Here are the steps to solve these menu planning and cost control problems: 1) Given the following information, calculate cost percentages: a) Cost $200, Sales $500 = Cost/Sales x 100 = 40.0% b) Cost $150, Sales $500 = 30.0% c) Cost $178.50, Sales $700 = 25.5% d) Cost $216.80, Sales $800 = 27.1% 2) Calculate cost percentages: a) 28.0% of $500 is 0.28 x $500 = $140 b) 34.5% of $2,400 is 0.345 x $2,400 =

1. DMC2523 MENU PLANNING
AND COST CONTROL
LAURA LAW - PERAK COLLEGE

2. 1. DEFINITION OF COST
2. INDUSTRY WIDE VARIATIONS IN COST
3. SALES CONCEPT
LAURA LAW - PERAK COLLEGE OFTECHNOLOGY
Handout Copy of Text Book

3. 3
•Accountants define a cost as a reduction in the value of an
asset for the purpose of securing benefit or gains.
•In F&B Business cost is defined as the expense to a hotel or
restaurant of goods or service when the goods are consumed or
the service rendered.
•Food and beverage are “Consumed” when they are used,
wastefully or otherwise, and are no longer available for the
purpose which they were acquired.(Units: weight, volume or
total value)
•The cost of labor is incurred when people are on duty, whether
or not they are working and whether they are paid at the end
of the shift or at some later date. (Hourly or weekly or
monthly)

4. 4
•Fixed Cost (FC) and Variable Cost (VC) are used to
distinguished between those cost that have no direct
relationship to business and those that do.
•Fixed Cost are those that are normally unaffected by changes
in sales volume. Such as = real estate taxes, insurance
premiums, depreciation, repairs and maintenance, rent or
occupancy cost, most utility cost, advertisement, professional
services.
The term fixed should never taken to mean static or unchanging
but merely to indicate that any changes that may occur in such
cost are related only indirectly or distantly to changes in
business volume.

5. 5
•Variable Cost are those that are clearly related to business
volume. As business volume increase, variable cost will increase
and vice versa.
•Food & Beverage cost are considered directly variable cost.
Direct Variable Cost are those that are directly linked to
volume of business increase and decrease of volume
correspondingly.
•Payroll Cost includes salaries and wages and employee
benefits and often referred as Labor Cost.
Because labor cost consist of fixed and variable element it is
known as semi-variable cost, meaning a portion should change
in short-term and the other portion remains unchanged.

6. 6
CONTROLLABLE AND NON-CONTROLLABLE COST
•Controllable cost are those that can be change in the
short term such as Direct Variable Cost, Wages,
Advertising & Promotion, Utilities, Repairs &
Maintenance and Administration and General
Expenses.
•Non-Controllable cost are those that cannot normally be
changed in short-term such as fixed cost like Rent, Interest
on a mortgage, Real estate taxes, License fee and
Depreciation.

7. 7
•Unit Cost may be food & beverage portion as in the cost of
one item or hourly unit of work. In F&B business unit cost
are commonly in average unit cost rather then actual
unit cost.
•Total Cost are the total of food & beverage portions served
in one period such as a week or a month or total cost of
labor for one period.

8. 8
•Prime Cost is a term used in the Hotel Industry refer to the cost
of materials and labor. (Food, Beverage and Payroll)
•Historical and Planned Costs
•Historical cost are all cost are historical - that is, that they can
be found in business records, book of account, financial
statements, invoices, employees’ time card and other similar
records. It is used for establishing unit cost, determining menu
prices and comparing present with past labor cost.
•It will be used for planning and determining the future to develop
planned costs - projections of what cost will be or should be for
a future period. It is often called as Budgeting.

9. 9
Cost percentage vary considerably from one foodservice operation to
other. This is due to many possible reasons.
Basically there are two types of foodservice operation.
• Those that operate at low profit margin and depends on relatively
high business volume.
• Those that operate at relatively high profit margin thus does not
require high business volume.

10. 10
Sales Defined
In general, the term sales is defined as revenue resulting
from the exchange for a products (Food & Beverage) and
service (Waiter) for value ($$).
The sales concept in F&B operation usually can be express
as: monetary and non-monetary.

11. 11
•Total Sales is a term that refers to the total volume of
expressed in dollar term for instant any given period , such as a
week, a month or a year.
By Category. Total dollar volume of sales by category are
total food sales or total beverage sales. Or total steak sales or
seafood sales.
By Server. This is total dollar volume of sales for which a
given server has been responsible in a given period. This is to
help the management to make judgment on employees
performance.
By Seat. Usually for a year period. Total Dollar sales divided
by the number of seats in the restaurant.

12. 12
•Sales Price refers to the amount charged each customer
purchasing one unit of a particular item. It can be a single meal or
entire meal.
•Average Sale in business is determine by adding individual sales
to determine a total and then dividing that total by the number of
individual sales. Two types of commonly calculated averages are:
average sale per customer and average sale per server.
Per Customer is the result of dividing total dollar sales by the
number of sales or customer.
Per Server is total dollar sales for an individual server divided
by number of customer served by that individual.

