ProStart Year 1 Chapter ProStart Year 1 Chapter 1212

Controlling Foodservice CostsControlling Foodservice Costs

Ways to Express RevenueWays to Express Revenue

► Total Dollar salesTotal Dollar sales► Total Dollar sales by category (beverage, Total Dollar sales by category (beverage,

seafood, steak, etc.)seafood, steak, etc.)► Sales PriceSales Price► Average dollar sales per customer, per Average dollar sales per customer, per

server, and per seatserver, and per seat►Quantity of items soldQuantity of items sold► Average number of items soldAverage number of items sold► TurnoverTurnover

Cost Control consists of Four Cost Control consists of Four Basic Steps:Basic Steps:

►Create standards and standard Create standards and standard operating procedures.operating procedures.

►Train all employees to follow Train all employees to follow procedures.procedures.

►Compare actual performance to Compare actual performance to standards.standards.

►Correct any changes.Correct any changes.

Forecasting Foodservice Forecasting Foodservice RevenueRevenue

►Factors to Consider:Factors to Consider: Number of seatsNumber of seats Estimated turnoverEstimated turnover Estimated average checkEstimated average check Number of days in the year that the Number of days in the year that the

operation will be openoperation will be open

The Average Cover FormulaThe Average Cover Formula

Total revenue/Total customers= Average Total revenue/Total customers= Average covercover

Example:Example:

A restaurant had $69,112 in revenue and A restaurant had $69,112 in revenue and a total of 2,789 customers last month.a total of 2,789 customers last month.

AnswerAnswer

$69,112/2,789 = Average Cover$69,112/2,789 = Average Cover

The Cost/Volume/Profit The Cost/Volume/Profit RelationshipRelationship

(Fixed costs + 0)/(100% - Variable Cost (Fixed costs + 0)/(100% - Variable Cost Percentage)=Break-even pointPercentage)=Break-even point

(Fixed costs + profit)/(100% - Variable (Fixed costs + profit)/(100% - Variable Cost Percentage)=Revenue LevelCost Percentage)=Revenue Level

The Three Goals of Sales Control The Three Goals of Sales Control Are:Are:

►To Sell ProductsTo Sell Products

►To Earn RevenueTo Earn Revenue

►To Make a profitTo Make a profit

Customers Select Restaurants Customers Select Restaurants based on:based on:

►LocationLocation►CleanlinessCleanliness►Menu itemsMenu items►PricesPrices►DécorDécor►Portion SizesPortion Sizes►Product QualityProduct Quality►ServiceService

Indicate the formula that can be Indicate the formula that can be used to determine each sales used to determine each sales item in the left column below:item in the left column below:

Average Sales Average Sales 0.15xCheck subtotal0.15xCheck subtotalPer CustomerPer Customer

Standard TipStandard Tip Total Dollar sales/Total Dollar sales/total number of coverstotal number of covers

Percentage of Percentage of Tip/Check subtotalTip/Check subtotalCheck totalCheck total

AnswerAnswer

Average Sales Average Sales 0.15xCheck subtotal0.15xCheck subtotalPer CustomerPer Customer

Standard TipStandard Tip Total Dollar sales/Total Dollar sales/total number of total number of

coverscovers

Percentage of Percentage of Tip/Check subtotalTip/Check subtotalCheck totalCheck total

Balancing a Cash DrawerBalancing a Cash Drawer

The Formula:The Formula:

Gross receipts Gross receipts (all recorded money received)(all recorded money received)

+ Change in drawer+ Change in drawer

-- Cash Paid Out Cash Paid Out

Actual ReceiptsActual Receipts

A register reads $976.85 in gross receipts, A register reads $976.85 in gross receipts, contains $19.05 in change, and has paid out contains $19.05 in change, and has paid out $23.66. What are the actual receipts?$23.66. What are the actual receipts?

Answer:Answer:

$976.85 + $19.05 - $23.66 = $972.24$976.85 + $19.05 - $23.66 = $972.24

Taking Inventory of InventoryTaking Inventory of Inventory

►Opening Inventory- Items on hand, Opening Inventory- Items on hand, first day of the monthfirst day of the month

►Closing inventory- Total dollar value of Closing inventory- Total dollar value of food on hand, last day of the monthfood on hand, last day of the month

►Book inventory- Stores purchased + Book inventory- Stores purchased + Closing inventory for the preceding Closing inventory for the preceding day – Stores issueday – Stores issue

►Average Inventory- (Opening inventory Average Inventory- (Opening inventory + Closing inventory) / 2+ Closing inventory) / 2

Determining Monthly Food Determining Monthly Food CostCost

Opening inventory (items on hand, first Opening inventory (items on hand, first day of the month)day of the month)

+ Purchases (directs and stores)+ Purchases (directs and stores)

Total available for saleTotal available for sale- Closing inventory (items on hand, last Closing inventory (items on hand, last

day of the monthday of the month

Cost of food soldCost of food sold

Determining Daily Food CostDetermining Daily Food Cost

Cost of directs (from the receiving clerk’s daily Cost of directs (from the receiving clerk’s daily report)report)

+ Cost of stores (from requisitions and meat + Cost of stores (from requisitions and meat tags)tags)

+ Transfers from other departments or units to + Transfers from other departments or units to the food departmentthe food department

- Transfers from the kitchen to other areasTransfers from the kitchen to other areas

Cost of food soldCost of food sold- Cost employee mealsCost employee meals

Daily food CostDaily food Cost

Determining Closing Book Determining Closing Book Inventory ValuationInventory Valuation

►Steps involved:Steps involved: Begin with the closing inventory valuation Begin with the closing inventory valuation

for the preceding day.for the preceding day. Add any stores purchased.Add any stores purchased. Subtract any stores issued.Subtract any stores issued.

Inventory Turnover FormulasInventory Turnover Formulas

(Opening inventory + Closing inventory) (Opening inventory + Closing inventory) / 2 = Average inventory/ 2 = Average inventory

Food cost for the month / Average food Food cost for the month / Average food inventory= Inventory Turnoverinventory= Inventory Turnover

Causes of High Food CostCauses of High Food Cost

► Improper purchasingImproper purchasing► Inaccurate forecastingInaccurate forecasting►Poor receiving proceduresPoor receiving procedures►Failure to follow standardized recipesFailure to follow standardized recipes►Poor production schedulesPoor production schedules►Lack of good selling and serviceLack of good selling and service► Improper selection of menu itemsImproper selection of menu items

Focus on Standard PortionsFocus on Standard Portions

►Standard Portion Size- The fixed quantity Standard Portion Size- The fixed quantity served to a customer for a fixed selling served to a customer for a fixed selling price.price.

►Standard Portion Cost- The dollar amount Standard Portion Cost- The dollar amount that a standard portion should cost.that a standard portion should cost.

►Equation: Purchase price per unit / Equation: Purchase price per unit / Number of portions per unit = Standard Number of portions per unit = Standard portion costportion cost