KAUTI King abdul Aziz university Tourism institute Food & Beverage Management - I Cost Control HT 225 Cost Concepts Dr Mohamed El-Sayed Abdel-Aziz February 2014 King Abdul Aziz University Tourism Institute Diploma in Hospitality Management HT 225: Food &Beverage Management 1 – Cost Control jvcvghkh;nb;jkv;j

Scope Cost Concepts Fixed Cost VS Variable Cost Standard Cost Controllable VS Non-Controllable Cost Historical and Planned Costs Sales Price King Abdul Aziz University Tourism Institute Diploma in Hospitality Management HT 225: Food &Beverage Management 1 – Cost Control

Cost Concepts Accountants definition reduction in the value of an asset for the purpose of securing benefit or gains the expense to a hotel or restaurant of goods or service when the goods are consumed In Food &Beverages Business King Abdul Aziz University Tourism Institute Diploma in Hospitality Management HT 225: Food &Beverage Management 1 – Cost Control

Fixed Cost VS Variable Cost Fixed Cost (FC) Taxes Insurance Depreciation Repairs Maintenance Rent, and Adv. Variable Cost (VC) F. & B. cost are considered directly variable cost King Abdul Aziz University Tourism Institute Diploma in Hospitality Management HT 225: Food &Beverage Management 1 – Cost Control

Payroll Cost and Standard Cost includes salaries and wages and employee benefits Standard Cost cost of goods or services identified, and accepted by management to make judgment of the effectiveness of the operation. . King Abdul Aziz University Tourism Institute Diploma in Hospitality Management HT 225: Food &Beverage Management 1 – Cost Control

CONTROLLABLE, NON-CONTROLLABLE COST Wages, Advertising & Promotion, Utilities, Repairs & Maintenance and A. & G. Expenses Non-Controllable Cost Rent, Interest on a mortgage, taxes, License fee and Depreciation King Abdul Aziz University Tourism Institute Diploma in Hospitality Management HT 225: Food &Beverage Management 1 – Cost Control

Historical and Planned Costs Historical cost found in business records, book of account, financial statements, invoices, employees’ time card planned costs projections of what cost will be or should be for a future period. King Abdul Aziz University Tourism Institute Diploma in Hospitality Management HT 225: Food &Beverage Management 1 – Cost Control jvcvghkh;nb;jkv;j

Calculating food cost Cost/Sales = Cost per Dollar of Sales (or Cost %) Cost/cost% = Sales (or Sales Price) Sales X Cost% = Cost King Abdul Aziz University Tourism Institute Diploma in Hospitality Management HT 225: Food &Beverage Management 1 – Cost Control jvcvghkh;nb;jkv;j

Total Sales By Category Total food sales or total beverage sales. Or total steak sales or seafood sales. By Server Total sales for which a given server has been responsible in a given period. By Seat Total Dollar sales divided by the number of seats in the restaurant. King Abdul Aziz University Tourism Institute Diploma in Hospitality Management HT 225: Food &Beverage Management 1 – Cost Control jvcvghkh;nb;jkv;j

Average Covers is determined y dividing the total number of cover by : Total Cover Average Covers is determined y dividing the total number of cover by : per Hour = Total Covers / Numbers of Hours per Day = Total Covers / Number of Days of Operation per Server = Total Covers / Number of Servers King Abdul Aziz University Tourism Institute Diploma in Hospitality Management HT 225: Food &Beverage Management 1 – Cost Control jvcvghkh;nb;jkv;j

Group Exercise (4) Group Exercise jvcvghkh;nb;jkv;j King Abdul Aziz University Tourism Institute Diploma in Hospitality Management HT 225: Food &Beverage Management 1 – Cost Control jvcvghkh;nb;jkv;j

Sales mix Sales Mix is a term used to describe the relative quantity sold of any menu item compared to other items in the same category. King Abdul Aziz University Tourism Institute Diploma in Hospitality Management HT 225: Food &Beverage Management 1 – Cost Control jvcvghkh;nb;jkv;j

Thank You King Abdul Aziz University Tourism Institute Diploma in Hospitality Management HT 225: Food &Beverage Management 1 – Cost Control