Quản lý Nhà Hàng , Khách sạn Ebook full English

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NINTH EDITION

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LAST H1 HEAD

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i

PRINCIPLES OF FOOD,
BEVERAGE, AND LABOR
COST CONTROLS
Paul R. Dittmer
J. Desmond Keefe III

JOHN WILEY & SONS, INC.

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ᨸ

NINTH EDITION

ᨸ

LAST H1 HEAD

ᨸ

i

PRINCIPLES OF FOOD,
BEVERAGE, AND LABOR
COST CONTROLS
Paul R. Dittmer
J. Desmond Keefe III

JOHN WILEY & SONS, INC.

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This book is printed on acid-free paper.
Copyright © 2009 by John Wiley & Sons, Inc. All rights reserved
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form
or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as

permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior
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For more information about Wiley products, visit our Web site at .
Library of Congress Cataloging-in-Publication Data:
Dittmer, Paul.
Principles of food, beverage, and labor cost controls / Paul R. Dittmer, J. Desmond Keefe
III. — 9th ed.
p. cm.
Includes index.
ISBN 978-0-471-78347-3 (cloth/CD: alk. paper)
1. Food service—Cost control. I. Keefe, J. Desmond. II. Title.
TX911.3.C65D57 2009

647.95068—dc22
2008001373
Printed in the United States of America
10

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ᨸ

CONTENTS
PREFACE

IX

ᨸ

PART I ᨸ
INTRODUCTION TO FOOD, BEVERAGE,
AND LABOR CONTROLS 1
CHAPTER 1

COST AND SALES CONCEPTS 3
INTRODUCTION 4

•

COST CONCEPTS 10

THE COST-TO-SALES RATIO: COST PERCENT 22
KEY TERMS IN THIS CHAPTER 32

•

•

SALES CONCEPTS 16

•

•

CHAPTER ESSENTIALS 31

QUESTIONS AND PROBLEMS 32

•

•

EXCEL EXERCISES 35

CHAPTER 2

THE CONTROL PROCESS
INTRODUCTION 40

•

CONTROL SYSTEMS 60
ESSENTIALS 66

•

CONTROL 40
•

•

THE CONTROL PROCESS 43

COST–BENEFIT RATIO 64

•

KEY TERMS IN THIS CHAPTER 66

•

QUESTIONS AND PROBLEMS 67

CHAPTER 3

39

•

•

CHAPTER

EXCEL EXERCISES 70

COST/VOLUME/PROFIT RELATIONSHIPS 71
INTRODUCTION 72

•

THE COST/VOLUME/PROFIT EQUATION 75

VARIABLE RATE AND CONTRIBUTION RATE 78
POINT 80

•

BISTRO 80

•

•

BREAK-EVEN

COST/VOLUME/PROFIT CALCULATIONS FOR THE GRANDVIEW

•

COST CONTROL AND THE COST/VOLUME/PROFIT EQUATION 87

CHAPTER ESSENTIALS 91
AND PROBLEMS 91

•

•

KEY TERMS IN THIS CHAPTER 91

•

•

QUESTIONS

EXCEL EXERCISES 94

ᨸ

PART II ᨸ
FOOD CONTROL 95
CHAPTER 4

FOOD PURCHASING AND RECEIVING CONTROL 97
INTRODUCTION 98
RECEIVING 98

•

•

DEVELOPING STANDARDS AND STANDARD PROCEDURES

FOR PURCHASING 101

•

STANDING ORDERS 123

•

RECEIVING

CONTROLS 123

•

ESTABLISHING STANDARD PROCEDURES FOR

RECEIVING 125

•

CHAPTER ESSENTIALS 133

CHAPTER 134
EXERCISES 136

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THE CONTROL PROCESS—PURCHASING AND

