55.0% 1,850 1,064,811 55.0%Labour 207,000 10.7% 220,000 11.8% -13,000 228,763 11.8%
Expenses 152,450 7.9% 148,950 8.0% 3,500 154,883 8.0%
Contribution 341,405 17.6% 368,790 19.8% -27,385 383,480 19.8%
Advertising 78,625 65,165 13,460 65,165
Miscellaneous 3,320 3,000 320 3,000
Depreciation 24,000 24,000 0 24,000
Insurance 9,780 9,400 380 9,400
Taxes and licenses 10,940 11,700 -760 11,700
Rent (Base) 72,000 72,000 0 72,000
Rent (Overage) 26,980 23,275 3,705 23,275
Management 98,000 95,000 3,000 95,000
Operating Profit 17,760 65,250 -47,490 79,940
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8/10/2019 BSAD 322Charley Family Steak House (1).ppt
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Charleys Family Steak House
Charley's Family Steak House
Operating Profit Statement
Actual % of Planned % of Variance Flexible % of Variance
1994 Sales 1994 Sales 1994 1994 Sales 1994
Gross Sales 1,936,025 100.0% 1,861,860 100.0% 74,165 1,936,025 100.0% 0
Net Sales (net coupo 1,726,725 89.2% 1,761,760 94.6% -35,035 1,831,938 94.6% -105,213
Food 1,025,870 53.0% 1,024,020 55.0% 1,850 1,064,811 55.0% -38,941Labour 207,000 10.7% 220,000 11.8% -13,000 228,763 11.8% -21,763
Expenses 152,450 7.9% 148,950 8.0% 3,500 154,883 8.0% -2,433
Contribution 341,405 17.6% 368,790 19.8% -27,385 383,480 19.8% -42,075
Advertising 78,625 65,165 13,460 65,165 13,460
Miscellaneous 3,320 3,000 320 3,000 320
Depreciation 24,000 24,000 0 24,000 0
Insurance 9,780 9,400 380 9,400 380
Taxes and licenses 10,940 11,700 -760 11,700 -760
Rent (Base) 72,000 72,000 0 72,000 0
Rent (Overage) 26,980 23,275 3,705 23,275 3,705
Management 98,000 95,000 3,000 95,000 3,000
Operating Profit 17,760 65,250 -47,490 79,940 -62,180
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Charleys Family Steak House
Charley's Family Steak House
Operating Profit Statement
Actual % of Planned % of Variance Flexible % of Variance
1994 Sales 1994 Sales 1994 1994 Sales 1994Gross Sales 1,936,025 100.0% 1,861,860 100.0% 74,165 1,936,025 100.0% 0
Net Sales (net coupons) 1,726,725 89.2% 1,761,760 94.6% -35,035 1,831,938 94.6% -105,213
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Charleys Family Steak House
Charley's Family Steak House
Operating Profit Statement
Actual % of Planned % of Variance Flexible % of Variance
1994 Sales 1994 Sales 1994 1994 Sales 1994
Gross Sales 1,936,025 100.0% 1,861,860 100.0% 74,165 1,936,025 100.0% 0
Net Sales (net coupons) 1,726,725 89.2% 1,761,760 94.6% -35,035 1,831,938 94.6% -105,213
Coupons 209,300 10.8% 100,100 5.4% 109,200 104,087 5.4% 105,213
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Charleys Family Steak House
Charley's Family Steak House
Operating Profit Statement
Actual Planned Variance
Supporting Data 1994 1994 1994
Average Weekly customer count 4,025 3,870 155.00% customers - lunch 50% 40% 10%
% customers - dinner 50% 60% -10%
Gross average check - lunch 7.50$ 7.50$ -$
Net average check - lunch 6.50$ 7.00$ 0.50-$
Gross average check - dinner 11.00$ 10.50$ 0.50$
Net average check - dinner 10.00$ 10.00$ -$
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Charleys Family Steak House
Charley's Family Steak House
Operating Profit Statement
Actual Planned Variance
Supporting Data 1994 1994 1994
Average Weekly customer count 4,025 3,870 155.00
% customers - lunch 50% 40% 10%
% customers - dinner 50% 60% -10%
Gross average check - lunch 7.50$ 7.50$ -$
Net average check - lunch 6.50$ 7.00$ 0.50-$
Gross average check - dinner 11.00$ 10.50$ 0.50$
Net average check - dinner 10.00$ 10.00$ -$
Contribution margin - overall 17.6% 19.8% -2%
Contribution margin - lunch 1.32$ 1.49$ 0.16-$
Contribution margin - dinner 1.94$ 2.08$ 0.14-$
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Charleys Family Steak House
Charley's Family Steak House
Operating Profit Statement
Actual Planned Variance
Supporting Data 1994 1994 1994
Average Weekly customer count 4,025 3,870 155.00
% customers - lunch 50% 40% 10%
% customers - dinner 50% 60% -10%
Gross average check - lunch 7.50$ 7.50$ -$
Net average check - lunch 6.50$ 7.00$ 0.50-$
Gross average check - dinner 11.00$ 10.50$ 0.50$
Net average check - dinner 10.00$ 10.00$ -$
Contribution margin - overall 17.6% 19.8% -2%
Contribution margin - lunch 1.32$ 1.49$ 0.16-$
Contribution margin - dinner 1.94$ 2.08$ 0.14-$
Contribution margin - overall 341,405 370,706 -29,301
Contribution margin - lunch 138,407 119,583 18,825
Contribution margin - dinner 202,998 251,123 -48,126
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Charleys Family Steak House
Conclusions: Budget vs Actual Actual operating profit for Unit 2 is $47,490 less
than anticipated Actual profit for Unit 2 is $62,180 less than the
flexible budget Customer mix change from 40/60 to 50/50 which
changed weighted contribution margin from $1.84to $1.63 per customer
Customers made use of coupons in greaternumber than anticipated perhaps because of therecession ($105,213 more than anticipated).
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Charleys Family Steak House
Conclusions: Evaluation System
Participatoryno consultation
Inventive and risknone communicated
Goal congruencenot linked to overall exceptgenerally (e.g. best steak house in town)
Fair and objectiveunknown measures
AttainableOptimistic and aggressive, highexpectations.
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Charleys Family Steak House
Conclusions: Evaluation System -Controllability
Prices - are set (over 10%) by Charley
Ordering - of food done centrally
Coupons (discount) - good at all four locations
Recent economic recession -was not
forcastableAdvertising - is managed by Charley
Management charge - is assessed by Charley