Chapter 8

Operations, Budgeting, and Control

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

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

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

Front of the House (cont’d.)• Forecasting

– 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.

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

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

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

• Food cost percentage – Should be calculated at least monthly:

• Formula: Cost/Sales × 100

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

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

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

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)

Figure 8.5: Form for projecting expected payroll amounts

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.

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

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

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