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Continued part 1, part 2 of ebook Food and beverage cost control (Sixth edition) presents the following content: managing the cost of labor; controlling other expenses; analyzing results using the income statement; planning for profit; maintaining and improving the revenue control system;...
Trim Size: 8.5 in X 11 in c07.indd 06:58:8:PM 12/16/2014 Page 215 CHAPTER Managing the Cost of Labor OVERVIEW T his chapter explains the techniques that managers use to control labor costs by establishing and monitoring labor cost standards Factors that affect labor productiv- ity as well as methods for improving labor productivity are presented This chapter teaches you how to schedule employees based on established labor productivity standards, as well as how to compute a labor cost percentage and other measures of labor productivity used in the foodservice industry Chapter Outline t -BCPS&YQFOTFJOUIF)PTQJUBMJUZ*OEVTUSZ t &WBMVBUJOH-BCPS1SPEVDUJWJUZ t BJOUBJOJOHB1SPEVDUJWF8PSLGPSDF t FBTVSJOH$VSSFOU-BCPS1SPEVDUJWJUZ t BOBHJOH1BZSPMM$PTUT t 3FEVDJOH-BCPS3FMBUFE$PTUT t 5FDIOPMPHZ5PPMT t "QQMZ8IBU:PV)BWF-FBSOFE t ,FZ5FSNTBOE$PODFQUT t 5FTU:PVS4LJMMT LEARNING OUTCOMES At r r r the conclusion of this chapter, you will be able to: Identify the factors that affect employee productivity Develop labor standards and employee schedules used in a foodservice operation Analyze and evaluate actual labor utilization 215 Trim Size: 8.5 in X 11 in c07.indd 06:58:8:PM 12/16/2014 Page 216 216 $IBQUFSøø.BOBHJOHUIF$PTUPGø-BCPS LABOR EXPENSE IN THE HOSPITALITY INDUSTRY You have learned that having the correct amount of food and beverage products available to serve your guests is important Knowing how those products should be prepared and served is also vital To see why, consider the case of Pauline She manages the open-to-the-public cafeteria located in a large urban hospital Both hospital staff and patients’ visitors, who constitute the majority of her cafeteria guests, have good things to say about the quality of her food They complain often, however, about the slowness of her cafeteria line, the soiled tables during the busy lunch hour, and the frequent running out of items at the salad bars Pauline often feels that she needs more employees She knows, however, that her current staff is actually larger than it was a few years ago She also knows that she now serves more guests each day than she has in the past Her question is, “Do I have the right number of employees scheduled to work, and at the right times, for the number of guests I am serving today?” Unfortunately for her, Pauline is so busy “helping” her employees get through the meal periods that there seems to be little time for thinking about and planning the strategies and techniques she needs to apply if she is to solve her labor-related customer service problems In years past, when labor was relatively inexpensive, Pauline might have responded to her need for more workers by simply hiring more employees Today’s foodservice manager, however, does not have that luxury In today’s increasingly costly labor market, you must learn the supervisory skills needed to maximize the effectiveness of your staff and the cost control skills required to evaluate their efforts That is because labor is a significant foodservice operating cost In fact, in some foodservice establishments, the cost of labor actually exceeds the cost of food and beverage products Today’s competitive labor market indicates that, in the future, foodservice managers will likely find it even more difficult to recruit, train, and retain an effective team of employees Therefore, the control of labor expenses takes on a greater level of importance than ever before In some sectors of the foodservice industry, a reputation for long hours, poor pay, and undesirable working conditions has caused some high-quality employees to look elsewhere for more satisfactory jobs or careers It does not have to be that way, and it is up to you to help ensure that in your organization it is not When labor costs are adequately controlled, management has the funds necessary to create desirable working conditions and pay a wage that will attract the very best employees In every service industry, better employees mean better guest service and, ultimately, better business profits LABOR EXPENSE DEFINED Payroll is the term generally used to refer to the salaries and wages you will pay your employees Labor expense includes salaries and wages, but it also includes other labor-related costs These include: FICA (Social Security) taxes, including taxes due on employees’ tip income FUTA (Federal unemployment taxes) state unemployment taxes Workers’ compensation Group life insurance Health insurance, including: Medical Dental Vision Disability Trim Size: 8.5 in X 11 in c07.indd 06:58:8:PM 12/16/2014 Page 217 -BCPS&YQFOTFJOUIF)PTQJUBMJUZ*OEVTUSZ 217 10 11 12 13 Pension/retirement plan payments Employee meals Employee training expenses Employee transportation costs Employee uniforms, housing, and other benefits Vacation/sick leave/personal days Tuition reimbursement programs Employee incentives and bonuses Not every operation will incur all of the costs listed But some operations will have all of these and more You can be sure, however, that regardless of the facility you manage, you will incur some labor-related expenses in addition to wages and salaries The critical question you must answer is, “How much should I spend on payroll and other labor expenses to deliver the quality of products and service that I feel is appropriate?” Before you can hope to answer that question, it is important that you understand well the individual components that make up payroll and labor expense FUN ON THE WEB! In the United States, the Patient Protection and Affordable Care Act (ACA) was signed into law in 2010 This health insurance-related law directly affects the benefit costs incurred by many food service organizations To learn more about the ACA, and its requirements go to: http://www.healthcare.gov/law/index.html PAYROLL Payroll refers to the gross pay received by an employee in exchange for his or her work That is, if an employee earns $10.00 per hour and works 40 hours for his or her employer, the gross paycheck (the employee’s paycheck before any mandatory or voluntary deductions) would be $400 ($10.00 per hour × 40 hours = $400) This gross amount is considered a payroll expense If the employee earns a salary, that salary amount is also a payroll expense A salaried employee generally receives the same income per week or month regardless of the number of hours worked Thus, if a salaried employee is paid $700 per week when he or she works a complete week, that $700 is included in payroll expense Salaried employees are actually more accurately described as exempt employees because their duties, responsibilities, and level of decisions make them “exempt” from the overtime provisions of the federal government’s Fair Labor Standards Act (FLSA) Exempt employees not receive overtime for hours worked in excess of 40 per week and are expected by most organizations to work the number of hours needed to their jobs FUN ON THE WEB! The designation of which workers can (and cannot) be considered exempt employees is governed by the US Department of Labor and the Fair Labor Standards Act (FLSA) Minimum allowable salary levels are also determined by the Wage and Hour Division (WHD) of this department To learn more about wages that must be paid to exempt and to nonexempt employees, go to: www.dol gov/whd/ Trim Size: 8.5 in X 11 in c07.indd 06:58:8:PM 12/16/2014 Page 218 218 $IBQUFSøø.BOBHJOHUIF$PTUPGø-BCPS FIXED PAYROLL VERSUS VARIABLE PAYROLL When you manage a foodservice facility, you must make choices regarding the number and type of employee you will hire to help you serve your guests Some employees are needed simply to open the doors for the minimally anticipated business Minimum staff is the term used to describe the least number of employees, and the least number of payroll dollars, needed to operate a business For example, in a small operation, this may include only one manager, one server, and one cook The cost of providing payroll to these three individuals would be its minimum staff payroll Suppose, however, that the operation anticipated much greater volume on a given day The increased number of guests expected means that the operation may need more cooks and more servers, as well as cashiers, dishroom personnel, and, perhaps, more supervisors to handle the additional workload Clearly, these additional staff positions create a work group that is far larger than the minimum staff, but it is needed to adequately