1. 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
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2. 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

3. 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

4. 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

5. 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

6. 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

7. 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
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8. 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
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9. 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
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10. 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
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11. 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
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12. 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
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13. Thank You
King Abdul Aziz University Tourism Institute Diploma in Hospitality Management
HT 225: Food &Beverage Management 1 – Cost Control