Food Beverage & Labour Cost

Control

StudentS’ Workbook

Congrats
Class 2023

Introduction
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This workbook is designed to help students reflect on assess
their learning of each of the 10 units in the Module Food
Beverage and Labour Cost Control. In order to benefit from
this teaching learning strategy, students are required to:

1. Prepare for each lecture by reading the related chapters in

the textbook.
2. Attend each lecture
3. Complete each Unit Tutorial Activity. (If there are
questions about which you are unsure, you are required to
have them clarified in the upcoming tutorial class).

This is a very important guide for interpreting and responding

to assessment questions.

Bloom’s Taxonomy Explained

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According to Benjamin Bloom, there are 6 levels of understanding
that we pass through as our intellect grows. They are
remembering, understanding, applying, analyzing, evaluating, and
creating. He laid these out in his famous Bloom’s Taxonomy.

Bloom's taxonomy (the cognitive domain) is a hierarchical

arrangement of 6 processes where each level involves a deeper
cognitive understanding. The levels go from simplest to complex:
Remember, Understand, Apply, Analyze, Evaluate, Create. They
allow students to build on their prior understanding

Drew, C. (February 17, 2023). All 6 Levels of Understanding (on Bloom’s

Taxonomy). Helpful Professor. https://helpfulprofessor.com/levels-of-
understanding/

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 Pre Test
1. Several control documents are helpful in controlling costs in food service operations and
therefore must be completed accurately. For each of the operational activities listed in Column
A, identify TWO (2) control documents and write your response in Column B. In Column C you
are required to briefly explain how the document/record you have identified helps to control
costs.
Write clear and complete sentences. Bulleted points are unacceptable.
{24 marks (1 mark for each form /document and 2 marks for each explanation)}

COLUMN A - COLUMN B COLUMN C

Operational Relevant cost control document How does this document control
Activities costs?
1 Purchasing
2 Receiving
3 Storing
4 Issuing
5 Preparing
6 Cooking
7 Sales
8 Labour cost
24 marks

2. Review the Income and Expenditure Statement for The Millenium Bakery and answer the
questions that follow.

The Millenium Bakery Summarized Income and Expenditure Statement

Revenue $3,200.000.00
Food Sales $2,000,000.00
Beverage Sales $1,200,000.00
Expenses
Food Cost $700.000.00
Beverage Cost $780,000.00
Labour Cost $1,400,000.00
Overhead Cost $288.000.00
Total Expenses
Profit/Loss

2a. Calculate the following cost percentages. Round up to the nearest whole number:
(12 marks)
i. Food Cost
ii. Beverage Cost
iii. Food and Beverage Cost
iv. Labour Cost
v. Total Cost
vi. Profit/Loss

2b. State two (2) concerns that a food and beverage controller may have regarding this Income
and Expenditure Statement.
(2 marks)
2c. Suggest two (2) possible reasons for each of the concerns stated in (B) above.

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 (4 marks)

3. Review the Table below showing the number of each dessert served during the period January
– March 2022 at Suzie’s Bakery. Why might there have been a decrease in sales in March?
Suggest five (5) reasons.

Table Showing the number of desserts sold for the period January – March 2022 @
Suzie’s Bakery

Desserts January 2022 February 2022 March 2022

Fruit Tarts 500 1050 320

Lemon Key Pies 700 1500 460
Sweet Potato 600 1250 380
Pudding
Red Velvet Cake 300 650 200
Swedish Tea Ring 550 170
250
Total number of 2,350 5,000 1,530
items sold

***END OF PRE TEST***

Instruction: Read the below article and prepare for a collaborative class discussion in tutorial
sessions on September 4 and 6

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The biggest mistakes restaurants make, and why they have a
high failure rate
The restaurant business is tough. Everyone in it knows it. Everyone looking to get
in it ignores it.

The cold fact of the matter is that opening up a restaurant may be one of the worst
investments you could make with your money. That’s a horrible, sobering
statement coming from someone like me who’s in the business of helping
restaurants succeed, but it’s the truth. Most restaurant fail. Oh, the failure rate isn’t
the “90%” you may have heard from friends and family, but according to Cornell
University, and the National Restaurant Association, 60% of restaurants fail within
the first three years of operation. After five years, the number might be as high as
75%.

Uggghh!