•
•

•

QUESTIONS AND PROBLEMS 134

KEY TERMS IN THIS
•

EXCEL

WEB ADDRESSES 137

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iv

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CONTENTS

CHAPTER 5

FOOD STORING AND ISSUING CONTROL 139
INTRODUCTION 140

•

STORING CONTROL: ESTABLISHING STANDARDS AND

STANDARD PROCEDURES FOR STORING 140
BEVERAGE TRANSFERS 150

•

•

IN THIS CHAPTER 156

QUESTIONS AND PROBLEMS 156

•

•

CHAPTER ESSENTIALS 156

FOOD AND
KEY TERMS
•

EXCEL

WEB ADDRESS 162

FOOD PRODUCTION CONTROL I: PORTIONS 163
INTRODUCTION 164
PROCEDURES 164

•
•

ESTABLISHING STANDARDS AND STANDARD
CALCULATING STANDARD PORTION COSTS 170

•

ADVANTAGES AND DISADVANTAGES OF STANDARDIZED YIELD 190

•

USING YIELD PERCENTAGES 191

CHAPTER

ESSENTIALS 193
PROBLEMS 194

CHAPTER 7

ISSUING CONTROL: ESTABLISHING
•

EXERCISES 162

CHAPTER 6

•

STANDARDS AND STANDARD PROCEDURES FOR ISSUING 145

•

•

RECIPE SOFTWARE 192

KEY TERMS IN THIS CHAPTER 193

•

EXCEL EXERCISES 198

•

•

•

QUESTIONS AND

WEB ADDRESS 198

FOOD PRODUCTION CONTROL II: QUANTITIES 199
INTRODUCTION 200
PROCEDURES 200

•
•

ESTABLISHING STANDARDS AND STANDARD
DETERMINING PRODUCTION QUANTITIES 212

CONTROL OF PREPORTIONED ENTRÉES 221
CHAPTER ESSENTIALS 223

•

QUESTIONS AND PROBLEMS 224

•

KEY TERMS IN THIS CHAPTER 224
•

•

A WORD OF CAUTION 223

EXCEL EXERCISES 225

•

•

•
WEB

ADDRESS 225

CHAPTER 8

MONITORING FOODSERVICE OPERATIONS I:
MONTHLY INVENTORY AND MONTHLY
FOOD COST 227

INTRODUCTION 228
MANAGEMENT 243
ESSENTIALS 250
PROBLEMS 251

CHAPTER 9

•
•

•
•

MONTHLY INVENTORY 229

•

INVENTORY TURNOVER 247

•

KEY TERMS IN THIS CHAPTER 250
EXCEL EXERCISES 254

•

CHAPTER
•

QUESTIONS AND

WEB ADDRESS 255

MONITORING FOODSERVICE OPERATIONS II:
DAILY FOOD COST 257
INTRODUCTION 258

•

DETERMINING DAILY FOOD COST 258

BOOK VERSUS ACTUAL INVENTORY COMPARISON 269
ESSENTIALS 273
PROBLEMS 274

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REPORTS TO

•
•

KEY TERMS IN THIS CHAPTER 274

•

•

CHAPTER
•

QUESTIONS AND

EXCEL EXERCISES 278

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CONTENTS

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CHAPTER 10 MONITORING FOODSERVICE OPERATIONS III:
ACTUAL VERSUS STANDARD FOOD COSTS 279
INTRODUCTION 280

