1. MONITOR CATERING REVENUE AND COSTS
D1.HFI.CL8.08
Trainer welcomes students and introduces him/herself.

2. Introduction Monitor catering revenue and costs Classroom schedule
Trainer contact details
Assessments
Resources:
Calculator, pen and paper
Session Introduction
Welcome trainees and introduce the classroom schedule
Discuss housekeeping issues such as times of attendance, expected classroom behavior, contact details, resources required such as a calculator
Explain that the trainees will be assessed and the requirements of those assessments.
Trainers will find it beneficial to have access to the following training equipment:
Whiteboard
Butchers paper
Spreadsheet software is optional but may assist in the demonstration of calculations
Internet access is optional but will assist with using relevant, local examples to illustrate concepts.
Get to know you activity on next slide.

3. Introduction
Unit comprises four elements which are covered in this sequence:
Use financial record keeping technology
Create financial control system
Create production control system
Respond to the results produced by the established control systems
Trainer advises students this Unit comprises four elements, as listed on the slide explaining:
Each Element comprises a number of Performance Criteria which will be identified throughout the class and explained in detail
Students can obtain more detail from their Trainee Manual
The course presents advice and information but where their workplace requirements differ to what is presented, the workplace practices and standards must be observed.

4. Use financial record keeping technology
Develop computer hardware to implement internal controls for catering operations
Develop computer software to implement internal controls for catering operations
Integrate catering revenue and cost objectives and requirements into existing control systems
Enter catering financial data into control systems
Manipulate catering financial data into control systems
Continued from previous slide.

5. Use financial record keeping technology
Measuring performance:
What is profit?
Nature and size of catering operations
Guide to cost and profit levels in percentages
Revenue
Expense
Profit
Trainers discuss with trainees that catering operations must be profitable and what that means. The distinction between the different types of catering operations should be made here. Use a whiteboard or simliar to display the percentages that guide catering business for profit and cost levels.
Food costs should be between 20-28%
Staff costs should be kept below 27%
Other costs will range from %
Profit will be around 10%.

6. Use financial record keeping technology
Defined
Measures
Safeguard assets
Promote efficient operations
Maintain accurate and reliable accounting records
Compliance with policies and procedures
Trainers: It is important that trainees are clear on the need for internal controls and can identify internal control measures in the workplace. The next slide also illustrates this.

7. Use financial record keeping technology
Internal controls in catering operations:
Menu design, recipes and costs
Staffing needs, rostering and costs
Ordering, receiving and storing food and beverage stock or inventory
Preparation of food and beverages for resale
Continued from the previous slide.

8. Use financial record keeping technology
Computer systems:
Implementing computer systems
Analysis
Design
Implementation
Considerations
Costs and benefits
Compatibility
Trainers discuss the phases of implementing computer systems and the key considerations for managers of catering operations.

9. Use financial record keeping technology
Computer systems:
Hardware options
POS systems
Handwriting recognition
Staff sharing technologies
Motion detection
Impact of the Internet and Wi-Fi
Trainers: Hardware and software options over the next two slides are examples only. You should refer to local relevant hardware choices using examples based on experience where appropriate.

10. Use financial record keeping technology
Computer systems:
Software options
Financial control
Revenue
Cost control
Kitchen production
Other
Impact of the Internet and Wi-Fi
Continued from previous slide.

11. Use financial record keeping technology
Integrate catering objectives into the financial system:
STUDENT ACTIVITY
What is the financial system?
Revenue:
Forecasts
Security
Food costs:
Menu
Standard recipes
Trainer: In small groups or as a class, discuss the revenue and cost objectives of catering operations based on the experience of trainees and the trainer. Relevant local examples should be used and form the basis for illustrations over the next series of slides. The training manual provides a general overview.

12. Use financial record keeping technology
Integrate catering objectives into the financial system:
Beverage costs
Inventory:
Purchasing
Receiving
Storing
Labour costs:
Continued from previous slide.

13. Use financial record keeping technology
Integrate catering objectives into the financial system:
POS systems
Separation of duties
Standardised recipes
Stocktakes
Reconciliations
Kitchen production controls
Labour specific controls
Continued from previous slide.

