A2 PPT2 2023 DETAIL GUIDELINES.ppt

UWL ASSIGNMENT 2 - SFBM
INDIVIDUAL PROJECT
PPT PROJECT
MAXIMUM 11 SLIDES OR AT THE MOST 12/13 SLIDES WITH REF
BEYOND THE SIDE AREA, BELOW, YOU HAVE TO DESCRIBE IN THE NOTES
AREAS OF THE PPT WHAT YOU MIGHT HAVE HAD SPOKEN IN PRESENTATION…
CITATIONS ARE MANDATORY
MINIMUM 12 - 15 REFERENCES
PURELY ANALYTICAL WORK

You can also consider non-statistical recommendations to reflect
the recent developments within the industry (dark kitchens,
COVID, working from home): online delivery service, change of
concepts etc…
You must include relevant citations within your presentation
slides. In the last provide a full reference list in UWL Harvard
format. It is expected at least 15 sources including academic
books, journal articles and professional press.

THE CASE ( COVERED INSIDE LATER IN SEVERAL SLIDES)
A 150 COVER RUNNING RESTAURANT, IN BUSY AREA, SURROUNDED BY PUBS,
PIZZERIA, CAFE, COFFEE SHOPS BAR ETC
A SUCCESSFUL, PROFESSIONAL GROUP OWNS IT, THEY ARE PROPERTY
INVESTORS
THE GROUP CARES ABOUT THE SUCCESS OF THE RESTAURANT, ITS STAFF
AND REVENUE AND PROFIT
THERE RESTAURANT RMT, HAS A RESAURANT MANAGEMENT TEAM
THERE ARE 15 WORKERS / STAFF PRESENT AT ANY MOMENT OF TIME
TIME OF OPERATION 9.00 AM IN THE MORNING TILL 10.00 PM AT NIGHT,
BREAKFAST LUNCH, DINNER
ONE YEAR’S FINANCIAL DATA, OPERATIONAL DATA HAS BEEN PROVIDED
APPARENTLY WHAT APPEARS EXCITING ABOUT THE RESTAURANT IS
CONFUSING OFTEN DISCOURAGING IN THE FIGURES
YOU ARE THE CONSULTANT RESOLVING THE PROBLEMS…

IMPORTANT TO MENTION HERE, THE
OWNERS HAVE ALREADY TAKEN A
HUGE LOAN OF INR 450,000,000 FROM
BANK TO PAY OFF THE LOSSES…

As part of the management team, you are required to
operate the restaurant on behalf of the owners and
suggest ways to turn the business from operating at
a loss to a position of profit.
Your mission includes the following:
1. Critically evaluate the performance of the restaurant. You must present to
the owners the results of the first-year trading:
Comment/ SUGGEST CHANGES on the following
Average spend per person
Wages
Food sales
Beverage sales
Marketing
ALL DATA IN GRAPHICAL FORMAT IN APPENDICES
Menu choices

2. 15% sales increase has been projected for the
current financial year. Assuming that the operating
expenses and fixed costs haven’t changed from last
year, evaluate the profitability of the restaurant for
the current year.
3. Based on current market trends (market research) and
relevant academic theories advise the owners about your
strategies to make the restaurant profitable in the future (To
further justify your strategies, consider key performance
indicators (KPIs) within menu management, marketing, and
operating expenses). You can also consider non-statistical
recommendations to reflect the recent developments within
the industry (dark kitchens, COVID, working from home):
online delivery service, change of concepts etc…

FIRST SLIDE – NAME OF MEMBER / STUDENT
STUDENT REGISTRATION NUMBER: 99999999999
STRATEGIC FOOD AND BEVERAGE MANAGEMENT
YEAR: 2020 APRIL
MODULE CODE
CAMPUS :
MODULE CO-ORDINATOR: XXXXXXXXXX
MODULE LEADER IN LONDON : BEN CHRISTOPHERSON
TITLE: EVALUATION OF RMT’S RESTAURANT MANAGEMENT AND PERFORMANCE
ASSIGNMENT NUMBER : A2
SLIDE 1

GIVE A BRIEF OF THE CASE
STUDY, PROJECT AND ALSO
MENTION WHAT YOU NEED TO
DO

Food sales analysis
GRAPH AND DIAGRAMS
.
PROVIDE ELABORATE EXPLANATION IN
NOTES AREA BELOW PPT
SLIDE 3
.

