MONITOR CATERING REVENUE AND COSTS

1. D1.HFI.CL8.08 MONITOR CATERING REVENUE AND COSTS

2. Introduction Monitor catering revenue and costs • Classroom schedule • Trainer contact details • Assessments • Resources: • Calculator, pen and paper

3. Introduction Unit comprises four elements which are covered in this sequence: • Use financial record keeping technology • Create financial control system • Create production control system • Respond to the results produced by the established control systems

4. Use financial record keeping technology • Develop computer hardware to implement internal controls for catering operations • Develop computer software to implement internal controls for catering operations • Integrate catering revenue and cost objectives and requirements into existing control systems • Enter catering financial data into control systems • Manipulate catering financial data into control systems

5. Use financial record keeping technology Measuring performance: • What is profit? • Nature and size of catering operations • Guide to cost and profit levels in percentages

6. Use financial record keeping technology • Defined • Measures • Safeguard assets • Promote efficient operations • Maintain accurate and reliable accounting records • Compliance with policies and procedures

7. Use financial record keeping technology • Internal controls in catering operations: • Menu design, recipes and costs • Staffing needs, rostering and costs • Ordering, receiving and storing food and beverage stock or inventory • Preparation of food and beverages for resale

8. Use financial record keeping technology Computer systems: • Implementing computer systems • Analysis • Design • Implementation • Considerations • Costs and benefits • Compatibility

9. Use financial record keeping technology Computer systems: • Hardware options • POS systems • Handwriting recognition • Staff sharing technologies • Motion detection Impact of the Internet and Wi-Fi

10. Use financial record keeping technology Computer systems: • Software options • Financial control • Revenue • Cost control • Kitchen production • Other Impact of the Internet and Wi-Fi

11. Use financial record keeping technology Integrate catering objectives into the financial system: STUDENT ACTIVITY • What is the financial system? • Revenue: • Forecasts • Security • Food costs: • Menu • Standard recipes

12. Use financial record keeping technology Integrate catering objectives into the financial system: • Beverage costs • Inventory: • Purchasing • Receiving • Storing • Labour costs:

13. Use financial record keeping technology Integrate catering objectives into the financial system: • POS systems • Separation of duties • Standardised recipes • Stocktakes • Reconciliations • Kitchen production controls • Labour specific controls

14. Use financial record keeping technology Financial data: • Enter into financial control system • Historical data • Current data • Other information • Reports and schedules • Budget • Performance reports

15. Create financial control system Two performance criteria: • Develop or confirm an existing financial control system to monitor performance in the catering department • Input financial data into the catering financial control system

16. Create financial control system Monitoring performance: • Uniform Systems of Accounts • Cost classifications • Fixed and variable • Controllable and non-controllable • Activity - When is each classification used?

17. Create financial control system Percentages: • Common standard for evaluating performance • Part – individual revenue or expense • Whole – Total revenue

18. Create financial control system The profit and loss statement

19. Create financial control system The profit and loss statement: • Gross profit • Operating expenses • Non-operating expenses • Supporting schedules

20. Create financial control system Analysis of the profit and loss statement: • Sales • Calculation • Adjust for price • Interpretation

21. Create financial control system Analysis of the profit and loss statement: • Food and beverage expenses • Percentage calculations • Beware of Revenue to use • Interpretation • Food and beverage inventory turnover rate • Calculation • Interpretation

22. Create financial control system Analysis of the profit and loss statement: • Labour expenses • Calculation • Interpretation • Profit • Calculation • Interpretation – good or not?