As with other high risk investments, opening the right kind of restaurant in the
right kind of market can pay off very well financially. Some of the better chains
can see average net profits approaching, and even exceeding 30% of sales. That’s a
great return! While the risk of opening a restaurant is huge, the reward can also be
huge. If you happen upon the right concept, and manage it well, you could see your
investment paid off in 3 years or less, and have lots of residual cash flow to boot.

Certainly there has to be some sort of magic formula you can follow to make sure
your restaurant gets these incredible returns, isn’t there?

Unfortunately….. no. There is no magic formula. Experienced operators have

businesses go belly up every day, and just as often, novices open up with no clue
of what they’re doing, and make a killing. While experience does give you a better
chance of succeeding in the high risk world of restaurant ownership, I’m going to
give you some points of consideration even more important than experience.

These are the top reasons why restaurants fail.

2) Too large of a menu

This is a VERY common killer of independent restaurants. As an independent

operator, you’ll get

Faced pressure from customers to have certain items on your menu. You’ll also
have pressure to keep certain items when you make a menu change. You’ll get
requests. You’ll get complaints when you change things.

You have to realize that this is all part of the process. YOU CAN NOT PLEASE
EVERYONE. It’s a waste of time to even try because you’ll lose your own identity
in the process.

Large menus create several problems within an operation:

 Large menus lack focus. When you try and offer EVERYTHING your
customers like, you aren’t giving them more choices and more reasons to

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 come back, you are confusing them. They don’t know what your specialties
are, what you supposedly do well, what they should order, and how to
describe you to their friends. If your message is focused and easy to convey,
more of your customers will convey your message.
 Large menus take longer to order from. The more choices you have on your
menu, the longer it takes each table to peruse that menu, and the longer it
takes for them to order. For every minute they are NOT ordering, you are
NOT making money for the seat they are occupying. Take this statement to
heart if you want to be successful in the restaurant business: You will only
ever be as successful as your peak period of service. 80% of revenue, and
100% of profit is made during peak periods. Anything that limits your
ability to serve customers and collect money during your peak periods is
limiting your potential for profit.
 Large menus require more inventory items. The more items on your menu,
the more ingredients you need to buy to make those items, and the more
items you’ll have on your shelf. Every item on your shelf represents
a possibility for loss. It can be stolen, it can be mishandled, mis-prepped or
stored incorrectly and spoiled. The less inventory items you have, the less
waste you’ll have. The less waste you have, the more profit you’ll have.
 Large menus require more equipment and personnel to produce. The more
items you have on your menu, the less opportunity your staff has to cook
multiple orders at once. Less multiple orders means more burners, grill
space, fryer grease, and hands are required to produce the same number of
dishes. All these additional tools cost you money.
 Large menus mean longer ticket times. When you have too many different
dishes cooking at once, and less multiple orders in the same pans, it means
more time to produce whatever is being ordered. Beyond the fact that
Americans are no longer willing to wait 45 minutes to have their dinner
prepared for them, you should be thinking about how long ticket times limit
your ability to process people through your dining room. The longer it takes
to serve each table, the less tables you can turn during peak periods.

It is inherent in people to assume that somehow offering people more will make
you appealing to more people. It’s just not true. When you try to be all things to all
people, you end up being very little to very few. People need to know what you’re
about. Keep your menu focused.

3) All talent and no brains

So you can cook. Your food is fantastic, and everyone you cook for confirms it.
You’re ready to open a restaurant then, aren’t you?

NO!

Not to burst your bubble, but a lot of people are excellent cooks. Many of them
have original ideas and fantastic food that no one has ever offered in a restaurant
before. That doesn’t make them, or you, a good candidate to open a restaurant.

Owning a restaurant isn’t about cooking. It’s not about having good food. While
those things are components of a good restaurant, they are not the reason for it’s
success.

Once you have the perfect menu for your market, knowledgable staff to serve your
market, a trained line to reproduce your food, and plenty of booze to ply your

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guests with, you’re 1/3 of the way there. “WHAT?”, you say? “That’s it! I’ve got
all the pieces in place! I’m ready to go!”. No, you’re 1/3 of the way there.

What most new restaurant owners don’t realize is that having good food and
service is only 1/3 of the battle. The other 2/3rds include marketing their restaurant
and managing their restaurant. We’ll talk about marketing after this, but managing
is a very important piece to the puzzle that most new restaurant owners overlook.
Beyond making good food and selling it to people, you need to know how to
collect data and analyze your business to make sure you have the necessary
information to run a profitable business.

