2. Principles of Control in a Foodservice Operation
Chapter 1
Principles of Control in a Foodservice Operation

3. Learning Outcomes Summarize the four basic functions of management.
Understand the role of cost control in the success of an operation.
Recall five areas in which basic math skills are used in a foodservice operation.

4. Introduction
The management function of control is essential to running a successful foodservice operation
Control refers to the effective management of resources

5. Functions of Management
There are four basic functions of management
Planning
Organizing
Leading
Controlling
All four functions are essential to running any type of business or operation
continued

6. Functions of Management
Planning is the process of determining what an operation will be
Planning involves defining an operation’s goals and objectives and the steps that will be necessary to achieve them
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7. Functions of Management
Organizing is the process of deciding
what tasks need to be completed
who will perform those tasks
how the tasks will be coordinated
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8. Functions of Management
Leading is the process of directing people to meet the goals and objectives set in the planning phase
Leadership includes
motivating people
communicating effectively
providing feedback on employee performance
listening and responding to employee needs
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9. Functions of Management
Controlling is the process of monitoring the performance of the operation against its plans
Controlling is accomplished by
setting measurable goals
measuring the results
comparing those results against the goals
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10. Functions of Management
If results are not in line with goals, the reason should be determined and corrective action taken
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11. Functions of Management
Control is an ongoing process in which the operation must
define its expected results
have a plan in place to achieve those results
provide the resources that enable it to meet its goals
modify its structure, methods, or tools to meet its plan and measure the results

12. Cost Control
Cost control is the process an operation uses to ensure that its forecasted sales and expenses conform to its plans, goals, and objectives
The successful foodservice manager balances quality with financial control to yield a profit for the business and secure its continued success
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13. Cost Control
Cost control is a critical function that should be required of every foodservice operator
Many foodservice operations lack strong cost controls
To control costs and enhance profits, a manager needs to understand the relationship among cost, sales, and profit (or loss)
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14. Cost Control
Cost, or expense, is the dollar amount spent to create the good or service being sold
Sales, or revenues, result from the exchange of goods or services for payment or promise to pay
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15. Cost Control
Cost is subtracted from sales to determine whether the operation had a profit or a loss
Profit is the dollar amount remaining after all expenses have been paid
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16. Cost Control
A loss is the amount incurred when the expenses of an operation are greater than its sales
The successful manager understands where the numbers come from in the profit equation
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17. Cost Control
Operations need to make enough money from sales to cover the costs of doing business
This is true for both for-profit and not-for-profit businesses
An operation can increase its profits in two ways
by increasing sales
by decreasing expenses
continued

18. Cost Control Math skills are used in
standardizing and converting recipes
purchasing food and supplies
determining staffing needs
determining selling prices
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19. Cost Control Math skills are used in
forecasting how much food to produce
controlling inventory
preparing budgets
analyzing customer satisfaction
evaluating sales results

20. Basic Math Review
A manager needs basic math skills to effectively run a foodservice operation through a strong cost-control system
These skills include the use of
fractions
decimals
percentages
ratios
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21. Basic Math Review
Fractions, percentages, and decimals can be considered one in the same
They all deal with parts of a whole
A fraction is made up of
a numerator (the top number)
a denominator (the bottom number)
The numerator is the part and the denominator represents the whole
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22. Basic Math Review
A percentage is another way of expressing a part of the whole
The word percent is from the Latin words per centum meaning “per hundred”
A percentage is another way of expressing a fraction in which the denominator is 100
The percent symbol is used after a number when writing percentages (50%)
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23. Basic Math Review
Decimals are another way of expressing a part of the whole
A decimal represents a fraction based on the number 10
A decimal point separates the whole from the part
The number 5.67 represents five wholes and 67 parts
continued

24. Basic Math Review To express a decimal as a percentage
move the decimal point two places to the right
add the percent symbol
Decimals and percentages show the same relationship
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25. Basic Math Review
To convert a percentage to a decimal, move the decimal point two places to the left
Both percentages and decimals can also be expressed as fractions
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26. Basic Math Review
A ratio expresses how one number relates, or compares, to another
X:Y is stated “the ratio is X to Y”
A ratio can be written in a number of ways

27. Practical Foodservice Applications
Percentages, ratios, fractions, and decimals are used every day in foodservice operations to control costs
A ratio expresses how one number relates, or compares, to another
For example, the ratio 2:7 can express that a baker sells two sugar cookies for every seven chocolate chip cookies
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28. Practical Foodservice Applications
Many foodservice operations base the selling price of a menu item on the cost of the food used to make it
They want to limit the food cost to a certain percentage of the selling price—a food cost percentage
A common food cost percentage used by foodservice operations is 30 percent
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29. Practical Foodservice Applications
The foodservice operator can determine the selling price by using a calculation in which X is the selling price
For example, if the food cost is $10, and the food cost percentage is 30 percent, the operator sells the menu item for $33.33
The $10 food cost divided by X equals 30 percent
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30. Practical Foodservice Applications
When making decisions about which food products to purchase, a manager often compares the prices of two or more products
Factors such as pack size and product yield must be taken into consideration when comparing product prices
The manager must determine the best price per unit
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31. Practical Foodservice Applications
For each option being considered
determine the total amount or weight per package or case
calculate the price per unit, such as per pound
compare the prices to find the best buy
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32. Practical Foodservice Applications
To compare prices between a processed and a raw product, managers must consider the yield
Product yield is the amount of a product that is usable after cooking or other processing
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33. Practical Foodservice Applications
Ways to find the product yield vary by product
For a fresh roast, for example, the yield would be affected by the amount of fat to be trimmed off
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34. Practical Foodservice Applications
The manager needs to determine the price per unit, such as per pound, for the amount of the product yield
This is calculated by dividing the purchase price by the product yield
The prices can then be compared
Another common calculation in foodservice management is determining the cost to produce a meal
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35. Practical Foodservice Applications
The cost to produce a meal includes the costs of food and labor per meal served
The food cost per meal can be calculated by dividing the cost of food to prepare meals by the number of meals served
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36. Practical Foodservice Applications
The labor cost per meal is calculated using a similar equation
Labor costs are divided by the number of meals served
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37. Practical Foodservice Applications
When comparing actual performance to goals, a manager looks at the variance
The variance is the difference between a budgeted amount and an actual amount
Variances are calculated for revenues, expenses, and profit
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38. Practical Foodservice Applications
A manager may want to determine the variance as a percentage difference
To do so, the variance amount is divided by the budgeted amount
The result is multiplied by 100
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39. Practical Foodservice Applications
A manager is also responsible for evaluating quality
A quality measure rates the level of perceived value placed on the parameter being evaluated
One quality measure, or parameter, is customer satisfaction
An operation often surveys its customers to learn their views on its performance
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40. Practical Foodservice Applications
Customer satisfaction is often expressed as a percentage
For example, the number of “excellent” service ratings may be stated as a percentage of the total ratings
A manager records and compares the results of quality measures over time to monitor the success of the operation

41. Key Terms Review planning organizing leading controlling cost control
sales
profit
loss
fraction
percent
decimal
ratio
product yield
variance
quality measure