Chapter 10
Food and Beverage
Management:
Analysis and
Decision Making
Principles of Food and
Beverage Management
Learning Objectives
After completing this chapter, you should be able to:
• Explain how enhanced quality should be the focus of an
operation’s improvement philosophy.
• Explain a three-step process for analyzing a restaurant or
foodservice operation and establishing financial priorities.
• Describe procedures for corrective action plans.
• Describe basic procedures for implementing change.
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
QUALITY AS AN IMPROVEMENT PHILOSOPHY
Management Decision Making
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
Evaluating Quality
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
A CLOSE LOOK AT FINANCIAL ANALYSIS
Set Expectations
Annual Operating Budget
The Budget Team
Budgeting Revenues
Budgeting Expenses
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
Assess the Actual Situation
Analyze the Variance
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
Revenue Analysis
Expense Analysis
Profit Analysis
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
Budget Revisions
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
CORRECTIVE ACTION PROCESS
Identify Problems
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
Managers Math
Answer the Questions:
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
Make Decisions
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
PROCEDURES FOR IMPLEMENTING CHANGE
Overcoming Resistance to Change
Managing Change
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
Quality Improvement in Action: Implement Rollouts
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
Managers Are Decision Makers
Chapter 10 Food and Beverage Management: Analysis
and Decision Making - Summary
1. Explain how enhanced quality should be the focus of an
operation’s improvement philosophy.
•
A quality system involves several steps: establish standards, identify
defects, track defects, and implement a problem-solving strategy to
correct defects that occur.
•
Spot checking strategies by the manager and chef are useful for
evaluating quality.
•
They might, for example, order the same meal during two different
shifts and see whether the meal is the same.
•
They should evaluate the plating, speed of delivery, and quality, and
confirm that a standardized recipe was followed.
•
Managers may take daily or weekly notes to record their findings and
communicate issues to the appropriate staff members.
Chapter 10 Food and Beverage Management: Analysis
and Decision Making - Summary
2. Explain a three-step process for analyzing a restaurant or
foodservice operation and establishing financial priorities.
• A three-step analysis process for establishing corrective action
priorities includes developing a budget, assessing the situation using
the income statement, and analyzing for variances.
• Budgets are prepared with input from the management team.
• The basic process includes estimating revenues and then forecasting
expenses (including fixed, variable, and mixed costs) to determine
profits.
• Experienced managers use historical information and their knowledge
about internal and external changes to develop budget
benchmarks.
• Income statements reflect the operation’s efficiency and profitability.
Chapter 10 Food and Beverage Management: Analysis
and Decision Making - Summary
2. Explain a three-step process for analyzing a restaurant or foodservice
operation and establishing financial priorities continued…
• Significant variances between budget expectations and actual
performance reflected by the income statement require analysis.
• Analysis should include both dollar figures and profit percentages.
• If basic assumptions have changed, the budget should be revised.
Chapter 10 Food and Beverage Management: Analysis
and Decision Making - Summary
3. Describe procedures for corrective action plans.
• Sometimes corrective action is necessary to reduce variances.
• First, problems must be identified to determine those that most affect
profitability.
• Managers must then make decisions about how to address
unacceptable variances most effectively.
• One decision-making process involves defining the problem,
determining and evaluating solution alternatives, selecting and
implementing the best alternative, and evaluating its effectiveness.
Chapter 10 Food and Beverage Management: Analysis
and Decision Making - Summary
4. Describe basic procedures for implementing change.
• Employees may resist the changes required.
• Managers can use several strategies to overcome resistance to
change.
• First, the process will be easier if the manager has involved employees
and explained why changes are necessary.
• Also, change is easier if situations have historically been better after
changes than before.
• A continuous quality improvement (CQI) initiative can drive the
culture in which change is implemented.
• Employees will know that regardless of how small a change might be,
the operation can better meet its mission and goals.
• Several basic procedures can be used to implement rollouts of new
or revised policies, procedures, and menu items.
Chapter 10 Food and Beverage Management: Analysis
and Decision Making - Summary
4. Describe basic procedures for implementing change continued…
• This process involves identifying rollout changes, planning rollout
details, considering staff training if necessary, and implementing the
rollout.
• Then, rollout data must be collected and evaluated, and the rollout
may need adjustments depending on how well its objectives were
attained.
• A final step is recording the rollout results.
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
Key Terms:
Bottom line A planned profit or another financial goal such as to break
even.
Calendar year A year that begins on January 1 and ends on
December 31.
Continuous quality improvement (CQI) A system of ongoing efforts to
better meet or exceed customers’ expectations, and to define ways to
perform work with better, less costly, and faster methods.
Fiscal year Any 365-day accounting period that does not begin on
January 1.
Fixed cost A cost, such as rent, that does not change as revenue
changes.
Food cost percentage The percentage of all food revenue that was
spent to purchase the food products required to generate that revenue.
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
Key Terms continued:
Income statement The percentage of all food revenue that was spent to
purchase the food products required to generate that revenue.
Mixed cost A cost that contains both fixed and variable components,
such as labor.
Net income The profit made in a business.
Profit percentage The profit or loss expressed as a percentage of total
revenue.
Quality system A system that outlines how quality processes and
procedures should be implemented, controlled, and maintained.
Revenue, incremental
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
Key Terms continued:
Rollout The process of introducing something new in an operation.
Spot checking A regular review of standardized recipes and food
products as a way to maintain product quality.
Supply and demand, law of Economic beliefs about the supply of an
item and its price relative to its demand. Generally, as the price of an
item increases, the demand for the item decreases (although the
reverse can also occur).
Variable cost A cost that changes in proportion to revenues.
Chapter 10 Food and Beverage Management: Analysis
and Decision Making
Chapter Images