service the anticipated number of guests Payroll costs may be fixed or variable Fixed payroll refers to the amount an operation pays in salaries This amount, in most cases, is fixed because it remains unchanged from one pay period to the next unless the individual receiving the pay separates employment from the organization or is given a raise Variable payroll consists primarily of those dollars paid to hourly employees Thus, variable payroll is the amount that should “vary” with changes in sales volume Generally, as you anticipate increased volume levels in your facility, you may need to add additional hourly and, sometimes, additional salaried employees The distinction between fixed and variable labor is an important one As a manager, you may have little direct control over your fixed labor expense, whereas you will have nearly 100 percent control over variable labor expenses that are above your minimum staff levels LABOR EXPENSE Unlike payroll expense, labor expense refers to the total of all costs associated with maintaining your workforce Labor expense includes employee taxes and benefits costs and is always larger than payroll expense The actual amount of taxes and employee benefits paid for by a specific operation can vary greatly Some expenses, such as payroll taxes and contributions to workers’ unemployment and workers’ compensation programs, are mandatory for all employers Other benefit payments, such as those made for employee insurance and retirement programs, are voluntary and vary based on the benefits a business chooses to offer its employees As employment taxes and benefit costs increase an operation’s labor expense will increase even if payroll expense remains constant Most foodservice operators have total control over their payroll expense It is, therefore, often referred to as a controllable labor expense Other labor expenses, such as taxes and some benefits, over which an operator has little or no control, are commonly called noncontrollable labor expenses In reality, however, you can exert some control over these noncontrollable labor expenses, such as a foodservice manager who works very hard to ensure a well-trained workforce in a safe environment and thereby achieves a lower rate on workers’ compensation, accident, and health insurance for his or her employees In this chapter, we deal primarily with payroll-related expenses This is in keeping with the concept that these are the most controllable of labor-related expenses To determine how much payroll is needed to operate your business, you must be able to determine how much work must be done and how much work each employee can perform If too few employees are scheduled to work, poor service and reduced sales can result, because guests may choose to go elsewhere in search of superior food and service levels If too many employees are scheduled, payroll and other labor-related expenses will be too high, resulting in reduced profits The best solution Trim Size: 8.5 in X 11 in c07.indd 06:58:8:PM 12/16/2014 Page 219 BJOUBJOJOHB1SPEVDUJWF8PSLGPSDF 219 to this challenge is to know how many employees are needed given the estimated number of guests you will serve To determine this number of employees, you must have a clear idea of the productivity of each of your employees Productivity is the amount of work performed by an employee in a fixed period of time EVALUATING LABOR PRODUCTIVITY There are many ways to assess labor productivity In general, productivity is measured by the productivity ratio as follows: Output = Productivity ratio Input To illustrate this formula, assume a restaurant employs servers and it serves 60 guests Using the productivity ratio formula, the output is guests served; the input is servers employed, as follows: 60 guests = 15 guests per server servers This formula demonstrates that, for each server employed, 15 guests can be served The productivity ratio is 15 guests to server (15 to 1) or, stated another way, server per 15 guests (1/15) There are several ways of defining foodservice output and input; thus, there are several types of productivity ratios Some of these are presented later in this chapter All of these productivity ratios can be helpful in determining the answer to the key question, “How much should I spend on labor?” The answer, however, is even more complicated than it might seem at first In the preceding example, you know that, on average, of your servers can serve 15 guests But how many guests will a slow server serve? How about your best server? How much you pay the most productive server? Your least productive? Are you better off scheduling your best server if you anticipate 20 guests, or should you schedule two of your slower servers? How can you help the slower server become an average or above-average server? At what cost? These are the types of questions that must be answered daily if you are to effectively manage your total payroll costs Foodservice operators must develop their own methods for managing payroll because every foodservice unit is different Consider the differences between managing payroll costs at a small, quick-service food kiosk in a shopping mall and a large banquet kitchen in a 1,000-room convention hotel Although the methods used to manage payroll costs may vary somewhat, it is always true that payroll costs can and should be managed MAINTAINING A PRODUCTIVE WORKFORCE Before we address how managers calculate and utilize productivity ratios, it is important to understand the factors that make employees more productive because these factors directly affect employee productivity The following are 10 key employee-related factors that directly affect levels of employee productivity: Ten Key Factors Affecting Employee Productivity Employee selection Training Trim Size: 8.5 in X 11 in c07.indd 06:58:8:PM 12/16/2014 Page 220 220 $IBQUFSøø.BOBHJOHUIF$PTUPGø-BCPS 10 Supervision Scheduling Breaks Morale Menu Convenience food use versus scratch preparation Equipment/tools Service level desired EMPLOYEE SELECTION Choosing the right employee from the beginning is vitally important in developing a highly productive workforce Good foodservice managers know that proper selection procedures go a long way toward establishing the kind of workforce that can be both efficient and effective This involves matching the right employee with the right job The process begins with the development of the job description JOB DESCRIPTION A job description is a listing of the tasks that must be accomplished by the employee hired to fill a particular position For example, in the case of a room service delivery person in a large hotel, the tasks might be listed as indicated on the job description shown in Figure 7.1 A job description should be maintained for every position in every foodservice operation From the job description, a job specification can be prepared FIGURE 7.1 Job Description Job Description Unit Name: Thunder Lodge Resort Position Title: Room Service Delivery Person PRIME TASKS: "OTXFSUFMFQIPOFUPSFDFJWFHVFTUPSEFST #BMBODFSPPNTFSWJDFDBTIESBXFS 4FUVQSPPNTFSWJDFUSBZTJOTUFXBSEBSFB $MFBOSPPNTFSWJDFTFUVQBSFBBU DPODMVTJPOPGTIJGU %FMJWFSUSBZTUPSPPN BTSFRVFTUFE 0UIFSEVUJFT BTBTTJHOFECZTVQFSWJTPS 3FNPWFUSBZDPWFSTVQPOEFMJWFSZ 10 3FNPWFTPJMFEUSBZTGSPNGMPPST 11 .BJOUBJOHVFTUDIFDLDPOUSPM 12 Special Comments:)PVSMZSBUFFYDMVEFTUJQT6OJGPSNBMMPXBODFJTQFSXFFL 4BMBSZ3BOHFoIPVS 4JHOBUVSF.BUU7 Trim Size: 8.5 in X 11 in c07.indd 06:58:8:PM 12/16/2014 Page 221 BJOUBJOJOHB1SPEVDUJWF8PSLGPSDF 221 FIGURE 7.2 Job Specification Job Specification Unit Name: Thunder Lodge Resort Position Title: Room Service Delivery Person Personal Characteristics Required: (PPEUFMFQIPOFTLJMMT TQFBLTDMFBSMZ TQFBLTFBTJMZVOEFSTUPPE&OHMJTI "CJMJUZUPPQFSBUFQPJOUPGTBMF 104 TZTUFNT %FUBJMPSJFOUFE 1MFBTBOUQFSTPOBMJUZ %JTDSFFU 4QFDJBM$PNNFOUT(PPEHSPPNJOHIBCJUTBSFFTQFDJBMMZJNQPSUBOUJOUIJTQPTJUJPO BT FNQMPZFFXJMMCFBQSJNBSZHVFTUDPOUBDUQFSTPO +PC4QFDJGJDBUJPO1SFQBSFE#Z.BUU7 JOB SPECIFICATION A job specification is a listing of the personal characteristics needed to perform the tasks contained in a job description Figure 7.2 shows the job specification that would match the job description shown in Figure 7.1 As can be seen, this position requires a specific set of personal characteristics and skills When a room service delivery person is hired, the job specification requirements (specs) must be foremost in management’s mind If the job specs not exist or are not followed, it is likely that employees may be hired who are simply not able to be highly productive Each employee hired must be able to do, or be trained to do, the tasks indicated in the employee’s job description It will be your role to develop and maintain both job descriptions and