CHAPTER 14 RESTAURANT OPERATIONS,BUDGETING, and CONTROLLING COSTS •Front-of-the-House Operations •Back-of-the-House Operations •Control –Food –Beverage •Controllable Expenses –Labor –Guest Check Control •Productivity Analysis & Cost Control
FRONT-OF-THE-HOUSE• Front of the house refers to the hosts, bartenders, servers & bussers.• The visual appeal of the building & parking area are important to potential guests. – Guests receive a first impression known as curbside appeal—or, would you even stop or get out of the car?
FRONT-OF-THE-HOUSE• The first thing restaurant managers do is to forecast how many guests are expected and share that information with the kitchen.• A guest count is arrived at by taking the same day last year and factoring in things like today’s weather, day of the week, and so on.
FRONT-OF-THE-HOUSE • The elements of management are planning, organizing, communicating, decision- making, motivation & control. • Schedules and checklists help organize the restaurant. • A “lead sheet” lists staff on both shifts so you can easily see who is on duty.
BACK-OF-THE-HOUSE OPERTIONS:• The back of the house is sometimes called the “heart” of the operation.• The kitchen is the center of production.• Production sheets are created for each station, detailing all the tasks necessary to bring the food quantities up to par stock of prepared items & to complete the preparation on time.
BACK-OF-THE-HOUSE OPERTIONS:• The chef makes sure that all menu items are prepared in accordance with the standardized recipes and that the line is ready for service.• During service, either the chef or a manager may act as a caller—in an attempt to control the ordering and expediting of plates at the pass.
CONTROL• There is so much food and beverage in a restaurant that, unless management and owners exert tight control, losses will occur.• Restaurants can use programs like Chef Tec, which shows the actual food cost compared with the ideal food cost. This is known as food optimization.• The food cost percentage should be calculated at least monthly: – The formula for doing the food cost percentage is Cost/Sales × 100
LIQUOR CONTROL• Control of liquor is critical to the success of the restaurant.• Management decides on the selling price and mark-up for beer, wine, and liquor. – This will set the standard for the beverage cost percentage. – Normal pouring cost for beer is 24 to 25%. – Wine should have a pouring cost of 26 to 30%. – Liquor pouring costs should be 16 to 20% of sales. – Combined, the beverage pouring cost should be 23 to 25% of beverage sales.
CONTROLLABLE EXPENSES • Term used to describe the various expenses that can be changed in the short term: – Variable costs – Payroll – Operating expenses – Marketing – Heat – Light – Repairs – Maintenance
LABOR COSTS• Depending on the type of restaurant & the degree of service provided, labor costs may range from approximately 16% of sales in a quick-service restaurant to 24% in a casual operation & up to about 30% in an upscale restaurant.
LABOR COSTS• Projecting payroll costs requires the preparation of staffing schedules & establishing wage rates.• Staffing patterns may vary during different periods of the year, with changes occurring seasonally or when there are other sales variations.• Payroll and related costs fall into two categories: • Variable (percentage ratio to payroll). • Fixed (dollar amount per employee on the payroll).
LABOR COSTS• Variable items include those mandated by law: Social Security, unemployment insurance, Workers’ Compensation insurance & state disability insurance.• The fixed items usually mean employee benefits & include health insurance, union welfare insurance, life insurance & other employee benefits.
GUEST CHECK CONTROL• Without check control, a server can give food & beverages away or sell it & keep the income.• Guest checks can be altered & substitutions made if the checks are not numbered. – To avoid such temptations, most restaurants require that the server sign for checks as received & return those not used at the end of the shift.
GUEST CHECK CONTROL• For tight control, every guest check is audited, additions checked, and every check accounted for by number.• Some operators control restaurant income by having servers act as their own cashiers. – They bring their own banks of $50 in change; they do not operate from a cash register but out of their own pockets; they deposit their income in a night box at the bank.
PRODUCTIVITY ANALYSIS & COST CONTROL• Without knowing what each expense item should be as a ratio of gross sales, the manager is at a distinct disadvantage.• The simplest employee productivity measure is sales generated per employee per year: – Divide the number of full-time equivalent employees into the gross sales for the year.