23. Create financial control system Other performance measures: • Budgets: • Department • Expense • Variances • Performance to budget • Break-even analysis • Fixed and variable costs • Sales? Expenses? Profit

24. Create financial control system Variances are: • Expressed as monetary units, percentages or sales volume • Favourable – beneficial, positive • Unfavourable – need investigation • Evaluated according to the effect on profit

25. Create financial control system 2 main calculations: • Horizontal analysis • Actual results and budgeted numbers for EACH line item are compared • Actual minus budget = Variance in monetary unit • Variance divided by budget x 100 = Variance percent

26. Create financial control system 2 main calculations: • Vertical analysis • EACH line item calculated as a percentage of sales • Budget and actual reports are calculated separately

27. Create financial control system TRANSACTIONS Inputs Processing Outputs LEDGERS

28. Create production control system Two performance criteria: • Develop or confirm an existing production control system to monitor performance in the catering department • Input production data into the catering financial control system

29. Create production control system • What is the production control system? • Defined • Six step process • Maximising financial performance and production efficiencies

30. Create production control system Key features: • Menu design and recipes • Ordering, receipt and storage of supplies • Clear descriptions • Checking goods received • Timely work practices • Knowledge of storage requirements

31. Create production control system Key features continued: • Daily production schedules • Menu, popularity data, forecasts • Margin of error

32. Create production control system Key features (continued): • Product issuing • Forms and documents • Authorisation • Returns • Store person • Beverage issues – other considerations

33. Create production control system Key features (continued): • Inventory control • Stocktakes • Managing food production • Waste • Overcooking • Portion control • Carryovers • Make or buy decisions

34. Create production control system Key features (continued): • Managing beverage production • Automated choices • Theft management • Minimise not eliminate • Rewards

35. Create production control system Input production data: STUDENT ACTIVITY • Food production • Recipes, Supplies • Production schedules • Labour costs • Direct, indirect • Inventory

36. Respond to results from the established control systems • Take action to address unacceptable expense figures • Take action to address unacceptable revenue figures • Negotiate with management to revise budgeted figures

37. Create financial control system Variances are: • Expressed as monetary units, percentages or sales volume • Favourable – beneficial, positive • Unfavourable – need investigation • Evaluated according to the effect on profit

38. Create financial control system 2 main calculations: • Horizontal analysis • Actual results and budgeted numbers for EACH line item are compared • Actual minus budget = Variance in monetary unit • Variance divided by budget x 100 = Variance percent

39. Create financial control system 2 main calculations: • Vertical analysis • EACH line item calculated as a percentage of sales • Budget and actual reports are calculated separately

40. Respond to results from the established control systems Identify unacceptable variances: • Remember variance calculations! • Favourable • Unfavourable • When is a variance unacceptable?

41. Respond to results from the established control systems Determine the cause of the variance: • Revenue • Price • Volume • Expenses • Rate or Price • Quantity

42. Respond to results from the established control systems Corrective action: • Food expenses • Unfavourable, higher than planned • Common approaches to remedy variance • Portions, recipes • Product quality and mix • Revise processes

43. Respond to results from the established control systems Corrective action: • Inventory turnover • Unfavourable, higher than planned • Common approaches to remedy variance • Processes and procedures for food storage • Waste minimising practices • Security measures • Staff training Minimise wastage!

44. Respond to results from the established control systems Corrective action: • Labour or payroll costs • Monetary amounts • Hours worked • Common reasons for variance • Unplanned overtime • Inefficient work practices • Staff qualifications not matched to position

45. Respond to results from the established control systems Corrective action: • Other expenses • Unfavourable variances • Action that can be taken • Correct allocation of expenses to catering department • Maintenance programs changed • Implement a bid process for suppliers

46. Respond to results from the established control systems Corrective action: • Revenue • Unfavourable variances • Change to forecast assumptions • Menu items • Portion sizes • Price

47. Respond to results from the established control systems Corrective action: • Revenue is recorded accurately • Permanent record of sales • Cash sales counted and authorised • Reconciliations • Allocations Address workplace policies and procedures

48. Respond to results from the established control systems Corrective action: • Adjust prices • Discounts • Promotions • Other offers

49. Respond to results from the established control systems Negotiate with management to change budget: • Role of the budget • Performance • Preparation process • Revising the budget • Negotiation techniques