MENU CHOICES
GRAPH AND DIAGRAMS
PRESENT MENU , WHAT ARE THE
CHICES, COUNTRYWISE NUMBER OF
DISHES,COUNTRY WISE MENU PRICE
AVERAGES
SUGGEST COMBOS
SUGGEST OTAKEAWAY MENUS
SUGGEST DESSERTS, HORSDOEUVRE
SLIDE 4

Beverage sales analysis
GRAPH AND DIAGRAMS
.
SLIDE 4

WAGES EXPENSE ANALYSIS GRAPH AND DIAGRAMS
IN THIS AREA WORK OUT A REAL TIME
WAGES / SALARY CALCULATION IN A
EXCEL CHART TAKING MARKET
REALITIES INTO CONCERN, PROVE WHAT
IS WRONG WITH THE GIVEN WAGES
FIGURE.

AVERAGE PER COVER ANALYSIS GRAPH AND DIAGRAMS
EXPLAIN YOUR OBSERVATION ON APC
& ITS IMPACTS
MENTION HOW IT WILL IMPACT UPON
SUCCESS OF THE RESTAURANT
BUSINESS
MENTION INTERNATIONAL STANDARDS
FOLLOWED FOR FOOD COST
PERCENTAGES.
EXPLAIN YOUR OBSERVATION ON
GIVEN APC. DISCUSS WAYS TO
CONTROL IT ACCORDING TO THE
REQUIREMENT OF THE MANAGEMEN
GIVE AT LEAST 5 IDEAS
COMPARE MENU DISH PRICING AND
APC.

EXPLAIN YOUR OBSERVATION ON
MARKTING EXPENSES AND GOOD
SALES
MARKETING PERFORMANCE
ANALYSIS GRAPH AND DIAGRAMS
SUGGEST MARKETING IDEAS TO
EXPAND COVER SALES, IMPROVE
SEAT RESERVATIONS
INCREASE CUST LOYALTY,
POPULARISE THE BRAND, IMPROVE
DEMAND FOR ITS PRODUCTS.

3 Based on current market trends (market research) and relevant academic theories advise the owners
about your strategies to make the restaurant profitable in the future (To further justify your strategies,
consider key performance indicators (KPIs) within menu management, marketing, and operating
expenses). You can also consider non-statistical recommendations to reflect the recent developments
within the industry (dark kitchens, COVID, working from home): online delivery service, change of
concepts etc…
MENU MGT:
APPLICATION OF THE FOLLOWING INCOME OPTIMISING
TOOLS , IT ALSO REDUCES LOSSES DUE TO
WASTAGES>>>
MENU MERCHANDISING, - XXXXXXXXXXX
MENU CARD RE-DESIGN, - XXXXXXXXXXX
MENU ADD ON INC AVG CHECK ETC, - XXXXXXXXX
MENU ENGG …- XXXXXXXXXXXXX
OPTIMISE OPRT COSTS:>>>
REDUCE OP COST BY :
RECIPE REDESIGN, - XXXXXXXXXXX
INVENTORY SMART CONTROL, - XXXXXXXXXX
IMPROVING TECHNOLOGY THUS REDUCING
MANPOWER COST,-- XXXXXXXXX
CONTROLLING USE OF WATER, ELECTRICITY,
ENERGY ETC – USE OF AI IN DIGITAL
TECHNOLOGIES
USE RevPASH, the Essential
Formula for Restaurant Management
TO UNDERSTAND CASHFLOW AS
PER MEAL HOURS: FROM THAT
DATA DEDUCE MENU COMBOS,
DISCOUNTS ETC.

