1. Chapter 3
Cost Control

2. Cost Control Overview
Cost control is a business’s efforts to ……………………………………………………
Every business needs to make _______________ than it ___________ in order to survive.
Its sales, or _________, have to be higher than its costs.
Revenue is the income from …………………………………………………………….
_______ is the price an operation pays out in the purchasing and preparation of its products or the providing of its service.
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Chapter 3 | Cost Control

3. Types of Costs
A successful restaurant or foodservice operation needs to manage and control many costs.
Four main categories of costs: 1. 2. 3. 4.
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Chapter 3 | Cost Control

4. Costs cont. ___________ costs can change based on sales
Variable: go up and down as sales go ___________________in direct proportion; ex. ______ cost (more business, buy more food inventory)
Semivariable: go up and down as sales go up and down in ___________ proportion; labor costs (less business, must pay _____________ but can have less waiters)
the operation has a certain amount of _______ in how much it spends on these aspects of the operation.

5. Costs cont.
Non-controllable/fixed costs: needs to be paid ______________________________________
overhead costs = ____________________________________
do not change based on the operation’s ____________.

6. Operating Budgets
An _______________is a financial plan for a specific period of time (usually ________)
_________________ is a prediction of sales levels or costs that will occur during a specific time period.
Steps of forecasting
Analyze ___________: what items were popular at what time
Account for externalities:_______________________
Predict sales ______: How busy will certain days be?
Predict sales ______: how will each menu item sell
Most forecasting techniques rely on having accurate ___________________________________
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Chapter 3 | Cost Control

7. Forecasting cont.
The most common foodservice revenue forecasting techniques are based on the number of ___________and average _________________
A sales history is a record of the number of _____________________________________
Most operations can run historical sales and production reports from their _________________________ systems.

8. Profit-and-Loss Report
A profit-and-loss report (P&L) is ____________________________________________ P&L is also known as an ____________________p. 157
P&L report shows whether an operation has ________money during the time period covered by the report.
P&L helps management determine areas where ____________________ must be made to bring business operations in line with established financial goals.
For an operation to be profitable, sales must exceed _____.
________________is listed on bottom of P&L statement
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Chapter 3 | Cost Control

9. Cost-Control Tools Cost control measures:
___________ menu items (food costs)
________________________(labor costs)
Full-line supplier co.: one-stop shops that ______________________________________________________________________
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Chapter 3 | Cost Control

10. Steps in Controlling Food Costs
Food costs must be controlled during all seven stages of the food flow process:
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Chapter 3 | Cost Control

11. Determining Food Cost
________________: actual dollar value of the food used by an operation during a certain period (sold, given away, wasted, spoiled, overportioned, etc.)
____________: dollar value of a food product in storage and can be expressed in terms of units, values, or both:
______________ inventory is the physical inventory at the beginning of a given period.
The ____________________ inventory is the inventory at the end of a given period.
food cost formula:
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Chapter 3 | Cost Control

12. Determining Food Cost Percentage
Total food cost percentage is the relationship between __________ and the _____ of food to achieve those sales.
Food cost % formula
Food cost is a ____________ cost: It should _________ or ___________ in direct proportion to an increase or decrease in sales
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Chapter 3 | Cost Control

13. Establishing Standard Portion Costs
Most every operation has _______________ recipes that are followed every time a menu item is prepared.
For every standardized recipe, an operation should establish a _______________________, which is the exact amount that one serving, or portion, of a food item should cost when prepared according to the item’s standardized recipe.
A _______________________is a tool used to calculate the standard portion cost for a menu item (p. 169)
As with the standardized recipe, a recipe cost card should exist for _____________________________________________
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Chapter 3 | Cost Control

14. As-purchased versus Edible-portion Costs
The __________________________is used to cost an ingredient at the purchase price before any trim or waste is taken into account.(p. 171)
The ___________________________is used to cost an ingredient after trimming and removing waste, so that only the usable portion of the item is reflected.
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Chapter 3 | Cost Control