You need to know:

 How many people I’m feeding each day/shift/hour

 What items they’re buying, and how many of each
 What gross profit those items are contributing
 What those items should have cost me to sell
 What my actual cost of selling those items is
 What my labor is compared to my budget
 How many labor dollars I spend per sales dollar
 How many labor hours I spend per sales dollar
 What I purchase each day, and how to categorize each purchase for analysis
 What my sales are compared to what they should have been
 What my profit and loss is for EACH WEEK

That’s a lot of things to worry about, and that’s only the tip of the ice berg. There
are many other managerial concerns. This is why I’m telling you that your great
ideas for a menu, and incredible talent for cooking will only get you 1/3 of the way
to operating a successful restaurant.

4) Poor pricing strategy

Strategy? Yes, strategy. You need to have a method for pricing your menu. You
can’t just look at what everyone else is charging, and charge the same. The
financial picture of your business is different than every other business out there,
and you need to have a pricing strategy that takes your unique financial situation
into account.

When considering pricing strategy, I first need to tell you what is being done out
there now, in restaurants all over the country, even the world, because the point of
this article is to tell you what mistakes everyone else is making.

The predominant method to pricing menus in the food service industry is to use a
budgeted cost percentage to formulate prices that will yield that budgeted
percentage when the sale of all your different items is taken into account. This
method assumes that if you sell X dollars of food, and Y percentage of those
dollars go to pay for the food, then you will get Z profit.

The major problem with this pricing method is that most operating expenses within
a restaurant do not fluctuate as a percentage of sales. The rent of a restaurant is not
always 5% of sales. If sales are down, the percentage goes up, if sales are up, the
percentage goes down. Simply achieving a target food cost percentage does not
guarantee that a restaurant will make the profit they priced for.

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The common sense alternative to pricing by a target percentage is pricing
according to the markup you need to cover the expense of doing business, leaving
you with a profit you find acceptable. This method is called pricing by gross profit
dollars. The basic principle of this method states that you can assume, through
calculation, how much every person that walks through your door will cost you to
serve, and that with this number you can price your menu to yield an average gross
profit greater than the cost necessary to serve every person who walks through
your door, in addition to your needed profit. Adjusting these prices according to
market price points yields a gross profit that will cover your operating costs, your
product costs, and the profit that you decide you need to make for this venture to
be worth your time.

Pricing by gross profit is the only method of pricing that takes into account every
cost of operating a business, including profit.

UNIT 1- control functions

Case Study
Seafood City Restaurant: A time of reckoning
Seafood City Restaurant located on the hip strip of the popular resort town of Ocho Rios has
been operational for over 20 years. The restaurant which boasts a fusion of Seafood and
Traditional Jamaica Dishes is popular among tourist and locals alike. Within the last 6 months,
the restaurant has been facing intense competition from the newly opened Track Star Restaurant
and Sports Bar located a few meters away. In addition to the reduction in revenue, Seafood City
lost some of its supervisory management and kitchen staff to the newly opened restaurant.

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Kory Khaloon, the CEO/Operations Manager at Seafood City Restaurant realized that to stay
ahead of the competition, a new approach to operations management was necessary; one that
would allow the entire operations to focus on operational excellence and systems management. A
decision was therefore taken to overhaul the entire operation. The project lifespan would be 2
years. However, the initial start-up phase would take 6 months. A decision was taken to kick-
start the project with external help in 3 areas as follows:
o Behavioural change programme targeting key staff
o Improved purchasing, receiving, issuing and production processes to minimize losses
o Implementing a structured system of controlling costs with a self-correction element.
The project was supervised with a joint team of external consultants and internal staff.
Management and supervisors were informed that they should commit 30% of their working time
to the project. Early analysis of the management system pointed out the fact that some of the
most basic principles of good management systems were not in place. For example, the daily
production problems were not reviewed, daily operational meetings did not focus on the flow of
food in the operation and there were no key performance indicators. The external team was
mandated to:
o Review cost control techniques with the managers and supervisors
o Suggest forms that will improve the purchasing and receiving functions
o Recommend an effective system of issuing goods from storage
o Recommend strategies to minimize theft of goods in storage
o Recommend checklist that can be used in the production kitchen to ensure that standards
are maintained.