3 Based on current market trends (market research) and relevant academic theories advise the owners
about your strategies to make the restaurant profitable in the future (To further justify your strategies,
consider key performance indicators (KPIs) within menu management, marketing, and operating
expenses). You can also consider non-statistical recommendations to reflect the recent developments
within the industry (dark kitchens, COVID, working from home): online delivery service, change of
concepts etc…
START DARK KITCHEN THUS REDUCING
OVERHEAD COST AND INCREASING
PRODUCTION CAPACITIES: XXXXXXX
ALLOW NON CORE ACTIVITIES TO HAPPEN
ALONGSIDE WORK FROM HOME PARADIGM,
THUS REDUCING INFRASTUCTURAL COSTS:
XXXXXXX
MARKT PROMO:
INC LOYALTY, THRU LOYALTY PROGRAMMES:
XXXXXXXX.
IMPROVED BRANDING, >> USE EXTENSIVE
BRANDING EXCERSISES - XXXXXXXXX
USE OTHER MRKT ACTIVITIES - EXTENSIVE USE OF
DIGITAL MKT MEANS- XXXXXXXXX
USE THE BREAK EVEN POINT ANALYSIS, TO
UNDERSTAND THE MINIMUM SALES AGAINST
COST TO BREAK EVEN IN THE BUSINESS AND
ALSO TO DECIDE UPON WHAT DIRECTION TO
TAKE, - INVEST MORE OR CONTROL MORE, IF
INVEST, WHAT TO INCREASE
MIN SALES REQUIRED> XXXXXXXX
MAX FOOD COST % TO BE CAPPED AT>
XXXXXXXX
MAX BEV COST % TO BE CAPPED AT>
XXXXXXX

FOOD COST % TOO HIGH AS
AGAINST WORLD STANDARD
BEV COST % HIGH AS AGAINST
WORLD STANDARD
WAGES VERY HIGH AS AGAINST
WORLD STANDARD
AT THE GIVEN OPERATING
EXPENSES, THE SALES / TOTAL
REVENUE MUST INCREASE TO
BREAK EVEN
EMPLOYEE BENEFIT % TO COME
DOWN AS PER INDIAN HR
ADVICES, DENTAL, CHILDCARE
NOT APPLICABLE IN INDIA…
INCREASE EXP FOR TABLE WARE
ETC TO ELEVATE SERVICE
STANDARDS
PROVIDE ELABORATE
EXPLANATION IN NOTES AREA
BELOW PPT
STUDYING THE GIVEN REVENUE STATEMENT AND ANALYSIS AMOUNT IN INR % OF SALES
SALES present data
FOOD 145,008,000 75
BEVERAGE 49,350,000 25
TOTAL SALES 194,350,000 100
COST OF SALES
FOOD 65,050,589 45
BEVERAGE 16,097,970 33
TOTAL COST OF SALES 81,148,559 42
GROSS PROFIT
TOTAL G R O S S INCOME/ PROFIT 113,201,441 58
OPERATING EXPENSES
WAGES 60,450,000 31
EMPLOYEE BENEFIT, LIC, MED, DENTAL, CHILD CARE 7,506,500 4
DIRECT OPERATING EXP, TABLEWARE, LINEN, UNIFORM,
DRY CLEANING
10,010,000 5
MUSIC & ENTERTAINMENT 6,233,500 3
MARKETING SELLING PROMO ADV 9,519,500 5
UTILITY BILLS GAS ELECTRICITY 7,774,000 4
DEPRICIATION 9,000,000 5
GENERAL ADMIN 10,125,000 5
REPAIRS AND MAINTBLDG, EQUIPMENT, FURNITURE 5,830,500 3
OCCUPANCY COST - RENT 8,171,000 4
INTEREST 1,800,000 1
LOAN PAYMENT EMI FOR 5 YEARS
TOTAL OPERATING EXPENSES 136,420,000 70
NET INCOME (23,218,559) (12)

, PROFITS BASED ON 15% RISE
IN SALES ON THE INCOME /
EXPENSE STMT
PROVIDE ELABORATE
EXPLANATION IN NOTES
AREA BELOW PPT
2. 15% sales increase has been projected for the current financial
year. Assuming that the
operating expenses and fixed costs haven’t changed from last year,
evaluate the profitability of the
restaurant for the current year.
AMOUNT IN INR % OF SALES 15% INCREASE IN SALES
SALES present data 15% INCREASE
FOOD 145,008,000 75 166,759,200 75
BEVERAGE 49,350,000 25 56,752,500 25
- -
TOTAL SALES 194,350,000 100 223,502,500 100
- -
COST OF SALES - -
FOOD 65,050,589 45 75,041,640 45
BEVERAGE 16,097,970 33 18,728,325 33
TOTAL COST OF SALES 81,148,559 42 93,769,965 42
- -
GROSS PROFIT - -
- -
TOTAL G R O S S INCOME/ PROFIT 113,201,441 58 129,732,535 58
OPERATING EXPENSES -
WAGES 60,450,000 31 5,531,400 2
EMPLOYEE BENEFIT, LIC, MED, DENTAL, CHILD CARE 7,506,500 4 7,506,500 4
DIRECT OPERATING EXP, TABLEWARE, LINEN, UNIFORM, DRY
CLEANING
10,010,000 5 10,010,000 5
MUSIC & ENTERTAINMENT 6,233,500 3 6,233,500 3
MARKETING SELLING PROMO ADV 9,519,500 5 9,519,500 5
UTILITY BILLS GAS ELECTRICITY 7,774,000 4 7,774,000 4
DEPRICIATION 9,000,000 5 9,000,000 5
GENERAL ADMIN 10,125,000 5 10,125,000 5
REPAIRS AND MAINTBLDG, EQUIPMENT, FURNITURE 5,830,500 3 5,830,500 3
OCCUPANCY COST - RENT 8,171,000 4 8,171,000 4
INTEREST 1,800,000 1 1,800,000 1
LOAN PAYMENT EMI FOR 5 YEARS
TOTAL OPERATING EXPENSES 136,420,000 70 81,501,400 36
NET INCOME (23,218,559) (12) 48,231,135 22
BY INCREASING
SALES THE LOSS
IN REVERSED
INTO PROFITS