•

DETERMINING STANDARD COST 281

ACTUAL AND STANDARD COSTS 281
CHAPTER ESSENTIALS 297
AND PROBLEMS 297

•

•

•

•

COMPARING

PERIODIC COMPARISON 293

KEY TERMS IN THIS CHAPTER 297

•

•
QUESTIONS

EXCEL EXERCISES 300

CHAPTER 11 MENU ENGINEERING AND ANALYSIS 301
INTRODUCTION 302

•

MENU ENGINEERING 303

ANALYSIS 309

•

SOLD 314

CHAPTER ESSENTIALS 316

•

CHAPTER 316

MENU

USING 100 PERCENT OF THE AVERAGE FOR NUMBER

•

EXERCISES 319

•

•

KEY TERMS IN THIS

QUESTIONS AND PROBLEMS 316

•

•

EXCEL

WEB ADDRESSES 319

CHAPTER 12 CONTROLLING FOOD SALES 321
INTRODUCTION 322

•

THE GOALS OF SALES CONTROL 322

OPTIMIZING THE NUMBER OF CUSTOMERS 323
PROFIT 332

•

•

CONTROLLING REVENUE 343

MANUAL MEANS 345

•

CHAPTER ESSENTIALS 354
AND PROBLEMS 355

MAXIMIZING
•

REVENUE CONTROL USING

REVENUE CONTROL USING COMPUTERS 352
•

•

•

KEY TERMS IN THIS CHAPTER 355

•

•
QUESTIONS

EXCEL EXERCISE 356

ᨸ

PART III ᨸ
BEVERAGE CONTROL 357
CHAPTER 13 BEVERAGE PURCHASING CONTROL 359
INTRODUCTION 360

•

CONTROL PROCESS AND PURCHASING 360

ALCOHOLIC BEVERAGES 361
PURCHASING 369
CHAPTER 383

•

•

EXERCISES 385

•

•

NONALCOHOLIC BEVERAGES 368

CHAPTER ESSENTIALS 383

•

QUESTIONS AND PROBLEMS 384

•
•

BEVERAGE

KEY TERMS IN THIS
•

EXCEL

WEB ADDRESSES 386

CHAPTER 14 BEVERAGE RECEIVING, STORING, AND ISSUING

CONTROL 387
INTRODUCTION 388
ISSUING 399
CHAPTER 408
EXERCISES 409

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•

RECEIVING 388

CHAPTER ESSENTIALS 408

•
•

•

STORING 392
•

QUESTIONS AND PROBLEMS 408

•

KEY TERMS IN THIS
•

EXCEL

WEB ADDRESSES 409

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CONTENTS

CHAPTER 15 BEVERAGE PRODUCTION CONTROL 411
INTRODUCTION 412
CONTROL 412

•

•

OBJECTIVES OF BEVERAGE PRODUCTION

ESTABLISHING STANDARDS AND STANDARD PROCEDURES FOR

PRODUCTION 413

•

CHAPTER 436

QUESTIONS AND PROBLEMS 436

EXERCISES 438

•
•

CHAPTER ESSENTIALS 436

•

KEY TERMS IN THIS
•

EXCEL

WEB ADDRESSES 438

CHAPTER 16 MONITORING BEVERAGE OPERATIONS 439
INTRODUCTION 440

•

APPROACH 456

THE SALES VALUE APPROACH 457

•

TURNOVER 466
CHAPTER 469
EXERCISES 473

•
•

THE COST APPROACH 440

CHAPTER ESSENTIALS 468

•

•

INVENTORY

KEY TERMS IN THIS

QUESTIONS AND PROBLEMS 469

•

THE LIQUID MEASURE
•

•

EXCEL

WEB ADDRESSES 474

CHAPTER 17 BEVERAGE SALES CONTROL 475
INTRODUCTION 476
CONTROL 476

•

ESSENTIALS 490

•

GUEST CHECKS AND CONTROL 486

•

CHAPTER

KEY TERMS IN THIS CHAPTER 491

•

QUESTIONS AND

•

PROBLEMS 491

•

THE OBJECTIVES OF BEVERAGE SALES

EXCEL EXERCISE 492

ᨸ

PART IV ᨸ
LABOR CONTROL 493
CHAPTER 18 LABOR COST CONSIDERATIONS 495
INTRODUCTION 496

•

EMPLOYEE COMPENSATION 496

OF TOTAL LABOR COSTS AND LABOR COST PERCENTS 499
CONTROL 513
CHAPTER 516

CHAPTER19

•
•

CHAPTER ESSENTIALS 515

•

QUESTIONS AND PROBLEMS 516

•

DETERMINANTS
LABOR COST

KEY TERMS IN THIS
•

EXCEL EXERCISES 517

ESTABLISHING PERFORMANCE STANDARDS 519
INTRODUCTION 520

•

ESTABLISHING PERFORMANCE STANDARDS AND

STANDARD PROCEDURES 520

•

PREPARING JOB DESCRIPTIONS 526

ORGANIZING THE ENTERPRISE 523
•

SCHEDULING EMPLOYEES 531

PERFORMANCE STANDARDS BASED ON TEST PERIOD 547

REQUIREMENTS 548
COST 552

•

CHAPTER 553
EXERCISES 556

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•

CHAPTER ESSENTIALS 553
•
•

•

STANDARD WORK HOURS 550
•

•
•

STANDARD STAFFING
•

STANDARD

KEY TERMS IN THIS

QUESTIONS AND PROBLEMS 554

•

EXCEL

WEB ADDRESSES 557

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CONTENTS

vii

CHAPTER 20 TRAINING STAFF 559
INTRODUCTION 560
OF TRAINING 561

•
•

A DEFINITION OF TRAINING 560
THE TRAINING PROGRAM 561

VERSUS LOCALIZED TRAINING 575
ESSENTIALS 578

•

PROBLEMS 579

•

•

THE PURPOSE

CENTRALIZED

TRAINING MANUALS 576

KEY TERMS IN THIS CHAPTER 578

•

•

EXCEL EXERCISES 580

•

•

•

CHAPTER

QUESTIONS AND

WEB ADDRESSES 581

CHAPTER 21 MONITORING PERFORMANCE AND TAKING CORRECTIVE
ACTION 583
INTRODUCTION 584

•

MONITORING PERFORMANCE 584

•

TAKING

CORRECTIVE ACTION TO ADDRESS DISCREPANCIES BETWEEN STANDARDS AND
PERFORMANCE 594
CHAPTER 599
•

•

•

CHAPTER ESSENTIALS 599

QUESTIONS AND PROBLEMS 599

•
•

KEY TERMS IN THIS
WEB ADDRESS 601

EXCEL EXERCISE 601

GLOSSARY 603
INDEX 623

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ᨸ
ᨸ

PREFACE

ᨸ

TO THE STUDENT
Successful restaurant personnel, including chefs, restaurant managers, food
and beverage controllers, dining room managers, and stewards have many
skills. Among them is the ability to keep costs at predetermined levels. They
understand that successful operations require that costs be carefully established and monitored so that profit will result. After all, most profitable restaurants have only about a 10 percent profit margin on sales after taking all
costs into consideration. Food, beverage, and labor costs generally represent
between 60% and 70% of the toal costs of a restaurant operation. If these
costs are not carefully established and monitored, they can gradually increase
until profit is eliminated and losses are sustained.
