bsad 322charley family steak house (1).ppt

8/10/2019 BSAD 322Charley Family Steak House (1).ppt

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CHARLEYS FAMILYSTEAK HOUSE


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Class Announcements

Traditional Assignment:

Assignment #3 due April 10, 2012; available on-line

Service Learning Assignment:

Final Report is due April 10, 2012

Cost of an Egg:

Assignment details on-line


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Class Objectives

1. Understanding performance measurementboth financial and non-financial effectiveness

2. Assessing performance and compensation in

context


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Charleys Family Steak House

Company Context:Charley Turners four steak restaurants

Located in a rapidly growing mid-size city in Texas

Restaurant goalbest steak house in the cityCharacterized by: Pleasant atmosphere

Fast and courteous service

High quality food Freshly prepared good

Reasonable prices

Innovative express lunch option


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Company Context: Unit 2

Alex Pearson is the manager of Charleys

Steakhouse Unit 2 (since one year)

Seating for 150 customers Employs 18-20 people

Menu featured 4-6 items in each of fourcategories ranging in price from $1.99 (Smallsalad) to $16.99 (Lobster dinner)

Feature an express service for frequent lunchtime customers


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Company Context: Customer Segments

Community

Located next to a shopping mall

Business communityOffices are nearby

No eating establishment within one mile radius

Hotel

100 room budget motel with no restaurant withinwalking distance


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Company Context: Evaluation

Plans to implement a new bonus plan

25% of salary in bonuses

Specific performance measures not yet determined Suggestions from managers not solicited

Comparison between budget and actual

Original budget prepared was aggressive and

optimistic Profit is $46,490 less than planned

Severity of the recent recession


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Issues: How did actual sales compare with planned

sales? Profit is $46,490 less than plannedActual sales vs planned salesvariance analysis Sales mix analysis Customer use of coupons

How well were costs and expenses controlled? Actual expenses vs planned expensesvariance analysis

Performance Evaluation Comparison of planned vs actual New bonus plan


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Charley's Family Steak House

Operating Profit Statement

Actual % of Planned % of

1994 Sales 1994 Sales

Gross Sales 1,936,025 100.0% 1,861,860 100.0%

Net Sales (net coupo 1,726,725 89.2% 1,761,760 94.6%

Food 1,025,870 53.0% 1,024,020 55.0%

Labour 207,000 10.7% 220,000 11.8%

Expenses 152,450 7.9% 148,950 8.0%

Contribution 341,405 17.6% 368,790 19.8%

Advertising 78,625 65,165

Miscellaneous 3,320 3,000Depreciation 24,000 24,000

Insurance 9,780 9,400

Taxes and licenses 10,940 11,700

Rent (Base) 72,000 72,000

Rent (Overage) 26,980 23,275

Management 98,000 95,000 Operating Profit 17,760 65,250


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Actual % of Planned % of Variance

1994 Sales 1994 Sales 1994

Gross Sales 1,936,025 100.0% 1,861,860 100.0% 74,165

Net Sales (net coupo 1,726,725 89.2% 1,761,760 94.6% -35,035

Food 1,025,870 53.0% 1,024,020 55.0% 1,850Labour 207,000 10.7% 220,000 11.8% -13,000

Expenses 152,450 7.9% 148,950 8.0% 3,500

Contribution 341,405 17.6% 368,790 19.8% -27,385

Advertising 78,625 65,165 13,460

Miscellaneous 3,320 3,000 320

Depreciation 24,000 24,000 0Insurance 9,780 9,400 380

Taxes and licenses 10,940 11,700 -760

Rent (Base) 72,000 72,000 0

Rent (Overage) 26,980 23,275 3,705

Management 98,000 95,000 3,000

Operating Profit 17,760 65,250 -47,490


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Actual % of Planned % of Variance Flexible % of

1994 Sales 1994 Sales 1994 1994 Sales

Gross Sales 1,936,025 100.0% 1,861,860 100.0% 74,165 1,936,025 100.0%

Net Sales (net coupo 1,726,725 89.2% 1,761,760 94.6% -35,035 1,831,938 94.6%

Food 1,025,870 53.0% 1,024,020 55.0% 1,850 1,064,811 55.0%Labour 207,000 10.7% 220,000 11.8% -13,000 228,763 11.8%