REFERENCE PAGE AND APPENDICES MAX 2 PAGES.

RMT is a restaurant serving modern international food located in the business district of
Bangalore/ Goa/ Pune/ Hyderabad/ Delhi/ Kolkata/ Ahmadabad. Your team has been
recently appointed to operate the following:
• RMT operates full service, with breakfast, lunch and dinner meal periods, including
alcoholic beverages at lunch and dinner (RMT is open daily from 9.00am to 10.00pm).
• 150 seat restaurants operating in a busy central city location. • The restaurant
has 19 two seat tables and 6 four seat tables. • The restaurant employs on
average minimum of 15 staff (Kitchen and Front of house). • The restaurant has
been in operation for one year, but the business is not making any profit (See
Appendices A and B). • The business owners have to pay off a loan of ₹495,00000. •
For the rental price the restaurant has 180 square metres on street level, plus a
basement space for storage, offices and staff room.

The business district is known for its many open-air cafés, restaurants, pubs, market stalls and shops. Famous are the many street performers
who entertain the visitors on the pedestrianised piazza. The restaurant owners are investors and their main business interests are in the property
market. They bought RMT last year as part of their plans to invest into the restaurant sector and build a successful company. Their operational
experience in the sector is limited, thus, they have appointed you as the management team to run the business and turn it into profitability.
The owners are optimistic about trade during all serving periods (breakfast, lunch, dinner), therefore, for the second year of operation (2019 –
2020) of RMT, they have set a target increase of 15% on sales compared to the previous year. They believe that sales could consistently
increase as the restaurant has received good reviews from restaurant critics and from customers. However, they believe that the restaurant menu
(See Appendix 3) alongside their marketing efforts could be changed, thus attracting more customers. The main segments that visit the restaurant
are tourists, office workers and business people that work in and visit the area.
The previous management team alongside the chef created a menu that would appeal to customers based on quality and local produce,
however, the owners have identified a number of areas that could change and increase both number of covers and average spend per head for
the new financial year. In terms of marketing efforts, RMT had focused extensively last year on advertising mainly through internet rather that
other forms of marketing that could increase trade for the business. The owners believe that there is a lot of potential for the business from a
marketing perspective that the new management team could apply in the restaurant.
RMT opens at 9.00am Monday to Sunday, starting with breakfast service until 12.00pm, serving lunch from 12.00pm to 4.00pm and dinner from
6.00pm to 10.00pm. During the breakfast and lunch trade the restaurant attracts mainly tourists, however, the owners believe that the restaurant
has the potential to attract local office workers and business people. During dinner the number of customers visiting the restaurant are equal
between the three main segments (tourists, office workers and business people).
The owners place great emphasis on staff development and believe that maintaining good personal relationships with customers will increase
loyalty in their business. They believe that the attention to build customer relationships and service makes RMT different from the big restaurant
chains which can sometimes be impersonal. The owners invest substantially on staff training in order to increase the morale of their team and as
a result to retain them in the business. Special training sessions are held for staff, especially with changes in menu, to continually maintain and
upgrade the level of service. The owners believe that the previous management team did not have a very acute sense of cost control awareness
and stated that they always reviewing the operational side of the business for ways to save money even though they do not have extensive
experience.
The owners see the future growth potential in terms of developing a specific destination trade built on a unique level of food quality and personal
service. The constant innovations in menus to keep ahead of competition will continue but with more emphasis on freshness and quality rather
than the range of items on offer. The increasing numbers of competition within the business district makes it very difficult to compete and be
successful restaurateurs. However, they are very optimistic for the future due to increasing numbers of people eating out and the growth of the
on-line delivery platforms. They have some new ideas about expanding their business, but they have not decided on a particular concept or idea
as they have not done any market research or business planning. They are exploring the possibility of setting up a new operation with the aim of
creating a portfolio of 5 restaurants within the next 3 years.