CASE STUDY QUESTIONS

1. What are five (5) control techniques that you think the external team will share with the
management of Seafood City Restaurant? (10 marks)

2. State the four (4) major steps in the control process? (4 marks)
3. Explain how the effective application of the cost control process can lead to the reduction of
costs in a high-volume restaurant. Use four (4) clear examples in your explanation.
(16 marks)
4. Critically analyze one (1) factor that food service managers should consider when
developing a control system.
(8 marks)

***END OF TUTORIAL***

Unit 2 – costs and sales concept

1. Complete Column A with the Terms that match the definitions in column B

Column A (Terms) Column B (Definitions)

1. Is the sum of food costs, beverage costs and labour costs.

2. Is the amount charged each customer purchasing one unit

of a particular item.

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 3. Total food sales or beverage sales for all items in one
category.

4. A technique used to evaluate a menu by assessing sales

volume and contribution margin for each item on a given
menu.

5. A summary report that describes the sales achieved,

expenses, and the resulting profit generated by the
business in a specific time.

6. A formula for producing a food or beverage item.

7. Refers to the weight of a product after it has been cleaned,

trimmed, cooked, and portioned.

8. The specific quantity of any given menu item that is to be

served to every customer ordering that item.

9. The quantity of an item has been cleaned, trimmed and is

ready for consumption.

10. Arrangments made between purveyors and food service

operators that result in regular deliveries.

11. The amount of a particular item that will be ordered each

time the quantity of the item diminishes to the reorder
point.

12. A rubber stamp used by the receiver to overprint a small

form on an invoice for the purpose of recording the date
on which the goods were received.

13. Those foods charged to cost on the day they are received.

14. Measures of weight, count or volume used to make

comparison or judgments.

15. The number of times an inventory or food or beverage is

used and reordered, and used to adjust food and beverage
cost, thus increasing accuracy.

16. A computerized system that records sales, prints guest

checks, and tallies sales and related information, including
management reports.

17. A procedure used to determine the standard cost of one

standard portion of a product portioned before cooking. It
is used for products that required further processing before
portions are produced.

18. The percentage of a whole purchase unit of meat, poultry

or fish available for portioning after required in-house
processing has been completed.

19. An anticipated cost projected by management that reflects

business plans for the future.

20. A concise description of the quality, size, weight, count

and other quality factors desired in a particular item.

21. Total costs that change when sales volume changes. Cost
are linked to business volume, such that total variable cost
increases and decreases as sales volume increases and
decreases.

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22. The cost of one or many like units, such as one portion of
a particular menu item (e.g. one steak or one martini) or
one hour of labor.

23. Total dollar sales for a given time period, divided by the
number of seats in the establishment.

24. Total volume of sales revenue for a given period of time,

expressed in terms of dollars or units

25. The sum of all unit costs for a given period of time.

26. The number of seats occupied during a given period

divided by the number of dining seats in the restaurant;
the number of customers (or covers) served in a given
period, divided by the number of dining seats available.

27. A past cost that has been documented in business records.

28. The ratio of the number of sales of one menu item to the
total number of sales of all menu items. Usually calculated
for particular segments of a menu (e.g. appetizers, entrees,
or desserts).

29. The total number of sales for a given period of time for a
particular category of food, such as entrees beverages, and
so on.

30. Revenue resulting from the exchange of products and

services for value.

31. A cost that management cannot change in the short term.

Examples include rent, real estate taxes, and license fees.

32. Payroll costs, which includes salaries, wages, and

employee.

33. A cost that has both fixed and variable elements, such that
one component would not change as sales volume
changes, whereas the other component would change.

34. Total dollar sales attributable to a particular server in a

given time, divided by the number of customers served.

35. The expense incurred for goods or services when the

goods are consumed or the services rendered.

36. A cost that can be changed by management in the short

term. Examples include food cost, beverage cost, and
labor cost.

37. Costs That are normally unaffected by chains in sales

volume; does not increase or decrease significantly as
business volume changes and this is said to have little
direct relationship to the volume of business.

38. Total Number of covers for a given time. divided by some

other number (e.g. number of hours of operation, number
of days of operation, number of servers).

39. Include all expenses that are neither food, beverage or

labor such as rent and utilities.

40. The number of units to which an inventory should

decrease before an order for additional units is placed.

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41. A form used for taking daily inventory of perishable
foods, determining suitable reorder quantities, recording
market quotations and selecting vendors.

