MONITORING FOODSERVICE OPERATIONS
Actual vs. Standard Food Cost
ESTABLISHING STANDARDS
•
Setting standards are somewhat like goals.
•
In setting standards within a foodservice environment, management
needs to consciously consider the level of standards to adopt:
• Achievable standards are realistically within reach. Such standards take
into account normal spoilage and inefficiency.
• Ideal standards may never be reached. They represent what will result
in a state of perfection (e.g., no spoiled goods, no worker errors, etc.).
•
Many foodservice operations avoid ideal standards because they fear
that employees will see ideal standards as meaningless since they cannot
hope to achieve them.
STANDARD COST
•
Management needs to adjust the
potential food cost to include waste
and spoilage that occurs during normal
preparation, as well as an allowance
for complimentary or discounted meals
to employees and guests.
•
Are used as target costs (or basis for
comparison with the actual costs)
•
Are developed from historical data
analysis.
•
They almost always vary from actual
costs, because every situation has its
share of unpredictable factors.
PRE-COST MENU ABSTRACT
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Is a sheet based on standard costs
•
Contains sales on one side and the
food cost % in the other column.
(referred to daily food cost % as well)
•
Another column is added, known as
forecast.
Standard Cost/ Sales = Standard Cost %
Total Standard Cost/Total Sales = Standard Cost %
Date
Standard Cost
Sales
Standard Cost %
1- Mar
$981.15
$2778.00
35.21%
2- Mar
$1035.85
$2919.20
35.45%
3- Mar
$1106.95
$3056.95
36.21%
4- Mar
$1091.95
$3094.20
35.29%
5- Mar
$1077.20
$3427.35
31.43%
Total
$5293.10
$15,275.70
Total Stand.
Cost
$5293.10
Total Sales
$15,275.70
Standard
Cost %
34.65%
MENU ABSTRACT CONCLUSION
•
With these totals available, it is easy to
project gross profit and standard cost
percent.
•
If the projections are judged
satisfactory, the manager can send the
menu to a
printer.
•
If they are not considered satisfactory,
various changes can be made,
because production has not yet
started.
•
Essentially, a new forecast can be
developed.
•
Standard cost and sales figures
may be raised or lowered,
depending
on which is desirable, by the
following means:
1.
Sales prices may be changed.
2. Standard portion costs may be
changed by altering portion
standards:
sizes, ingredients, recipes, or some
combination of these.
3. Menu items may be added or
eliminated.
VOLUME FORECAST AND SALES FORECAST
•
Is a list of projected sales volume.
•
Items are listed in terms of units
forecasted to be sold.
•
Items are compared to with actual units
sold to compute the difference (+ or -)
•
The forecasted volume is later multiplied
by the cost price which becomes the
sales forecast.
•
An acceptable variance will range from
half to three percentage points of food
sales.
•
The difference between actual food cost
and standard food cost reflects
inefficiencies that should have been
controlled by management.
VOLUME FORECAST
DAILY COMPARISON
Formula: Actual Sales – Sales Forecast = Difference
Menu Item
Sales Forecast
Actual Sales
Difference
Oyster Rockefeller
16
15
-1
Ginger Shrimp
7
8
1
Strip Steak
15
13
-2
Lamb Chops
7
8
1
Trout Almandine
7
7
0
Cheesecake
6
4
-2
Frozen Choc.
Parfait
5
7
2
Fruit and Cheese
5
3
-2
Total Covers
68
65
FOOD COST VARIANCES
•
Unfavorable variances signal waste,
or inefficiency of some sort.
However, one must also be wary of
favorable variances.
•
Favorable variances can
mean that food personnel are not
following standardized recipes
(preparing Fruits de Mer with cod fish
instead of lobster), serving portions
that are smaller than standard (serving
8 ounce steaks instead of 12 ounce
steaks), and so on.
3 REASONS FOR COMPARING
FORECAST VS. ACTUAL FIGURES
1. To see if a menu item has sold in
greater quantities than forecasted.
2. To determine the extent to which
forecasts are wrong.
3. To see the extent to which forecasting
techniques can be improved.
ACTUAL FOOD COST
•
The actual food cost percentage
appears on the monthly income
statement. This is the cost of the food
consumed by your customers, and
does not include employee meals or
spoilage.
Although the actual food cost indicates
what the food cost is currently running,
it has little value unless the operator
knows what the target percentage
should be.
•
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