Matakuliah
Tahun
: V0254 - Operational Tata Hidang II
: 2010
Managing Revenue and Expense
Pertemuan 1
Professional Foodservice Manager
• Management handles functions of product sales
to product delivery.
• Management of foodservice is more difficult
than for manufacturing or retailing management
counterparts.
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Profit: The Reward for Service
• If management focuses on controlling costs more
than on servicing guests, problems will certainly
surface.
• Do not get yourself in the mind-set of reducing
costs to the point where it is thought that “low”
costs are good and “high” costs are bad.
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Profit: The Reward for Service
• Efforts to reduce costs that result in unsafe
conditions for guests or employees are never wise.
• The question is whether costs are too high or too
low, given management’s view of the value.
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Profit: The Reward for Service
Revenue - Expenses = Profit
• Revenue is the amount of dollars you take in.
• Expenses are the costs of the items required to operate the
business.
• Profit is the amount of dollars that remain after all expenses
have been paid.
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Profit: The Reward for Service
Revenue - Expenses = Profit
• The following terms will be used interchangeably:
revenue and sales; expenses and costs.
• All foodservice operations, including non-profit
institutions, need revenue in excess of expenses if they
are to thrive.
• Profit is the result of solid planning, sound management,
and careful decision-making.
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Profit: The Reward for Service
Revenue – Desired Profit = Ideal Expense
• Desired profit is defined as
– Profit that the owner wants to achieve on that predicted quantity of
revenue.
• Ideal Expense is defined as
– Management’s view of the correct or appropriate amount of
expense necessary to generate a given quantity of revenue.
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Profit: The Reward for Service
Revenue – Desired Profit = Ideal Expense
• Revenue varies with
– Number of guests
– Amount of money spent by each guest
• Increase revenue by
– Increasing the number of guests served
– Increasing the amount that each guest spends
– Or a combination of both
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Four Major Foodservice Expense
Categories
•
Food Costs
–
–
•
Costs associated with actually producing menu items
Largest or second largest expense category
Beverage Costs
–
Costs related to the sale of alcoholic beverages-beer,
wine
– May also include ingredients, mixers and garnishes
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liquor,
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Four Major Foodservice Expense Categories
•
Labor Costs
–
–
–
Cost of all employees, including taxes
Labor costs are second only to food costs in total dollars spent
Some include the cost of management in this category.
Others prefer to place the cost of managers in the Other
Expense category.
• Other Expenses
–
Include all expenses that are neither food, beverage nor
labor, such as utilities, rent, linen, etc.
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Percentages
• Numbers can be difficult to interpret due to
inflation. Therefore, the industry often uses
percentage calculations.
• You will be evaluated primarily on your ability
to compute, analyze, and control these
percent figures.
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Percentages
• Percent (%) means “out of each hundred.”
• There are three (3) ways to write a percent:
– Common Form
 “%” sign is used, as in 10%
– Fraction Form
 the part, or a portion of 100, as in 10/100
– Decimal Form
 the decimal point (.), as in 0.10
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Percentages
• Divide the number that is the part by the
number that is the whole.
Part = Percent
Whole
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Percentages in Foodservice
• Percentage of revenue that went to pay for
expenses:
Expense
Revenue =
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Expense %
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Percentages in Foodservice
• As long as expense is smaller than revenue, some profit
will be generated
Profit
Profit % = Revenue
• Modified profit formula:
Revenue - (Food and Beverage Cost + Labor
Cost + Other Expenses) = Profit
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Profit Formula
• Put in another format, the equation looks as follows:
Revenue (100%)
- Food and Beverage Cost %
- Labor Cost %
- Other Expense %
= Profit %
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Understanding the Income
(Profit and Loss) Statement
• Profit and loss statement (P&L) lists revenue, food
and beverage cost, labor cost, other expense, and profit.
• The P&L is important because it indicates the efficiency
and profitability of an operation.
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Understanding the Income
(Profit and Loss) Statement
• The Uniform System of Accounts is used to report
financial results in most foodservice units. This system
was created to ensure uniform reporting of financial
results.
• Published by the National Restaurant Association.
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Common Percentages Used
in a P&L Statement
1. Food and Beverage Cost
Revenue
= Food and Beverage Cost %
2. Labor Cost
Revenue
= Labor Cost %
3. Other Expense
Revenue
= Other Expense %
4. Total Expense
Revenue
= Total Expense %
5. Profit
Revenue
= Profit %
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Understanding the Budget
• Budget
– An estimate of projected revenue, expense, and profit.
– The budget is known as the plan.
– All effective managers, whether in the commercial (for profit) or
non-profit sector, use budgets.
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Understanding the Budget
• Performance to budget is the percentage of the
budget actually used.
• The 28-day-period approach to budgeting
– 13 equal periods of 28 days each
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Understanding the Budget
• Percentages are used to compare actual expense with
the budgeted amount, using the formula
Actual
Budget = % of Budget
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Understanding the Budget
• “in-line” with the budget vs. “significant” variation to the
budget.
• A significant variation is any variation in expected costs
that management feels is an area of concern.
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Understanding the Budget
•
If significant variations with planned results occur,
management must:
1. Identify the problem
2. Determine the cause
3. Take corrective action
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Technology Tools
• Most hospitality managers would agree that an accurate
and timely income statement (P&L Statement) is an
invaluable aid to their management efforts.
• There are a variety of software programs on the market
that can be used to develop this statement.
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Technology Tools
• Variations include programs that can compare actual
results to budgeted figures or forecasts, to prior-month
performance, or to prior-year performance.
• P&L’s can be produced for any time period, including
months, quarters, or years.
• Most income statement programs will have a budgeting
feature and the ability to maintain historical sales and
cost records.
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Technology Tools
• Not all information should be accessible to all parties,
and security of cost and customer information can be
just as critical as accuracy.
• To effectively manage an operation, a manager will need
to communicate with employees, guests, and vendors.
Thus, the software you will need includes office products
for word processing, spreadsheet building, faxes, and email.
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