42. The ratio of cost to sales, expressed as a percent.

43. A procedure used primarily to determine the standard cost

of one standard portion of a product that is portioned after
cooking. It is used for portions that cannot be portioned
uncooked. It is also used to determine yield factors and
cost factors.

44. The point at which the sum of all costs is equal to sales,
such that profit equals zero.

45. A system used by chains, franchises and groups of

independent operators that result in purchases for all
participating units being made at one central office.

46. A food or beverage transfer between de

partments in a single hotel, restaurant or similar

enterprise.

47. The number of portions produced by a given standard

recipe.

48. The maximum quantity of an item that should be on hand

at any given time.

49. The expense to an establishment for food, incurred when

food is consumed.

50. A card or label used to record the number of units of a

particular item added to and issued from inventory, and
for determining inventory balance.

51. Fresh foods that have comparatively short useful life.

52. A process designed to minimize inventory costs by

purchasing small quantities more frequently.

53. The practice of physically counting stored products on a

periodic basis.

54. The weight, volume or count of non-fabricated foods.

55. An unethical situation where the supplier works in

collusion with an employee and in return obtain gifts or
money.

56. A continuous record to show the balance on hand for each

item in store.

57. A written form indicates to the vendor how many items

are to be delivered.

Income and Expenditure for Johnny’s Eatery

SALES/REVENUE
Food Sales $325,110.00

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 Beverage Sales $191,060.00
EXPENSES
Cost of food sales $94,580
Cost of beverage sales $43,944
LABOUR
Payroll wages $190,800
Other payroll expenses $51,400
OTHER EXPENSES $60,000
Total Expenses
Net Profit/Loss

2. Review the Income and Expenditure for Johnny’s Eatery above and calculate the following:

i. Food Cost Percentage = (1 mark)

ii. Beverage Cost Percentage = (1 mark)
iii. Total Sales/Revenue = (1 mark)
iv. Total Food and Beverage Cost of Sales & Total Food and Beverage Cost Percentage
(2 marks)
v. Total Payroll Costs and Total Payroll Cost Percentage =
(2 marks)
vi. Total Expenses & Total Expense percentage = (2 marks)
vii. Net Profit & net profit percentage = (2 marks)

3. Analyze the summarized Income and Expenditure Statement (Table 1), for each Seafood
Express Restaurants located in the resort towns of Montego Bay, Ocho Rios, Negril and Port
Antonio and answer questions 1A- 1E. Write clear and complete sentences. Bulleted point are
unacceptable

Table 1: Summary Report for Lollipop Restaurant for the period June – August 2023

Franchises Lollipop Lollipop Lollipop Lollipop

Montego Bay Ocho Rios Negril Port Antonio

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 Revenue $8,000,000.00 3,000,000.00 $4, 500,000.00 $5,000,000.00

Food and Beverage 40% 35% 42% 38%

Cost Percent
Labour Cost Percent 27% 38% 38% 25%

Overhead Cost 20% 17% 10% 22%

Percent
Profit
13% 10% 10% 15%

1A. Which restaurant had the best overall performance and why?

(3 marks)

1B. Which restaurant was the least profitable and in great financial danger?

(3 marks)

1C. What is the most important advice that you would give the manager of Lollipop Negril?

(3 marks)

1D. What might have accounted for the difference in overhead cost percentages of Lollipop Port
Antonio? State two (2) reasons.
(2 marks)

1E. Suggest one (1) clear benefit of analyzing the Income and Expenditure Statement.

(2 marks)

1F. Point out to the restaurant managers two(2) very important considerations when developing
a control system

(4 marks)

***END OF TUTORIAL***

Unit 3 – sales income control

1. Formulate and outline and effective strategy to address two (2) internal threats to sales
income. One threat should relate to the bar operation and the other to the dining
room/kitchen. Be sure to point out a benefit to be derived from the implementation of the
strategies outlined. Points must be clearly developed and articulated in order to get full
marks.