CONCEPTS AND
SUGGESTIONS AND
EXCEL DATA

Restaurant Management
Insights
RevPASH, the Essential
Formula for Restaurant
Management

RevPASH stands for “Revenue Per Available
Seat Hour” and measures the income/benefit
of each seat available per hour.
With RevPASH, you can determine which seat
to assign to each guest during a specific time
period that benefits the restaurant best.

To calculate RevPASH for your restaurant, use the following
formula:
1.RevPASH = Sales per Hour / Number of Seats by the Hours
2.To get the Number of Seats by the Hours for more than one
hour, calculate:
3.(Total Number of Seats x Number of Hours x Number of
Day(s))
Your RevPASH is directly impacted by the cashflow of your
restaurant, and using an integrated POS system can help
analyze and calculate this figure. Boston University
published this RevPASH calculator to help restaurant owners
understand their earning potential.

An Example of RevPASH
A restaurant has an income of $700 between 8 p.m. and 9
p.m.
-- and has a total of 35 seats on the floor.
Following the RevPASH formula, the average income FROM
each diner during that hour is $20.

How to Calculate RevPASH of a Restaurant for Longer than
One Hour
To get a complete understanding of your restaurant’s income,
you need to follow the patterns of sale. Some hours, days,
weeks, and months of the year perform better than others in
reality. To make the appropriate business decisions, calculate
the RevPASH for many time intervals, including shifts, days,
weeks, and months. Then, you can establish a target number
for increased profitability.

An Example of Using RevPASH to See a Difference Between
Shifts
The same restaurant earns $2,000 during its lunch shift,
between 12 p.m. and 3 p.m. Considering it has 35 seats, the
RevPASH is $19.04 per person.
($2,000 / (35 seats x 3 hours x 1 day) = $19.04)
Later that day, the restaurant earns $3,500 during its dinner
shift, between 5 p.m. and 9 p.m.
The RevPASH is $25.
$3,500 / (35 seats x 4 hours x 1 day) = $25

As the manager of this restaurant, the RevPASH
calculations show that more money is earned during
the dinner shift than the lunch shift.
By showing the difference in the sales per seat
averages, RevPASH allows you to investigate why
there are differences and to start making educated
decisions to improve the lunch service.
If one shift has significantly lower profits per seats,
train your staff on best practices to increase
profitability.

What Is Cost-Volume-Profit (CVP) Analysis?
Cost-volume-profit (CVP) analysis is a method
of cost accounting that looks at the impact
that varying levels of costs and volume have
on operating profit.

KEY TAKEAWAYS
•Cost-volume-profit (CVP) analysis is a way to find
out how changes in variable and fixed costs affect a
firm's profit.
•Companies can use CVP to see how many units
they need to sell to break even (cover all costs) or
reach a certain minimum profit margin.
•CVP analysis makes several assumptions,
including that the sales price, fixed and variable cost
per unit are constant.

Understanding Cost-Volume-Profit (CVP) Analysis
The cost-volume-profit analysis, also commonly known as
breakeven analysis, looks to determine the breakeven
point for different sales volumes and cost structures, which
can be useful for managers making short-term business
decisions.
CVP analysis makes several assumptions, including that the
sales price, fixed and variable cost per unit are constant.
Running a CVP analysis involves using several equations for
price, cost, and other variables, then plotting them out on an
economic graph.

