THE CONTROL

PROCESS
 CONTROL
- Process of exercising governing power over
events and situations such that an outcome
can be achieved or prevented
- There are consequences if one chooses not
to follow the “control techniques” like laws,
regulations, procedures and rules that are
established
- In F&B operations, control is applied to
people rather than things
 CONTROL
- Used by management to direct, regulate
and restrain the actions of people so that
the established goals of an enterprise may
be achieved
- GOALS:
1. Financial success – profit or return on
investment
2. To be the best restaurant
3. To have low labor turnover
4. To provide better health to customers
 COST CONTROL
- Process used by managers to regulate cost
and guard against excessive costs.
- Involves every step in the chain:
a. Purchasing
b. Receiving
c. Storing
d. Issuing
e. Preparing food and beverage for sale
* Inefficiency and waste are the two principal
causes of excessive cost
 THE CONTROL PROCESS
1. Establish standards and standard
procedures for operation
2. Train all individuals to follow established
standards and standard procedures
3. Monitor performance and compare actual
performances with established standards
4. Take appropriate action to correct
deviation from standards
 SALES CONTROL
COST CONTROL alone will not ensure
profitability. Additional steps must be
taken to ensure that all sales will result to
appropriate income to the business.
1. Accurate recording of sales
- Compare sales record to production
records
2. Guest checks should be numbered and
should have duplicates
3. Use industry specific computer programs
 RESPONSIBILITY FOR CONTROL
Responsibility for every aspect of any food
and beverage enterprise rests with the
management.
Control, therefore, is a clear responsibility of
management
Nature, size and scope of operations help
determine the extent to which managers
can exercise direct or indirect control.
** food controller, beverage controller,
assistant manager, supervisor etc.
 CONTROL TECHNIQUES
1. Establishing standards
2. Establishing procedures
3. Training personnel
4. Setting examples
5. Observing and correcting employee
actions
6. Requiring records and reports
7. Disciplining employees
8. Preparing and following budgets
 ESTABLISHING STANDARDS
Standards – rules or measures established for
making comparisons and judgments
- Set by the management
a. Quality Standards
- Define the degree of excellence of raw
materials, finished products and by
extension, work.
- Must also be determined for the workforce
 ESTABLISHING STANDARDS
b. Quantity Standards – measures of weight,
count or volume, are used to make
comparisons and judgments
- Standard portion sizes of food and
beverage products
- Standard for work output
c. Standard cost – cost of goods or services
identified, approved and accepted by
management
- May be a basis for establishing sales price
 ESTABLISHING STANDARDS
c. Standard cost – must be realistic and ideal
at the same time
- Useful in measuring effectiveness of
operations in food and beverage
establishments
 ESTABLISHING PROCEDURES
PROCEDURES – methods employed to prepare
products or perform jobs
STANDARD PROCEDURES – correct methods,
routines and techniques for day to day
operations (all phases)
a. Ordering and purchasing – procedure must
be standardized to ensure that ingredients
used to make f&b products are purchased at
appropriate times in needed quantities at the
most favorable prices and are of
appropriate quality for their intended use
 ESTABLISHING PROCEDURES
b. Receiving procedures
- All goods received must conform in quantity,
quality and cost to those ordered
c. Storing procedures
- Must be put into effect to guard against
spoilage and theft that will lead to excessive
cost
d. Issuing procedures
- FIFO
- Must be linked carefully to production needs
 ESTABLISHING PROCEDURES
e. Production procedures
- Key to customer satisfaction
- Food and beverage must be served in the
same quantity and quality every time it is
ordered
 TRAINING PERSONNEL
Training – process by which managers teach
employees how work is to be done given
the standards and standard procedures
established
If all employees are not aware of the
relevant standards and standard
procedures established for their work and
are not trained to follow these standards,
the standards are completely useless
 SETTING EXAMPLES
- Employees in an operation follow the
examples set by the manager – the
manager’s behavior, manner, responses to
questions and even a failure to speak or
take action in some situations
- Managers must be consistent in setting
examples as well as in directing,
regulating and restraining employees and
their actions
 OBSERVING AND CORRECTING
EMPLOYEE ACTIONS
- It is the manager’s responsibility to correct
the performance of employees who fail to
follow the standards to the extent
necessary at the appropriate time
REQUIRING RECORDS AND REPORTS
Managers need timely information to
determine whether primary goals and
subgoals are being met

