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:
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–
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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