Cost From a seller’s point of view, the cost is the amount of money that is spent to produce a good or product. If a producer were to sell his products at the production price, his costs and income would break even, meaning that he would not lose money on the sales....
The term sales is used in several ways among professionals in the foodservice industry. For the term to be meaningful, one must be specific about the context in which it is used. The following paragraphs, therefore, define the term and explore some of the many ways it...
Monetary sales concept Total Sales Total sales is a term that refers to the total volume of sales expressed in rupees terms. This may be for any given time period, such as a week, a month, or a year. For example, total rupee sales for a restaurant is Rs 10,00,000 for...
Inventory control in the hospitality industry is incredibly important. Some studies suggest that hotel theft and losses are at $100 million a year! The main objective of stocktaking is to ascertain the actual value of goods in hand as distinct from the book value of...
There are two methods to control the inventory of stores: 1. Physical inventory system 2. Perpetual inventory system Physical inventory system A physical inventory system is a periodic actual counting of all the products in the storage areas. Usually store items are...
Some of the most important techniques of the inventory control system are 1. Setting up of various stock levels. 2. Preparations of inventory budgets. 3. Maintaining perpetual inventory system. 4. Establishing proper purchase procedures. 5. Inventory turnover ratios....
In this system, goods received or issued is immediately recorded on stocktaking sheet & compiled at the end of the day. In this system, at any given time you know the value of stock in hand. An individual card is required for each item. All figures are recorded,...
In most business establishment physical inventories are taken. This is done at the close of accounting period or after the close of the business day or monthly. The process of taking a physical inventory requires that one physically count the actual number of units of...
In a department, there must be a system established so that the department can be fairly charged for what it has requisitioned for its use. The method of pricing the food issued depends mainly on the type of commodities in question. Perishables In the case of...
Physical and perpetual inventory are two different methods used in food and beverage management to track inventory levels and manage costs. Here are some key differences between the two: Definition: Physical inventory is a manual count of all products on hand at a...
The purchasing of alcoholic and non-alcoholic beverages, like that of foodstuffs, has the aim to purchase the very best quality of items, at the lowest price for a specific purpose. The purchasing of beverages should be undertaken by the purchasing manager together...
The objectives for beverage receiving are similar in many ways to those of food receiving. However, as the value of beverage purchases and the ensuing profits from the sale of beverages are high, it is important that due attention is given to the receiving of...
Once beverages are received they must be removed immediately to the cellar and a tight level of control maintained at all times. The storage of beverage is ideally separated into five areas as follows: The main storage area for spirits and red wine held at a dry and...
Issuing of beverages should take place at set times during the day and only against a requisition note signed by an authorized person, for example, head barman, banqueting head waiter, etc. Ideally, when the requisition is a large one it should be handed in several...
Objectives of Production Control To ensure that all drinks are prepared according to management’s specifications Take into account the tastes of expected customers To guard against excessive costs that can develop in the production process Management’s desire to...
Standardized recipes are an important part of a well-managed food service program. A standardized recipe specifically describes the exact, measurable amount of ingredients and the method of preparation needed to consistently produce a high-quality product. The exact...
There are four measuring devices commonly used by bartenders: shot glasses, jiggers, pourers, and automated dispensers. The Shot Glass In some establishments, bartenders are provided with small glasses, called shot glasses, that are used for measuring. There are two...
As per Cambridge dictionary, a Fraud means the crime of getting money by deceiving people. Frauds by Customer Customer walking without paying The primary kind of customer fraud is customers walking out without paying their checks. However, customers may also...
The books maintained for beverage control are: Cellar inward book Bin card Cellar control book Beverage perpetual inventory ledger Breakage book Empty return book Hospitality book Cellar Inventory Control Ledger 1. Cellar Inward Book This book contains records...
Cash control is a process that is utilized to verify the complete nature and accurate recording of all cash that is received as well as any cash disbursements that take place. As a broad principle of responsible financial accounting, cash control takes place in an...
Pre-checking systems Pre-check machines are somewhat similar in appearance to a standard cash register and are designed to operate only when a sales check is inserted into the printing table to the side of the machine. The machine is operated in the following way. A...
These are very high-speed machines which were developed mainly for operations such as supermarkets and were further adapted for use in high volume catering operations. They are robust machines that apart from printing the customer bill they can also provide basic...
A cash register (US English) or till (British English) is a mechanical or electronic device for calculating and recording sales transactions, and an attached cash drawer for storing cash. The cash register also usually prints a receipt for the customer. In most cases,...
Point of sale (POS) (also sometimes referred to as Point of purchase (POP) ) or checkout is the location where a transaction occurs. A "checkout" refers to a POS terminal or more generally to the hardware and software used for checkouts, the equivalent of an...
Sales Summary Sheet The sales summary sheet is an analysis of all the transactions/cash taken during the particular period of service. It is prepared to know the revenue generated through the sales of food, beverages, the modes of bill settlement- cash, cheque, credit...
Major types of frauds 1. Failure to make kot 2. Failure to make check 3. Failure to record sales in sales summary sheet 4. Under-recording of sale. 5. Pickup of food without proper check 6. Charging incorrect room rent 7. Selling room without registration 8. Payment...
Best Practices for Cash Handling The procedures listed below are a list of best practices to accept, store, reconcile and deposit, document, and transport deposits, for cash, checks and payment cards. There are several steps to ensure that all cash is handled...
Zero Base Budgeting: An operating planning and budgeting process which required each manager to justify his entire budget in detail from scratch. Zero-base budgeting technique was used by the U.S. Department of Agriculture in 1962. Texas Instruments, a multinational...
A budget is a statement expressed in monetary &/or quantitative terms, reflecting the policy of a business and determining business operations in respect of a particular trading period. In a business, organization budget represents an estimate of future costs and...
