1. CHAPTER 14
RESTAURANT OPERATIONS,
BUDGETING, and CONTROLLING COSTS
•Front-of-the-House Operations
•Back-of-the-House Operations
•Control
–Food
–Beverage
•Controllable Expenses
–Labor
–Guest Check Control
•Productivity Analysis & Cost
Control
2. FRONT-OF-THE-HOUSE
• Front of the house
refers to the hosts,
bartenders, servers &
bussers.
• The visual appeal of the
building & parking area are
important to potential
guests.
– Guests receive a first
impression known as
curbside appeal—or, would
you even stop or get out of
the car?
3. FRONT-OF-THE-HOUSE
• The first thing restaurant
managers do is to
forecast how many
guests are expected and
share that information
with the kitchen.
• A guest count is arrived
at by taking the same day
last year and factoring in
things like today’s
weather, day of the week,
and so on.
4. FRONT-OF-THE-HOUSE
• The elements of
management are
planning, organizing,
communicating, decision-
making, motivation &
control.
• Schedules and checklists
help organize the
restaurant.
• A “lead sheet” lists staff
on both shifts so you can
easily see who is on duty.
5. BACK-OF-THE-HOUSE
OPERTIONS:
• The back of the house is
sometimes called the “heart”
of the operation.
• The kitchen is the center of
production.
• Production sheets are created
for each station, detailing all
the tasks necessary to bring
the food quantities up to par
stock of prepared items & to
complete the preparation on
time.
6. BACK-OF-THE-HOUSE
OPERTIONS:
• The chef makes sure
that all menu items are
prepared in accordance
with the standardized
recipes and that the line
is ready for service.
• During service, either
the chef or a manager
may act as a caller—in
an attempt to control
the ordering and
expediting of plates at
the pass.
7. CONTROL
• There is so much food and
beverage in a restaurant that,
unless management and owners
exert tight control, losses will
occur.
• Restaurants can use programs
like Chef Tec, which shows the
actual food cost compared with
the ideal food cost. This is
known as food optimization.
• The food cost percentage should
be calculated at least monthly:
– The formula for doing the
food cost percentage is
Cost/Sales × 100
8. LIQUOR CONTROL
• Control of liquor is critical
to the success of the
restaurant.
• Management decides on the
selling price and mark-up
for beer, wine, and liquor.
– This will set the standard for
the beverage cost percentage.
– Normal pouring cost for beer
is 24 to 25%.
– Wine should have a pouring
cost of 26 to 30%.
– Liquor pouring costs should
be 16 to 20% of sales.
– Combined, the beverage
pouring cost should be 23 to
25% of beverage sales.
9. CONTROLLABLE EXPENSES
• Term used to describe the
various expenses that can
be changed in the short
term:
– Variable costs
– Payroll
– Operating expenses
– Marketing
– Heat
– Light
– Repairs
– Maintenance
10. LABOR COSTS
• Depending on the type of
restaurant & the degree
of service provided, labor
costs may range from
approximately 16% of
sales in a quick-service
restaurant to 24% in a
casual operation & up to
about 30% in an upscale
restaurant.
11. LABOR COSTS
• Projecting payroll costs
requires the preparation of
staffing schedules &
establishing wage rates.
• Staffing patterns may vary
during different periods of
the year, with changes
occurring seasonally or when
there are other sales
variations.
• Payroll and related costs fall
into two categories:
• Variable (percentage ratio
to payroll).
• Fixed (dollar amount per
employee on the payroll).
12. LABOR COSTS
• Variable items include
those mandated by law:
Social Security,
unemployment insurance,
Workers’ Compensation
insurance & state
disability insurance.
• The fixed items usually
mean employee benefits &
include health insurance,
union welfare insurance,
life insurance & other
employee benefits.
13. GUEST CHECK CONTROL
• Without check control, a
server can give food &
beverages away or sell it &
keep the income.
• Guest checks can be altered
& substitutions made if the
checks are not numbered.
– To avoid such temptations,
most restaurants require that
the server sign for checks as
received & return those not
used at the end of the shift.
14. GUEST CHECK CONTROL
• For tight control, every guest
check is audited, additions
checked, and every check
accounted for by number.
• Some operators control
restaurant income by having
servers act as their own
cashiers.
– They bring their own banks of
$50 in change; they do not
operate from a cash register
but out of their own pockets;
they deposit their income in a
night box at the bank.
15. PRODUCTIVITY ANALYSIS &
COST CONTROL
• Without knowing what each
expense item should be as a
ratio of gross sales, the
manager is at a distinct
disadvantage.
• The simplest employee
productivity measure is sales
generated per employee per
year:
– Divide the number of full-time
equivalent employees into the
gross sales for the year.