How to Increase the Average Spend Per Customer in
Restaurants
Pre-shift meetings and competitions amongst staff to sell dishes
Suggestive selling (Sullivan Nod)
Menu Design (Offer add-ons)
This goes along with suggestive selling to increase your customer’s average sale.
Before you can get your staff to excel, make sure your menu gives them a chance to
succeed.
Up-charge for larger drink
Charge for premium sides
Discounted price for additional sides
Adding a discounted salad to an entrée
These items don’t have to have low food costs, since you already have the sale, these
just add incremental money to the register which add up over many transactions and
360 days a year!
Start increasing the average spend of your customer’s now

ALL ABOUT FOOD COST AND ITS DIMENSIONS
FOOD COST = THE COST OF ALL RAW INGREDIENTS USED TO MAKE A DISH
IT ALSO MEANS
THE TOTAL COST OF ALL RAW INGREDIENTS USED IN A KITCHEN FOR A
DAY/MONTH / YEAR
THIS FOOD COST CAN BE EASILY DETERMINED AND CONTROLLED
MAKE A GOOD RECIPE AFTER EXPERIMENTATION, MAKE DISHES ACCORDING
TO THE RECIPE
CONTROL INGREDIENTS IN THE RECIPE, THE FOOD COST CHANGES, EG,
REDUCE THE USE OF ANY PART OF THE INGREDIENT…
SUBSTITUTE INGREDIENTS WITH LOWER PRICED ALTERNATIVES…
PURCHASE RAW INGREDINTS AT A DISCOUNT., BULK PURCHASE
REDUCE PORTION SIZE, REDUCE RECIPE QUANTITY.

ALL ABOUT FOOD COST FOOD COST PERCENTAGES
AND ITS DIMENSIONS
CALCULATE
FOOD COST = THE COST OF ALL RAW INGREDIENTS USED TO MAKE A DISH
IT ALSO MEANS SIT DOWN WITH A CALCULATOR AND ADD UP THE COST OF ALL
INGREDIENTS FOR A DISH.
THE TOTAL COST OF ALL RAW INGREDIENTS USED IN A KITCHEN FOR A
DAY/MONTH / YEAR – EXTRACT THIS FIGURE FROM THE COMPUTER DATABASE
IN THE STORE SECTION OR ADDUP FROM THE DAILY INDENT SHEET…
FOOD COST PERCENTAGE
FOOD COST OF A DISH / THE SELLING PRICE
EG FISH AND CHIPS IN LUXURY HOTEL INR (140/ 600) X 100 = 23 percentage
MEANING – FOR EVERY 100 RS INCOME THAT I GET FROM F & CHIPS, Rs 23 TO
BE SPENT ON RAW INGREDIENTS…
ALSO THIS MEANS FOR EVERY 100 RS INCOME, RS 77 IS MY GROS PROFIT
OBSERVE >>>>>>>>>>>>>>>>>>>>>
COST
OF ING
GROS PROFIT

COST
OF ING
GROS PROFIT - HIGH
FOOD COST OF A DISH SAY RS 140 / THE SELLING PRICE SAY RS 1200
EG FISH AND CHIPS IN LUXURY HOTEL INR (140/ 1200) X 100 = 11.5 percentage
MEANING – FOR EVERY 100 RS INCOME THAT I GET FROM F & CHIPS, Rs 11.5
TO BE SPENT ON RAW INGREDIENTS…
ALSO THIS MEANS FOR EVERY 100 RS INCOME, RS 88.5 IS MY GROS PROFIT
HIGH PROFIT BUT GUEST FEELS CHEATED NOT A GOOD RATIO

COST OF
ING
FOOD COST OF A DISH SAY RS 140 / THE SELLING PRICE SAY RS 280
EG FISH AND CHIPS IN LUXURY HOTEL INR (140/ 280) X 100 = 50 percentage
MEANING – FOR EVERY 100 RS INCOME THAT I GET FROM F & CHIPS, Rs 50 TO
BE SPENT ON RAW INGREDIENTS…
ALSO THIS MEANS FOR EVERY 100 RS INCOME, RS 50 IS MY GROS PROFIT
50 – 50 SITUATION, GOOD FOR OPEARTIONS WITH LOW OVERHEADS
BUT NOT FOR OPERATIONS WITH HIGH OVERHEADS,
FANCY, LUXURIOUS…

SOME STANDARD FOOD / BEVEGARE COST PERCENTAGES
ANALYZING YOUR FOOD COST
WHAT SHOULD BE YOUR FOOD COST PERCENTAGE? Ron Gorodesky
President of RAS, maintains that successful restaurants
generate food costs in the low to mid 30's.
However, different types of restaurants typically run higher or lower
percentages - steak houses may run up to 40% whereas Italian
restaurants may run about 28%.
INDIAN RESTAURANTS – 28% TO 30%
BUFFET RESTAURANT – 25% TO 28%
Comparing your cost percentage to restaurants with similar menus and
service levels provides a more accurate perspective

