Matakuliah
Tahun
: V0254 - Operational Tata Hidang II
: 2010
Controlling Other Expenses
Pertemuan 7
Managing Other Expenses
• Other expenses are those items that are neither food,
beverage, nor labor.
• Other expenses can account for a significant financial
expenditure.
• You must look for ways to control all of your expenses,
but sometimes the environment in which you operate
will act upon your facility to influence some of your costs
in positive or negative ways.
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Managing Other Expenses
• In the past, serving water to each guest upon arrival in a
restaurant was simply SOP (standard operating
procedure) for many foodservice operations. The rising
cost of energy has caused many foodservice operations
to implement a policy of serving water on request rather
than with each order.
• Energy conservation and waste reduction are two
examples of attempts to control and reduce other
expenses.
• Source reduction is working with food manufactures
and wholesalers to reduce product packaging waste.
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Managing Other Expenses
• Each operation will have its own unique list of required
other expenses.
• Other expenses can constitute almost anything in the
foodservice business.
• Groupings, if used, should make sense to the operator
and should be specific enough to let the operator know
what is in each category.
• Operators can use their own categories, or follow those
used in the Uniform System of Accounts for Restaurants
(USAR) recommended for use by the National
Restaurant Association.
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Managing Other Expenses
• While there are many ways in which to consider other
expenses, two views of these costs are particularly
useful for the foodservice manager.
• They are:
– Fixed, variable, or mixed
– Controllable or noncontrollable
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Fixed, Variable, and Mixed Other Expenses
• A fixed expense is one that remains constant despite
increases or decreases in sales volume.
• A variable expense is one that generally increases as
sales volume increases, and decreases as sales volume
decreases.
• A mixed expense is one that has properties of both
fixed and variable expenses.
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Fixed, Variable, and Mixed Other Expenses
• The following shows how fixed, variable, and mixed
expenses behave as sales volume increases.
Expense
As a Percentage of
Sales
Total Dollars
Fixed
Expense
Decreases
Remains the Same
Variable
Expense
Remains the Same
Increases
Mixed
Expense
Decreases
Increases
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Fixed, Variable, and Mixed Other Expenses
• Percents can be computed for other expenses as follows:
Other Expenses
Total Sales
Cost %
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= Other Expense
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Fixed, Variable, and Mixed Other Expenses
• If an operator feels that a fixed expense percentage is
too high, he or she must either increase sales or
negotiate better rates.
• Variations in expense percentage that relate only to
whether an expense is fixed, variable, or mixed should
not be of undue concern to management. It is only when
a fixed expense is too high or a variable expense is out
of control, that management should act. This is called
management by exception.
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Controllable and Noncontrollable Other
Expenses
• A noncontrollable expense is one that the manager
can neither increase nor decrease
• A controllable expense is one in which decisions
made by the manager can have an effect of either
increasing or reducing the expense.
• Management should focus its attention on controllable
rather than noncontrollable expenses.
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Monitoring Other Expenses
• When managing other expenses, two control and
monitoring alternatives are available. They are:
– Other expense cost %
– Other expense cost per guest
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Monitoring Other Expenses
Other Expenses
Total Sales
Cost %
Other Expense
=
Other Expense
Number of Guests Served = Other Expense
Cost
Per Guest
• The cost per guest formula is of value when
management believes it can be helpful, or the lack of
sales figure makes the computation of other expense
percentage impossible.
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Reducing Other Expenses
• It is useful to break down other expenses into four
categories: food and beverage, labor, facility
maintenance, and occupancy when devising strategies to
lower costs.
• In general, fixed costs related to food and beverage
operations can only be reduced when measuring them
as a percent of total sales. This can be done only by
increasing the total sales figure.
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Reducing Other Expenses
• Labor related expenses can also be considered partially
fixed and partially variable.
• To reduce costs related to labor, it is necessary to
eliminate wasteful labor-related expenses.
• However, if an operator attempts to reduce costs too
much he or she may find the best workers employed
elsewhere.
• Reducing employee benefits while attempting to retain a
well-qualified workforce is simply management at its
worst.
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Reducing Other Expenses
• A properly designed and implemented preventative
maintenance program can go a long way toward
reducing equipment failure and thus decreasing
equipment and facility-related costs.
• Proper care of mechanical equipment prolongs its life
and reduces operational costs.
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Reducing Other Expenses
• One way to help ensure that costs are as low as possible
is to use a competitive bid process before awarding
contracts for serviced you require.
• In the area of maintenance contracts, for areas such as
kitchen or mechanical equipment, elevators, or grounds,
it is recommended that these contracts be bid at least
once per year.
• Air-conditioning, plumbing, heating and refrigerated
units should be inspected at least yearly, and kitchen
equipment should be inspected at least monthly for
purposes of preventative maintenance.
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Reducing Other Expenses
• Occupancy costs refer to those expenses incurred by
the foodservice unit that are related to the occupancy of
and payment for the physical facility it occupies.
• For the foodservice manager who is not the owner, the
majority of occupancy costs will be noncontrollable.
• The owner should find ways to control occupancy costs
such as rent and interest on debt, if possible.
• If occupancy costs are unrealistically high, no amount of
effective cost control can help “save” the operation’s
profitability.
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Technology Tools
• Depending upon the specific food service operation,
these costs can represent a significant portion of the
operation’s total expense requirements. As a result,
controlling these costs is just as important as controlling
food and labor-related costs.
• Software and hardware that can be purchased to assist
in this area include applications that relate to:
1. Assessing and monitoring utilities cost
2. Minimizing energy costs via the use of motion-activated
sensors
3. Managing equipment maintenance records
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Technology Tools
4. Tracking marketing costs/benefits
5. Menu and promotional materials printing - hardware and
software
6. Analysis of communications costs (telephone tolls)
7. Analysis of all other expense costs on a per-guest basis
8. Analysis of all other expense costs on a “cost per dollar sale”
basis
9. Comparing building/contents insurance costs across alternative
insurance providers
10.Software designed to assist in the preparation of the income
statement, balance sheet, and the statement of cash flows.
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Technology Tools
11.Income tax management
12.Income tax filing
 At the minimum, most independent operators
should computerize their records related to
taxes at all levels to ensure accuracy,
safekeeping, and timeliness of required filings.
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