F&B Cost Control Flashcards by Christopher Uruma

definition: Cost Control

analyzing costs to optimize profits by reducing business expense

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% of restaurants that close within 3 years.

60%

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what does PESTEL stand for? What is it?

Political, Economic, Social, Technological, Environmental, Legal

Analysis tool to assess external/macro forces organization is faced with

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Product Life Cycle

Development, Introduction, Growth, Maturity, Decline

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Development phase events

investmenting, cost intensive and no revenue

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Introduction phase events

product availble, gradule sales, HIGH MARKETING and staff cost

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Growth phase events

sales start to grow, increased profits

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Maturity phase events

stable sales or increasing

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Decline

decrease in sales and needs reshaping

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Impact of a Manager

managing business, operations, people, personal skills

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Commercial v Institutional

commercial: profit oriented and usually easily visible
institutional: cost driven, invisible to external customers

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definition: fragmented

many competitors with no stand out establishment that can influence market

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definition: concentrated

fewer competitors with big influencers in the market ie. apple

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Basic business model

inputs -> transformation -> output

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Expanded business model

inputs (memory) -> transformation (control) -> output (feedback)

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definition: preventive control

reduce errors and minimize need for correction

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definition: corrrective control

fix issues and acheive standard

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definition: revenue mix

distribution between different types of revenue streams

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defintion: prime costs

COGS + labor cost

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gross revenue fromula

sum of all revenue

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get rid

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definition: fixed costs

cost that does not change regardless of production

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definition: variable costs

cost changing depending on production levels

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get rid

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Gross Operating Profit (GOP) is used for?

stand-alone restaurants

definition: direct costs

business expenses that can be directly applied to either a specific goods or services. ie. flour and butter for croissants

definition: indirect costs

expenses that apply to more than one business activity, ie. utilities, overhead costs

definition: controllable costs

can be manipulated/controled by management ie. part time pay roll

definition: non-controllable costs

rent, full time employess

definition: capture rate

% of hotel guests that come and use hotel F&B outlet

what is the REVPAS equation

total revenue / covers

what is the REVPASH equation?

total revenue / (covers * open hours)

True or False: Revpash can effectively be used for all restaurants

False, used mainly for high turnover restaurants

Define: Flow Through

% of revenue retained as profit

Objectives of Menu Engineering

- improve profit margins - influencing position of items - align profitability with organizational objectives (create, reduce, eliminate, raise)

X axis of product classification represents

profitability

Y axis of product classification represents

popularity

Product Classification: high popularity, low profitability

plough horse

Product Classification: low profitability, low popularity

dog

Product Classification: high popularity, high profitability

star

Product Classification: low popularity, high profitability

puzzle

Product Classification: plough horse

high popularity, low profitability

Product Classification: dog

low profitability, low popularity

Product Classification: star

high popularity, high profitability

Product Classification: puzzle

low popularity, high profitability

Name of the product classification system used

Dr. Smith and Kasavana

List some limitations of the Product Classification

- only an internal analysis - risk of over-engineering - time consuming

Price is made of ...

reputation, brand, appearance, and price itself

3C's of Pricing Policy

Company, Customer, Competition

Define: Cost-based pricing

Cost focus and no customer consideration

Define: Value-based pricing

Customer and sales ability focus

4 Pricing Positioning strategy

skimming, alignment, penetration, survival

Define: Skimming strategy

Price positioning strategy - maximizing profit and ROI by selling good products at high price

Define: Alignment strategy

Price positioning strategy - matching competition

Define: penetration strategy

Price positioning strategy - market disruption (new player with the same service but lower price)

Define: Survival strategy

Price positioning strategy - covering at least the variable cost new iPhone example

Difference between procurement v purchasing?

procurement is the step of selecting vendors, establishing payment terms, selection, etc while purchasing is the direct link between internal department and suppliers (grants, approval, receipts of goods

The price of using intermediaries are covered by ____ tier customers

Second tier customers, the final consumers pay the price

what are AP and EP?

AP - as purchased (gross weight) | EP - edible portion (net weight)

Describe the Pareto Law

about 80% of a firm's sales are generated by approx. 20% of items in inventory

Coffee, tea, and juice should be accounted for _____ cost.

Food cost. Do not include as a beverage cost

Food available for sale =

beginning inventory + purchases during the accounting period

definition: Food cost consumed

value of all food used or consumed by operation (including comp. sales, staff meals, spoilage etc.)

Contribution Margin formula

Revenue - Variable Cost

Contribution Margin % formula

Contribution Margin (Rev - VC) / Revenue

Break even formula

Fixed cost / CM%

Break Even in day

BE / (revenue / days)

Break even by guest

BE / average check (average rate)

define: budget

an outline of expectations a company wants to achieve in a period (usually a year)

"an outline of expectations a company wants to achieve in a period (usually a year)" describes ...

budget

define: forecast

an estimate of a company's future financial outcomes based on historical data

"an estimate of a company's future financial outcomes based on historical data" describes

forecast

How are a budget and forecast different?

Budget is an expectation/goal whereas forecast is a prediction

F&B Cost Control Flashcards

(73 cards)