Budgetary Control Throughout the budget period, the use of budgets & budgetary reports for the purpose of coordinating, evaluating & controlling day-to-day operations according to the goals which are specified by the budget is involved by budgetary...
Budgetary control is an essential tool for management, playing a crucial role in planning, coordinating, and controlling the activities of an organization. It helps define targets, anticipate potential issues, and guide the overall direction of the organization. This...
Essentials of Budgetary Control: There are certain steps which are necessary for the successful implementation budgetary control system. These are as follows: 1. Organization for Budgetary Control 2. Budget Centers 3. Budget Manual 4. Budget Officer 5. Budget...
A key factor (limiting factor, principal budget factor, or governing factor) is the most important factor in the context of budgetary control which limits or governs the whole process of preparation of budgets. The examples of key factor, which can be one or even more...
Sales budget – an estimate of future sales, often broken down into both units and currency. It is used to create company sales goals. Production budget - an estimate of the number of units that must be manufactured to meet the sales goals. The production budget also...
What is Budgetary Control? Budgetary control is the process of comparing various actual revenues and expenditures with budgeted figures/planned income or expenditure to identify whether or not corrective action is required & for calculating variances if any....
A variance occurs when expenses such as revenue or labour are either more or less than what the company anticipated and budgeted for. Hospitality businesses such as hotels and restaurants can experience variances due to occupancy rates, check sizes, supply costs or...
Standard Costs An estimated or predetermined cost of performing an operation or producing a good or service, under normal conditions. Standard costs are used as target costs (or basis for comparison with the actual costs) and are developed from historical data...
Types of Variances which we are going to study in this chapter are:- Cost Variances Material Variances Labour Variances Overhead Variance Fixed Overhead Variance Sales Variance Profit Variance If you haven't been through Variance Analysis Introduction, please consider...
Here is a quick video to help you get started https://youtu.be/LDEyu1TR0Rs?t=2s It is very common for food and beverage management to be faced with problems concerning the level of food and beverage cost that can be afforded, the prices that need to be set for food...
It is a graphical representation of the cost-volume-profit relationship. Example A restaurant has a seating capacity of 180 covers, enabling to serve a total of 10,080 customers per twenty-eight-day trading period over lunch and dinner. The ASP of the customers is £15...
Understanding the Profit Volume Ratio in Breakeven Analysis is crucial for any business. Learn how to calculate PV ratio, and use it to make informed business decisions.
Here is a nice quick video to help you understand better about the topic:- https://www.youtube.com/watch?v=pm6Eo9qiUIY Contribution margin is a cost accounting concept that allows a company to determine the profitability of individual products. The phrase...
Marginal cost of production is an economics term that refers to the change in production costs resulting from producing one more unit. It is most often used among manufacturers as a means of identifying an optimum production level. The formula for marginal costs of...
Menu merchandising refers to any technique used to stimulate sales within the Food and Beverage facility. The efficient menu merchandised will affect the popularity of the food and beverage facilities. Some Menu merchandising tools that can be used inside an F & B...
There are a number of basic factors you have to be considered to ensure the efficacy of menu as an in-house effective sales tool for optimizing sales. Menu presentation is very important as it identifies the image and personality of that particular unit or department...
Structures of Menus Menus vary in from very simple to complex. A menu’s structure defines the amount of control given to the user in performing a task. The most common structures are the following. Single Menus Single menus conceptually require choices from this...
The pricing of a menu is “art of pricing”. The successful management analyses the food cost and other overheads, the guest's ability to pay for the menu and competitors menu pricing before fixing the menu and its prices. Usually, the menus are priced by the General...
1. Table d hote menu This is a French word which means food from the host's table. A table d hote menu offers a complete meal at an affixed price for the guest no matter how much food has been consumed. This menu can include appetizer. Banquets Buffets Coffeehouses...
Menus have a lot of sale value. To make the best or most effective use of menus as a means of advertising and selling is a MENU MERCHANDISING. It is the piece of advertising which is sure to be read for this reason. Every detail of the menu deserves the closest...
Skill of staff. Facility Layout/Design Availability of ingredients. Availability of Equipment Type of target market Seasonality of business Quality Levels and Costs
Menu engineering is the study of the profitability and popularity of menu items and how these two factors influence the placement of these items on a menu. The goal is simple: to increase profitability per guest. The marketing-oriented approach to the evaluation of a...
Using this simple mix, menu items can be grouped depending upon the popularity among guests, gross profit contribution etc. The four squares of the matrix commonly plotted depending upon the performance of items in a particular square. On a graph comparing popularity...
To be a successful food and beverage service personnel, you have to have perfect knowledge of the menu, menu planning considerations, menu pricing and engineering. Either you work as an employee for an establishment or want to operate your own business, this is a...
Management Information System or 'MIS' is a planned system of collecting, storing, and disseminating data in the form of information needed to carry out the functions of management. To the managers, Management Information System is an implementation of the...
A management information system (MIS) is a computerized database of financial information organized and programmed in such a way that it produces regular reports on operations for every level of management in a company. It is usually also possible to obtain special...
Restaurant owners, managers and chefs all stress over food costs. They are never low enough. At its heart, lies the challenge of balancing the (rather) static cost of the item displayed on the menu with the daily variations in cost for its ingredients. How to...
Monthly food costs are determined by taking a monthly physical inventory of food stock, evaluating the inventory, and then adjusting the valuation to more accurately reflect the cost of food consumed. The basic formula to determine the cost of food in a month is: Cost...
Commulative simply means Increasing or enlarging by successive addition. The origin of cumulative is helpful in remembering the meaning; it comes from the Latin cumulatus for "to heap." If something is cumulative, it is heaped together so it can be counted up to get a...