1. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Chapter 8 Operations, Budgeting, and Control The Restaurant: From Concept to Operation, 7th edition Courtesy of Roy's New York City. Photo by Paul Warhol. 1

2. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Objectives After reading and studying this chapter, you should be able to: –Describe front-of-the-house operations –Describe back-of-the-house operations –Identify ways to control food, beverage, and labor costs –Discuss methods of guest check control 2

3. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Restaurant Operations Split between back and front of the house –Back of the house areas: Purchasing, receiving, storage, issuing, food preparation and service, dishwashing area, sanitation, accounting, budgeting, and control –Front of the house: Operations and people who interface with customers in dining areas 3

4. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Front of the House Refers to: –Hosts, bartenders, servers, and bussers –Opening and closing manager Curbside appeal –First impression Visual appeal of the building and parking area are important to potential guests 4

5. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Front of the House (cont’d.) First thing restaurant managers do: –Forecast how many guests are expected and share that information with the kitchen –Guest count Arrived at by taking the same day last year and factoring in things like today’s weather, day of the week, etc. 5

6. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Daily Flash Report 6 © John Wiley & Sons, Inc.

7. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Front of the House (cont’d.) Managers –Make sure everything goes smoothly Elements of management: planning, organizing, communicating, decision-making, motivation, and control –Goals are set for each key result area –Schedules and checklists help organization “Lead sheet” lists staff on both shifts so you can easily see who is on duty 7

8. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Back of the House Sometimes called the “heart” of the operation –Kitchen: center of production –Production sheets: detail all tasks necessary to bring food quantities up to par stock and to complete preparation on time –Chef: makes sure all menu items are prepared according to standardized recipes and the line is ready for service May act as a caller during service 8

9. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Tips for managers-by Foodservice Where House –Manage costs effectively –Increase sales –Be consistent –Deliver superior service –Manage time wisely –Create positive work environment –Motivate the team –Be a good example –Reward as often as possible 9

10. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Control There is so much food and beverage in a restaurant –Unless management and owners exert tight control, losses will occur –Programs may be used Chef Tec shows actual food cost compared with ideal food cost, known as food optimization 10

11. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Calculating the Food Cost Percentage Food cost percentage –Should be calculated at least monthly: Formula: Cost/Sales × 100 Determining the Food Cost of a Particular Item on a Menu –FC%=EDC ÷ MP 11

12. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Recycling to Reduce Costs Recycling has become business as usual for 65% of restaurants 12

13. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Liquor Control Critical to the success of the restaurant Management decides on the selling price and mark-up for beer, wine, and liquor –Sets the standard for beverage cost percentage Beer pouring cost: 24 to 25 percent Wine pouring cost: 26 to 30 percent Liquor pouring costs: 16 to 20 percent Combined beverage pouring cost: 23 to 25 percent of beverage sales 13

14. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Controllable Expenses Various expenses that can be changed in the short term: –Variable costs –Payroll –Direct operating expenses –Marketing –Heat, light, and power –Repairs and maintenance 14

15. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Labor Costs May range –Depends on the type of restaurant and degree of service provided 16 percent of sales in a quick-service restaurant 24 percent in a casual operation Up to about 30 percent in an upscale restaurant 15

16. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Labor Costs (cont’d.) Projecting payroll costs –Requires preparation of staffing schedules and establishing wage rates Staffing patterns may vary during different periods of the year Categories of payroll and related costs: –Variable (percentage ratio to payroll) –Fixed (dollar amount per employee on the payroll) 16

17. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Figure 8.5: Form for projecting expected payroll amounts © John Wiley & Sons, Inc. 17

18. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Labor Costs (cont’d.) Variable items –Include those mandated by law Social Security, unemployment insurance, workers’ compensation insurance, and state disability insurance Fixed items –Usually refer to employee benefits Health insurance, union welfare insurance, life insurance, etc. 18

19. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Guest Check Control Without it a server can give food and beverages away or sell it –Guest checks can be altered and substitutions made if they are not numbered Most restaurants require the server sign for checks and return those not used 19

20. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Restaurant Shoppers Report 20

21. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Guest Check Control (cont’d.) For tight control: –Every check is audited, additions checked, and every check accounted for by number Some operators control income by having servers act as their own cashiers –Bring their own banks of $50 in change –Do not operate from a cash register but out of their own pockets –Deposit income in a night box at the bank 21

22. Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved. Productivity Analysis and Cost Control Various measures of productivity have been developed: –Meals produced per employee per day, meals produced per employee per hour, etc. Simplest productivity measure: –Sales generated per employee per year: Divide the number of full-time equivalent employees into the gross sales for the year 22