job specifications so that employees know what their jobs are and so that you know the characteristics your employees must have, or be trained in, to their jobs well Managers selecting new employees have several important tools available to them These include: Applications Interviews Preemployment testing Background/reference checks APPLICATIONS The employment application is a document completed by the candidate for employment It will generally list the name, address, work experience, and related information of the candidate It is important that each employment candidate for each position be required to fill out in person, or online, an identical application, and that his or her application be kept on file for each candidate who is ultimately selected for a position INTERVIEWS From the employment applications submitted, you will select some candidates for the personal interview process It is important to realize that the types of questions that can be asked in the interview process are highly regulated As a result, job interviews, if improperly performed, can subject an employer to significant legal liability For example, if a candidate is not hired based on his or her answer to—or refusal to answer—an inappropriate question, that candidate may have the right to file a lawsuit Trim Size: 8.5 in X 11 in c07.indd 06:58:8:PM 12/16/2014 Page 222 222 $IBQUFSøø.BOBHJOHUIF$PTUPGø-BCPS What questions can and cannot be asked of potential employees? The Equal Employment Opportunity Commission suggests that all employers consider the following three issues when deciding whether to include a particular question on an employment application or in a job interview: Does this question tend to screen out minorities or females? Is the answer needed to judge this individual’s competence for performance of the job? Are there alternative, nondiscriminatory ways to judge the person’s qualifications? In all cases, questions asked both on the application and in the interview should focus on the applicant’s ability to a job, and nothing else PREEMPLOYMENT TESTING Preemployment testing is a common way to help improve employee productivity In the hospitality industry, preemployment testing will generally fall into one of the following categories: Skills tests Psychological tests Drug screening tests Skills tests allow an applicant to show that he or she can complete a task Example activities could include drink production for bartenders, computer application tests for those involved in using word processing or spreadsheet tools, or food production tasks for cooks and chefs Psychological testing can include personality tests, tests designed to predict mental performance, or tests of mental ability Preemployment drug testing is used by some organizations to determine if an applicant uses illegal drugs Such testing is allowable in most states, and it can be a very effective tool for reducing insurance rates and potential employee liability issues BACKGROUND/REFERENCE CHECKS Increasingly, hospitality employers are utilizing background checks prior to hiring employees in selected positions Common verification points include the following: r Name r Social Security number r Address history r Dates of past employment and duties performed r Education/training r Criminal background r Credit history Background checks, like preemployment testing, can leave an employer subject to litigation if the information secured during a check is false or is used in a way that violates federal or state employment laws In addition, if the information is improperly disclosed to third parties, it could violate the employee’s right to privacy Not conducting background checks on some positions can, however, subject the employer to potential litigation under the doctrine of negligent hiring, that is, a failure on the part of an employer to exercise reasonable care in the selection of employees When background checks are performed, a candidate for employment should be asked to sign a consent form authorizing you to conduct the background check Trim Size: 8.5 in X 11 in c07.indd 06:58:8:PM 12/16/2014 Page 223 BJOUBJOJOHB1SPEVDUJWF8PSLGPSDF 223 FUN ON THE WEB! For government information regarding labor issues and laws in the United States, explore the US Department of Labor website at www.dol.gov Click on “Site Map” then review the “Find It by Topic” list You will find important information on hiring, minimum wage and overtime pay, family and medical leave, employment discrimination, and much more Green and Growing! Consumers are increasingly aware that when they support businesses committed to sustainability, their dollars make an impact socially and environmentally As a result, influential and leading-edge thinkers concerned about society and the environment seek out companies that share their health, social, and environmental interests and priorities So committed are they that they are, on average, willing to spend 20 percent more than the typical guest for products that conform to their values and lifestyle In a similar manner, environmentally conscious workers are increasingly aware that a company’s care for the environment most often is also reflected in its care for its employees As a result, companies espousing genuine commitment to the environment attract a more committed and, as a result, higher-quality staff These workers tend to value health, the environment, social justice, personal development, and sustainable living They want to contribute their efforts to companies that share those values, and their numbers are growing Do you have to be “certified” as green to attract these environmentally conscious employees? That is, you have to be a “perfect” green facility? No But you cannot just pretend that you are, either Workers easily see beyond false claims of care, in part because they share information so freely and easily via Web pages, Twitter “tweets,” blogs, and chat rooms The more environmentally friendly, socially responsible, and healthy you are known to truly be, the easier it will be for prospective employees who share these goals to find you—because they are looking TRAINING Perhaps no area under your control holds greater promise for increased employee productivity than effective training In too many cases, however, training in the hospitality industry is poor or almost nonexistent Highly productive employees are usually well-trained employees, and, frequently, employees with low productivity have been poorly trained Every position in a foodservice operation should have a specific, well-developed, and ongoing training program Effective training will improve job satisfaction and instill in employees a sense of well-being and accomplishment It will also reduce confusion, product waste, and loss of guests In addition, supervisors find that a well-trained workforce is easier to manage than one in which employees are poorly trained An additional advantage of a well-trained workforce is that management will be more effective because of reduced stress, in terms of both work completion and interpersonal relationships Effective training begins with a good orientation program An orientation program prepares a new worker for success on his or her job The following list includes some of the concerns that most employees have when they start a new job You should identify which items are relevant to your new employees and take care to provide them information in each area, in either written or verbal form Potential Orientation Program Information Payday Annual performance review Probationary period Trim Size: 8.5 in X 11 in c07.indd 06:58:8:PM 12/16/2014 Page 224 224 $IBQUFSøø.BOBHJOHUIF$PTUPGø-BCPS 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Dress code Telephone call, cell phone use policy Smoking policy Uniform allowance Disciplinary system Educational assistance Work schedule Mandatory meetings Tip policy Transfers Employee meal policy Sexual harassment policy Lockers/security Jury duty Leave of absence Maternity leave Alcohol/drug policy Employee assistance programs Tardy policy Sick leave policy Vacation policy Holidays and holiday pay Overtime pay Insurance Retirement programs Safety/emergency procedures Grievance procedures Orientation and training programs need not be elaborate They must, however, be consistent and continual Hospitality companies can train in many different areas Some training seeks to influence attitudes and actions, for example, when training to prevent work-related harassment is presented In other cases, training may be undertaken to assist employees with stress or other psychologically related job aspects In most cases, the training you will be responsible for as a unit manager is task training—the training