This text has been written to provide the student with the necessary
principles to keep restaurant costs under control so that a profitable operation can be sustained. Putting these principles into practice will not guarantee
a profit, because there are other necessary elements for a successful restaurant. But they are absolutely necessary if a profit is to be maintained. Chain
operations such as Red Lobster, Olive Garden, Burger King, and Wendy ’s
have learned long ago the necessity of keeping cost under control They supply high-quality products to their restaurants and establish procedures that
guarantee food, beverage, and labor costs will be kept within predetermined
bounds. Independent restaurants must do the same if profits are to be realized. Learn these principles well and you will stand a much better chance of
being successful in your chosen profession.

ᨸ

TO THE INSTRUCTOR
This text has been developed for use in courses introducing food, beverage,
and labor cost controls to students preparing for careers in food and beverage management as well as hotels and other enterprises where this knowledge is necessary. This edition consists of 21 chapters, divided into four parts,
as follows:
Part I offers an introduction to food, beverage, and labor cost controls,
defining a number of key terms and concepts and providing a foundation
for the balance of the work as well as some sense of its scope. It identifies

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PREFACE

working definitions for the terms cost and sales, discusses the control process
in some detail, and introduces the basics of cost/volume/profit analysis.
Part II addresses the application of the four-step control process to the
primary phases of foodservice operations: purchasing, receiving, storing, issuing, and production. Specific techniques and procedures for each phase are
explained and discussed in detail. Three chapters are devoted to determining
costs and using them as monitoring devices in foodservice operations. One
chapter deals specifically with menu analysis. Another discusses food sales control, offering a broad definition of the term and providing detailed discussion of
several approaches to sales control.
Part III discusses the application of the four-step control process to
the various beverage operations: purchasing, receiving, storing, issuing, and
production. Here, too, specific techniques and procedures for each phase are
explained and discussed in detail. One chapter is devoted to the principal
methods used to monitor beverage operations. The final chapter in Part III
specifically addresses beverage sales control, offering a broad definition of the
term and providing detailed discussions of several approaches to controlling
beverage sales.
Part IV is a four-chapter exposition of labor cost control. The first of
the four explores the factors affecting labor cost and labor cost percentage.
Admittedly, some of these are beyond the control of management, but it is
important for managers to know about them. The second chapter discusses the
need for performance standards. This leads naturally to a chapter on training, a

topic many believe to be central to labor cost control. The concluding chapter in
Part IV deals with monitoring performance and taking corrective action.
The authors recognize that most food and beverage operations are
computerized to a great extent. Thus, each of the chapters in Parts I, II,
and III incorporates a discussion of computer use in food and beverage operations. Additionally, Excel computer exercises are provided at the end of each
chapter, utilizing the CD-ROM found in the back of this book.
In developing and revising the text, flexibility has always been a key
concern. For example, each of the four parts can generally stand alone.
Except for Part I, eliminating any other part will not make it difficult to use
the remaining parts. Thus, in courses without beverage components, instructors may prefer to skip Part III. And instructors in courses that do not include
labor cost control can choose to ignore Part IV.
The book has a greater number of chapters than many instructors use in
a one-term course. In our view, this is a virtue, because it provides instructors
with opportunities to select chapters dealing with specific topics identified in

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their course syllabus. We believe this is the best way to meet the varying needs
of instructors in the broad range of courses and programs in this field.
Because a great many chapters include more questions and problems
than most will be inclined to assign, instructors will find it easy to make

selective use of the end-of-chapter exercises for written assignment or for
in-class discussion.
For those instructors who will use this text as a supplement to train
management personnel, Chapter 20 is particularly useful. It outlines specific
training methods, and provides various thoughts on training methods that
can be best utilized in different circumstances.