{12 marks (1 mark for each internal threat, 3 marks for each strategy, 2 marks for each
benefit)}

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2. Explain the importance of a good knowledge of sales income control to the success of a
food service operation. Highlight and explain five (5) primary principles to minimize the
loss of sales income discussed in class.
(20 marks)

***END OF TUTORIAL***

Unit 4 – Labour Cost Control

1. Review the Revenue per Available Seat Hour (RevPASH) for Jack Sprat Restaurant, outlined
in the table below and advise the management of the restaurant of a clear strategy to control
costs. (4 marks)

Revenue per available seat hour (RevPASH) for Jack Sprat Restaurant – December 2022

Hours Available Seats # Guests Revenue RevPASH

Served
4-5pm 60 0 $0.00 $0.00

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 5-6pm 60 15 $15, 000 $1,000.00
6-7 pm 60 25 $37, 000 $1,480.00
7-8pm 60 60 $52, 000 $866.67
8-9pm 60 60 $51, 500 $858.34
9-10 pm 60 60 $40,000 $667.66
10-11pm 60 0 $0.00 $0.00

2. Explain two (2) important factors that influence labour cost and that food service managers
must be cognizant of when planning their operational budgets. Be sure to point out the reason
why each factor must be considered
(10 marks {2 marks for each reason and 3 marks for each reason}))
3A. Racers is a popular eatery on the South Coast of Jamaica that operates on Fridays and
Saturdays only. Last Friday it operated with 3 employees preparing Jerk Chicken and Festivals.
Each employee was paid $250/hour. During a three-hour time period they prepared and served
500 servings of Jerk Chicken and Festival. What was the labour cost per serving?
(2 marks)
3B.On Saturday the proprietors increased the number of employees by two (2) and were opened
for business for 8 hours. During that period, they prepared and served 650 serving of Jerk
Chicken and Festival. Calculate the labour cost per serving.
(2 marks)
3CReview the productivity ratios over the two days and describe one (1) significant observation.
(2 marks)
3d. Advise the proprietors of one (1) effective way to address the productivity ratios.
(4 marks)
4. In a restaurant employing 600 persons. An average of 150 persons per year departed and
have been replaced over the last 5 years. Calculate the rate of employee turnover.
(2 marks)

5. A small food stand has two (2) employees preparing and serving hot dogs. Each is paid $100.00 /hour.
During a recent 2- hour period they prepared and served 120 hotdogs. Each hotdog is sold for $100.00. In
the period cited, the labour cost per hotdog was:
(2mark)

***END OF TUTORIAL***

Unit 5 – Purchasing and receiving controls

CASE STUDY
40 marks
Instruction: Read the following case and answer the questions that follow in the answer
booklet provided.
Franky’s Fast Food’s Dilemma

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On Friday October, 14, 2018, customers could no longer order Franky’s Super Burger and Fries. The
restaurant had to close its doors because it could no longer sustain the high operational costs.
Franky’s was well loved and accepted for its large juicy burgers, French Fries, ice cream and
irresistible chicken nuggets.
The initial aggressive push, saw the chain expanding to three restaurants in 2 years. Having been in
the Corporate Area for just about three years, the principals had been planning to introduce the
concept to the tourist resort areas of Ocho Rios, Montego Bay and Negril

Admittedly, the writing on the wall was clear. There were numerous customer complaints about
the declining quality of the burgers and fries. Additionally, supplier were inconsistent in the
delivery of goods.At the heart of the problem was the restaurants poor purchasing and receiving and
storing and issuing practices. In an effort to cut costs the principals invested in large scale farming
and purchased several farms, with the desire to provide its own tomatoes, lettuce and onions.
However, the purchasing and receiving arrangements were informal. Produce was ordered from the
farms by the Executive Chef weekly and paid for on a monthly basis through online bank transfers.
When the produce arrived at the restaurants they were received by the supervisor or chef on duty. A
review of the Frank’s operations indicated over-purchasing, spoilage and pilferage

CASE STUDY QUESTIONS

1. Recommend six (6) documents that the managers can implement improve the purchasing and
receiving functions in a food service operation such as Franky’s.
(6 marks)
2. Design a 10-point checklist that the management of Franky’s Fast Food can use to monitor
the purchasing and receiving functions of the restaurant. You are required to write five (5)
criteria for each of the functional areas.
(10 marks)
3. In some restaurants the steward who receives the goods also functions as the
purchasing clerk. Specify five (5) negative effects of this practice.
(1 mark each = 5 marks)

4. The delivery invoice helps in the event that there are legal concerns. Design and label five (5)
important criteria that must be included on the delivery invoice.
(5 marks)

5. Recommend five (5) strategies that can reduce receiving theft

(5 marks)

***END OF TUTORIAL***

Unit 6 – storing and issuing controls

1. You are the manager of a popular quick-service restaurant chain in Jamaica. Apply your
knowledge of the control process to advise your storeroom manager of four (4) steps he/she
should take to control costs.
(20 marks)

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2. Recommend four (4) factors that the management of restauraants should consider
when determining inventory levels
(4 marks)

3. Suggest four (4) benefits of an effective store room requisition system

(4 marks)

4. Distinguish between physical, perpetual and ABC inventory control

(6 marks)

***END OF TUTORIAL***

Unit 7 – Production controls

1. An audit of the bakery revealed serious breaches in the implementation its production
control system. Describe four (4) possible breaches that may have been highlighted.

