FOOD AND

BEVERAGE
CONTROL
SYSTEM
THE REALITY OF
CONTROL
THE REALITY OF CONTROL
No matter how effective a control system may be there are certain realities that do
not allow for any system to be 100% efficient. The reasons for the deficiency of a
system can be:

The material product (apart from

The employees are unlikely to
purchased beverages) is very
always work to a level of 100%
unlikely to be 100% consistent as to
efficiency, although operational
quality or the final yield obtainable
standards may exist.
from it.

The equipment used is also unlikely The customers ’ choice of dishes

to always work to the level of 100% can well be different at times to
efficiency, and this could well affect some of the budgeted sales mix,
the yield obtainable. therefore affecting all forecasts.
THE REALITY OF CONTROL
Considerations:

It is important that the staff should see that control in some form
is taking place and that on occasions there is a follow-up and
action is taken on irregularities to set standards.

The management of any catering operation must be fully aware

of everything that is taking place within and outside the
operation and, to be successful, needs to continually collect,
analyze, and evaluate data and take any necessary steps to
correct anything which is irregular to the standards set for the
operation.
SETTING THE
BUDGET AND
BREAK-EVEN
ANALYSIS
BUDGET
 A budget is a plan – expressed
usually in financial and/or
quantitative terms (e.g. total
value of payroll, number of
customers, etc.) – which reflects
the policies of an establishment
and determines the business
operations for a particular
trading period.
The term budgetary control refers to a method of
control where responsibility for various budgeted
results is assigned to the managers concerned and
a continuous comparison of the actual results and
budgeted figures is made.

When there are discrepancies between

the two, it is necessary to identify the BUDGETARY
reasons for the variances and to take
appropriate action. CONTROL
It is essential that when budgets are set,
they are clearly seen to be achievable;
otherwise, they are of little value.
● To provide a plan of action for a set trading period, to
guide and regulate a business in keeping with its stated
policies, and to maximize the full use of its resources.
The objectives
of budgetary
● To set standards of performance for management
against which their performance can be measured. control are
threefold:
● To set out levels of cost responsibility and encourage
cost awareness.
Budgets are prepared by the senior management of an organization in consultation with the
various managers and departmental heads to ensure a greater level of commitment and an
awareness of the aims, objectives, problems and possible weaknesses of the establishment.

There are two main types:

capital budgets; and operating budgets.

 Capital budgets, as the name implies, are those which are concerned with the assets and
liabilities of an establishment, for example equipment, plant and cash.

 Operating budgets are those concerned with the day-to-day income and expenditure of an
establishment and include sales, cost of sales, labor, maintenance, head office expenses,
etc. This is the type of budget that food and beverage managers will be mostly concerned
with when looking at the food and beverage control system.
Budgeting may be seen as being in six stages.
The amount of detail and subdivision into departmental budgets depends very much on the
type and size of the business. The basic stages are:

1. Determination of the net profit required for the business in

relation to the capital invested and the risk involved.
Alternatively, in the case of non-profit making
establishments, the level of subsidy available or required is
postulated.

2. Preparation of the sales budget : This determines the volume

of sales necessary to achieve the desired net profit or subsidy
and influences the budget.
Budgeting may be seen as being in six stages.
The amount of detail and subdivision into departmental budgets depends very much on the
type and size of the business. The basic stages are:

3. Preparation of administration and general budgets : These are for such

items as head office expenses, advertising, rates, insurance, etc. Some of
these may be regarded as fixed budgets, that is, they are not affected by any
change in the volume of business, for example head office expenses,
advertising, rates, etc.; while others may be regarded as flexible budgets, that
is, they are affected by changes in the volume of business, for example
telephones, laundry, etc.

4. Preparation of the capital expenditure budget which makes provision for

such items of expenditure as new kitchen equipment, restaurant and bar
furniture (including any installation charges), etc.
Budgeting may be seen as being in six stages.
The amount of detail and subdivision into departmental budgets depends very much on the
type and size of the business. The basic stages are:

5. Preparation of the cash budget : This is regarded as the most important of

the capital budgets and it predetermines the cash inflows, the cash outflows
and resulting cash balance at points during the period.

6. Preparation of master budgets : As stated previously master budgets are

prepared for the trading account, profit and loss account and the balance sheet
(see Figure 8.2 ).