ᨸ

FEATURES
Chapters are organized in the folowing manner.
1. Chapter objectives are listed at the beginning of each chapter.
2. Chapter 1 illustrates a hypothetical restaurant, and each chapter thereafter continues a discussion of that restaurant, relating the control procedures discussed in that chapter to the hypothetical restaurant.
3. A discussion of established computer programs that perform control
procedures in each chapter is included. Web references for these programs are listed at the end of the chapter.
4. Chapter essentials and key terms in that chapter are shown at the end
of each chapter discussion.
5. Substantial numbers of questions and problems are listed at the end of
each chapter.
6. A running exercise for a hypothetical restaurant in Excel is included
at the end of each chapter, and the CD-ROM for that exercise is
included in the text.
An additional feature is a glossary of all key terms listed in the text. It is
found at the conclusion of text material.

ᨸ

NEW TO THIS EDITION
This edition contains the following new features. Each chapter has been
updated with current material and outdated material has been eliminated.

All figures have been updated. All chapters contain a discussion of computer

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PREFACE

programs that perform the procedures outlined in the chapters. Web addresses
for these programs are shown at the end of each chapter. A CD-ROM is
included with the text for students use in doing Excel problems at the end of
each chapter.

ᨸ

SUPPLEMENTARY MATERIALS
An Instructor’s Manual (ISBN: 978-0-470-25732-6) to accompany the textbook is available to qualified adopters upon request from the publisher. It
contains answers to the end-of-chapter questions and problems, along with
various other materials designed to assist in the classroom.
A companion Web site, at www.wiley/college/dittmer, is also available
for instructors with this text, which includes the Instructor’s Manual and
PowerPoint slides as well as the solutions to the Excel exercises.
WebCT and Blackboard online courses are available for this book. Visit
www.wiley.com/college/dittmer and click on “Blackboard” or “WebCT” in
the Title Information box, or contact your Wiley representative.

A newly created Study Guide (ISBN: 978-0-470-14056-7) provides several additional resources to help students review material and exercises to
strengthen their knowledge of key concepts.

ᨸ

ACKNOWLEDGMENTS
We would like to thank those who provided their comments about how to
improve this edition of Food, Beverage, and Labor Cost Controls by reviewing
it in various stages of development:
Eric Breckoff, J. Sargeant Reynolds Community College
Dr. Jaemin Cha, Niagara University
Dr. Charles Godwin Ogbeide, Southwestern Minnesota University
Jeff Igel, Fox Valley Technical College
Ken Narcavage, Western Culinary Institute
Terri Melincoff, New England Culinary Institute
Dori Finley, East Carolina University
Lloyd Shelton, Northern Arizona University
Armando Trujillo, Pima Community College/Northern Arizona
University Partnership
Cliff Wener, College of Lake County

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xiii

And those who reviewed earlier editions of this book:
Earl Arrowwood, Jr., Bucks County Community College
James A. Bardi, the Berks Campus of Pennsylvania State University
Patricia S. Bartholomew, New York Technical College of the City
University of New York
Kevin Bedard, of Canopy ’s Training Restaurant, a program of the
Educational Opportunity Center, State University of New York at
Brockport
Anthony Bruno, Nassau Community College
Mary Ann Caroll, Keystone Junior College
Prakash Chathoth, San Francisco State University
Frank C. Constantino, New York Technical College of the City University
of New York
John Drysdale, Johnson County Community College
David Dyer, University of Central Florida
Michael Evans, Appalachian State University
Julie Fain, New Hampshire College
George G. Fenich, University of New Orleans
T.C. Girard, Southern Illinois University, Carbondale
Robert A. Heath, Birmingham (U.K.) College of Food, Tourism, and
Creative Studies
Stephen K. Holzinger, New York Technical College of the City University
of New York
John Peter Laloganes, Cooking & Hospitality Institute of Chicago
Charles Latour, Northern Virginia Community College
Fredrick Laughlin, Jr., Northwestern Michigan College
Chris Letchinger, Kendall College
Edward F. McIntyre. Birmingham (U.K.) College of Food, Tourism, and

