oh 1-1 agenda welcome ground rules warm up activity syllabus nraef managefirst what is cost control?...
Post on 20-Dec-2015
213 views
TRANSCRIPT
OH 1-1
Agenda
Welcome
Ground Rules
Warm Up Activity
Syllabus
NRAEF ManageFirst
What is Cost Control?
Next week
OH 1-2
Ground Rules
Be on time – start on time All cell phones, pagers and IPods should be
turned off during class No Internet use during class, unless part of
classroom activity Free to take a break if needed Appreciate other points of view Respect others’ desire to learn End on time
OH 1-3
Warm Up Activity
Break into groups of 2-3 students
Interview each other; as you will introduce each other to the class
Information you may wish to share: What is your degree path?
Hospitality Experience
Family, hobbies
OH 1-4
NRAEF ManageFirst Program
Competency GuideIS REQUIRED FOR THIS COURSE
How can this book help me?
Part of a certificate program
Industry-driven
Resume builder
OH 1-5
Who is the NRAEF?Educational arm of the National Restaurant Association
Bridge between academia and industry
Work with over 60,000 restaurant, hospitality and foodservice members companies
NRAEF ManageFirst Program
Competency GuideIS REQUIRED FOR THIS COURSE
OH 1-6
Management-focused
Application-based, not just theory
Professional Profiles give you a “sneak peek” into the field
“Real world” activities help build job skills
Competency Guide Content
NRAEF ManageFirst Program
Competency GuideIS REQUIRED FOR THIS COURSE
OH 1-7
Validated by over 200 restaurant, foodservice and hospitality organizations
Resume builder
Tangible accomplishment
Can give you a hiring advantage over peers who didn’t use ManageFirst
How will this certificate help me?
NRAEF ManageFirst Program
Competency GuideIS REQUIRED FOR THIS COURSE
OH 1-8
Undergraduate students are eligible to apply for this scholarship who have earned at least one ManageFirst certificate (not including ServSafe® Food Safety and ServSafe Alcohol®) and are studying culinary arts and/or foodservice management.Award amount: $2,000Application and Instructions available at:http://www.nraef.org/scholarships/managefirst/
Academic Scholarship for NRAEF ManageFirst Program® Students
OH 1-9
MCC & ICA
NRAEF ManageFirst Core Credential TopicsCHRM 2475 Leadership: Hospitality & Restaurant ManagementCHRM 2460 Cost Management: Controlling Foodservice CostsCHRM 2470 Supervision: Human Resources Management & SupervisionCHRM 1020 Sanitation: ServSafe Food Safety
NRAEF ManageFirst Foundation TopicsCHRM 2480 Purchasing: Inventory and PurchasingCHRM 1140 Food Production: Food ProductionCHRM 2350 Nutrition: Nutition
OH 1-13
Chapter Learning Objectives
Describe the relationship between standards and controlling costs.
Identify the types of costs incurred by a restaurant or foodservice organization.
Classify foodservice costs as controllable or noncontrollable.
Describe and give examples of controllable and noncontrollable costs.
OH 1-14
Chapter Learning Objectives continued
Classify foodservice costs as variable, semivariable, or fixed.
Describe and give examples of variable, semivariable, and fixed costs.
Explain the basic foodservice cost control process.
OH 1-15
Characteristics of Controls
Contribute to profit making
Start with the menu
Affect all areas of the operation
Are formalized through a restaurant’s policies and procedures
OH 1-16
Cost Standards
Are used to compare actual results to planned results
Are established by management
Standards may be designed to Ensure a profit
Stay within the budget
Achieve planned quality levels
OH 1-18
Types of Costs
Controllable Costs Food Labor Cleaning supplies
Noncontrollable Costs Insurance
Mortgage payments
Cost of licenses
OH 1-19
Types of Costs continued
Fixed Costs Do not vary with sales volume Do not change from one accounting period to the
next Variable Costs
Increases and decreases are directly related to sales volume
Semivariable Costs Increase or decrease with changes in sales volume,
but not in direct proportion Contain both fixed and variable components
OH 1-20
Variable Costs
Directly affect profitability
Can be controlled by management
Are compared to an established standard
OH 1-21
Prime Costs
Include those expenses classified as Food
Labor
Are directly controlled by management
Make up the majority of a restaurant’s total costs
Are directly related to profitability
OH 1-23
The Cost Control Process Steps
Step 1 – Collect sales and cost data.
Step 2 – Monitor and analyze sales and costs.
Step 3 – Take corrective action as appropriate.
OH 1-24
The Cost Control Process
Step 1 – Collect sales and cost data.
Yearly and monthly data are used for budgets and income statements.
Weekly and monthly data are used for purchasing and scheduling.
Meal period data are used for production planning.
OH 1-25
The Cost Control Process continued
Step 2 – Monitor and analyze sales and costs.
Evaluate The line item’s name
Budgeted cost
Actual cost
Cost difference
Percentage difference
OH 1-26
The Cost Control Process continued
Step 2 – Monitor and analyze sales and costs.
Compare actual sales and costs to Budget (line item review)
Operational standards
Historical information
Identify variances
OH 1-27
Computation of Percent Difference
Actual cost of $48,000
Budgeted cost of $45,000
Actual cost – Budgeted cost = Cost difference
$48,000 – $45,000 = $3,000
OH 1-28
Computation of Percent Difference continued
Cost difference ÷
Cost budgeted = Percent
difference
$3,000 ÷ $45,000 = 0.067, or 6.7%
OH 1-29
Cost Variations
Can be preventable
May be unpreventable
Take corrective action on preventable cost variations
OH 1-30
The Cost Control Process continued
Step 3 – Take corrective action as appropriate.
Variations from anticipated results may be Large and significant
Small, but still significant
Small and insignificant
OH 1-31
Corrective Actions for Cost Control
To reduce food cost
Reduce portion size.
Replace the item with a lower cost alternative.
Feature menu items with higher profit margins (lower costs).
Raise menu prices.
OH 1-32
Corrective Actions for Cost Control continued
To reduce food waste
Monitor portion control.
Monitor food storage and rotation.
Monitor food purchasing (buy appropriate amounts).
Minimize production errors.
OH 1-33
Corrective Actions for Cost Control continued
To reduce labor cost
Reduce the number of employees on the schedule.
Ask employees to end their shift early if they are not needed.
Cross-train staff.
OH 1-34
Corrective Actions for Cost Control continued
Do you think food or labor costs are higher in this restaurant?
Why?
OH 1-35
How Would You Answer the Following Questions?
1. Who is responsible for the size of a restaurant’s fixed expense?
2. Which of the following vary with sales volume?A. Fixed expenseB. Semivariable expenseC. Variable expenseD. Both B and C
3. Who is responsible for monitoring controllable costs?
4. What two components make up “prime cost?”
OH 1-36
Key Term Review
Control
Controllable cost
Corrective action
Cost of food sold
Fixed cost
Gross profit
Income statement
Labor expense
Line item review
Loss
OH 1-37
Key Term Review continued
Noncontrollable cost
Prime cost
Profit
Sales
Semivariable cost
Standard
Total expense
Variable cost
OH 1-38
Chapter Learning Objectives—What Did You Learn?
Describe the relationship between standards and controlling costs.
Identify the types of costs incurred by a restaurant or foodservice organization.
Classify foodservice costs as controllable or noncontrollable.
Describe and give examples of controllable and noncontrollable costs.