Foundations of cost control by daniel traster chapter12

If it changes much over time, manager should research why and correct problems or reinforce results • When seating is limited, increasing average check may be only way to improve profit

Class Name

Instructor Name

Revenue Prediction

chapter 12

Opening Question

If you managed a restaurant, what information would you want to

know to help you predict how many guests to expect at tomorrow’s meal services?

Forecasting Process

Forecasting Process

• Historical quantitative data come from POS system or reservation/walk-in book

• Qualitative data should be recorded daily in a log or POS system

• Qualitative data includes:

• Start with customer count from the same day of the week from the prior week

or the prior year.

• Adjust based on historical trend percent increase or decrease

% change

Current customer count– prior count

Prior customer count

=

Example 12a

Restaurant saw 347 customers the first Friday in March this year and 360 the first Friday in March last year What is the percent change from last year?

% change

347-360

360

Using Trends

• Trends only significant if repeated over and over each same day of the week

• Manager uses trend to calculate initial forecast

New Customer Count =

Prior Count X ( 1 + percent change in decimal form )

Example 12b

New Count = 340 X (1 + 0.014) = 344.8 or 345

Business has consistent trend of 1.4% increase over last year’s customer counts If first Friday in March last year saw 340 customers, how many should be forecast for the first Friday in March this year?

Adjusting for Qualitative Data

• Manager adjusts initial forecast based on qualitative data

• Keep adjusting as new data comes in (weather report changes, for example)

• Forecast 1-2 weeks our for schedule, 2-3 days out for ordering, 1 day out for kitchen production schedule

Evaluating the System

Constantly compare the forecast to the actual guest count to learn from mistakes and to make more accurate forecasts in the future.

Forecasting Sales

• Converting customers to revenue helps to budget and control costs

• Average Check = amount of revenue the average person generates on a check

• Can calculate average check by server to identify strong servers or average check by day, week, or meal period to inform when to offer promotions

Average Check

Average Check

Revenue for a Period

Guests for that Period

=

Uses for Average Check

• It is a control tool If it changes much over time, manager should research why and correct problems or reinforce results

• When seating is limited, increasing average check may be only way to improve profit

• Average check can forecast revenue

Forecast Revenue

= Forecast Guests X Average Check

Example 12e

Forecast revenue = 3,700 X $47.58

= $176,046

Restaurant with average check of $47.58 forecasts 3,700 guests next month How much revenue should manager expect next month?

Using Forecast Revenue

Using forecast revenue and target food cost %, beverage cost %, and labor cost %, manager can determine budget in dollars for a given period of time.

Customers Served in a Period

Total Seats in Dining Room

=

Example 12f

Seat Turnover = 280 ÷ 120 = 2.33

Restaurant has 120 seats in dining room, but serves 280 guests at dinner What is seat turnover for dinner?

Seat Turnover (cont.)

• Impacted by slow kitchen service or understaffed or slow dining room staff

• Guest service should not be so rushed that it reduces check average; service must remain efficient but comfortable for guests

• Seat turnover can be used with forecast to decide how many (if multiple) dining rooms to open or when to expand dining room

Menu Mix

• Menu Mix % = % of sales that come from each menu item

• It is usually divided by menu category and is relatively consistent with a meal period across same days of the week

Caveat : may change seasonally or with weather, and definitely with menu change

Menu Mix Formula

Menu Mix %

Number of that item sold

Total number of items sold

=

Menu Mix (cont.)

• Menu mix usually calculated against total in a menu category

• Manager must calculate % of guests who purchase food from each menu category

% buying category

Guests buying that category

Total guests

=

Forecasting Number of Menu Items Sold

from Menu Mix Percents

Step 1

Forecasting Number of Menu Items Sold

from Menu Mix Percents

Step 2

Example 12i

1. No ordering dessert = 370 X 0.42 = 155.4

2. No of sorbets = 155.4 X 0.37 = 57.5 or 58 sorbets

Historically, 42% of guests order dessert Thursday night Of those, 37% are sorbet How many sorbets should the pastry chef plan for next

Thursday if the guest forecast is 370 guests?

Forecasting Kitchen Production

• Manager uses forecast menu mix sales to plan kitchen production

• Manager should adjust forecast based on qualitative data, desire to have a buffer, or desire to run out of certain foods to avoid leftovers.

• Accurate production schedule minimizes leftovers, waste, purchases, and labor costs

Menu Analysis for Increased Profitability

• Making the most profitable items the most popular ones helps to

maximize overall profit

• Menu Analysis is best done over a long time period (several months or a year)

Menu Analysis is process through which managers compare each menu item’s

profitability and popularity

Calculating Popularity

Work with only one menu category at a time…

Calculating Profitability, Part 1

Contribution = Item Sales Price – Item Food (or

Menu CM = No sold (for an item) X CM (for that item)

Calculating Profitability

Still working with only one menu category at a time…

Using Menu Analysis

• To make an item more popular: move its location on the menu or suggestive sell it.

• To make an item more profitable: adjust its portion size or sales price.

• Can always rework a menu item or replace it entirely

Menu Analysis Categories

Reconciling Kitchen Production with Sales

• Kitchen production schedules can be used to reconcile food produced against food sold.

• All food prepared by kitchen must be accounted for to protect against theft.

• Kitchen Production Sheet uses menu mix % and forecast to predict how many

of each dish will be sold

Example 12j

Number ordering dessert

=130 X 0.42

= 54.6 or 55 guests ordering dessert

Restaurant forecasts 130 guests for dinner tomorrow 42% of guests usually order dessert Use chart on next slide to calculate the number of each dessert forecast to be sold.

Converting Forecast Menu Mix Count to Kitchen Production Schedule

Kitchen Production Sheet

Kitchen Production Sheet

Portions on Hand

Prepare

Total able

Kitchen Production Sheet Notes

• If kitchen runs out of food and additional portions are made during service,

“additional production” should be recorded on the form

• If a dish is 86’ed, manager should record when this occurs to determine if it represents good or bad forecasting

Mishaps and Sales Reconciliation

• When no errors occur during service, dishes sold = number available for sale – leftovers

• Errors often occur and should be recorded on a Food Mishap Report a.k.a Void Sheet

• Void Sheet lists all items rendered unusable during service; for each item lost,

• Every void must be accounted for to ensure it isn’t being stolen

• Trusted employee or manager should verify (visually) that each item is

legitimately ruined before entering it on Void Sheet

Voids occur when food is dropped on floor, customer rejects it for improper cooking, customer dislikes the taste, or cook ruins it and removes it from circulation

• Lots of a voids coming from a single employee suggest the employee needs retraining

• Lots of voids across the staff may suggest an understaffed business

Reasons for voids:

Food and Sales Reconciliation Form

At end of service or day, manager should complete a food and sales reconciliation form to confirm that all portions prepared by kitchen are accounted for as sales, voids, or leftovers.

Part of Example 12j as Food and Sales Reconciliation Form

Food and Sales Reconciliation Form

• Info on Form comes from Kitchen Production Sheet, Void Sheet, POS

system/guest checks, and physical inventory of kitchen stations

• Total Output (portions sold + voids) should match Portions Consumed (sent out from kitchen)

• Any discrepancy should be investigated

Reconciliation Form (cont.)

• Regularly forgetting to enter voids or checks missing from the same employee may be a sign of theft or signal a need for retraining

• POS systems record which server orders each dish, so missing checks are not

an issue Missing food is easier to track to a specific server.