14. Use financial record keeping technology
Financial data:
Enter into financial control system
Historical data
Current data
Other information
Reports and schedules
Budget
Performance reports
Trainers should ensure that trainees are clear on the definition of the financial control system within catering operations. Refer to the training manual. Using small groups and display materials, it may also be useful to identify local examples of financial data, budgets and performance reports. Trainers may encourage trainees to provide examples from their workplace or trainers may provide themselves.

15. Create financial control system
Two performance criteria:
Develop or confirm an existing financial control system to monitor performance in the catering department
Input financial data into the catering financial control system
Trainer reviews the requirements for the second element of this unit explaining that the focus is now on the financial control system. The definition for the financial control system could be displayed as a reminder for trainees.
Trainers should also explain that some workplaces have no computerised systems and others may use advanced technologies.

16. Create financial control system
Monitoring performance:
Uniform Systems of Accounts
Cost classifications
Fixed and variable
Controllable and non-controllable
Activity - When is each classification used?
Trainers highlight the features of a financial control system and the different ways information can be presented. Trainees might find it useful to review the Uniform Systems of Accounts for Restaurants or other summary of information for catering operations so that specific examples can be used. This could be undertaken as a class activity.

17. Create financial control system
Percentages:
Common standard for evaluating performance
Part – individual revenue or expense
Whole – Total revenue
Part
Whole
Decimal
100
Trainers will need to assess the mathematical ability of the group of trainees with regard to calculating percentages. The following explanation may help. Trainers should provide examples for trainees to practice should this be required. The profit and loss statement from the training manual can be used.
Percentages in their most common form are expressed with the percent (%) symbol and always mean out of a hundred. For example, if you think 15% of your customers will choose the vegetable curry option from the menu then 15 out of every 100 customers served will select this item.
Percentages can also be expressed as a fraction, 15/100 or as a decimal 0.15.

18. Create financial control system
The profit and loss statement
Trainers use the detail in the training manual to introduce the different components of the profit and loss statement. The format of the profit and loss should be discussed and the nature of the information that is included.
The following series of slides will detail the analysis of the profit and loss. The data in this statement can be used as an example.
Note that trainees could perform calculations and analysis based on their review of the training manual and then discuss as a class as an alternative method for presenting this content.

19. Create financial control system
The profit and loss statement:
Gross profit
Operating expenses
Non-operating expenses
Supporting schedules
Continued from previous slide.

20. Create financial control system
Analysis of the profit and loss statement:
Sales
Calculation
Adjust for price
Interpretation
Continued from previous slide.

21. Create financial control system
Analysis of the profit and loss statement:
Food and beverage expenses
Percentage calculations
Beware of Revenue to use
Interpretation
Food and beverage inventory turnover rate
Calculation
Continued from previous slide.

22. Create financial control system
Analysis of the profit and loss statement:
Labour expenses
Calculation
Interpretation
Profit
Interpretation – good or not?
Continued from previous slide.

23. Create financial control system
Other performance measures:
Budgets:
Department
Expense
Variances
Performance to budget
Break-even analysis
Fixed and variable costs
Sales? Expenses? Profit
Trainer discusses other performance measures as indicated in the training manual. Note that variances are reviewed in the next three slides.

24. Create financial control system
Variances are:
Expressed as monetary units, percentages or sales volume
Favourable – beneficial, positive
Unfavourable – need investigation
Evaluated according to the effect on profit
Description
Actual over budget
Actual under budget
Sales and Profit
Improve profit Favourable
Reduce profit Unfavourable
Expenses
Improve profit Favourable
Trainer: You can decide to review variance calculations now or include with Element 4 Respond to results produced by established control systems. The variance series of slides will be repeated in that element.
Take time to explain the concepts of favourable and unfavourable. It is best to avoid the terms “positive or negative” and “good or bad.” Variances themselves are neither of these – they either indicate a contribution to profit or have reduced profit. Trainees can note table and keep it as a reference to assist with assessments.

25. Create financial control system
2 main calculations:
Horizontal analysis
Actual results and budgeted numbers for EACH line item are compared
Actual minus budget = Variance in monetary unit
Variance divided by budget x 100 = Variance percent
Line item
Budget
Actual
Variance
Variance %
Favourable
Unfavourable
Sales
56,000
58,200
2,200
3.93%
Food costs
16,800
18,900
2,100
12.5%
Trainer takes trainees through calculations.
A full report on variances can show whether there are any serious problems between actual and budgeted results and where any problems are located.
Trainer may give trainees a three step approach to variance analysis:
1. Calculate the variance
2. Decide if variance is favourable or unfavourable
3. Investigate variance if required.