undertaken to ensure an employee has the skills to meet productivity goals The development of a training program for any task requires managers to: Determine how the task is to be done Plan the training session Present the training session Evaluate the session’s effectiveness Retrain at the proper interval DETERMINE HOW THE TASK IS TO BE DONE Often, jobs can be done in more than one way When management has determined how a task should be completed, however, that method should be made part of the training program and should be strictly maintained unless a better method can be demonstrated and successfully implemented If this is not done, employees will Trim Size: 8.5 in X 11 in glossary.indd 08:3:10:PM 12/12/2014 Page 395 Glossary 395 Padded inventory The term used to describe the inappropriate activity of adding a value for nonexisting inventory items to the value of total inventory in an effort to understate actual costs Par level A system of determining the purchase point by using management-established minimum and maximum allowable inventory levels for a given inventory item Payroll Total wages and salaries paid by a foodservice operation to its employees Percent The number “out of each hundred.” Thus, 10 percent means 10 out of each 100 This is computed by dividing the part by the whole Percentage variance The change in sales, expressed as a percentage, that results from comparing two operating periods Performance to budget The percentage of the budget actually spent on expenses Perpetual inventory An inventory control system in which additions to and deletions from total inventory are noted as they occur Perpetual inventory card A bin card that includes the product’s price at the top of the card, allowing for continual tracking of the quantity of an item on hand and its price Physical inventory An inventory control system in which an actual or physical count and valuation of all inventory on hand is taken at the close of each accounting period Plan See Budget Plate cost The sum cost of all product costs included in a single meal (or “plate”) served to a guest for one fixed price PO See Purchase order Point-of-sale (POS) system A system for controlling hospitality operations’ cash and product usage by using a computer processor and, depending on the size of the operation, additional computer hardware, communication devices, and/or software Popularity index The percentage of total guests choosing a given menu item from a list of menu alternatives Portion cost The product cost required to produce one serving of a menu item POS See Point of sales Potentially hazardous foods Foods that must be carefully handled for time and temperature control to keep them safe to consume Precheck/postcheck system The server records the order (prechecks) on a guest check when the order is given to him or her by the guest The products ordered by the guest, prechecked by the server and issued by the kitchen or bar, should match the items and money collected by the cashier (postcheck) Predicted number to be sold A method of determining the number of a given menu item that is likely to be sold if the total number of customers to be served is known Preemployment drug testing A preemployment test used to determine if an applicant uses drugs It is allowable in most states and can be a very effective tool for reducing insurance rates and potential employee liability issues Premium liquors Expensive call liquors Price blending The process of assigning prices based on product groups for the purpose of achieving predetermined cost objectives Price comparison sheet A listing of several vendors’ bid prices on selected items that results in the selection of a vendor based on the best price Price spread The difference in price on a menu between the lowest and highest priced item of a similar nature Price/value relationship The guests’ view of how much value they are receiving for the price they are paying Prime cost An operation’s total cost of sales added to its total labor cost Prix fixe (menu) A menu format in which guests select a preset group of menu items and then pay one set (fixed) price for all of the menu items included in the grouping Product mix See Sales mix Product specification (spec) A detailed description of an ingredient or menu item Also referred to as a spec Product yield The amount of product remaining after cooking, trimming, portioning, or cleaning Productivity The amount of work performed by a worker in a set amount of time Productivity ratio This formula refers to the total unit output divided by the total unit input Productivity standard Management’s expectation of the productivity ratio of each employee Also, management’s view of what constitutes the appropriate productivity ratio in a given foodservice unit or units Profit The dollars that remain after all expenses have been paid Often referred to as net income Profit and loss statement (P&L) A detailed listing of revenue and expenses for a given accounting period Also referred to as an income statement Profit margin This formula refers to net income divided by total revenues Also referred to as return on sales Psychological testing Preemployment testing that can include personality tests, tests designed to predict performance, or tests of mental ability Pull date (beer) Expiration date on beverage products, usually beers, after which they should not be sold Purchase order (PO) A listing of products requested by the purchasing agent The purchase order lists various product information, including quantity ordered and price quoted by the vendor Purchase point The point in time when an item held in inventory reaches a level that indicates it should be reordered Purchases The sum cost of all food purchased during the accounting period Determined by adding all properly tabulated invoices for the accounting period Quick-service restaurant (QSR) A quick-service restaurant offers a limited menu and is designed for the convenience of customers who want their food fast Quick-change artist A guest who, having practiced the routine many times, attempts to confuse the cashier so that the cashier, in his or her confusion, will give the guest too much change Recipe-ready A recipe ingredient that is cleaned, trimmed, cooked, and generally completed, save for its addition to the recipe Recodable electronic locks A locking system that allows management to issue multiple keys and to identify precisely the time an issued key was used to access the lock, as well as to whom that key was issued Refusal hours Those hours of the day in which an operation refuses to accept food and beverage deliveries Reporting period The process of reporting a time period for which records are being maintained This may be of the same duration as an accounting period Trim Size: 8.5 in X 11 in glossary.indd 08:3:10:PM 12/12/2014 Page 396 396 Glossary Requisition When a food or beverage product is requested from storage by an employee for use in an operation Restaurant operating income A term utilized in the Uniform System of Accounts for Restaurants (USAR) indicating an operation’s remaining revenue after subtracting all operating expenses except costs those designated as corporate overhead, interest expense and other income (expense) Return on sales (ROS) Often referred to as profit margin This formula refers to net income divided by total revenues The ROS can also be stated in whole dollar terms Revenue The term used to indicate the dollars taken in by the business in a defined period of time Often referred to as sales Revenue per available seat hour (RevPASH) The amount of hourly income generated by each available seat in a foodservice operation Rolling average The average amount of sales or volume over a changing time period; for example, the last 10 days or the last three weeks ROS See Return on sales Safety stock These are additions to par stock, held as a hedge against the possibility of extra demand for a given product This helps reduce the risk of being out of stock on a given item Salaried employee An employee who receives the same income per week or month regardless of the number of hours worked Sales See Revenue Salaried employee An employee who receives the same income per week or month regardless of the number of hours worked Sales forecast/projected sales A prediction of the number of guests to be served and the revenues they will generate in a defined, future time period Sales history A record of sales achieved by an operator in a given sales outlet during a specifically identified time period Sales mix The series of consumer-purchasing decisions that result in a specific food and beverage cost percentage Sales mix affects overall product cost percentage any time menu items have