chapter 1 principles of control in a foodservice operation
TRANSCRIPT
Chapter 1
Principles of Control in a Foodservice Operation
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Learning Outcomes
• Summarize the four basic functions of management.
• Understand the role of cost control in the success of an operation.
• Recall five areas in which basic math skills are used in a foodservice operation.
Learning Outcomes
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Introduction• The management function of
control is essential to running a successful foodservice operation
• Control refers to the effective management of resources
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Functions of Management• There are four basic functions of
management– Planning– Organizing– Leading– Controlling
• All four functions are essential to running any type of business or operation
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Functions of Management• Planning is the process of
determining what an operation will be
• Planning involves defining an operation’s goals and objectives and the steps that will be necessary to achieve them
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Functions of Management• Organizing is the process of
deciding –what tasks need to be completed–who will perform those tasks– how the tasks will be coordinated
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Functions of Management• Leading is the process of directing
people to meet the goals and objectives set in the planning phase
• Leadership includes –motivating people– communicating effectively– providing feedback on employee
performance– listening and responding to employee
needscontinued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Functions of Management• Controlling is the process of
monitoring the performance of the operation against its plans
• Controlling is accomplished by – setting measurable goals–measuring the results– comparing those results against the
goals
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Functions of Management• If results are not in line with goals,
the reason should be determined and corrective action taken
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Functions of Management• Control is an ongoing process in
which the operation must– define its expected results– have a plan in place to achieve those
results– provide the resources that enable it to
meet its goals–modify its structure, methods, or tools
to meet its plan and measure the results
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Cost Control• Cost control is the process an
operation uses to ensure that its forecasted sales and expenses conform to its plans, goals, and objectives
• The successful foodservice manager balances quality with financial control to yield a profit for the business and secure its continued success continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Cost Control• Cost control is a critical function
that should be required of every foodservice operator
• Many foodservice operations lack strong cost controls
• To control costs and enhance profits, a manager needs to understand the relationship among cost, sales, and profit (or loss)
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Cost Control• Cost, or expense, is the dollar
amount spent to create the good or service being sold
• Sales, or revenues, result from the exchange of goods or services for payment or promise to pay
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Cost Control• Cost is subtracted from sales to
determine whether the operation had a profit or a loss
• Profit is the dollar amount remaining after all expenses have been paid
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Cost Control• A loss is the amount incurred
when the expenses of an operation are greater than its sales
• The successful manager understands where the numbers come from in the profit equation
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Cost Control• Operations need to make enough
money from sales to cover the costs of doing business
• This is true for both for-profit and not-for-profit businesses
• An operation can increase its profits in two ways– by increasing sales – by decreasing expenses
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Cost Control• Math skills are used in– standardizing and converting recipes– purchasing food and supplies– determining staffing needs– determining selling prices
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Cost Control• Math skills are used in– forecasting how much food to produce– controlling inventory– preparing budgets– analyzing customer satisfaction– evaluating sales results
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Basic Math Review• A manager needs basic math skills
to effectively run a foodservice operation through a strong cost-control system
• These skills include the use of – fractions– decimals– percentages– ratios
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Basic Math Review• Fractions, percentages, and
decimals can be considered one in the same
• They all deal with parts of a whole• A fraction is made up of– a numerator (the top number)– a denominator (the bottom number)
• The numerator is the part and the denominator represents the whole
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Basic Math Review• A percentage is another way of
expressing a part of the whole• The word percent is from the Latin
words per centum meaning “per hundred”
• A percentage is another way of expressing a fraction in which the denominator is 100
• The percent symbol is used after a number when writing percentages (50%)
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Basic Math Review• Decimals are another way of
expressing a part of the whole• A decimal represents a fraction
based on the number 10• A decimal point separates the
whole from the part• The number 5.67 represents five
wholes and 67 parts
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Basic Math Review• To express a decimal as a
percentage –move the decimal point two places to
the right– add the percent symbol
• Decimals and percentages show the same relationship
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Basic Math Review• To convert a percentage to a
decimal, move the decimal point two places to the left
• Both percentages and decimals can also be expressed as fractions
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Basic Math Review• A ratio expresses how one number
relates, or compares, to another• X:Y is stated “the ratio is X to Y”• A ratio can be written in a number
of ways
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Practical Foodservice Applications• Percentages, ratios, fractions, and
decimals are used every day in foodservice operations to control costs
• A ratio expresses how one number relates, or compares, to another
• For example, the ratio 2:7 can express that a baker sells two sugar cookies for every seven chocolate chip cookies continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Practical Foodservice Applications• Many foodservice operations base
the selling price of a menu item on the cost of the food used to make it
• They want to limit the food cost to a certain percentage of the selling price—a food cost percentage
• A common food cost percentage used by foodservice operations is 30 percent continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Practical Foodservice Applications• The foodservice operator can
determine the selling price by using a calculation in which X is the selling price
• For example, if the food cost is $10, and the food cost percentage is 30 percent, the operator sells the menu item for $33.33
• The $10 food cost divided by X equals 30 percent continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Practical Foodservice Applications• When making decisions about which
food products to purchase, a manager often compares the prices of two or more products
• Factors such as pack size and product yield must be taken into consideration when comparing product prices
• The manager must determine the best price per unit continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Practical Foodservice Applications• For each option being considered– determine the total amount or weight
per package or case– calculate the price per unit, such as
per pound– compare the prices to find the best
buy
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Practical Foodservice Applications• To compare prices between a
processed and a raw product, managers must consider the yield
• Product yield is the amount of a product that is usable after cooking or other processing
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Practical Foodservice Applications• Ways to find the product yield vary
by product• For a fresh roast, for example, the
yield would be affected by the amount of fat to be trimmed off
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Practical Foodservice Applications• The manager needs to determine
the price per unit, such as per pound, for the amount of the product yield
• This is calculated by dividing the purchase price by the product yield
• The prices can then be compared• Another common calculation in
foodservice management is determining the cost to produce a meal
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Practical Foodservice Applications• The cost to produce a meal
includes the costs of food and labor per meal served
• The food cost per meal can be calculated by dividing the cost of food to prepare meals by the number of meals served
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Practical Foodservice Applications• The labor cost per meal is
calculated using a similar equation• Labor costs are divided by the
number of meals served
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Practical Foodservice Applications• When comparing actual
performance to goals, a manager looks at the variance
• The variance is the difference between a budgeted amount and an actual amount
• Variances are calculated for revenues, expenses, and profit
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Practical Foodservice Applications• A manager may want to determine
the variance as a percentage difference
• To do so, the variance amount is divided by the budgeted amount
• The result is multiplied by 100
continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Practical Foodservice Applications• A manager is also responsible for
evaluating quality• A quality measure rates the level
of perceived value placed on the parameter being evaluated
• One quality measure, or parameter, is customer satisfaction
• An operation often surveys its customers to learn their views on its performance continued
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Practical Foodservice Applications• Customer satisfaction is often
expressed as a percentage• For example, the number of
“excellent” service ratings may be stated as a percentage of the total ratings
• A manager records and compares the results of quality measures over time to monitor the success of the operation
Permission granted to reproduce for educational use only.© Goodheart-Willcox Co., Inc.
Key Terms Review
• planning• organizing• leading• controlling• cost control• cost• sales• profit
• loss• fraction• percent• decimal• ratio• product yield• variance• quality measure