26. Create financial control system
2 main calculations:
Vertical analysis
EACH line item calculated as a percentage of sales
Budget and actual reports are calculated separately
Line item
Budget
Variance
Actual
Sales
56,000
100%
58,200
Food costs
16,800
30.0%
18,900
32.47%
Wages
11,000
19.64%
18.9%
Advertising
560
1.0%
800
1.37%
Total Expenses
28,360
50.64%
30,700
52.75%
Profit or Income
27,640
49.36%
25,300
43.47%
Owners and managers often budget expenses as a percentage of sales. So these percentages can also be used to compare budget and actual results.
Trainer takes trainees through calculations. Note that budget line items are divided by budgeted sales and actual line items by actual sales.

27. Create financial control system
Inputs Processing Outputs
TRANSACTIONS
TRANSACTIONS
SOURCE DOCUMENTS
JOURNALS
LEDGERS
TRIAL BALANCE
FINANCIAL REPORTS
LEDGERS
Trainers walk trainees through the diagram explaining how financial data is input into the financial control system.
Alternatively, trainers could provide relevant local examples and in small groups, trainees note the step and procedures to enter the financial data.

28. Create production control system
Two performance criteria:
Develop or confirm an existing production control system to monitor performance in the catering department
Input production data into the catering financial control system
Trainer reviews the requirements for the third element of this unit explaining that the focus is now on the production control system. The definition for the production control system could be displayed as a reminder for trainees.
Trainers should also explain that some workplaces have no computerised systems and others may use advanced technologies.

29. Create production control system
What is the production control system?
Defined
Six step process
Maximising financial performance and production efficiencies
Trainers use relevant local examples to explain the production control system and ensure trainees are familiar with the six step process.

30. Create production control system
Key features:
Menu design and recipes
Ordering, receipt and storage of supplies
Clear descriptions
Checking goods received
Timely work practices
Knowledge of storage requirements
Trainers discuss the key features of a production control system illustrating with relevant local examples – especially where computerised solutions are used.

31. Create production control system
Key features continued:
Daily production schedules
Menu, popularity data, forecasts
Margin of error
Prior day carry over
Todays’ production
Today’s sales forecast
Continued from previous slide.

32. Create production control system
Key features (continued):
Product issuing
Forms and documents
Authorisation
Returns
Store person
Beverage issues – other considerations
Continued from previous slides.
Trainers should address beverage issues if relevant and refer to the training manual for controls to consider.

33. Create production control system
Key features (continued):
Inventory control
Stocktakes
Managing food production
Waste
Overcooking
Portion control
Carryovers
Make or buy decisions
Continued from previous slides.

34. Create production control system
Key features (continued):
Managing beverage production
Automated choices
Theft management
Minimise not eliminate
Rewards
Continued from previous slide.
Trainers discuss theft and the attitude that rewarding when theft does not occur is more effective than punishing when it does to prevent theft in the long term. Use relevant local examples where appropriate.

35. Create production control system
Input production data:
STUDENT ACTIVITY
Food production
Recipes, Supplies
Production schedules
Labour costs
Direct, indirect
Inventory
Trainers review the types of production data to be entered into the production control system. It may be beneficial to organise trainees into small groups and compile a list of all the types of production data that they know.
Trainers can write on display material and ensure that all the key data types are included and explained.

36. Respond to results from the established control systems
Take action to address unacceptable expense figures
Take action to address unacceptable revenue figures
Negotiate with management to revise budgeted figures
Trainer: provide an overview of the fourth element for trainees explaining that variances may have already been discussed. If variance calculations are to be reviewed in this element, continue to the next slide. Otherwise skip to slide 43.

37. Create financial control system
Variances are:
Expressed as monetary units, percentages or sales volume
Favourable – beneficial, positive
Unfavourable – need investigation
Evaluated according to the effect on profit
Description
Actual over budget
Actual under budget
Sales and Profit
Improve profit Favourable
Reduce profit Unfavourable
Expenses
Improve profit Favourable
Trainer: You can decide to review variance calculations now or include with Element 4 Respond to results produced by established control systems. The variance series of slides will be repeated in that element.
Take time to explain the concepts of favourable and unfavourable. It is best to avoid the terms “positive or negative” and “good or bad.” Variances themselves are neither of these – they either indicate a contribution to profit or have reduced profit. Trainees can note table and keep it as a reference to assist with assessments.

