1. Operations, Budgeting, and Control
Chapter 8
Operations, Budgeting, and Control

2. Objectives
After reading and studying this chapter, you should be able to:
Describe front-of-the-house operations
Describe back-of-the-house operations
Identify ways to control food, beverage, and labor costs
Discuss methods of guest check control

3. Restaurant Operations
Split between back and front of the house
Back of the house areas:
Purchasing, receiving, storage, issuing, food preparation and service, dishwashing area, sanitation, accounting, budgeting, and control
Front of the house:
Operations and people who interface with customers in dining areas

4. Front of the House Refers to: Curbside appeal
Hosts, bartenders, servers, and bussers
Opening and closing manager
Curbside appeal
First impression
Visual appeal of the building and parking area are important to potential guests

5. Front of the House (cont’d.)
Forecasting
First thing restaurant managers do
Forecast how many guests are expected and share that information with the kitchen
Guest count
Arrived at by taking the same day last year and factoring in things like today’s weather, day of the week, etc.

6. Front of the House (cont’d.)
Managers
Make sure everything goes smoothly
Elements of management: planning, organizing, communicating, decision-making, motivation, and control
Goals are set for each key result area
Schedules and checklists help organization
“Lead sheet” lists staff on both shifts so you can easily see who is on duty

7. Back of the House Sometimes called the “heart” of the operation
Kitchen: center of production
Production sheets: detail all tasks necessary to bring food quantities up to par stock and to complete preparation on time
Chef: makes sure all menu items are prepared according to standardized recipes and the line is ready for service
May act as a caller during service

8. Control There is so much food and beverage in a restaurant
Unless management and owners exert tight control, losses will occur
Programs may be used
Chef Tec shows actual food cost compared with ideal food cost, known as food optimization
Food cost percentage
Should be calculated at least monthly:
Formula: Cost/Sales × 100

9. Liquor Control Critical to the success of the restaurant
Management decides on the selling price and mark-up for beer, wine, and liquor
Sets the standard for beverage cost percentage
Beer pouring cost: 24 to 25 percent
Wine pouring cost: 26 to 30 percent
Liquor pouring costs: 16 to 20 percent
Combined beverage pouring cost: 23 to 25 percent of beverage sales

10. Controllable Expenses
Various expenses that can be changed in the short term:
Variable costs
Payroll
Direct operating expenses
Marketing
Heat, light, and power
Repairs and maintenance

11. Labor Costs
May range
Depends on the type of restaurant and degree of service provided
16 percent of sales in a quick-service restaurant
24 percent in a casual operation
Up to about 30 percent in an upscale restaurant

12. Labor Costs (cont’d.) Projecting payroll costs
Requires preparation of staffing schedules and establishing wage rates
Staffing patterns may vary during different periods of the year
Categories of payroll and related costs:
Variable (percentage ratio to payroll)
Fixed (dollar amount per employee on the payroll)

13. Figure 8.5: Form for projecting expected payroll amounts

14. Labor Costs (cont’d.) Variable items Fixed items
Include those mandated by law
Social Security, unemployment insurance, workers’ compensation insurance, and state disability insurance
Fixed items
Usually refer to employee benefits
Health insurance, union welfare insurance, life insurance, etc.

15. Guest Check Control
Without it a server can give food and beverages away or sell it
Guest checks can be altered and substitutions made if they are not numbered
Most restaurants require the server sign for checks and return those not used

16. Guest Check Control (cont’d.)
For tight control:
Every check is audited, additions checked, and every check accounted for by number
Some operators control income by having servers act as their own cashiers
Bring their own banks of $50 in change
Do not operate from a cash register but out of their own pockets
Deposit income in a night box at the bank

17. Productivity Analysis and Cost Control
Various measures of productivity have been developed:
Meals produced per employee per day, meals produced per employee per hour, etc.
Simplest productivity measure:
Sales generated per employee per year:
Divide the number of full-time equivalent employees into the gross sales for the year