Food and Beverage Cost Control

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THEORY MANUAL
FOR
B.A.HOSPITALITY MANAGEMENT

INSTITUTE OF HOTEL MANAGEMENT
AURANGABAD

PREPARED BY
HEMANT GOKHALE
BA(Hons)in Hospitality Management
EXECUTIVE CHEF

Introduction
Food service operation requires many resources and personnel. The food service industry is huge, employees millions and grosses billions. However no business establishment earns a fortune with out hard work, risks and good control systems. The food service industry is a high risk business. It is possible to earn high profits. It is also possible to loose a lot of money. The individual managers in this industry who know management and understands the accounting and record keeping involved- including the application of control techniques - have a chance of survival.

Organisations need to use control procedures to ensure they are making satisfactory progress towards their goals and using their resources efficiently. Control is one of the most important function of management. It is a Management tool.

These control techniques are not tyrannical, unfair, authoritarian management tactics, but the basic method to keep the organisation functioning smoothly and profitably for all the stakeholders. Management control means sensible safeguards that management sets up to help operation succeed. Control means the managers investigate the situations, understand the events, and then decide to act or not. __________________________________________________________

Source : DOUGLAS C. KEISTER, Food and beverage control Ch.2, Prentice hall. Second edition, 1990

Definition:
By one definition management control is the process of ensuring that actual activities confirm to planned activities. In fact control is more pervasive than planning. Control helps the managers monitor the effectiveness of their planning, their organising and their leading activities. An essential part of control is taking corrective actions as needed.

Robert J. Mucklers definition of control points out the essential elements of the control process. Management control is a systematic effort to set performance standards with planning objectives, to design information feedback systems, to compare actual performance with these predetermined standards, to determine whether there are any deviations and to measure their significance and to take any action required to assure that all corporate resources are being used in most effective and efficient way in achieving corporate objectives. (Source: Robert J Mockler, The management control process Eaglewood Cliffs, N.J. Prentice Hall1984 page 2) Mockler’s definition divides control into four steps

* To establish standards and methods for measuring performance. * Measure the performance
* Determine whether the performance matches the standard. * Take corrective actions.
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Source: JAMES A.F. STONER, R.EDWARD FREEMAN. DANIEL R. GILBERT, Management, Prentice Hall of India. (Part Six. Controlling. Chapter 20)

Overall View Of Food And Beverage Control

Food and beverage control may be defined as the guidance and regulation of the costs and revenue of operating the catering activity in hotels, restaurants, hospitals, schools, employee restaurants and other establishments.

The importance of food and beverage control needs considerable emphasis. In hotels, food and beverage sales often account for up to half of the total revenue, while in restaurants, food and beverage sales are main or the only source of revenue. The cost of food and beverages in the commercial sector is usually in the region of 25-45 percent of the total operating costs. In hospitals, schools, employee restaurants and similar operations, food and beverages are the main day-to-day expenditure, which is controlled by budgets and/or a level of subsidy, either on a total company or on a per unit basis.

The amount of control is related to the size of the operation. A large group...
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