15. Recipe Yields
A ____________is the process of determining the number of portions that a recipe produces.
To convert a recipe, use the formula:
When determining yield, take into account for __________________ loss of meats and some vegetables (greens)
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Chapter 3 | Cost Control

16. Controlling Portion Sizes
Controlling ____________ is very important for a restaurant to meet its standard food cost.
Tools that are essential for accurate portion control include: 1. 2. 3. 4.
Another mechanism for ensuring that portions are the right size is to __________any item that can be preportioned before serving.
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Chapter 3 | Cost Control

17. Monitoring Production Volume and Cost
When restaurants produce too much, food cost goes ___; produce too little, and sales are lost.
A food production chart shows how much product should be ____________by the kitchen during a given meal period.
A well-structured chart can ensure product quality, avoid product ______________, and minimize ________
______________is critical in helping management forecast how many portions of each menu item to produce on a given day.
p. 177
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Chapter 3 | Cost Control

18. Menu Pricing The _______ is the primary sales tool in most restaurant
There are a number of methods for menu pricing: (p.178)
A contribution margin is the portion of dollars that a ____________________________________
1. ____________________________, an operation must know the portion costs for each item sold.
2. _______________pricing method, multiply raw food costs by a predetermined fraction.
3. __________________method, the total revenue is divided by the number of seats, average seat turnover, and days open in one year.
4. ______________percentage is equal to the food cost divided by food sales.
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Chapter 3 | Cost Control

19. Budgeting Labor Costs
Labor is a semivariable, controllable cost. Labor costs are tied to _____________________
Most operations have both ____________________________________
Operations must be aware of the fluctuations in their sales so as to have just the right amount of ______ on hand to handle customers efficiently
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Chapter 3 | Cost Control

20. Labor Cost Factors
___________________: amount of sales an operation is doing for a given time period, impacts labor costs.
_____________________: the number of employees hired to fill one position in a year’s time.
_____________________: specifications of the operation with regard to products and service (employee skills will need to be higher in fine dining vs. quick service)
A restaurant or foodservice operation must meet ________________ standards. If an employee does not prepare a product that meets the operation’s standards, the item must be redone. This costs money, in terms of wasted product and lost productivity (overcooked steaks, burnt fries)
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Chapter 3 | Cost Control

21. Scheduling
A __________________: shows the number of people needed in each position to run the restaurant or foodservice operation for a given time period. P. 190
To make the best estimates for a master schedule, it also needs to consider current ______________________
A _____________________is a chart that shows employees’ names and the days and times they are to work. P. 191
A contingency plan helps an operation remain efficient and productive even during _________________________________________ 1. 2.
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Chapter 3 | Cost Control

22. Quality Standards for Purchasing and Receiving
Purchasing: choose a ____________ _______
Receiving: receive only when operation is slow
Meat: _______________
Dairy: _______________
Fish: fresh, _______; frozen fish, __________
When receiving: 1.
2. Have a copy of ______________on hand
3. Check delivery against both ______________________________________
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Chapter 3 | Cost Control

23. Quality Standards for Storing
Monitor __________ food daily to preserve its quality.
Rotate all products in storage following the __________________________________
Check storage facilities:
Dry storage ____________
Refrigerator: _____________
Freezer: _______________
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Chapter 3 | Cost Control

24. Quality Standards for Food Production and Service
Standard-_________ sizes, ______________recipes, and standard-portion ___________ are all food-production standards.
Managers should __________ each item to be sure that it meets quality standards
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Chapter 3 | Cost Control

25. Quality Standards for Inventory
____________________means counting and recording the number of each item in the storeroom.
Closely monitor _______________ to ensure that products are ordered as they are needed.
Carefully monitoring inventory also helps ensure that no product goes to _________. Minimizing waste keeps costs __________ and sales ____.
_________% of all inventory shortages are due to employee theft
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Chapter 3 | Cost Control