Profit Center Essays
Terrence Wei, the new property president, feels that his department managers appear to be in conflict with each other. The managers …show more content…
The Food department should be run as a cost center because 20% of the revenue is generated from complimentary sales and also because the restaurants are currently running at a 15% loss. The restaurants’ main purpose is to serve gamblers and should not be established as a standalone business. The restaurants are expected to provide low-cost meals that will attract more people or retain the current customers on the property.
The Beverage department should also be evaluated as a cost center. 77% of the beverage’s division revenues come from complimentary beverages served to the casino customers. The casino has major control over which customers receive the complimentary beverages and the manager of the department has very little control over the division’s profit. The department should however be responsible for controlling costs like the staff and the cost of the inputs supplied.
The synergy between the different departments makes it harder to evaluating those individually. The food and beverage departments have the