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The control process

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  • 1. The Control Process
    Slide 1 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 2. Recap of the previous session
    What is average sale per customer?
    What is Directly variable cost?
    Describe non-controllable cost.
    Define sales mix.
    Explain Total sales per seat.
    Explain the features of labor cost.
    What is Basic food cost and Food cost %age.
    Slide 2 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 3. Learning objectives KCM
    Define control and discuss the significance in food and beverage management.
    Enlist the responsibility for control in the food and beverage operation.
    Give examples of control techniques used in F & B service operation.
    Prepare an operating budget.
    Imbibe the significance of the cost benefit ratio.
    Slide 3 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 4. Scope
    Introduction to Control.
    Cost Control.
    Control Techniques.
    Budgets.
    Preparing an operating budget.
    The Cost/Benefit ratio.
    Examples Control Measures.
    Slide 4 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 5. Introduction to Control
    Control is a process used by managers to direct, regulate, and restrain the actions of people so that the established goals of an enterprise can be achieved.
    The first step is to establish the objectives and goals.
    Slide 5 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 6. Examples of Goals
    Financial success.
    Operating the best restaurant in the city.
    Providing insurance for health to all employees.
    Implementation of safety policy.
    Reduction of overtime.
    Food cost control.
    Slide 6 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 7. Cost Control
    Cost control is defined as the process used by managers to regulate costs and guard against excessive costs.
    The process is chain oriented from Purchasing, Receiving, Storing, Issuing, preparing for sale and includes Training and scheduling.
    The process may vary from establishment to establishment.
    The goal is to eliminate excessive costs.
    Slide 7 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 8. Causes of excessive cost
    Two principal causes of excessive costs are inefficiency and waste:
    The following are the main places are where excessive costs are found:
    Material
    Labor
    Overhead expenses.
    Slide 8 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 9. Steps taken while administering sales control
    Ensuring that the serving staff know the proper prices of food.
    Ensuring that the staff documents the orders and maintains KOT’s in the proper manner.
    Ensure that service staff KOT’s and Kitchen KOT’s match.
    Keep a tab food quantity leaving the kitchen for service.
    Slide 9 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 10. Control Techniques
    Establishing standards.
    Establishing Procedures.
    Training.
    Setting examples.
    Observation, correction employee actions.
    Record keeping.
    Disciplining employees.
    Preparing and following budgets.
    Slide 10 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 11. Control Process
    The Control System is a term used to describe that collection of interdependent control techniques and procedures in use in a given food and beverage operation.
    Most control systems are based on Standard Operating Procedures.
    SOP’s used for financial operation are more stringent than the ones used for the general operation.
    Slide 11 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 12. Establishing standards
    Standards are defined as rules or measures established for making comparisons and judgments.
    The standards are usually set by the management which are useful in judging the extent to which results meet the expectations.
    Quality Standards.
    Quantity standards.
    Cost standards.
    Slide 12 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 13. Quality Standards
    Quality standards are used to define the degree of excellence of raw materials, finished products and , by extension, work.
    USDA standard
    Grading in food products 1 2 3 or A B C.
    Grading in case of alcoholic beverages with age.
    Grading done in employees against levels of skill.
    Slide 13 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 14. Quantity standards
    Quantity standards are defined as measures of weight, count, or volume used to make comparisons and judgments.
    Quantity Standard in food and beverage are for:
    Ingredients.
    Recipe.
    Portion size.
    Slide 14 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 15. Cost standard
    Standard Cost is defined as the cost of goods or services identified, approved, justified and accepted by the management.
    These costs are both idealistic and real value.
    The basic method of calculating standard costs in food and beverage services is Recipe calculation.
    Used for measuring effectiveness of the operation.
    Slide 15 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 16. Establishing procedures
    Procedures are methods employed to prepare products or perform jobs.
    Procedures are also standardized.
    Purchases.
    Receiving.
    Storage.
    Production.
    Service
    Slide 16 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 17. Training
    Training is a process whereby managers teach employees to how is work done given the standards and procedures established.
    Training is in-depth, structured, difficult, frustrating, time consuming and lastly cost intensive.