varying food and beverage cost percentages Sales per labor hour A calculation used to measure worker productivity The formula used to calculate sales per labor hour is: Total sales ÷ Labor hours used = Sales per labor hour Sales per seat The total revenue generated by a facility divided by the number of seats in the dining area Sales to date The cumulative sales figures reported during a given financial accounting period Sales per square foot A measure of an operation’s revenue as it relates to the number of square feet the operation occupies The formula used to calculate sales per square foot is: Total sales ÷ Total square footage = Sales per square foot Sales variance An increase or decrease from previously experienced or predicted sales levels Sales volume The number of units sold Sarbanes–Oxley Act (SOX) Technically known as the Public Company Accounting Reform and Investor Protection Act, the law provides criminal penalties for those found to have committed accounting fraud The SOX covers a whole range of corporate governance issues, including the regulation of those who are assigned the task of verifying a company’s financial health Scoop (food) See food scoop Selling price The total amount paid by guests for the purchase of a singly priced item Shelf life The period of time an ingredient or menu item maintains its freshness, flavor, and quality Short Term used when the total amount of money in a cash drawer is less than the total amount of money that should be there based on sales receipts Shorting When the vendor is unable to deliver the quantity of item ordered for the appointed delivery date Skills tests Preemployment tests such as typing tests for office employees, computer application tests for those involved in using word processing or spreadsheet tools, or food production tasks, as in the case of chefs Skip See Walk SOP See Standard operating procedure Spec See Product specification Spirits Fermented beverages that are distilled to increase the alcohol content of the product Split shift A scheduling technique used to match individual employee work shifts with the peaks and valleys of customer demand Spotter An individual employed by management for the purpose of inconspicuously observing bartenders and waitstaff in order to detect any fraudulent or policy-violating behavior Standard labor cost The labor cost needed to meet established productivity standards Standard menu A printed and otherwise fixed menu that stays the same day after day Standard operating procedure (SOP) Term used for the way something is done in normal business operations Standardized recipe The procedures to be used for consistently preparing and serving a given menu item Standardized recipe cost sheet A record of the ingredient costs required to produce an item sold by a foodservice operation Statement of income and expense The accounting tool used to report an operation’s revenue, expenses, and profit for a defined time period Also known as the income statement, the profit and loss statement, and the P&L Supporting schedules List of all details associated with each line item on the income statement Sustainable development A variety of Earth-friendly practices and policies designed to meet the needs of the present population without compromising the ability of future generations to meet their own needs Task training The training undertaken to ensure an employee has the skills to meet productivity goals Tenths system A liquor inventory valuation system that requires the inventory taker to assign a product value based on a visual inspection of a bottle’s content For example, a value of 10/10 is assigned for a full bottle, 5/10 is assigned to a half bottle, and so on Tip-on (menu) A small menu segment clipped to a larger and more permanent list of menu items Total bar system An automated set of procedures that combine sales information with product dispensing information to create a complete beverage revenue and production control program Travel and entertainment (T&E) cards Cards in a payment system by which the card issuer collects full payment from the card users on a monthly basis These card companies not typically assess their users’ interest charges Trim Size: 8.5 in X 11 in glossary.indd 08:3:10:PM 12/12/2014 Page 397 Glossary 397 Two-key system A system to control access to storage areas Uniform systems of accounts A recommended and standardized (uniform) set of accounting procedures used for categorizing and reporting revenue and expense Uniform System of Accounts for Restaurants (USAR) The recommended and standardized (uniform) set of accounting procedures used for categorizing and reporting revenue and expense in the restaurant industry User workstation A computer terminal used only to ring up food and beverage orders Value pricing The practice of reducing all or most prices on the menu in the belief that total guest counts will increase to the point that total sales revenue also increases Variable expense An expense that generally increases as sales volume increases and decreases as sales volume decreases Variable payroll Those dollars expended on employees whose presence is directly dependent on the number of guests served These employees include servers, bartenders, and dishwashers, for example As the number of guests served increases, the number of these individuals required to the job also increases As the number of guests served decreases, variable payroll should decrease Vintage The specific year(s) of production for a wine Vintner Wine producer Voluntary separation An employee makes the decision to leave the organization Walk/skip (the bill) A term used to describe a customer who has consumed a product, but leaves the foodservice operation without paying the bill Also known as a skip Waste percentage This formula is defined as product loss divided by AP weight and refers to product lost in the preparation process Weighted average An average that combines data on the number of guests served and how much each has spent during a given financial accounting period Well liquors Those spirits that are served by an operation when the customer does not specify a particular brand name Wine A fermented beverage made from grapes, fruits, or berries Wine list A menu of wine offerings Working stock The quantity of goods from inventory reasonably expected to be used between deliveries Yardstick method Method of calculating expense standards so determinations can be made as to whether variations in expenses are due to changes in sales volume or other reasons, such as waste or theft Yield percentage This formula is defined as one minus waste percentage and refers to the amount of product available for use by the operator after all preparation-related losses have been taken into account Yield test A procedure used to determine actual EP ingredient costs It is used to help establish actual costs on a product that will experience weight or volume loss in preparation Trim Size: 8.5 in X 11 in Index.indd 08:36:4:PM 12/12/2014 Page 399 INDEX A B ABC inventory control, 115–118 ACA (Patient Protection and Affordable Care Act, Affordable Care Act), 217, 305 Accounting period, 15 Accounts payable, verification of, 383–384 Accounts receivable, 383 Achievement budget, 344 Actual cost of sales, 150–152 Affordable Care Act (Patient Protection and Affordable Care Act, ACA), 217, 305 Aggregate statements, 293 À la carte menu, 184 Alcoholic beverages See also Beer; Spirits (liquors); Wine consumption around the world, 172 defined, 53 forecasting sales of, 54–56 purchasing, 71–75 theft of, 161–163 Alcoholic beverage service, 130–132 See also Beverage production Ambience, pricing and, 191 American chain restaurants, overseas, 280 American Society of Composers, Authors and Publishers (ASCAP), 268 Annual budget, 344 AP (as purchased) state, 152–156 ASCAP (American Society of Composers, Authors and Publishers), 268 As-needed system, 119 As purchased (AP) state, 152–156 Attainable cost of sales, 150 Attainable product cost, 157 Auditors, 78 Average(s) check, 32 defined, 29 fixed, 30 rolling, 30–32 for sales histories, 29–32 weighted, 33–34 Average sales per guest computing, 32 forecasting, 40–41 Background checks, 222 Background music, 268 Back of the house, 121 Bank reconciliations, 382 Banquet operations, sale of alcoholic beverages for, 165 Bars See also Alcoholic beverages bar product loss, 161–163 in-room minibars, 164 open (hosted), 164–165 substituting products, 162–163 total bar system, 130 Bar product loss, 161–163 Bartending guides, 129 Beer defined, 53 draft, 54 forecasting sales of, 54 keg, 54 purchasing, 74–75 storage of, 101 Beginning inventory, 140–141 Berg, 163 Beverages See also Alcoholic beverages bottled wine, 