13.  This average is determined as follows:
Average check = Total dollar sales ÷ Total number of covers
Total sales of $3,902.30 and 140 covers. Thus,
Average sale = $3,902.30 ÷ 140
= $27.87
 Yasser, one of the servers, had 30 customers and total dollar
sale of $565 on the Saturday night of February 13, average sale
per server for Jim would be calculated as follows:
Average sale = Total sales for Yasser ÷ No. of customers for Yasser
= $565 ÷ 30
= $18.83

14. 14
•Total Number Sold refers to the total number of menu item sold
in a given time period.
•Cover is the term used to describe one diner regardless of the
quantity of good the person consumes.
•Total Cover refer to the total number of customer served in a
given period. Help to make judgment & comparisons
•Average Covers is determined y dividing the total number of
cover for a given period by some other number such as hour of
operation, day of operation or numbers of server.
1.Cover per Hour = Total Covers / No. of Hours of Op.
2.Covers per Day = Total Covers / No. of Days of Op.
3.Covers per Server = Total Covers / No. of Servers

15. 15
Seat Turnover or simply turnover refer to the number of seats
occupied during a given period (or number of cover) divided by the
number of seats available.
140 customers served during that one Saturday meal.
The restaurant has 75 seats, so seat turnover would be calculated
as follows:
Seat turnover = Number of customers served ÷ Number of seats
= 140 ÷ 75
= 1.87 turns

16. Sales Mix is a term used to describe the relative quantity sold
of any menu item compared to other items in the same
category.
Sales Mix For the Sugar & Spice Restaurant
August 20xx
Menu Item Portion Sales Sales Mix
Strip steak 12.5% 1000
Ginger shrimp 15.0% 1200
Lamb chop 22.5% 1800
Vege buritto 30.0% 2400
Chicken chop 20.0% 1600
Totals 100% 8,000

17. 17
Foodservice establishment calculate cost in dollars and compare
those cost to sales in dollars. This enable them to discuss the
relationship between cost and sales or the cost per dollar of sale.
Cost ÷ Sales = Cost per dollar of sale
decimal answer, and any decimal can be converted to a percentage
if one multiplies it by 100 and adds a percent
sign (%).
Cost ÷ Sales x 100 = Cost%
$ 312,090 ÷ $ 891,687 = .35 and .35 x 100 = 35.0 %
Food cost ÷ Food sales x 100 =Food cost%
Beverage cost ÷ Beverage sales x 100 = Beverage cost%
Labor cost ÷ Total sales x 100 = Labor cost%

18. 18
The formula also can be use to determine the Sales price if the
cost% is known.
Cost ÷ cost% = Sales(or Sales Price)
If the given cost percentage were 30.0 percent and the food cost
for the item were $3.60, the appropriate sales price would be
$12.00, illustrated here
30.0 % ÷ 100 = 0.3
$ 3.60 ÷ 0.3 = $12.00

19. 19
The formula also can be use to determine the cost if the spending
power and cost% is known.
Suppose this banquet manager is dealing with a group willing to
spend $15.00 per person for a banquet, and the same given 30.0
percent cost percent is to apply. Calculation of the maximum
permissible cost per person is facilitated by rearranging the
formula once again:
Sales x Cost % ( expressed as a decimal ) = Cost
Sales X Cost % = Cost
So the cost per person can be calculated as $4.50:
30.0 % ÷ 100 = 0.3
$ 15.00 X 0.3 = $ 4.50

21. 21
1. Given the following information, calculate cost percentages. Round
your answers to the nearest tenth of a percent.
a. Cost, $200.00; Sales, $500.00
b. Cost, $150.00; Sales, $500.00
c. Cost, $178.50; Sales, $700.00
d. Cost, $216.80; Sales, $800.00
2. Calculate cost, given the following figures for cost percent and sales:
a. Cost percent, 28.0%; Sales, $500.00
b. Cost percent, 34.5%; Sales, $2,400.00
c. Cost percent, 24.8%; Sales, $225.00
d. Cost percent, 31.6%; Sales, $1,065.00
3. Calculate sales, given the following figures for cost percent and cost:
a. Cost percent, 30.0%; Cost, $90.00
b. Cost percent, 25.0%; Cost, $500.00
c. Cost percent, 33.3%; Cost, $1,000.00
d. Cost percent, 27.3%; Cost, $1,300.40

22. 22
4. Sales records for a luncheon in the Zalika’s Restaurant for a recent week
were: Given this information, calculate the sales mix.
Item A, 196
Item B, 72
Item C, 142
Item D, 24
Item E, 112
Item F, 224
Item G, 162
5. Calculate the average check from the following data:
a. Sales, $1,000.00; Number of customers, 125
b. Sales, $1,300.00; Number of customers, 158
c. Sales, $8,720.53; Number of customers, 976

23. 23
6. The following table indicates the number of covers served and the gross
sales per server for one three - hour period in Asyikin’s Restaurant.
Determine:
(a) the average number of covers served per hour per server
(b) the average sale per server for the three - hour period.
Server Covers Served Gross Sales Per Server
Fadhli 71
$237.40
Azuan 66
$263.95
Nadia 58
$188.25
7. Use the information about Asyikin’s Restaurant identified in Question 6 to
complete the following:
a. Calculate the average check.
b. Calculate the turnover for the three - hour period if there are 65 seats
in the restaurant.