PLEASE STUDY THE UWL GIVEN DATA, EXPENSE STATEMENT FROM A2
MATERIAL

INR
?
?
IS THE SALES RATIO RIGHT
CONSIDER INDIAN SALES MIX
BETWEEN ALCHOL AND FOOD?
?
IS THE GROSS PROFIT
PERCENTAGE
COMFORTABLE, STANDARD

AVERAGE PER COVER
IMPORTANT TO UNDERSTAND WHO IS OUR CUSTOMER,
WHAT IS THEIR CAPACITY TO SPEND,
HOW MUCH DO THEY SPEND PER VISIT,
HOW IS OUR DISHES PRICED ARE THOSE PRICED TOO HIGH FOR THE
CUSTOMER OR TOO LESS THAN THE MARKET, OR CAN THEY BE PRICED MORE
TO INCRESAE PROFIT???
The revenue per guest, commonly referred to as the average
revenue per cover, includes both food and beverage.
It is perfectly acceptable to report the average food revenue
per cover, the average beverage per cover and the average
revenue per cover.
In fact, I prefer the components to be reported along with the
total revenue.

We can see the method more clearly with an example. A restaurant has total sales of
INR 2,000,000 comprised of INR 1,400,000 of food sales and INR600,000 of beverage
sales. They served 100,000 guests.
RS 2000,000 = RS 1400000 + RS 600,000
-----------------------------------------------------------------
100,000
Our average food sales per cover is INR14.00 and our average beverage sales per
cover is INR6.00. The Average Spend per Cover is INR20.00.
We use the same denominator in all 3 calculations.
The reason we use the same denominator is we always have the same number of
covers. A guest could spend nothing on beverages and still be included in our cover
count.
Cornell University Hotel School ( 2019)

Consider the menu card items and their prices given in A2 assignment.
Find out the average amount that a person may spend in breakfast ( one
main item + tea / coffee)
In lunch ( consider starter + main+ sweet)
Dinner ( starter + main + sweet)
Put the data in excel and find out the average for these figures / meals.
Match those with the actual average per cover given
Give your analysis, are the pricing right, is the sales right???
Consider cover turnover. If cover turnover is low, much of the overheads
can be reduced by reducing that operation

CONSIDER APPENDIX B PREVIOUS SLIDE,
PLOT IN EXCEL SHEET
FIND OUT PATTERN IN BREAKFAST APC PERCENTAGE THROUGHOUT THE
DIFFERENT MONTHS
DO THE SAME PATTERN COMPUTING AND PATTERN READING FOR OTHER
LUNCH, DINNER, ALCHOL SALES, ETC
ANALYSE AND INTERPRET

REALISTIC LABOUR COST
MORN/EVE
NUMBER SALARY/HEAD
WAITER 24 10,000 236,667
BAR STAFF 4 15,000 60,000
SUPV /MGR 3 15,000 45,000
KITCHEN 7 15,000 105,000
ADMIN 5 20,000 100,000
TOTAL 546,667

Sales in ₹ January JAN
NUM OF MEALS /
DAY
PER SHIFT
COVER
TURNOVER
Total Food 10,682,700 797 516 258 4
Total Beverage 3,294,100 246
Food Covers/ Service
Breakfast 1,068,270 250
Lunch 4,059,426 900
Dinner 5,555,004 1,200
Breakfast 362,351 85
Lunch 988,230 219
Dinner 1,943,519 420
Wages 5,065,000 36
REALISTIC WAGE 546,667 4
Marketing 878,000 6
Breakfast 4,273
Lunch 4,510
Dinner 4,629
Food Sales
Bev erage
Sales
Number of
Cov ers

IN THE ABOVE DIAGRAM OBSERVE THE
REALISTIC WAGES COST, THE PER DAY
COVER TURNOVER RATIO, THE APC
WITH ALL THESE NEW KNOWLEDGE, RE
WORK THE INCOME EXPENSE STATEMENT

Break Even Point?
The basic formula for determining your break even point follows:
Break Even = Fixed Cost / (1-Variable Cost%)
BE Break Even Point
FC Fixed Costs
VC Variable Costs
If your business had fixed costs of RS 500,000 and a
75% variable cost rate, your break even point is RS
2,000,000.
> 2000000-(75% OF 2000000)-500000 =0 BEP
If your fixed costs are RS 800,000 and your variable
costs are only 60%, you'd have the same RS
2,000,000 break even point.
..> 2000000 – (60% OF 2000000) -800000 – 0 BEP

