This fully updated sixth edition of Food and Beverage Cost Control provides students and managers with a wealth of comprehensive resources and the specific tools they need to keep costs low and profit margins high. In order for foodservice managers to control costs effectively, they must have a firm grasp of accounting, marketing, and legal issues, as well as an understanding of food and beverage sanitation, production, and service methods.

LEA R. DOPSON, EdD, is Chair of the Department of Hospitality Management at the University of North Texas in Denton. Dr. Dopson also teaches food and beverage cost control, hospitality managerial accounting, and hospitality finance.

DAVID K. HAYES, PhD, is the Managing Owner of the Clarion Hotel and Conference Center in Lansing, Michigan.

Preface ix

Acknowledgments xvi

About WileyPLUS Learning Space xvii

Chapter 1: Managing Revenue and Expense 1

Professional Foodservice Manager 2

Profit: The Reward for Service 2

Getting Started 7

Understanding the Income (Profit and Loss) Statement 12

Understanding the Budget 15

Chapter 2: Creating Sales Forecasts 25

Importance of Forecasting Sales 26

Sales Histories 27

Maintaining Sales Histories 34

Sales Variances 34

Predicting Future Sales 36

Chapter 3: Purchasing and Receiving 50

Forecasting Food Sales 51

Forecasting Beverage Sales 53

Importance of Standardized Recipes 56

Purchasing Food 62

Purchasing Beverages 70

Purchase Orders 76

Receiving Food and Beverage Products 78

Chapter 4: Managing Inventory and Production 96

Product Storage 97

Inventory Control 103

Product Issuing and Restocking 112

Managing Food Production 121

Managing Beverage Production 128

Chapter 5: Monitoring Food and Beverage Product Costs 139

Cost of Sales 140

Computing Cost of Food Sold 140

Computing Cost of Beverage Sold 143

Computing Costs with Transfers 144

Utilizing the Cost of Sales Formula 146

Reducing the Cost of Sales Percentage 160

Chapter 6: Managing Food and Beverage Pricing 181

Menu Formats 182

Menu Specials 186

Factors Affecting Menu Pricing 187

Assigning Menu Prices 195

Special Pricing Situations 199

Chapter 7: Managing the Cost of Labor 215

Labor Expense in the Hospitality Industry 216

Evaluating Labor Productivity 219

Maintaining a Productive Workforce 219

Measuring Current Labor Productivity 234

Managing Payroll Costs 246

Reducing Labor-Related Costs 255

Chapter 8: Controlling Other Expenses 265

Other Expenses 266

Controllable and Non-controllable Other Expenses 266

Fixed, Variable, and Mixed Other Expenses 269

Monitoring Other Expenses 272

Managing Other Expenses 275

Chapter 9: Analyzing Results Using the Income Statement 288

Introduction to Financial Analysis 289

Uniform System of Accounts 290

Income Statement (USAR Format) 291

Analysis of Sales/Volume 296

Analysis of Food Expense 298

Analysis of Beverage Expense 302

Analysis of Labor Expense 303

Analysis of Other Expenses 305

Analysis of Profits 307

Chapter 10: Planning for Profit 320

Financial Analysis and Profit Planning 321

Menu Analysis 321

Cost/Volume/Profit Analysis 334

The Budget 342

Developing the Budget 344

Monitoring the Budget 349

Chapter 11: Maintaining and Improving the Revenue Control System 367

Revenue Security 368

External Threats to Revenue Security 369

Internal Threats to Revenue Security 372

Developing the Revenue Security System 376

The Complete Revenue Security System 384

Glossary 391

Index 399