Food& Beverage COST CONTROL 6TH EDITION Trim Size: 8.5 in X 11 in fm.indd 08:46:50:PM 02/06/2015 Page iii Food& Beverage COST CONTROL -&"3%0140/t%"7*%,)":&4 6TH EDITION Trim Size: 8.5 in X 11 in fm.indd 08:46:50:PM 02/06/2015 Page iv Cover image © Jamie Grill Photography / Getty Images This book is printed on acid-free paper. ♾ Copyright © 2016, 2011, 2008 by John Wiley & Sons, Inc. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
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Library of Congress Cataloging-in-Publication Data Dopson, Lea R. Food and beverage cost control / Lea R. pages cm Includes bibliographical references and index. Food service—Cost control.95068—dc23 2014039225 ISBN: 978-1-118-98849-7 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 Trim Size: 8.5 in X 11 in fm.indd 08:46:50:PM 02/06/2015 Page v DEDICATION This edition is dedicated to the memory of Jack E.
and Anita Miller.5 in X 11 in fm.indd 08:46:50:PM 02/06/2015 Page vii CONTENTS Preface ix Purchase Orders 76 Acknowledgments xvi Receiving Food and Beverage About WileyPLUS Learning Space xvii Products 78 Chapter 1: Managing Revenue and Chapter 4: Managing Inventory and Expense 1 Production 96 Professional Foodservice Manager 2 Product Storage 97 Profit: The Reward for Service 2 Inventory Control 103 Getting Started 7 Product Issuing and Restocking 112 Understanding the Income (Profit and Loss) Managing Food Production 121 Statement 12 Managing Beverage Production 128 Understanding the Budget 15 Chapter 5: Monitoring Food and Chapter 2: Creating Sales Beverage Product Costs 139 Forecasts 25 Cost of Sales 140 Importance of Forecasting Sales 26 Computing Cost of Food Sold 140 Sales Histories 27 Computing Cost of Beverage Sold 143 Maintaining Sales Histories 34 Computing Costs with Transfers 144 Sales Variances 34 Utilizing the Cost of Sales Formula 146 Predicting Future Sales 36 Reducing the Cost of Sales Percentage 160 Chapter 3: Purchasing and Receiving 50 Chapter 6: Managing Food and Forecasting Food Sales 51 Beverage Pricing 181 Forecasting Beverage Sales 53 Menu Formats 182 Importance of Standardized Menu Specials 186 Recipes 56 Factors Affecting Menu Pricing 187 Purchasing Food 62 Assigning Menu Prices 195 Purchasing Beverages 70 Special Pricing Situations 199 vii Trim Size: 8.5 in X 11 in fm.indd 08:46:50:PM 02/06/2015 Page viii viii Contents Chapter 7: Managing the Cost of Analysis of Beverage Expense 302 Labor 215 Analysis of Labor Expense 303 Labor Expense in the Hospitality Analysis of Other Expenses 305 Industry 216 Analysis of Profits 307 Evaluating Labor Productivity 219 Maintaining a Productive Workforce 219 Chapter 10: Planning for Profit 320 Measuring Current Labor Productivity 234 Financial Analysis and Profit Planning 321 Managing Payroll Costs 246 Menu Analysis 321 Reducing Labor-Related Costs 255 Cost/Volume/Profit Analysis 334 The Budget 342 Chapter 8: Controlling Other Developing the Budget 344 Expenses 265 Monitoring the Budget 349 Other Expenses 266 Controllable and Non-controllable Other Chapter 11: Maintaining and Expenses 266 Improving the Revenue Control Fixed, Variable, and Mixed Other System 367 Expenses 269 Revenue Security 368 Monitoring Other Expenses 272 External Threats to Revenue Security 369 Managing Other Expenses 275 Internal Threats to Revenue Security 372 Developing the Revenue Security Chapter 9: Analyzing Results Using System 376 the Income Statement 288 The Complete Revenue Security Introduction to Financial Analysis 289 System 384 Uniform System of Accounts 290 Income Statement (USAR Format) 291 Glossary 391 Analysis of Sales/Volume 296 Index 399 Analysis of Food Expense 298 Trim Size: 8.5 in X 11 in fm.indd 08:46:50:PM 02/06/2015 Page ix PREFACE Many years have passed rapidly since the first edition of Food and Beverage Cost Control was released. Publication of the first edition fulfilled original lead author Professor Jack Miller’s vision for a college-level text that would provide students and practicing managers the essential tools needed to effectively manage costs in food and beverage operations. His steadfast insistence that the original text be easy-to-read, easy-to-understand, and easy-to-remember is no doubt the primary reason for its continued tremendous success. The authors hope that the study of cost management creates in readers the same interest and excitement for the topic that the authors experience.
