HOSPITALITY MANAGEMENT food and beverage cost control .pptx

food and beverage cost control

1. F&B COST CONTROL

2. Managing Cost, Sales and Profit Professional Food service Manager A professional food service manager is unique in that he or she is responsible for all aspects of product sales, from item conception to product delivery: you would be responsible for being both manufacturer and a retailer

3. Profit: The reward for Service every food service business is confronted with the following profit- orientend formula: revenues minus expenditures equals profit. REVENUE(SALES)- the term used to indicate the money you take in EXPENSES(COST)- the cost of the items required to operate the business. PROFIT- the money that remains after all expenses have been paid Managing Cost, sales and Profit

4. PROFIT- IS THE MITICULOUS PLANNING, MANAGEMENT AND DECISION-MAKING. IN REALITY, MAKING A PROFIT NECESSITIES METICULOUS PLANNING REVENUE-DESIRED PROFIT=IDEAL EXPENSES IDEAL EXPENSE- defined as management’s view of the correct or appropriate amount of expenses necessary to generate a given quantity of revenue. DESIRED PROFIT- defined as the profit that the owner desires to achieve on the predicted quantity of revenue. REVENUE- you can control your revenue to ome extent. The sales of units generates revenue money. Individual menu items, lunches, dinners, drinks or any other item produce by your operation maybe included in this units

5. Expenses 4 major food service expenses categories to keep under control Food Costs- the cost associated with actually producing the menu item a guests selects. Beverage costs- are those related to the sale of alcoholic beverages. Labor Costs- include the cost of employees necessary to run the business Other expenses

6. Percentage – it denotes “out of a hundred”, as a result, ten percent is ten out of hundred. It is often denoted by a symbol “%” or simply as “percent”. For Example, 35% is equivalent to the decimal 0.35 or the fraction 35/100 or7/20. To determine what percent one number is of another number, divide the number that is the part by the number that is the whole. Cost and profits may also be computed using these percent, through the following formulas: Part/Whole= percent 420/840= 0.50 ( food,beverage,labor and other)expense/revenue= expense %

7. Understanding the profit and loss statement The profit and loss statement is a simplified statement that details income, cost and profit for a specific time period. Revenue, food and beverage costs, labor costs, and other expenses are all listed. COST-VOLUME-PROFIT RELATIONSHIPS THE COST-VOLUME-PROFIT EQUATION 3 POINTS to keep in mind to understand this concept: 1. Relationship between variable cost and revenue remains largely constant within the regular range of business activity 2. In contrast, regardless of fluctuations in peso sales volume, fixed cost tend to remain constant in peso terms. 3. Once acceptable levels are determined for cost, they must be controlled if the operation is to be profitable.

8. Variable and contribution rate Variable rate- the ratio of variable cost to peso sales. It’s calculated by dividing variable costs by peso sales and then expressing the result in decimal form. CONTRIBUTION RATE- the remaining percentage aside from the variable cost available for other purposes;meeting fixed cost and providing profit. Break even point- revenue equals expenses