Expenses 152,450 7.9% 148,950 8.0% 3,500 154,883 8.0%

Contribution 341,405 17.6% 368,790 19.8% -27,385 383,480 19.8%

Advertising 78,625 65,165 13,460 65,165

Miscellaneous 3,320 3,000 320 3,000

Depreciation 24,000 24,000 0 24,000

Insurance 9,780 9,400 380 9,400

Taxes and licenses 10,940 11,700 -760 11,700

Rent (Base) 72,000 72,000 0 72,000

Rent (Overage) 26,980 23,275 3,705 23,275

Management 98,000 95,000 3,000 95,000

Operating Profit 17,760 65,250 -47,490 79,940


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Actual % of Planned % of Variance Flexible % of Variance

1994 Sales 1994 Sales 1994 1994 Sales 1994

Gross Sales 1,936,025 100.0% 1,861,860 100.0% 74,165 1,936,025 100.0% 0

Net Sales (net coupo 1,726,725 89.2% 1,761,760 94.6% -35,035 1,831,938 94.6% -105,213

Food 1,025,870 53.0% 1,024,020 55.0% 1,850 1,064,811 55.0% -38,941Labour 207,000 10.7% 220,000 11.8% -13,000 228,763 11.8% -21,763

Expenses 152,450 7.9% 148,950 8.0% 3,500 154,883 8.0% -2,433

Contribution 341,405 17.6% 368,790 19.8% -27,385 383,480 19.8% -42,075

Advertising 78,625 65,165 13,460 65,165 13,460

Miscellaneous 3,320 3,000 320 3,000 320

Depreciation 24,000 24,000 0 24,000 0

Insurance 9,780 9,400 380 9,400 380

Taxes and licenses 10,940 11,700 -760 11,700 -760

Rent (Base) 72,000 72,000 0 72,000 0

Rent (Overage) 26,980 23,275 3,705 23,275 3,705

Management 98,000 95,000 3,000 95,000 3,000

Operating Profit 17,760 65,250 -47,490 79,940 -62,180


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1994 Sales 1994 Sales 1994 1994 Sales 1994Gross Sales 1,936,025 100.0% 1,861,860 100.0% 74,165 1,936,025 100.0% 0

Net Sales (net coupons) 1,726,725 89.2% 1,761,760 94.6% -35,035 1,831,938 94.6% -105,213


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1994 Sales 1994 Sales 1994 1994 Sales 1994

Gross Sales 1,936,025 100.0% 1,861,860 100.0% 74,165 1,936,025 100.0% 0

Net Sales (net coupons) 1,726,725 89.2% 1,761,760 94.6% -35,035 1,831,938 94.6% -105,213

Coupons 209,300 10.8% 100,100 5.4% 109,200 104,087 5.4% 105,213


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Actual Planned Variance

Supporting Data 1994 1994 1994

Average Weekly customer count 4,025 3,870 155.00% customers - lunch 50% 40% 10%

% customers - dinner 50% 60% -10%

Gross average check - lunch 7.50$ 7.50$ -$

Net average check - lunch 6.50$ 7.00$ 0.50-$

Gross average check - dinner 11.00$ 10.50$ 0.50$

Net average check - dinner 10.00$ 10.00$ -$


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Average Weekly customer count 4,025 3,870 155.00

% customers - lunch 50% 40% 10%






Contribution margin - overall 17.6% 19.8% -2%

Contribution margin - lunch 1.32$ 1.49$ 0.16-$

Contribution margin - dinner 1.94$ 2.08$ 0.14-$


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Average Weekly customer count 4,025 3,870 155.00

% customers - lunch 50% 40% 10%






Contribution margin - overall 17.6% 19.8% -2%

Contribution margin - lunch 1.32$ 1.49$ 0.16-$

Contribution margin - dinner 1.94$ 2.08$ 0.14-$

Contribution margin - overall 341,405 370,706 -29,301

Contribution margin - lunch 138,407 119,583 18,825

Contribution margin - dinner 202,998 251,123 -48,126


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Conclusions: Budget vs Actual Actual operating profit for Unit 2 is $47,490 less

than anticipated Actual profit for Unit 2 is $62,180 less than the

flexible budget Customer mix change from 40/60 to 50/50 which

changed weighted contribution margin from $1.84to $1.63 per customer

Customers made use of coupons in greaternumber than anticipated perhaps because of therecession ($105,213 more than anticipated).


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Conclusions: Evaluation System

Participatoryno consultation

Inventive and risknone communicated

Goal congruencenot linked to overall exceptgenerally (e.g. best steak house in town)

Fair and objectiveunknown measures

AttainableOptimistic and aggressive, highexpectations.


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Conclusions: Evaluation System -Controllability

Prices - are set (over 10%) by Charley

Ordering - of food done centrally

Coupons (discount) - good at all four locations

Recent economic recession -was not

forcastableAdvertising - is managed by Charley

Management charge - is assessed by Charley

bsad 322charley family steak house (1).ppt

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