201–203 cost of sales, 143 eco-oriented drink programs, 75 inventory amounts, 108–109 inventory turnover, 302 issuing, 113–114 minimizing product loss, 161–163 other expenses related to, 276–278 pricing, 201–205 purchasing, 70–75 receiving, 84 at receptions and parties, 203–205 sales mix, 169–171 Beverage costs computing, 143 defined, with transfers, 144–145 Beverage cost percentage, 143 Beverage-dispensing systems, 163 399 Trim Size: 8.5 in X 11 in Index.indd 08:36:4:PM 12/12/2014 Page 400 400 Index Beverage expense adjusting categories, 303 analysis of, 302–303 Beverage gun, 129–130 Beverage production, 128–132 beverage gun, 129–130 free-pour, 129 jigger pour, 129 metered pour spout, 129 responsible alcoholic beverage service, 130–132 total bar system, 130 Beverage sales forecasting, 53–56 reducing cost of, 161–165 Beverage storage, 101–103 Bid sheet, 66, 67 Bin card, 115 BMI, 268 BOGO (buy one, get one), 199 Bonding, 375 Bookkeeping, 289 Bottled wine, 201–203 Bottled-wine sales forecasts, 66 Bottle sales, 164 Bottom line, 307 Box cutters, 80 Breaks, productivity and, 229 Break-even point, 335, 356 Budget achievement, 344 annual, 344 defined, 15 developing, 344–349 expense analysis, 351–355 long-range, 343 monitoring, 349–356 next-period operations assumptions, 345 operating goals establishment, 346–349 performance to, 16–18 prior-period operating results, 344–345 profit analysis, 355–356 in profit planning, 342–356 revenue analysis, 349–351 in revenue and expense management, 15–19 yearly, 344 Buffets, 200–201 Bundling, 199–200 Bureau of Fisheries, 64 Business dining, Buy one, get one (BOGO), 199 C Calculators, 80 Call liquors, 74 Carbon footprint, 160 Carryovers, 124–125 Cash, theft of, 372, 374 Cellar temperature (wine), 102 CEO (chief executive officer), 186 Certified management accountant (CMA), 290 Certified public accountant (CPA), 290 CF (conversion factor), 59 Chain restaurants, overseas, 280 Check average, 32 See also Average sales per guest Chief executive officer (CEO), 186 Cbord Group, 173 CMA (certified management accountant), 290 COLA (cost of living adjustment), 304 Competition, pricing and, 189 Computrition, 173 Container size, 65–66 Contract price, 85 Contribution margin, 197–198 defined, 197 in menu analysis, 325–329 Controllable expenses labor, 218 other expenses, 266–269 Convenience foods and make-or-buy decisions, 125 productivity and, 232–233 Conversion among measurement systems, 61 recipe, 152, 153 Conversion factor (CF), 59 Converting measurements, 61, 131 Cork condition (wine), 102 Cost accounting, 289 Costs by labor category, 244–246 Cost control beverage production, 128–130 food production, 121–125 worldwide, see International cost control issues Cost of beverage sold, 143 Cost of food consumed, 141 Cost of food sold, 140–143 Cost of living adjustment (COLA), 304 Cost of sales, 139–173 actual vs attainable, 150–152 beverages, 143, 161–165 daily, 148–150 food, 140–143, 160–161 formula for, 146–159 for individual product categories, 146–148 operational efficiency, 157–159 optimizing, 165–172 product yield, 152–157 reducing, 160–172 technology tools, 173 with transfers, 144–145 Cost of sales formula, 146–159 Cost percentage variances, 158–159 Cost/volume/profit (CVP) analysis, 334–342 linking goal value analysis and, 338–341 minimum sales point, 341–342 Counterfeit money, 369 Coupons, 199, 383–384 CPA (certified public accountant), 290 Credit cards for bill payment, 370 verification of, 372 Credit memo, 82, 83 Trim Size: 8.5 in X 11 in Index.indd 08:36:4:PM 12/12/2014 Page 401 Index 401 Currency converters, 348 CVP analysis, see Cost/volume/profit analysis Cycle menu, 184, 186 D Daily cost of sales, 148–150 Daily inventory sheet, 120–121 Daily menu, 183–184 Daily productivity report, 243–244 Daily receiving sheet, 86–87 Daydots, 99 Debit cards for bill payment, 370 security of, 376 verification of, 372 Decimals, Delivery invoice, 79, 85 Delivery schedules, 80, 107 Deposits, sales, 382 Desired profit, Dia del Nino, 38 Dilution, of beverages, 162 Direct billing, 383 Dopson, Lea, 330 Draft beer, 54 Dram shop laws, 130 Drug testing, preemployment, 222 Dry storage, 99–100 E Economic conditions, pricing and, 188 Eco-oriented drink programs, 75 Edible portion (EP), 156 Edible portion cost (EP cost), 155–156 Electronic funds transfers (EFTs), 371 Embezzlement, 382 Employee(s) bonding of, 375 exempt, 217 minimum staff, 218 salaried, 217 scheduling, laws of other countries and, 253 separation of, 230, 231 theft by, 372–376 turnover of, 230–232 Employee meal cost, 141–142 Employee selection, productivity and, 220–222 Employment applications, 221 Empowerment, 255 Empty for full system (liquor), 113 Ending inventory, 141 Energy costs, 126, 276–278 Energy Star program, 276 English measurements, 61 Environmental commitment, 223 See also Green operations EP (edible portion), 156 EP cost (edible portion cost), 155–156 Equipment maintenance and repair costs, 279–280 productivity and, 234 for receiving, 79–80 Equipment inspection report, 279 Ethics, 70 Ethyl alcohol, 130 European Union (EU), 131 Exempt employees, 217 Expense(s), 5–7 beverage, 302–303 controllable, 218, 266–269 defined, fixed, 269–272 food, 10, 298–301, 303 ideal, labor, 10, 215–219, 303–305 managing, see Managing revenue and expense minor, mixed, 269–272 non-controllable, 218, 266–269 other, See also Other expenses uncontrollable, 218 variable, 269–272 Expense analysis, in budget monitoring, 351–355 Extended price, 86 F Factor method (yield adjustment), 59 Fair Labor Standards Act (FLSA), 217 Farm to Fork concept, 65 FDA (US Food and Drug Administration), 64, 101 FIFO (first in, first out), 97–99 Financial analysis, 288–310 beverage expense, 302–303 food expense, 298–301 income statement in USAR format, 291–295 labor expense, 303–305 other expenses, 305–306 and profit planning, 321 profits, 307–309 sales/volume analysis, 296–298 technology tools, 310 uniform systems of accounts, 290–291 Financial reporting, international issues with, 348 First in, first out (FIFO), 97–99 Fiscal year, 108 Fixed average, 30 Fixed expenses, 269–272 Fixed labor costs, 303 Fixed payroll, 218 Flow of business, 3–4 FLSA (Fair Labor Standards Act), 217 Food inventory amounts, 108 inventory turnover, 300–301 minimizing product loss, 160–161 other expenses related to, 276–278 potentially hazardous, 100 storage of, 97–101 Trim Size: 8.5 in X 11 in Index.indd 08:36:4:PM 12/12/2014 402 Index Food and Drug Administration (FDA), 64, 101 Food available for sale, 141 Food costs defined, goals for, 347 for green operations, 126 labor costs and, 232–234 with transfers, 144–145 yardstick standards for, 351–353 Food cost percentage, 10 calculating, 142–143 in menu analysis, 322–325 Food expense adjusting categories, 303 analysis of, 298–301 calculating, 10 Food production, 121–128 cost control, 121–125 schedules, 126–128 Food purchasing, 62–70 determining best price, 66–68 determining what to purchase, 62–66 ensuring steady supply, 68–69 ethics in, 70 number of vendors, 69 Food sales cost of, 140–143 forecasting, 51–53 reducing cost of, 160–161 Food scoops, 124 Foodservice manager, Forecasting guest counts, 38–40 revenue, 37–38 sales, see Sales forecasts sales volume, 248 Fractions, Franchises, 247 Fraud, employee, 372–376 Free-pouring, 128, 129 Freezer storage, 100–101 G Goal value analysis linking cost/volume/profit analysis and, 338–341 in menu analysis, 330–334 Goods available for sale, 141 GRA (Green Restaurant Association), Grades, of food items, 64–65 Green operations benefits of, budgeting for utility costs, 346 carbon footprint, 160 cost of food, 126 customers’ concern about, 42 defined, eco-oriented drink programs, 75 environmental commitment, 223 Farm to Fork, 65 information technology systems, 385 LEED certification, 194 profit from, 309 for reducing other expenses, 275 Green Restaurant Association (GRA), Gross profit, 299 Guest charges, verification of, 378–380 Guest checks and employee theft, 373–375 verifying charges on, 378–380 walking or skipping, 369–370 Guest counts forecasting, 38–40 recording, 32–34 Guests served per labor dollar, 239 Guests served per labor hour, 239–241 Guest type, pricing and, 189–190 H Hayes, David, 330 Head size (draft beer), 162 Hiring, 220–222 Hobart, 280 Holidays, 38 Hosted bars (open bars), 164–165 HOTREC, 131 House wines, 66 Huffman, Lynn, 330 Hydrometer, 162 I Ice, in drinks, 163 Ideal expense, Income before income taxes, 293 Income statement, 12–15 analyzing results using, see Financial analysis in other countries, 299 software programs for, 19 in USAR format, 15, 291–295 Inflation, 7, Information accessibility, 19 Information technology (IT) systems, 385 Ingredient room, 112 Intended use (of food items), 66 