    Training produces tangible goods and vice versa bad or untrained staff are detrimental to the system.
    Slide 17 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 18. Setting Examples
    Example setting: Is a process of establishing standards and procedures.
    The procedures are a set of instructions presented in a sequential manner.
    Standards a benchmark for tasks either for every activity to be carried out in the operation.
    Procedures can be altered but standards remain uniform for an operation.
    Slide 18 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 19. Observing and correcting employees
    The result for not adhering to standards are evident from:
    Rise in Food and Beverage cost.
    Rise in consumption values.
    Inventory accumulation.
    Pilferage habit form.
    Setting a bad example.
    Slide 19 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 20. Records and reporting
    Usually are observation details and citations by the internal policy management and audit team.
    External audits for systems.
    Analysis of income statements.
    Careful analysis of requisitions.
    Careful analysis of inventories.
    Slide 20 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 21. Disciplining Employees
    Discipline is defined as an action taken to admonish, chastise or reprimand an employee for work performance or personal behavior incompatible with established standards.
    Discipline arrives when corrective action fails or if there is serious diversion from standards laid out.
    Used as a control technique.
    Slide 21 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 22. Budgets
    A Budget is defined as a financial plan and is described as a realistic expression of management goals and the objectives are defined in financial terms.
    Both Income and Expenses are budgeted.
    Cash flow budgets.
    Sales Budgets.
    Capital budget.
    Advertizing budgets.
    Slide 22 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 23. Budget in Food and Beverage
    Operating budget: Is a forecast of sales activity and an estimate of costs that will be incurred in the process of generating sales.
    A financial plan for the said period.
    Begins with the historical information or financial records.
    In case or organizational restructure and non availability of data the previous experience of managers and alternative sources
    Slide 23 / 32
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Wednesday, March 02, 2011
  • 24. Types of Budgets
    Static Budget: The one that is prepared assuming only one level of business activity for the period. It contains anticipated values about inputs and outputs that are conceived before the period in question begins.
    Flexible Budgets: Based on the actual costs for # of units sold in the current year and not on higher or lower estimates.
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Slide 24 / 32
    Wednesday, March 02, 2011
  • 25. BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Slide 25 / 32
    Wednesday, March 02, 2011
  • 26. Preparing an operating budget
    Segregation of fixed and variable costs:
    As salaries and wages are considered semi-variable costs they must be partitioned into their fixed and variable components.
    60% of Rs. 1,85,000.00 which is Rs. 111,000.00 to be taken as fixed component of salaries & wages.
    40 % of Rs. 1,85,000.00 which is Rs. 74,000.00 to be taken a variable component of salaries and wages.
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Slide 26 / 32
    Wednesday, March 02, 2011
  • 27. Preparing an operating budget
    4. 60 % of employee benefits of Rs. 46,250.00 which is Rs. 27,750.00 are taken as the fixed component.
    5. 40 % of employee benefits of Rs. 46,250.00 which is Rs. 18,500.00.
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Slide 27 / 32
    Wednesday, March 02, 2011
  • 28.
  • 29. The Cost/Benefit ratio
    The concept of the Cost/Benefit ratio is the relationship between costs incurred in instituting and maintaining a single control or control system and the benefits or savings derived by doing so.
    No control measure can be instituted without a cost.
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Slide 29 / 32
    Wednesday, March 02, 2011
  • 30. Examples Control Measures
    Lower Payback control measures:
    Relocation of cashier’s desk.
    Locking of front and back doors.
    Installing a modern time clock.
    Higher payback control measures
    Installing new locking system.
    Hiring new Food and Beverage controller.
    Incorporation of radical stores procedures.
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Slide 30 / 32
    Wednesday, March 02, 2011
  • 31. Considerations before implementing a control systems
    Quantifiable and non Quantifiable effects.
    Time required.
    Immediate and long term benefits.
    Accuracy.
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Slide 31 / 32
    Wednesday, March 02, 2011
  • 32. Questions

    Comments
    BAC-4131 Food and Beverage Management Cost Control: The Control Process
    Slide 32 / 32
    Wednesday, March 02, 2011