If timely records and reports are not

available, opportunities for taking
corrective action may be lost
 DISCIPLINING EMPLOYEES
Discipline – action taken to admonish,
chastise or reprimand an employee for
work performance or personal behavior
that is incompatible with the established
standards
- May be avoided by improving the hiring
practices in the organization
- Called for only when corrective action has
failed
 DISCIPLINING EMPLOYEES
• The object of discipline is to change or
modify employees’ job performance or
personal behavior to improve
performance so that the work done is in
conformance with the standards and
procedures set by management.
• If employees know that noncompliance to
standards have a negative effect on them,
they would perform better instead.
PREPARING AND FOLLOWING BUDGETS
BUDGET – financial plan
- Realistic expression of management’s
goals and objectives expressed in financial
terms

OPERATING BUDGET - forecast of sales

activity and estimate of costs that will be
incurred in the process of generating sales
- Financial plan for a particular period
PREPARING AN OPERATING BUDGET
For established restaurants – begin with the
historical information or the financial
records of the business

For new establishments – get information

from market analysis and from previous
experience in the industry
PREPARING AN OPERATING BUDGET
1. Determine which costs are fixed and which
are variable
2. Using the assumptions about fixed and
variable costs
3. Examine sales record to see pattern
4. Examine external environment and assess
any conditions or factors that could affect
sales volume in the coming year
5. Determine the nature and extent of
changes in cost levels
 The Grandview Bistro Income Statement, Year Ended
December 31, 20xx