(6 marks)

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2. Critically analyze four (4) reasons food service managers should enforce the use of
standardized recipes in production kitchens.

(Each point = 1 mark, 2 advantages= 2 marks, 2 disadvantages = 2 marks X 4= 20 marks)

3. Specify five (5) ways to exercise portion control in restaurants

(1 mark each = 5 marks)

4. Critically analyze four (4) operational factors that could cause variations in cost to sales
relationship

(1 mark for each point= 4; 2 marks for each pro = 8; 2marks for each con= 8 marks; Total
20 marks)

***END OF TUTORIAL***

Unit 8 – Sales Forecast

Instruction: Read the below scenario and answer all the questions that follow in the answer
booklet provided. Write clear and complete sentences. Bulleted points are unacceptable.

Scenario Analysis
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Robynn Rosen, a medical practitioner, is desirous of going into the restaurant business He enjoys
eating out and has always had a desire to one day own his restaurant. Although Robynn’s parents
were successful entrepreneurs; having owned and operated several wholesale businesses in the
Corporate Area, they were never formally trained. With a hectic job and demanding family,
Robynn does not have the luxury of registering for a course in Food Beverage and Labour Cost
Control and seeks your advice on a number of questions.

QUESTIONS

1A. Suggest four (4) factors should Robynn must consider before developing a budget?

(4 marks)

1B. Suggest to Robynn two (2) areas in which the budget should be monitored. Be sure to point
out the reason for your suggestion.
(2 marks)

1C. Advise Robynn about two (2) quantitative and two (2) qualitative forecast methods and
explain how each method helps to control costs in a food service operation?

(8 marks = 1 mark
for each method and 1
mark for the explanation)

2. Sales forecast, seat turnover ratio, popularity index and the operating budget are very useful
forecasting techniques used by food service operators to control excessive costs and thus helps to
ensure profitability. Justify two (2) benefits to be derived from the use of each.
(20 marks {2.5 marks for a clear explanation of each})

***END OF TUTORIAL***

Unit 9 – Determine food and beverage costs

Instruction: Read the following case and answer the questions that follow.

Roger’s Steak and Ale: Dilemma

After reviewing the financial reports for the period October to December 2018, Roger Moore
summoned an emergency meeting of all the restaurant managers. Of greatest concern to Roger
was the fact that there had been an unprecedented 54% food cost percentage over the last quarter

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and the sales had been less than desirable. Roger had not been keeping track of the financial
reports because he was oftentimes overseas working on the new addition to the chain. He was
convinced that if he could get all his managers together in one room, away from their daily
operational activities, they would be able to share ideas on how they could turn around the
restaurants. A recent audit of the popular eatery revealed a breakdown in the implementation of
the relevant standards and procedures in relation to the major operational areas of the restaurant.
The following represents a summary of the major shortcomings identified:

i. Significant differences between standard and actual costs

Disparities between budgeted and actual sales
ii. Incomplete and missing evidence of intra- unit transfers
iii. No documented authorization to prepare vendor invoices for payment
iv. Several invoices were not dated, signed or stamped

CASE STUDY QUESTIONS

1A. Why might there be significant differences between standard and actual costs? Give five (5)
reasons.

(5 marks)

1B. Advise Roger of five (5) reasons why he should evaluate financial statements more
frequently.
. (5 marks)

1C. In light of the disparities between budgeted and actual sales, Advise Roger and his team of
managers of (5) important information that should consider before developing a budget.
(5 marks)

1D. Advise Roger and his team of five (5) effective strategies that can reduce overall product
cost percentages.
(5 marks)

2. You purchased 20 pounds of brisket. If after cooking, trimming and portioning you have 12
pounds 8 ounces remaining, what is the wastage percentage?

