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Cost Control-Midterm

The most popular menu item over 3 months was lasagna with a popularity index of 41.7%. The least popular was seafood shells. Standardized recipes are important to provide consistency for guests and control costs. Not using them could result in portions varying each time and losing guests. Lack of profits from lost guests could lead to servers losing their jobs. Controlling food costs, which were 48.5% of revenue, to 25-30% could increase future profits. Last year's profits were 15% of $1.5M in revenue but next year profits are projected to decrease to 5% due to a 5% revenue increase but higher food and labor costs cutting profits to $78k, a 10% decrease

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76 views2 pages

Cost Control-Midterm

The most popular menu item over 3 months was lasagna with a popularity index of 41.7%. The least popular was seafood shells. Standardized recipes are important to provide consistency for guests and control costs. Not using them could result in portions varying each time and losing guests. Lack of profits from lost guests could lead to servers losing their jobs. Controlling food costs, which were 48.5% of revenue, to 25-30% could increase future profits. Last year's profits were 15% of $1.5M in revenue but next year profits are projected to decrease to 5% due to a 5% revenue increase but higher food and labor costs cutting profits to $78k, a 10% decrease

Uploaded by

ali
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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I.

1- The most popular menu item is “ lasagna “ and popularity index is = total number of a
specific item sold / total number of all menu items “ for example in the given table the
popularity index of lasagna = (215+130+164)/ 1220*100=41.7%
2- the least popular item in 3 months is “ seafood shells”
Conversion factor = desired portion / current portion
Desired portion = conversion factor * current portion

= 2.5 * 161 = 402.5

II. 1. The likely impact on guests if standardized recipes are not used is the the guest will
get every time a new plate like maybe more chicken in the plate every time he ordered
or maybe less salt the recipe of the plate will always change so we will lose the guest.

2- the impact on servers that the company will lose guests and when they lose them they will
not make profit and it’s not making profit the company will close so the servers will lose their job.

3. We can increase our profit in future revenue by working in the standardized recipes since if
every plate need for example 50g chicken as the standard say and we pot 100g of chicken in
the plate we will lose so we can make control on the cost of the extra chicken also as we can
see the food cost is very high it’s 48.5% while it must be between 25% to 30% maximum.

III. 1.

Revenue = 1,500,000$ 100%

Cost of food = 525,000. 35%

Cost of labor= 450,000. 30%

Other expenses= 300,000. 20%

Total expenses= 1,275,000. 85%

Profit = 225,000 15%


——————————
Next year budget:

Revenue will increase 5%


- 1,500,000 +5% = 1,575,000$. With 100%

- Cost of food = 551250$. 35%


Cost of labor increase by 10%
- 30% + 10% = 40%
- 630,000$. 40%

Other expenses = 20%


- 315,000$. 20%

Total expenses = 95%


- 1496250$. 95%

Profit = 5%
- 78750$ 5%

2. The profit next year will be lesser than this year by 10% since this year is 15% and the next
year will be only 5%

IV. the five keys for the food production process should be controlled are first starting with
the receiving the food we must make sure that it’s a good quality second the storage
must be clean and to separate the raw materials from the cooked one also separate
chicken and beef since we have salmonella in chicken also to keep the food in a safe
temperature and if it need keep to keep it away from the temperature zone which
bacteria can work.

V. The methods that make our inventory properly controlled is to use FiFO and LIFO also to
keep it away from the employees since they may steal something from it also to use
ABC analysis and we have to restocked it when we received the items from suppliers.

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