If our unit with the INR
500,000 fixed costs
above experienced a
10% drop in sales, fixed
costs would need to
drop INR 50,000 to
maintain the same
break even
point. PRIME COST is
cost of sales+ labour
cost
Work out fixed cost
consider wages too,
and find out the break
even point with new
sales figure

Which operation would you prefer to
own in a growth market? How about
a recession?
When a business experiences solid growth,
it's possible to increase fixed costs and
prosper.
The operation with the low variable cost %
would be the growth choice. However, you'd
want the low fixed cost scenario during
recessions.

.
Sales in ₹ January APC JAN NUM OF COVERS / DAY COVERS PER SHIFT COVER TURNOVER WAIT+BAR PRODUCTIVITY/SHIFT February FEB
Total Food 10,682,700 797 447 258 7 13,703,300 796
Total Beverage 3,294,100 360 305 258 5 4,231,800 361
Food Covers/ Service 22
Breakfast 1,068,270 250 1,370,330 250
Lunch 4,059,426 900 5,207,254 900
Dinner 5,555,004 1,200 7,125,716 1,200
Breakfast 362,351 85 465,498 85
Lunch 988,230 219 1,269,540 219
Dinner 1,943,519 420 2,496,762 420
Wages 5,065,000 36 5,495,000 31
REALISTIC WAGE MNTHLY 644,000 5 644,000 4
Marketing 878,000 6 1,025,000 6
Breakfast 4,273 13,412 5,481
Lunch 4,510 5,786
Dinner 4,629 5,938
5,065,000 - - - 5,495,000

.
OPENING INCOME STATEMENT 62 COVERS BEP CATEGORY
AMOUNT IN INR % OF SALES REALISTIC REWORKED ANNUAL/COVER MONTHLY/ COVER DAILY / COVER ANNUAL/COVER MONTHLY/ COVER DAILY / COVE
SALES BEP
FOOD 145,000,000 75 135,173,887 75
BEVERAGE 49,350,000 25 46,005,733 25
- -
TOTAL SALES 194,350,000 100 181,179,620 100 HIGH ANNUAL SALES 3,134,677 261,223 8,707 2,922,252 261,223
- -
COST OF SALES - -
FOOD 65,250,000 45 60,828,249 45 HIGH VARIABLE COST labour cost per cover
BEVERAGE 16,285,500 33 15,181,892
33
- -
ADVICE: BUILD UP CAPACITY / SPEND ON TECH, REDUCE FIXED COST /
INCREASE PRODUCTION BECAUSE MARKET IS RIPE, / SPEND ON NEW
RESTAURANT, INCRESAE NUMBER OF COVERS AS COVER SALES
ARE HIGH
TOTAL COST OF SALES 81,535,500 42 76,010,141 42
- -
GROSS PROFIT - -
- -
TOTAL INCOME 112,814,500 58 105,169,479 58
-
OPERATING EXPENSES -
WAGES 60,450,000 31 7,728,000 4
NOT VERY HIGH FIXED
COST
EMPLOYEE BENEFIT, LIC, MED, DENTAL, CHILD CARE 7,506,500 4 7,506,500 4
DIRECT OPERATING EXP, TABLEWARE, LINEN, UNIFORM,
DRY CLEANING
10,010,000 5 10,010,000 5
MUSIC & ENTERTAINMENT 6,233,500 3 6,233,500 3
MARKETING SELLING PROMO ADV 9,519,500 5 9,519,500 5
UTILITY BILLS GAS ELECTRICITY 7,774,000 4 7,774,000 4
DEPRICIATION 9,000,000 5 9,000,000 5
GENERAL ADMIN 10,125,000 5 10,125,000 5
REPAIRS AND MAINTBLDG, EQUIPMENT, FURNITURE 5,830,500 3 5,830,500 3
OCCUPANCY COST - RENT 8,171,000 4 8,171,000 4
INTEREST 1,800,000 1 1,800,000 1
TOTAL OPERATING EXPENSES 136,420,000 70 83,698,000 46
LOAN PAYMENT EMI FOR 3 YEARS 21,474,528
NET INCOME (23,605,500) (12) (3,049) (0)
after yearly loan payment (3,049) yearly loan repayment 21,474,528 @18%

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