38. Create financial control system
2 main calculations:
Horizontal analysis
Actual results and budgeted numbers for EACH line item are compared
Actual minus budget = Variance in monetary unit
Variance divided by budget x 100 = Variance percent
Line item
Budget
Actual
Variance
Variance %
Favourable
Unfavourable
Sales
56,000
58,200
2,200
3.93%
Food costs
16,800
18,900
2,100
12.5%
Trainer takes trainees through calculations. A full report on variances can show whether there are any serious problems between actual and budgeted results and where any problems are located.
Trainer may give trainees a three step approach to variance analysis:
1. Calculate the variance
2. Decide if variance is favourable or unfavourable
3. Investigate variance if required.

39. Create financial control system
2 main calculations:
Vertical analysis
EACH line item calculated as a percentage of sales
Budget and actual reports are calculated separately
Line item
Budget
Variance
Actual
Sales
56,000
100%
58,200
Food costs
16,800
30.0%
18,900
32.47%
Wages
11,000
19.64%
18.9%
Advertising
560
1.0%
800
1.37%
Total Expenses
28,360
50.64%
30,700
52.75%
Profit or Income
27,640
49.36%
25,300
43.47%
Owners and managers often budget expenses as a percentage of sales. So these percentages can also be used to compare budget and actual results.
Trainer takes trainees through calculations. Note that budget line items are divided by budgeted sales and actual line items by actual sales.

40. Respond to results from the established control systems
Identify unacceptable variances:
Remember variance calculations!
Favourable
Unfavourable
When is a variance unacceptable?
Trainers refer to local, relevant examples and use both personal experience and that of the trainees to discuss unacceptable variances. Trainers may also source local benchmarks as a further illustration.

41. Respond to results from the established control systems
Determine the cause of the variance:
Revenue
Price
Volume
Expenses
Rate or Price
Quantity
Trainers explain that trainees need to be able to identify the cause for the variance so that appropriate investigations and action are taken.

42. Respond to results from the established control systems
Corrective action:
Food expenses
Unfavourable, higher than planned
Common approaches to remedy variance
Portions, recipes
Product quality and mix
Revise processes
Trainers can review the next series of slides as an activity where a current local example is used to illustrate unfavourable variances.
At the conclusion of the activities, the slides can be reviewed to ensure trainees have covered and understand the content

43. Respond to results from the established control systems
Corrective action:
Inventory turnover
Unfavourable, higher than planned
Common approaches to remedy variance
Processes and procedures for food storage
Waste minimising practices
Security measures
Staff training
Minimise wastage!
Continued from previous slides.

44. Respond to results from the established control systems
Corrective action:
Labour or payroll costs
Monetary amounts
Hours worked
Common reasons for variance
Unplanned overtime
Inefficient work practices
Staff qualifications not matched to position
Continued from previous slides.

45. Respond to results from the established control systems
Corrective action:
Other expenses
Unfavourable variances
Action that can be taken
Correct allocation of expenses to catering department
Maintenance programs changed
Implement a bid process for suppliers
Continued from previous slides.

46. Respond to results from the established control systems
Corrective action:
Revenue
Unfavourable variances
Change to forecast assumptions
Menu items
Portion sizes
Price
Continued from previous slides.

47. Respond to results from the established control systems
Corrective action:
Revenue is recorded accurately
Permanent record of sales
Cash sales counted and authorised
Reconciliations
Allocations
Address workplace policies and procedures
Continued from previous slides.

48. Respond to results from the established control systems
Corrective action:
Adjust prices
Discounts
Promotions
Other offers
Continued from previous slides.

49. Respond to results from the established control systems
Negotiate with management to change budget:
Role of the budget
Performance
Preparation process
Revising the budget
Negotiation techniques
Trainer: Trainees must appreciate that organisations have limited resources or funds and all departments are competing for these funds so that they can maximise revenue.
Personal and trainee’s experience should be drawn upon for this discussion as relevant current examples will give trainees a better understanding of the concepts.