HM329 exam 3

unblended

All menu items priced using same item food cost %

special pricing situations

Coupons Bundling Value Pricing Salad Bars and Buffets

The labor dollars per guest served productivity measure:

Does not vary with changes in menu selling price

blended

Menu items priced using different item food cost % but overall total food cost % meets operation's target

perpetual inventory

Written record of purchases and issues of each item in storage so a written balance of stock on hand is always available

inventory valuation

item amount x item value

3 reasons for physical inventory control

-To calculate order quantities -To obtain an inventory value through price extensions -To verify accuracy of a perpetual inventory Inventory Value is used to determine actual food expense - cost of food sold or cost of food consumed

4 step process of managing payroll costs

1. Determine productivity standards. 2. Forecast sales volume. 3. Schedule employees using productivity standards and forecasted sales volume. 4. Analyze results.

Good management practice suggests that there should be multiple copies of purchasing records, particularly purchase orders, invoices and credit memos. According to our class discussion what is the minimum number of copies needed for these records.

3

The concept that managers should focus their attention on the small number of products that account for the major portion of the inventory value is termed

ABC method

guests served per labor dollar

As a measure of productivity, guests served per labor dollar expended has advantages. It can be used by foodservice units that do not routinely record dollar sales figures. guests served/ cost of labor

price/ value relationship

Customers demand value for their money. It is your job to set a price that: -Is high enough to make a profit -Is low enough that customers perceive good value

T/F Fixed expenses decline as sales volume declines.

F

T/F Increasing variable costs are never desirable in a foodservice operation.

F

guests served per labor hour

Guests served per labor hour is a true measure of productivity, not a measure of either cost and productivity or sales and productivity. It is extremely useful in comparing similar units in areas with widely differing wage rates or selling prices. guests served/ labor hours used

FIFO method

Item value is the price paid for the most recent (newest) product on hand. FIFO is more common method The inventory valuation sheet should be completed each time a physical inventory (actual count) is taken or at least once/month What is LIFO? How is it different?

ways to measure productivity

Labor cost percentage Sales per labor hour Labor dollars per guest served Guests served per labor dollar Guests served per labor hour

six column forum

Many operators prefer to compute their productivity measures on a daily, rather than on a weekly or monthly basis. This can easily be done by using a six-column form with cost of labor, sales, and labor cost %.

The budgeted food cost percentage is 30%, and by June the average food cost this year is running 35%. When the restaurant owner tells the kitchen manager to get the food cost "under control," what is the first thing s/he should do?

Reduce waste and overproduction

forecast sales volume

Sales volume forecasting, when combined with established productivity standards, allows a foodservice operator to determine the number of employees needed to effectively service those guests who will visit the facility.

factors effecting employee productivity

Scheduling (which includes Breaks) Menu Convenience vs. Scratch Preparation (Make versus Buy) Equipment Service Level Desired

T/F A fixed expense, expressed as a percentage of sales, will decrease as sales increases.

T

T/F The labor cost per guest productivity measure is of value when a sales figure is not available.

T

T/F Variable expenses change as sales volume changes.

T

sales per labor hour and how to find

The most perishable commodity a foodservice operator buys is the labor hour. When not productively used, it disappears forever. This is why many operators prefer to measure labor productivity in terms of the amount of sales generated for each labor hour used. total sales/ labor hours used=sales per labor hour

Schedule employees using productivity standards and forecasted sales volume.

You can establish a labor budget using your productivity standards, your sales forecast, and the labor cost percentage formula you have already learned.

split shift

a technique used to match individual employee work shifts with peaks and valleys of customer demand.

two equations of analyze result

actual amount/ budgeted amount= % of budget cost of labor/ total sales= labor cost %

ending inventory for one accounting period becomes the ______ inventory figure for the next period.

beginning

inventory method

beginning inventory + purchases= goods available for sale - ending inventory= cost of food consumed -value of employee meals= cost of food sold

Mike is trying to figure out how to increase his average check, what would you suggest he try related to pricing?

bundling

inventory turnover percentage

cost of food consumed/ average inventory value

food cost %

cost of food sold/ food sales

how to find labor cost percentage

cost of labor/ tool sales=labor cost %

Mike wants more people to try his new deli sandwiches, which feature local products. What would you suggest he try related to pricing?

coupons

Since labor is purchased on a daily basis, labor costs should be monitored how frequently

daily basis

The "six-column food cost percentage estimate" described in the content of this module, divides _______________ by ___________ to calculate percent food cost for each day.

daily purchases daily sales

minimum staff is used to

designate the least number of employees, or payroll dollars, needed to operate a facility or department within the facility.

T/F In actual practice the perpetual inventory is used to check the accuracy of the physical inventory.

f

labor hours budget

forecasted number of guests served/ guests served per labor hour standard

cost of labor budget

forecasted total sales x labor cost % standard

employee turnover and the equation

high in some sections of the hospitality industry. By some estimates, it exceeds 200% per year. You can measure your turnover by using the following formula: number of employees separated/ number of employees in workforce

ways to reduce fixed labor cost

improve productivity increase sales volume combine jobs to eliminate fixed positions reduce wages paid to the fixed payroll employees (not typically the best idea!)

ways to variable labor cost

improve productivity schedule appropriately to adjust to changes in sales volume combine jobs to eliminate variable positions reduce wages paid to the variable employees (again, not typically a wise plan!)

productivity standards

management's view of what constitutes an appropriate productivity ratio in a given foodservice unit or units. Productivity standards represent what you should reasonably expect in the way of output per unit of labor input. Productivity standards are typically based on the following types of information: unit history, company average, industry average, management experience, or a combination of some or all of the above.

inventory turnover ratio formula

monthly cost of food used/ average inventory value Average Inventory Value = Beginning + Ending Inventory / 2 Industry average = 2 -High ratio indicates a limited inventory is being maintained -Low ratio indicates that larger amounts of money are tied up in inventory -JIT purchasing is driving up the turnover ratio

estimated cost of labor

number of estimated guests served/ guests served per labor dollar

how to figure out order amount

par value-on hand+special order

total labor expense will always exceed

payroll

how to set prices with contribution margin

portion cost + contribution margin = selling price Contribution Margin is the amount of the selling price that will be "contributed" to the cost of labor, other expense, and profit

how to calculate suggested selling price

portion cost/ food cost % portion cost x mark up factor

menu price

portion cost/ item food cost %

item food cost %

portion cost/ menu price

what are the two major factors when deciding whether to make or buy

product quality and cost

6 column form used to estimate food cost % on a daily or weekly basis

purchases today/ sales today = cost % today purchases to date/ sales to date = cost % date

labor expense includes

salaries and wages, but it consists of other labor-related costs as well.

labor dollars per guest served why its used and how to find

sales per labor hour neglects to consider the amount paid to employees per hour to generate the sales. cost of labor/ guest served

food cost calculations

sum of all food purchased for the accounting period

In terms of food cost accounting, food is considered a food cost when it is:

taken from the storeroom and used to produce a menu item

fixed pay roll is referred to

the amount an operation pays in salaries.

productivity is ___________ There are many ways to assess labor productivity. In general, productivity is measured in terms of the productivity ratio as follows:

the amount of work performed by an employee in a fixed period of time. output/input=productivity ratio

variable payroll consists of

those dollars paid to hourly employees (with hours that can be adjusted.) Do not confuse these terms

Mike is also trying to get more people to come to the Café on Monday and Tuesday mornings for breakfast. What would you suggest he try related to pricing?

value pricing or coupons