Restaurant Business Cost Control

Goal of Restaurant Business Owner

• The main aim of costing in a food and beverage establishment is to satisfy both customers’ requirements and financial requirements.
• A suitable food and beverage control system must be developed to avoid excessive costs without sacrificing quality, quantity, and competitive price.

Cost Control

• Cost control is a process used by managers to regulate costs and guard against excessive costs.
• It involves every step in the chain of purchasing, receiving, storing, issuing, and preparing food and beverage for sale, as well as training and scheduling personnel.
• The main objective of cost control is to eliminate excessive costs for food and beverage and labor to accept some governing power over costs in all areas to ensure profitability.

Principles of Cost Control

• Organizing and implementing a purchasing, receiving, and storing system.
• Minimizing loss through efficient production.
• Standardizing production methods to satisfy the majority of guests and secure profit levels.

Objective of F&B Control

Analysis of Income and Expenditure

• Analysis of income and expenditure is concerned with food and beverage operations.
• Revenue analysis is usually done by each selling outlet, including aspects such as volume of food and beverage sales, sales mix, average spending power of customers, and number of customers served.
• Analysis of cost includes departmental food and beverage costs, portion costs, and labor costs.
• Performance of each outlet can be expressed in terms of gross profit, net margin, and net profit.

Establishment and Maintenance of Standards

• Establishment of a set of standards is the basis for the operation of any food and beverage outlet.
• Management sets SOPs (Standard Operational Procedures) available to all staff for reference.
• Regular checks on standards achieved by observation, analysis, and customer comments aid in maintaining standards.

Pricing

• Pricing determines food menu and beverage list prices based on accurate food and beverage costs and other main establishment costs.
• Pricing considers average customer spending power, competitor prices, and market acceptance.

Prevention of Waste

• Preventing waste is crucial to achieving performance standards for an establishment.
• Targets are set for revenue, cost levels, and profit margins to prevent wastage of materials.
• Efficient method of control is necessary to prevent waste caused by poor preparation, over-production, and failure to use standard recipes.

Prevention of Fraud

• Prevention of fraud by customers and staff is necessary through a control system.
• Typical areas of fraud by customers include walking out without paying, claiming food or drink is unpalatable, disputing the number of drinks served, and making payments by stolen cheques or credit cards.
• Typical areas of fraud by staff include overcharging or undercharging for items served and stealing food, drink, or cash.

Management Information

• A system of control provides accurate, up-to-date information for the preparation of periodical reports for management.