If so, we will have been successful in our attempt to be true to this text’s original vision of creating an outstanding learning tool that prepares students to be successful managers in the exciting hospitality industry. It has been said that there are three kinds of managers: those who know what has happened in the past, those who know what is happening now, and those who know what will happen in the future. Clearly, the manager who possesses all three traits is best prepared to manage effectively and efficiently. This text will give the reader the tools required to maintain sales and cost histories (the past), develop systems for monitoring current activities (the present), and learn the techniques required to anticipate what is to come (the future).
Previous revisions of the text focused primarily on ensuring that any new cost control–related information included was relevant, up-to-date, and accurate. All of those things remain true in the sixth edition. And indeed, much new and important information has been added to this edition. But recalling Professor Miller’s original vision for the book meant we needed to do even more for this revision.
The result was a renewed commitment on our part to carefully reexamine every chapter and word while revising this edition. Today’s professional foodservice managers face increasingly complex challenges in their jobs. As in the past, the tools and information they need to properly address these challenges must be easily understood if they are to be readily applied. Students will find this edition significantly easier to read.
Instructors will find the information in it easier to present. Practicing managers will find the information in it easier to apply. We are convinced that is exactly what Professor Miller would have wanted for the Sixth.Edition of Food and Beverage Cost Control, and we are delighted to play our part in sustaining his original vision. ix Trim Size: 8.5 in X 11 in fm.indd 08:46:50:PM 02/06/2015 Page x x Preface TO THE STUDENT This book will provide you all the cost control–related information and tools you will need to achieve success levels that match your own highest career goals.
If you work hard and do your best, you will find you have the ability to master all of the information in this text. When you do, you will have gained an invaluable set of management skills and tools that will enhance your knowledge of the hospitality management industry. These skills and tools will ensure that your hospitality career will consistently be rewarding for you both personally and professionally. TO THE INSTRUCTOR Today’s hospitality students are the most diverse, multicultural generation yet pro- duced.
How are today’s students different from their counterparts of 20 years ago? Studies indicate that instead of focusing on material wealth and professional status, people in their 20s and early 30s are more likely to seek a rewarding and spiritually fulfilling life. Their genders are also different. From 1975 to 1985, the typical hospital- ity cost control class would have been overwhelmingly male. Today, females will often make up the majority of students in the same type class.
Their ethnic backgrounds are different. National demographic projections suggest that about 65 percent of the growth in the US population through the year 2020 will be in ethnic minority groups, particularly Hispanic and Asian populations. Meeting the needs of today’s students required us to carefully reexamine two extremely important characteristics of the text: r Readability r Presentation of mathematical concepts READABILITY Another difference of today’s students from those of previous generations relates to the way students read. If you were to survey a wide range of hospitality instructors today, you would find a nearly universal answer to the question of whether they believe their current students read as much, or as well, as did students from earlier generations.
That uniform answer would be, “No; they do not.” It would be a big mistake, however, to conclude from this that modern students are ill-informed or do not learn as readily as those in prior generations. For today’s students, the use of smart devices and other highly advanced technology tools is a snap, but tweeting and texting are far more popular than textbooks. To ensure that our text continues to reach students who are used to reading concise messages, it was especially important to carefully review it for its readability. There were several main goals of this reading-related review: r Eliminate redundancy.
r Identify and remove pedantic wording. r Reexamine the presentation order of information to ensure maximum comprehension. r Simplify the presentation and explanation of mathematical procedures. PRESENTATION OF MATHEMATICAL CONCEPTS Experienced managers know that effective cost control in a foodservice operation is built on a variety of systems that depend on the skillful use of mathematics.5 in X 11 in fm.indd 08:46:50:PM 02/06/2015 Page xi Preface xi In many cases, however, hospitality students may be unsure of their mathematical abilities.
Because that is so, any textbook addressing cost control must possess two essential traits: 1. It must be accurate. The authors are grateful to the number of editors and reviewers who helped us ensure the mathematical formulas and examples presented in this edition are as error-free as humanly possible. We are grateful, as well, to the number of students and instructors who, in editions 1 through 5, provided feedback that helped ensure all mathematical examples and end-of-chapter questions and answers retained in this edition are clearly presented and accurate.
The mathematical concepts included in the text must be presented clearly. In a heightened effort to address this key concern, a new fea- ture titled “Here’s How It’s Done” has been added to this edition. This new feature was created in direct response to instructors’ desire that their students have step-by-step explanations and illustrations within every chapter of some of the text’s more challenging math concepts. In this unique feature, students are shown, using real work- setting examples, how the math concepts presented in the chapter are applied and their results evaluated.