(2 marks)

3. If a chef requires 30 pounds of ribs (edible portion) and the yield percentage is 60%, how
many pounds of ribs (as purchased) should he order?
(2 marks)

4. At the top Notch Restaurant, the established standard for servers is 20 covers per hour. During
a typical three-hour period, the number of customers in the dining room is 140 per hour. How
many servers should be scheduled per hour during the service period?
(2 marks)

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 5, If 300 customers are served in a 4-hour period in a restaurant with 75 seats, calculate the seat
turnover for the period.
(2 marks)

6. Actual costs for January at Blue Waters was $82,000 and standard cost for the same period
was $85,000. Sales were $100,000 for the month. Calculate the potential savings for the period.
(2 marks)

7. Review Table 2 below and calculate the following for each Entrée served at Lollipop on
the Beach Restaurant Negril. Complete Columns D, F, G, H and I
{25 marks}

 Total Sales
 Total Costs
 Item contribution margin
 Food cost percent

Table 2

A B C D E F G H I

Menu Number Selling Total Sales Item Total Item Total Food
items sold price cost cost contribution contribution cost %
margin margin
Pepper 73 $1795 $808
Shrimps
Brown Stew 121 $1695 $509
Fish
Lobster 105 $1795 $718
Thermidor
Curried 140 $1395 $307
Fish
Seafood 51 $2195 $1119
Boil

8. Why should restaurant managers understand the meaning of the term contribution margin?
Provide an example to substantiate your answer.
(2 marks)

9. Explain one (1) clear benefit of using scientific methods of calculating the price of menu
items.
{2 marks}

10. In determining food and beverage costs, there are several key terms that must be clearly
understood by food and beverage managers. Justify this statement by explaining the
importance of the following key terms:
{8 marks (2 marks each ) }

 Hidden costs
 Variable costs

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  Standard costs
 Prime costs

***END OF TUTORIAL***

Unit 10 – Pricing controls

CASE STUDY

BWW adjusts portioning policy to reflect wing costs

Buffalo Wild Wings (BWW) is switching to a new portioning policy for its chicken wings to
bring the menu price more in line with the cost to the chain.

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Instead of serving a set number of pieces, the casual chain will factor the size of the wings into
the count.
“If wing sizes stayed at the same place they are today, people would see a 5, 10, 15 [or] 20 count
as compared to the 6, 12, 18, 24” they get today, BWW CFO Mary J. Twinem explained
yesterday to investors. She added that the count could be adjusted if the wings sold to the chain
should trend toward larger or smaller sizes by the time of the July changeover.
Despite the lower count, customers will be getting the same volume of meat because wings have
been getting larger, CEO Sally Smith said in the same conference call. “Our new servings will
allow us to serve a consistent portion of chicken to our guests when the size of wings fluctuates,”
she explained.
Instead of ordering by the number of pieces, customers will have a choice of snack, small,
medium and large servings. The chain had tested the names “platter” and “feast” for its large
portion, but switched to the more straightforward descriptor because customers expected the item
to be accompanied by sides, Smith said.
The new volume-based portions have been tested at several dozen, including 40 corporate stores,
since late last year, according to the BWW executives. One of the takeaways, Smith said, was the
importance of training staff to explain the switch.
“It's very important that our servers and those taking phone calls for takeout orders really
understand and can talk about the quantity of wings that you're going to be receiving that day,”
she explained. She suggested that customers still want to know the count, even if they’re
reassured about how much chicken they’re getting.
Smith noted that sales of wings in the test stores initially ebbed, then rebounded as patrons
grasped that they were getting the same amount of food as they previously got.
Twinem noted that wing costs have been sliding, but still outstrip the year-ago price that BWW
pays on a per-pound basis by about 9 percent. “The size of wings increased over both prior year
and last quarter, and the result was that our cost per wing by the end of the first quarter was
closer to 30 percent higher than last year,” she said.
Chicken wings account for about 20% of the brand’s sales, Twinem added.
Extracted from Food Cost Outlook Written April 30, 2013
CASE STUDY QUESTIONS

i. Advise the management of BWW of the value of the control process in helping them to
effectively adjust their portioning policy.
(10 marks)
ii. Since chicken wings account for 20% of the brand’s sales, justify two (2) clear factors that the
managers should consider when determining the final selling price of the wings.

(10 marks)

iii. Recommend three (3) important factors that food service operators should consider before
pricing a menu.
(6 marks)

iv. Value pricing and bundling are two (2) special pricing strategies used by restaurant operators.
Explain the aim of these two strategies using an example for each. (6 marks)

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***END OF TUTORIAL***

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