International cost control issues, 19, 131 adjusting recipes, 61 alcoholic beverage consumption, 172 American chain restaurants, 280 employee scheduling, 253 financial reporting, 348 holidays, 38 HOTREC, 131 menu formats, 184 profit concept, 299 Interviews, employment, 221–222 Inventory, 97–121 ABC inventory control, 116–118 Page 402 Trim Size: 8.5 in X 11 in Index.indd 08:36:4:PM 12/12/2014 Page 403 Index 403 beginning, 140–141 beverage inventory amounts, 108–109 daily inventory sheet, 120–121 determining proper levels of, 104–109 ending, 141 food inventory amounts, 108 inventory control, 103–111 padding, 141 perpetual inventory system, 115–116 physical inventory system, 115 product issuing and restocking, 112–121 product security, 103 purchase points, 118–121 restocking, 114–115, 120 storage, 97–103 technology tools, 131 valuation of, 109–111 Inventory turnover beverages, 302 defined, 300 food, 300–301 Inventory valuation, 109–111 Involuntary separation, 231 Issuing products, 112–114 and guest charges, 379 verification of, 377–378 IT (information technology) systems, 385 J Jigger pour, 129 Job description, 220 Job specification, 221 John Wiley & Sons, 129, 187 Just-in-time system, 119 K Keg beer, 54 Kilowatt-hours (kWh), 277 Kimes, Sheryl E., 241 Kitchen theft, 160–161 Kotschevar, Lendal, 333 kWh (kilowatt-hours), 277 L Labor cost(s), 215–256 defined, goals for, 348 labor expense, 10, 216–219, 303–305 labor productivity, 219–246 payroll, 246–254 reducing, 255 technology tools, 215–256 yardstick standards for, 353–355 Labor cost percentage, 235–237 Labor dollars per guest served, 238–239 Labor expense, 216–219 analysis of, 303–305 calculating, 10 defined, 215 Labor productivity, see Productivity (labor) Last in first out (LIFO), 97–98 LEED (Leadership in Energy and Environmental Design) certification, 194 Leftovers (see Carryovers), 124–125 LIFO (last in first out), 97–98 Light, for wine storage, 102 “Linking Cost-Volume-Profit Analysis with Goal Value Analysis” (Lea Dopson), 330 Liquors, see Spirits Locally grown foods, 65 Location pricing and, 192 of receiving area, 79 Long-range budget, 343 M McDonald’s, 19 Maintenance of beverage storage areas, 101–103 of food storage areas, 99–101 for product security, 103 Maintenance costs, 279–280 Make or buy decisions, 125 Management by exception, 272 Management by Menu (Lendal Kotschevar), 333 Managerial accounting, 289, 290 Managerial Accounting for the Hospitality Industry, 291 Managing revenue and expense, 1–19 budget, 15–19 computing percentages, 9–10 developing skills, 7–12 income (profit and loss) statement, 12–15 other expenses, 275–281 percentages used in, 8–9 professional foodservice manager position, for profit, 2–7 technology tools, 19 using percentages, 11–12 Meal period, pricing and, 191 Meals served goals, 346 Mean, 29 See also Average(s) Measurements, converting, 61, 131 Measuring productivity, 234–246 costs by labor category, 244–246 guests served per labor dollar, 239 guests served per labor hour, 239–241 labor cost percentage, 235–237 labor dollars per guest served, 238–239 revenue per available seat hour, 241–243 sales per labor hour, 237–238 six-column daily productivity report, 243–244 Menu, productivity and, 232 Menu analysis, 321–334 contribution margin, 325–329 Trim Size: 8.5 in X 11 in Index.indd 08:36:4:PM 12/12/2014 Page 404 404 Index Menu analysis (cont’d) food cost percentage, 322–325 goal value analysis, 330–334 menu engineering software, 329 “Menu Analysis” (David Hayes and Lynn Huffman), 330 Menu engineering software, 329 Menu formats, 182–186 cycle menu, 184, 186 daily menu, 183–184 standard menu, 182–183 Menu pricing, see Pricing Menu specials, 186 Merchant service providers (MSPs), 371 Metered pour spout, 129 Metric measurements, 61 Minibars, in-room, 164 Minimum sales point (MSP), 341–342 Minimum staff, 218 Minor expenses, Mixed drinks, 55 Mixed expenses, 269–272 Monetary units, 348 Money, counterfeit, 369 Morale, productivity and, 229–232 Mother’s Day, 38 Mr Boston bartending guides, 129 MSP (minimum sales point), 341–342 MSPs (merchant service providers), 371 Music, background, 268 Mystery shoppers, 162 N National Association of Meat Purveyors, 64 National Restaurant Association (NRA), 6, 51, 306 Negligent hiring, 222 Next-period operations assumptions, 345 Non-controllable expenses labor, 218 other expenses, 266–269 North American Meat Processors Association, 77 NRA, see National Restaurant Association O Occupancy costs, 280–281 On-site cooking, 232 On-the-job training (OJT), 225 Open bars (hosted bars), 164–165 Open checks, 373 Operating calendar, 107 Operating goals establishment, in budget development, 346–349 Operational efficiency, 157–159 Organic products, 65, 75 Orientation program, 223–224 Other expenses, 265–281 analysis of, 305–306 controllable and non-controllable, 266–269 defined, fixed, variable, and mixed, 269–272 as managers’ concern, 18–19 managing, 275–281 monitoring, 272–275 technology tools, 281 types of, 266 Overall cost of sales percentage, optimizing, 165–172 Overcooking, 122 Overportioning, 123–124 Overpouring, 161–162, 164 Overtime wages, 252 Oxidation, 102 P Packaging costs of, 126 and purchasing decisions, 65 Padding inventory, 141 Par levels, 119–121 Partender, 109 Parties, pricing beverages for, 203–205 Patient Protection and Affordable Care Act (ACA, Affordable Care Act), 217, 305 Payment cards, 370–372 Payroll, 217–218 See also Labor expense defined, 215 fixed vs variable, 218 Payroll cost management, 246–254 analyzing results, 253–254 determining productivity standards, 246–248 forecasting sales volume, 248 scheduling, 249–253 Percent (%), Percentages, 8–9 beverage cost, 143 computing, 9–10 food cost, 10, 142–143, 322–325 forms of expressing, 8–9 labor cost, 235–237 overall cost of sales, 165–172 product cost, 195–198 using, 11–12 variances, 158–159 waste, 154–156 yield, 154–156 Percentage method (yield adjustment), 59–62 Performance to budget, 16–18 Perishability, product, 104–107 Perpetual inventory cards, 116 Perpetual inventory system, 115–116 Physical inventory system, 115 P&L, see Income statement Plan, 15 See also Budget Plate costs, 197 POs, see Purchase orders Point-of-sale (POS) systems, 26, 33, 41, 42, 289 guest checks, 373–374, 380 revenue control/security with, 385 verifying product issues, 377–378 Trim Size: 8.5 in X 11 in Index.indd 08:36:4:PM 12/12/2014 Page 405 Index 405 Point of success (POS) company, 205 Popularity index, 52, 193 Portion cost, 123–124 Portion size increasing price relative to, 172 overportioning, 123–124 pricing and, 190–191 relative to price, 167 POS (point of success) company, 205 POS systems, see Point-of-sale systems Potentially hazardous foods, 100 Pour spouts, 129 Precheck/postcheck system, 372–373 Predicted number to be sold, 52 Preemployment drug testing, 222 Preemployment testing, 222 Premium liquors, 74 Price (of products) relative to portion size, 172 verifying, 84–86 Price blending, 192–195 Price comparison sheet, 66–68 Price/value relationship, 187 Pricing, 181–205 assigning menu prices, 195–198 factors affecting, 187–195 menu formats, 182–186 menu specials, 186 special situations, 199–205 technology tools, 205 Pricing units, 63–64 Prime cost, 293 Prior-period operating results, in budget development, 344–345 Prix fixe menu, 184 Processing, 65 Product(s) beverages, 161–163 food, 160–161 Product contribution margin, 197–198 Product cost monitoring, see Cost of sales Product cost percentage, 195–198 Production, 121–131 beverage, 128–132 food, 121–128 technology tools, 131 Production schedule (foods), 126–128 Productivity (labor), 219–246 and breaks, 229 and convenience foods vs scratch cooking, 232–233 costs by labor category, 244–246 and employee selection, 220–222 and equipment/tools, 234 evaluating, 219 factors affecting, 219–220 measuring, see Measuring productivity and menu, 232 and morale, 229–232 and scheduling, 226–228 and service level, 234 and supervision, 226 and training, 223–226 Productivity ratios, 219, 234 Productivity standards determining, 246–248 and employee scheduling, 249–252 Product loss beverages, 161–163 food, 160–161 Product name, 63 Product security, 103 Product specification (spec), 62–63 Product yield, 66, 152–157 Professional foodservice manager, Professional trade organizations, 41 Profit(s) analysis of, 307–309 defined, desired, goals for, 349 as managers’ concern, 18–19 managing revenue and expense for, 2–7 other countries’ concepts of, 299 Profit analysis, in budget monitoring, 355–356 Profit-and-loss statement, see Income statement Profit formula, 3, 12 Profit margin, 307 Profit percentage, see Percentages Profit planning, 4, 320–357 budget, 342–356 cost/volume/profit analysis, 334–342 financial analysis