Cost Control in the hotel's industries #9th Session by Dino Leonandri

1. Cost Control
9 th Session
By : Dino Leonandri

2. SALES MIX
Of all the pricing-related factors addressed thus far, sales mix
most heavily influences the menu pricing decision; just as
guest purchase decisions will influence total product costs

3. MANAGING DIRECT
ISSUED INVENTORIES
SYSTEM IN
HOSPITALITY
OPERATIONS
Objective of the system:
1. Efficient in cost and expenses
of the company/hotel.
2. Increase cashflow of the company/
hotel.
3. Easily to control of food cost,
beverage cost, and materials
supplies expenses.
4. Direct responsibility and more
control by department heads
concern.
5. Increase profitability for the
company/ hotel.

4. HOW TO MANAGES AND
WHAT THE TOOLS.
1. Set up SOP related of the system to be
implemented, forms and reporting and
control system.
2. Train and socialize the SOP to all
department heads. Pay attention to
Director of F&B, Executive Chef, Chief
Engineering and Executive House
Keeper.
3. Assign and set up the suppliers to be
work with us. Introduce and launching the
system.
4. Effective control by All Department
Heads, Director of Finance and Cost
Controller.

5. SOP = THE MOST
IMPORTANT THINGS.
THE KEY SUCCESS OF THE SYSTEMS:
1. Set up and implement of SOP: Managing
Direct Issued System Inventories.
2. Set up the system will be part of
KPI all department heads.
3. Make sure all department heads
especially the key area
responsible(Executive Chef, Executive
Housekeeper, etc) understand about the
system and know how to implement and
controls.
4. Set up rewards and incentives.
5. Review the results and take necessary
action.
6. Train them as targeted and continue
trainings.

6. SYSTEMS PROCESS AND
CONTROLLING.1.
IMPLEME
NT SOP
2.
ACTIO
N BY
ALL
DEPARTME
NTS
4.
REVIEWIN
GS
3.
CONTROLLI
NG
BY ALL
DEPARTME
NTS
5.
TAKE
NECESSA
RY
ACTION
6.
DIRECT
ISSUED
SYSTEM
IMPLEMENT MANAGING DIRECT
ISSUED
INVENTORIES

7. Purchase of foods,
beverages,
materials
supplies.
Records and booked
as Inventories of
foods, beverages,
materials supplies
INVENTORIES
SYSTEM.
Store requisition to
issued inventories
and records as
cost or expenses
Send and keeping
inventories in
general store.
Foods, beverages
cost or
expenses

8. Purchase of foods,
beverages,
materials
supplies.
Records and booked as
foods, beverages cost,
materials supplies
expenses
DIRECT ISSUED
SYSTEM.
Send directly to
department
concern.

9. DEALS AND COMMITMENTS WITH
SUPPLIERS.
HOTEL’S
GENERAL
STORE OR
INVENTORI
ES
HOTEL’
S
SUPPLIE
RS
Transfer
to
supplier
s.

10. WHAT ARE THE DEALS AND
COMMITMENTS WITH
SUPPLIERS.1. Suppliers will keep hotel’s goods
inventories: foods, beverage, materials
supplies.
2. Hotel’s guarantee will buy the
goods as commitment.
3. Hotel’s allow suppliers mark up the
prices as deals and commitment.
4. Suppliers will guarantee the
goods inventories available
any time and shipments.
5. Both hotel and suppliers agree that
number suppliers will be limited 6 - 10.

11. WHAT ARE THE DEALS AND
COMMITMENTS WITH
SUPPLIERS.6. Make sure that suppliers understand
with the hotels of inventory direct
issued system.
7. Suppliers will always make priority the
hotel purchase orders.
8. Both parties agrees will do market
survey by hotels twice a month, to make
price based on market price + mark up
deal.
9. Payment to suppliers will set up on
time schedule agree by both
parties.
10.Good and active communication
among hotel management and
suppliers.

12. WHO ARE THE CHAMPION
ON THESE SYSTEMS.
1. All department heads to be
champion in the systems set up.
2. Director of FB and Executive Chef
are the champion of food
inventories.
3. Director of FB and Bar or
Beverage Manager are the
champion of beverage
inventories.
4. RDM and Executive
Housekeeper for room supplies
inventories.
5. Chief Engineering for
engineering supplies
inventories.

13. ALWAYS TO BE
REMEMBER AND
NOTED.1. All procedures are remain
same except storeroom
requisition, purchase
requisition we don’t require
it.
2. Running hotel make it
assumption that maximum in
six months all inventories
item to be move to direct
issued.
3. Preopening hotel it will be set
up the system from the
beginning of hotel operation.
4. No items will record as
inventories, all of them to be
cost or expenses.

14. REPORTINGS SYSTEM AND
CONTROLLINGS.
1. Daily Flash Food Cost should be
update on daily basis.
2. Weekly Departments Expenses
Reports.
3. Direct Control By Department
Heads, No Delay If Cost or
Expenses Higher Than Budget.
Then Take Necessary Actions.
4. Always Make It Planning For
Weekly Basis As Forecasted
Occupancy and Other Activities.
5. Make Sure On Hand Inventories
Has Calculated.

