Controlling Foodservice Costs: Chapter 1

Front 1

what is a control?

Back 1

a method of exercising some amount of power over events or situations to achieve a particular result.

Front 2

why establish controls, 2 reasons . . .

Back 2

prevent problems

achieve goals of organization

Front 3

where do cost controls start?

Back 3

with the menu

They continue through:
purchasing
receiving
storage
production
service

Front 4

without controls, the organization has no way to know what?

Back 4

whether it's profitable

whether it's meeting budget

Front 5

what is a standard?

Back 5

a measure established to compare levels of attainment for a goal, or a measure of adequacy

Front 6

what should standards cover?

Back 6

the entire spectrum of the business:

sales
quality
quantity
production
service
employment

Front 7

standards are an integral part of what?

Back 7

controlling costs

Standards are the regulating force behind controlling costs

Front 8

what are the 2 most common classifications of costs?

Back 8

controllable and noncontrollable

also fixed, variable and semivariable

Front 9

understanding the types of costs helps managers do what?

Back 9

interpret cost-related information, and

make control-related decisions

Front 10

what is the portion cost equal to?

Back 10

cost of ingredients divided by number of portions

Front 11

what are controllable costs?

Back 11

those costs management can directly control

Front 12

what are noncontrollable costs?

Back 12

those over which management has little or no control

Front 13

what is an example of a controllable cost?

Back 13

food cost

Front 14

how can management control food costs?

Back 14

use standardized recipes
make a standardized procedure for portion control, menu listing and pricing

take an item off the menu

Front 15

what kind of cost is a labor cost?

Back 15

controllable

Front 16

give an example of a noncontrollable cost

Back 16

insurance
license fees
lease/mortgage

Front 17

what are based on each's cost relationship to sales volume?

Back 17

fixed
variable
semivariable costs

Front 18

what are fixed costs?

Back 18

those that remain the same regardless of sales volume

Example: Insurance

Front 19

what is a variable cost?

Back 19

they increase and decrease in direct proportion to sales

Example: food costs

Front 20

what are semivariable costs?

Back 20

they increase and decrease as sales go up or down, but not in direct proportion.

They are made up of fixed and variable costs.

Example: Labor costs

Front 21

variable and semivariable costs are usually what?

Back 21

controllable costs

Front 22

fixed costs are typically what kind of costs?

Back 22

noncontrollable

Front 23

what are the 2 largest costs management has to control?

Back 23

food cost

labor cost

Front 24

what are food and labor costs together known as?

Back 24

the prime cost

the 2 highest costs in the operation

Front 25

prime cost should not exceed what percentage of sales?

Back 25

65%

Front 26

what is the primary objective of a restaurant?

Back 26

to build sales

Front 27

any controls implemented must ensure a continuation of what?

Back 27

standard levels for:

safety
sanitation
customer service

Front 28

start with accurate sales information, including what, to know whether costs are in appropriate range?

Back 28

historical sales

Front 29

sales should be tracked for which time periods?

Back 29

yearly
monthly
weekly
daily
meal period
hourly

Front 30

where do you find the yearly and monthly sales info?

Back 30

income statement

Front 31

where do you find the hourly, daily, and weekly figures?

Back 31

a POS (point of sale) system report,

or from guest checks or periodic cash register readings

Front 32

where do you get cost information from?

Back 32

operational records

Front 33

what's the best way to tell at a glance how an operation is performing?

Back 33

read the income statement

Front 34

what is an income statement?

Back 34

a report showing sales, costs and the profit or loss of a business.

It shows whether you made or lost money during the report time period

Front 35

what is the income statement also called?

Back 35

profit and loss report

Front 36

the profit and loss report helps managers do what?

Back 36

gauge profitability and compare results to goals or standards

Front 37

what is sales?

Back 37

the dollar amount the restaurant takes in for food

Front 38

what does "cost of foods sold" show?

Back 38

dollar amount spent on that food

It is opening inventory plus purchases, minus ending inventory

Front 39

what is gross profit?

Back 39

the amount of money made on the cost of food sold

Subtract cost of food sold from sales

Front 40

what is labor expense?

Back 40

payroll for hourly employees plus salaried management

(includes federal taxes and employee benefit costs)

Front 41

total expenses include . . .

Back 41

labor, controllable and noncontrollable expenses

Front 42

what is profit?

Back 42

what remains after all expenses are paid

Subtract total expenses and food costs from sales

Front 43

what is a line item review?

Back 43

every item on the budget is checked against actual figures - and the difference is noted

Front 44

how can you express differences between the budget and actual amounts?

Back 44

in dollar amount or in percentage

Front 45

what does the standard represent?

Back 45

the level at which cost should be

Front 46

with labor standard, what's the goal?

Back 46

produce a quality product and offer quality service

Front 47

if the food cost is off, what action can be reviewed?

Back 47

purchasing
prepping
receiving

Front 48

if labor cost is off, what do you review?

Back 48

scheduling

production standards

Front 49

what is a corrective action?

Back 49

correction of a problem

they can only be used to affect controllable costs

Front 50

how often should you review forecasts of the operating budget?

Back 50

at least once a month

Front 51

what are some corrective actions for controlling food costs?

Back 51

reduce portion size
replace item with one more cost effective

feature an item with a higher profit
raise menu price

Front 52

what are some corrective actions for food waste?

Back 52

monitor portion control
monitor food storage and rotation
improve communication to reduce production errors

monitor food ordering

Front 53

what are some corrective actions for inventory cost?

Back 53

order appropriate quantities so you don't have too much or too little in storage

Front 54

what's a corrective action for labor cost?

Back 54

reduce number of employees on the schedule

ask workers to end their shifts early

schedule cross-trained staff

Front 55

once actual sales and costs are calculated, what do you compare them to?

Back 55

budgeted amount

operational standards

historical info