and, 321 menu analysis, 321–334 technology tools, 356 Projected sales, 26 Promotions, 384 Psychological testing, 222 Purchases, 141 Purchase orders (POs), 67, 76–78 defined, 76 verifying unit price on, 85 Purchase points, 118–121 Purchase size, potential saving from, 107 Purchasing, 50–78 beverage, 70–75 ethics in, 70 food, 62–70 forecasting beverage sales, 53–56 forecasting food sales, 51–53 purchase orders, 76–78 standardized recipes, 56–62 technology tools, 88 Q QSRs (quick-service restaurants), 328 Quality (product) altering, 168 pricing and, 190 verifying, 82–84 Quantity (product), verifying, 82 Quick-change artists, 369 Quick-service restaurants (QSRs), 328 Trim Size: 8.5 in X 11 in Index.indd 08:36:4:PM 12/12/2014 Page 406 406 Index R Ready foods, 125 Receiving, 78–87 delivery schedules, 80 location, 79 receiving record or daily receiving sheet, 86–87 technology tools, 88 tools and equipment, 79–80 training, 81–86 Receiving record, 86–87 Receptions, pricing beverages for, 203–205 Recipes adjusting, 61 converting, 61, 152, 153 standardized, see Standardized recipes varying composition of, 167–168 Recipe-costing software, 152 Recipe-ready items, 59 Recodable electronic locks, 101 Record keeping software, 280 Reduced-price coupons, 384 Reference checks, 222 Refrigerated storage, 100 Refusal hours, 80 Repair costs, 279–280 Reporting period, 28 Requisition, 112 Reservations, 43 The Restaurant Industry Operations Report, 306 Restaurant operating income, 293 Restocking inventory, 114–115, 120 Retraining, 226 Return on sales (ROS), 307 Revenue, 4–5 forecasting, 37–38 goals for, 346 managing, see Managing revenue and expense reasons for shortage of, 369 recording, 32–34 Revenue analysis, in budget monitoring, 349–351 Revenue collection, in special situations, 383–384 Revenue control and security, 367–386 developing system for, 376–384 external security threats, 369–372 internal security threats, 372–376 key principles of, 384–385 manual systems, 385 technology tools, 386 Revenue management, 187 Revenue per available seat hour (RevPASH), 241–243 Rolling average, 30–32 ROS (return on sales), 307 S Safety stock, 104 Salad bars, 200–201 Salaried employees, 217 Sales bottle, 164 computing average sales per guest, 32 computing measures of, 296–297 cost of, see Cost of sales factors influencing analysis of, 297–298 minimum sales point, 341–342 projected, 26 return on sales, 307 Sales deposits, verification of, 382 Sales forecasts, 25–43 average sales per guest forecasts, 40–41 beverages, 53–56 bottled-wine, 66 defined, 26 food, 51–53 guest counts forecasts, 38–40 importance of, 26–27 maintaining sales histories, 34 revenue forecasts, 37–38 sales histories, 27–34 sales variances, 34–36 technology tools, 42–43 Sales histories, 27–34 computing averages for, 29–32 defined, 27 limitations of, 53 maintaining, 34 recording revenue and guest counts, 32–34 Sales mix effects of, 169–171 pricing and, 192–195 Sales per labor hour, 237–238 Sales per square foot, 350–351 Sales receipts, verification of, 380–382 Sales to date, 28 Sales variances, forecasting and, 34–36 Sales volume analysis of, 296–298 defined, 26 and employee scheduling, 249–252 forecasting, 248 increasing, 351 Sarbanes-Oxley Act (SOX), 290 Scales, 79 Schedules delivery, 80 food production, 126–128 Scheduling laws of other countries and, 253 for payroll cost management, 249–253 productivity and, 226–228 Scratch cooking, productivity and, 232–233 Security of inventory, 103 kitchen, 161 product, 103 Security threats (revenue) See also Revenue control and security external, 369–372 internal, 372–376 Selling price, 187 See also Pricing Trim Size: 8.5 in X 11 in Index.indd 08:36:4:PM 12/12/2014 Page 407 Index 407 Server theft, 372–373 Service charges, 381 Service levels pricing and, 189 productivity and, 234 SESAC, 268 Shelf life, 73 Shorting, 82 SHRM (Society for Human Resource Management), 255 Six-column daily productivity report, 243–244 Size (of food items), 65 Skill development, 7–12 Skills tests, 222 Skipping the guest check, 369–370 Society for Human Resource Management (SHRM), 255 SOP (standard operating procedure), 266 SOX (Sarbanes-Oxley Act), 290 Specials, menu, 186 Spirits (liquors) call liquors, 74 defined, 53 forecasting sales of, 55–56 inventory by weight, 109 premium liquors, 74 purchasing, 73–74 storage of, 103, 113–114 well liquors, 73–74 Spotters, 162 Staff, minimum, 218 See also Employee(s) Standards for food items, 64–65 productivity, 246–252 yardstick, 351–355 Standardized recipes, 56–62 adjusting, 58–62 cost sheets for, 151–152 defined, 56–57 pros and cons of using, 57–58 technology tools, 88 Standard measurements, 61 Standard menu, 182–183 Standard operating procedure (SOP), 266 Statement of income and expense, see Income statement Stock outages, 107–108 Storage, 97–103 beverages, 101–103 dry, 99–100 food products, 97–101 freezer, 100–101 perishability of products, 104–107 product security, 103 refrigerated, 100 Storage capacity, 104 Storage labels, 98–99 Substituting products, in bars, 162–163 Supervision, productivity and, 226 Supply of products, 68–69 Supporting schedules, 293 Sustainable development, See also Green operations Sysco Foods, 68 T T&E (travel and entertainment) cards, 370 Technology tools cost of sales, 173 financial analysis, 310 forecasting sales, 42–43 inventory and production, 131 labor costs, 215–256 managing revenue and expense, 19 other expenses, 281 pricing, 205 profit planning, 356 purchasing and receiving, 88 revenue control and security, 386 Temperature converting, 61 for wine storage, 102 Tenths system, 109 Theft of beverages, 161–163 by employees, 372–376 in kitchen, 160–161 Thermometers, 80 Tools productivity and, 234 for receiving, 79–80 Total bar system, 130 Trade organizations, 41 Training productivity and, 223–226 for receiving, 81–86 Transfers, cost of sales with, 144–145 Travel and entertainment (T&E) cards, 370 Turnover employee, 230–232 inventory, 300–302 28-day-period approach, 16–17 Two-key system, 101 U Uncontrollable labor expense, 218 Underpouring, 161–162 Uniform systems of accounts, 290–291 Uniform System of Accounts for Restaurants (USAR), 14–15, 140 income statement format, 291–295 other expenses, 267–269 The Uniform System of Accounts for the Lodging Industry, 291 United Fresh Fruit and Vegetable Association, 77 United Kingdom, profit concept in, 299 US Department of Agriculture (USDA), 64, 152 US Department of Labor, 223 US Food and Drug Administration (FDA), 64, 101 US Green Building Council (USGBC), 194 USAR, see Uniform System of Accounts for Restaurants User workstations, 373 Trim Size: 8.5 in X 11 in Index.indd 08:36:4:PM 12/12/2014 408 Index USGBC (US Green Building Council), 194 Utility costs, 276 budgeting for, 346 managing, 276–278 V Valuation, inventory, 109–111 Value, in price/value relationship, 187 Value pricing, 199, 330 Variable expenses, 269–272 Variable labor costs, 303 Variable payroll, 218 Variances, cost percentage, 158–159 Vendors delivery schedules, 107 number of, 69–70 verifying accounts payable, 383–384 Ving Card Elsafe, 101 Vintages, wine, 201 Volume measures, converting, 61 Voluntary separation, 230, 231 W Wages, overtime, 252 See also Payroll Walking the guest check, 369–370 Waste food, 121–122 and removal of cafeteria serving trays, 275 Waste percentage, 154–156 Watering down drinks, 162 Weight (of products), verifying, 81–82 Weighted average, 33–34 Weight measures, converting, 61 Weight range (food items), 65 Well liquors, 73–74 Wendy’s, 199 Wheeled equipment, 80 Wine bottled, 66, 201–203 defined, 53 forecasting sales of, 54–55 house, 66 purchasing, 71–73 storage of, 102 vintages, 201 Wine-by-the-glass sales forecasts, 66 Wine cellars, 114 Wine lists, 71–73 Wine Moderation Programme (EU), 131 Working stock, 104 Workstations, user, 373 Y Yardstick standards, 351–355 for food costs, 351–353 for labor costs, 353–355 Yearly budget, 344 Yield adjustment by percentage method, 59–62 product, 66, 152–157 Yield percentage, 154–156 Yield test, 153 Youth employment laws, 229 Z Zagat, 195 Page 408 WILEY END USER LICENSE AGREEMENT Go to www.wiley.com/go/eula to access Wiley’s ebook EULA ... 8.5 in X 11 in c07.indd 06:58:8:PM 12/ 16 /20 14 Page 22 4 22 4 $IBQUFSøø.BOBHJOHUIF$PTUPGø-BCPS 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Dress code Telephone call, cell... &NQMPZFF &NQMPZFF Total Hours = 32 Schedule B &NQMPZFF &NQMPZFF &NQMPZFF Total Hours = 24 22 7 Trim Size: 8.5 in X 11 in c07.indd 06:58:8:PM 12/ 16 /20 14 Page 22 8 22 8 $IBQUFSøø.BOBHJOHUIF$PTUPGø-BCPS... lawsuit Trim Size: 8.5 in X 11 in c07.indd 06:58:8:PM 12/ 16 /20 14 Page 22 2 22 2 $IBQUFSøø.BOBHJOHUIF$PTUPGø-BCPS What questions can and cannot be asked of potential employees? The Equal Employment