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.

Table of Contents:
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