Sales % of
Sales
Food $891,687 xx
Beverage 157,356 xx
Total Sales 1,049,043 xx
Cost of Sales
Food $312,090 xx
Beverage 39,339 xx
Total Cost of Sales $ 351, 429 xx
Gross Profit $697,614
Controllable % of
Expenses Sales
Salaries & Wages $209,809 xx
Employee Benefits 47,207 xx
Other Cont.Expenses 162,602 xx
Total Cont. Expenses $419,618 xx
Income before OC, etc $277,996 xx
Occupancy Costs $ 89,169 xx
Interest 13,875 xx
Depreciation 46,250 xx
Total $149, 294 xx
Restaurant Profit $128, 702 xx
 The Grandview Bistro Projected Operating Budget, Year
Ended December 31, 20xx
Present Figures Change Budget
Sales
Food $891,687 xxx xxx
Beverage 157,356 xxx xxx
Total Sales 1,049,043 xxx xxx
Cost of Sales
Food $312,090 xxx xxx
Beverage 39,339 xxx xxx
Total Cost
$ 351, 429 xxx
of Sales xxx
Gross Profit
$ 697,614 xxx xxx
 The Grandview Bistro Projected Operating Budget, Year
Ended December 31, 20xx
Present Figures Change Budget
Sales
Food $891,687 $ 44, 584 $936, 271
Beverage 157,356 7, 868 165, 224
Total Sales 1,049,043 52, 452 $ 1,101, 495
Cost of Sales
Food $312,090 $15,605 $327, 695
Beverage 39,339 1,967 41, 306
Total Cost
$ 351, 429 $ 369, 001
of Sales $ 17, 572
Gross Profit
$ 697,614 $34, 880 $732, 494
assumptions
1. Both food and beverage sales are expected to
increase by 5%
2. Food and beverage cost percentages will remain
the same
3. Fixed salaries and wages will decrease by 4%
4. Variable salaries and wages will continue to be
the same percentage of sales
5. The cost of employee benefits will increase but
will continue to be the same percentage of
salaries and wages
assumptions
6. Other controllable costs will increase by $6500
7. Occupancy costs will increase by $2000
8. Interest and depreciation will remain the same
Controllable Present Figures Change Budget
Expenses
Fixed Salaries $ 125,885
xxx xxx
& Wages
Variable Sal. 83, 924
xxx xxx
& Wages
Employee 47,207
xxx xxx
Benefits
Other Cont. 162,602
xxx xxx
Expenses
Total Cont. $ 419,618
xxx xxx
Expenses
Income before $ 277,996
xxx xxx
OC, Interest
Occupancy $ 89,169 xxx xxx
Interest 13,875 xxx xxx
Depreciation 46,250 xxx xxx
Total $149, 294 xxx xxx
Restaurant
xxx xxx
Controllable Present Figures Change Budget
Expenses
Fixed Salaries $ 125,885
5,035 130,920
& Wages
Variable Sal. 83, 924
4,196 88,120
& Wages
Employee 47,207
3,172 50,379
Benefits
Other Cont. 162,602
6,500 169,102
Expenses
Total Cont. $ 419,618
26,117 438,521
Expenses
Income before $ 277,996
293,973
OC, Interest
Occupancy $ 89,169 2,000 91,169
Interest 13,875 0 13,875
Depreciation 46,250 0 46,250
Total $149, 294 2,000 151,294
Restaurant
6,763 $ 142,679
Controllable Present Figures Change Budget
Expenses
Fixed Salaries $ 78,000
$ 7,800 $ 85,800
& Wages
Variable Sal. 52,000
- 1,040 50,960
& Wages
Employee 20,000
2,000 22,000
Benefits
Other Cont. 60,000
0 60,000
Expenses
Total Cont. $ 210,000
$ 8, 760 $ 218, 760
Expenses
Income before $ 132,500
$ 8,365 $ 140, 865
OC, Interest
Occupancy $ 95,000 27,500 27,500
Interest 8500 1,000 1,000
Depreciation 35,000 12,500 12,500
Total $ 82,000 41,000 41,000
Restaurant
$ 32,635 $ 99,865
 Set a
Present Figures Change Budget
Sales
Food $765,450 xxx xxx
Beverage 368,463 xxx xxx
Total Sales 1,133,913 xxx xxx
Cost of Sales
Food $416,120 xxx xxx
Beverage 162,038 xxx xxx
Total Cost
$ 578,158 xxx
of Sales xxx
Gross Profit
$ 555,755 xxx xxx
 Set b
Present Figures Change Budget
Sales
Food $1,685,250 xxx xxx
Beverage 549,975 xxx xxx
Total Sales 2,235,225 xxx xxx
Cost of Sales
Food $824,420 xxx xxx
Beverage 354,835 xxx xxx
Total Cost
$ 1,179,255 xxx
of Sales xxx
Gross Profit
$1,055,970 xxx xxx
Controllable Present Figures Change Budget
Expenses
Fixed Salaries $
xxx xxx
& Wages
Variable Sal.
xxx xxx
& Wages
Employee 120,000
xxx xxx
Benefits
Other Cont. 80,000
xxx xxx
Expenses
Total Cont. $ 480,000
xxx xxx
Expenses
Income before $ 579,970
xxx xxx
OC, Interest
Occupancy 100,000 xxx xxx
Interest 50,450 xxx xxx
Depreciation 35,000 xxx xxx
Total $185,450 xxx xxx
Restaurant
xxx xxx
Controllable Present Figures Change Budget
Expenses
Fixed Salaries $
xxx xxx
& Wages
Variable Sal.
xxx xxx
& Wages
Employee 80,000
xxx xxx
Benefits
Other Cont. 60,000
xxx xxx
Expenses
Total Cont. $ 270,000
xxx xxx
Expenses
Income before $ 285,755
xxx xxx
OC, Interest
Occupancy $ 55,000 xxx xxx
Interest 8,500 xxx xxx
Depreciation 35,000 xxx xxx
Total $98,500 xxx xxx
Restaurant
xxx xxx
 FLEXIBLE BUDGET
- Normally prepared for levels of business
volume above and below the expected
level
- Budget designed to project sales and costs
for several levels of business activity
 CONTROL SYSTEMS
- Describe the collection of interrelated and
interdependent control techniques and
procedures in use
- Paper and pencil method  electronic cash
register that is programmed to keep
records of portions sold  computers with
software designed to accumulate and
summarize information
 CONTROL SYSTEMS
- More complex computer systems are
designed to provide both quick access to
needed information and sophisticated
managerial control over most or all
operations in the restaurant
 COST- BENEFIT RATIO
- Relationship between the costs in
instituting and maintaining a single or
control system and the benefits or savings
derived by doing so.
- No control measure can be instituted
without some cost
- Primary purpose of cost and sales control
measures : to guard against excessive cost
and ensure that all sales result in
appropriate income
- Benefits must exceed cost