15. ORDERING SYSTEM FROM EACH
DEPARTMENTS.
ROO
M
DEP
T.
F&B
DEPT.
ENG.
DEPT.
SPA.
DEPT.
OTHE
R.
DEPT
.
PO
.
Checked by:
COST
CONTROL.
Controlled and
Approved by:
GENERAL MANAGER.
Controlled and
Approved by:
DIRECTOR OF
FINANCE.
Reviewed &
Followed up
by:
PURCHASUN
G.
Ready to
provide and
send the
Goods by:
SUPPLIERS.
Order from all
departments

16. CASE STUDY
BANQUET.Grahamaha resort be reserved by
customers for a banquet function on 5
to 7 January 2019 for 1400 pax. The
breakdown of banquet booking are as
follows: 5 January 200 pax, 6 January
200 pax and 7 January 400 pax. The
price per pax is Rp. 200,000,
- In order for the banquet to run
smoothly, the kitchen wants preparations
to be carried out 3 days in advance and
all of foods are directly charged to the
food cost. Your tasks, please provide
calculations in the Daily Flash Food
Cost Report.

17. DAILY FLASH FOOD COST
REPORT.HOTEL: Grahamaha Resorts
Period of: Jan-19
DAILY FLASH FOOD COST
DESCRIPTION
01/01/19
Day 1
02/01/19
Day 2
03/01/19
Day 3
04/01/19
Day 4
05/01/19
Day 5
06/01/19
Day 6
07/01/19
Day 7 TOTAL M T D
Gross Food Consumption 58.727.279 62.120.007 77.912.735 41.425.207 43.291.208 41.798.408 41.425.207 366.700.051
Add:
Beverage to Food 1.503.000 1.103.000 1.203.000 1.407.000 1.100.950 1.463.000 1.303.800 9.083.750
Total Gross Food Consumption 60.230.279 63.223.007 79.115.735 42.832.207 44.392.158 43.261.408 42.729.007 375.783.801
Less Credit to Food:
Food to Bar 224.700 225.600 187.500 256.700 210.800 180.600 187.500 1.473.400
Employee Meals 5.625.000 5.375.000 5.250.000 5.500.000 5.300.000 5.275.000 5.550.000 37.875.000
Fruit Baskets 600.000 500.000 650.000 550.000 600.000 700.000 550.000 4.150.000
Complimentary 750.000 750.000 750.000 750.000 1.050.000 1.250.000 1.750.000 7.050.000
Officer Checks 1.850.000 1.650.000 1.957.000 1.880.000 1.950.000 1.890.000 1.970.000 13.147.000
Music & Entertainment 570.500 680.900 698.500 780.500 980.500 1.180.500 1.280.500 6.171.900
Sales & Promotion 1.180.000 1.230.000 1.650.000 1.950.000 1.998.000 1.650.000 2.165.000 11.823.000
Total Credit to Food 10.800.200 10.411.500 11.143.000 11.667.200 12.089.300 12.126.100 13.453.000 81.690.300
Total Cost of Food 49.430.079 52.811.507 67.972.735 31.165.007 32.302.858 31.135.308 29.276.007 294.093.501
Total Food Revenue 78.900.650 86.790.715 94.680.780 96.337.693 180.677.229 177.205.600 216.337.693 930.930.360
% of Cost of Food 62,65% 60,85% 71,79% 32,35% 17,88% 17,57% 13,53% 31,59%

18. B A L A N C E S H E E T
H O T E L : A B C D F G
A s p e r D e c e m b e r 2 0 1 9 - 2 0 1 8 - 2 0 1 7 .
I N T H O U S A N D R U P I A H ( 0 0 0 )
A F T E R B E F O R E B E F O R E
A S S E T . 2 0 1 9 2 0 1 8 2 0 1 7
C u r r e n t A s s e t :
C a s h & H o u s e B a n k s 2.143.854 2.168.225 2.160.005
B a n k s 39.672.045 26.932.088 25.732.002
T o t a l C a s h & B a n k 41.815.899 29.100.313 27.892.007
A c c o u n t R e c e i v a b l e 10.052.750 11.056.109 13.011.042
I n v e n t o r i e s :
F o o d - 3.887.889 3.067.046
B e v e r a g e - 3.980.755 3.800.034
M a t e r i a l s S u p p l i e s - 4.989.603 4.590.327
T o t a l I n v e n t o r i e s - 12.858.247 11.457.407
P r e p a i d e x p e n s e s 381.542 211.098 250.677
T o t a l C u r r e n t A s s e t 52.250.191 53.225.767 52.611.133
T O T A L A S S E T . 52.250.191 53.225.767 52.611.133
L I A B I L I T I E S & C A P I T A L .
C u r r e n t L iabities:
T r a d e C r e d i t o r s 7.180.076 8.139.997 8.090.225
A c c r u e d Liabilities:
E lectricity 820.690 928.381 851.335
W a t e r 391.723 388.583 358.076
G a s 239.877 260.818 230.874
T o t a l A c c r u e d Liabilities 1.452.290 1.577.782 1.440.285
C a p i t a l :
O w n e r s h i p - - -
R e t a i n e d E a r n i n g 43.617.825 43.507.988 43.080.623
T o t a l C a p i t a l 43.617.825 43.507.988 43.080.623
L I A B I L I T I E S & C A P I T A L . 52.250.191 53.225.767 52.611.133

19. CONCLUSIO
N.In order to implementation of direct
issued inventories system to be
successfully implemented in hotel or
resort operations, the most important
things to do are as follows:
Implementation of the properly
control function.
Set up SOP and disseminate it to all
parties concerned.
Continuous and planned training of
the system.
Mutually beneficial cooperation
with suppliers.

20. RECOMMENDATIO
NS.In purpose of efficiency, increasing
cash flow and continuous
supervision of food, beverage and
materials supplies in hotel or resort
operations, and to increase profit
margins at restaurants, with direct
control of food costs, it is
recommended to apply “DIRECT
ISSUED INVENTORIES SYSTEM
IN HOSPITALITY OPERATIONS”.