Creative Studies
Paul McVety, Johnson and Wales University
Fedele J. Panzarino, New York Technical College of the City University
of New York
Wallace Rande, Northern Arizona University
Larry Ross, Georgia State University
Rodney Rudolph, State University of New York Technical College at
Delhi
Warren Sackler, Rochester Institute of Technology
Andrew R. Schwartz, Sullivan County Community College

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PREFACE

Jeffrey A. Sheldon, Cincinnati State Technical & Community College
Allan Sherwin, Harry Lundeberg School of Seamanship
Robert Sobigraj, Johnson County Community College
Don St. Hillaire, California State Polytechnic University-Pomona
John Stefanelli, University of Nevada, Las Vegas
Clorice Thomas-Haysbert, Delaware State University
David Tishkoff, Columbus State Community College
David Tucker, Widener University

Clifford Wener, College of Lake County

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ᨸ

PART I

ᨸ

INTRODUCTION TO
FOOD, BEVERAGE,
AND LABOR CONTROLS
This text outlines the elements and procedures for food, beverage, and labor
cost control. But before discussing these topics, it is necessary to define the
terminology used in the text and to discuss two other very important preliminary topics. These are outlined in the first three chapters.
Chapter 1 is devoted to the basic concepts of costs and sales and their
many variations and uses. Chapter 2 examines the concept of control—what
exactly do we mean by it and what are the many ways we institute it?
Chapter 3 is a necessary chapter dealing with break-even analysis and the
ramifications associated with the various ways an establishment can break
even and make a profit. In addition, it discusses the financial consequences
of inadequate control over costs.
As you begin your journey into this subject, keep in mind that cost
control is absolutely necessary for a profitable operation. Learn the principles
outlined in this text well, because all foodservice personnel at the supervisory and higher levels have an obligation to control those costs under their
jurisdiction.

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ᨸ

CHAPTER 1

ᨸ

COST AND SALES
CONCEPTS
• LEARNING OBJECTIVES •
After reading this chapter, you should be able to:
1. Define the terms cost and sales.
2. Define and provide an example of the following types of costs: fixed, directly variable, semivariable,
controllable, noncontrollable, unit, total, prime, historical, and planned.
3. Provide several examples illustrating monetary and nonmonetary sales concepts.
4. Describe the significance of cost-to-sales relationships and identify several cost-to-sales ratios
important in food and beverage management.
5. Identify the formulas used to compute cost percent and sales price.
6. Describe factors that cause industrywide variations in cost percentages.
7. Explain the value of comparing current cost-to-sales ratios with those for previous periods.

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4

ᨸ

ᨸ

INTRODUCTION

CHAPTER 1

COST AND SALES CONCEPTS

A Taste of Tuscany
Until she decided to purchase a restaurant two years ago, Joan Bailey had been
a successful advertising executive. Her annual income was substantial, and
she augmented it by investing in some profitable real estate ventures with her
brother. However, her position in advertising required that she travel several
days a week, and over time the travel became wearisome to her. This made her
decide to give up the advertising business in favor of operating her own business. On the advice of her brother, she decided to go into the restaurant
business, even though she lacked previous experience in the field. After all her
years of travel, she thought she knew more about restaurants from the customer’s point of view than most restaurateurs. So she began to look around for an
appropriate property. Fortunately, she soon found a place just 12 miles from her
home, located on a main road on the outskirts of a city of 75,000 people. The
building and equipment were only six years old and apparently in fine condition, and the retiring owner was anxious to sell at a very fair price. The owner’s

books revealed a successful operation, with a restaurant profit of approximately
$165,000 per year. Joan Bailey decided to buy. The restaurant, A Taste of
Tuscany, had 150 seats. It was open seven days a week, from 5 to 10 P.M., serving
a varied menu but emphasizing northern Italian food. Joan believed she would
be able to run it successfully with a small and dedicated staff.
In the first year, Joan’s profits were less than those of the previous owner.
After two years, profits were continuing to decline. The restaurant was simply
not showing an adequate profit, even though Joan had increased the volume
of business over that of the previous owner. The place was reasonably busy,
her customers often complimented her on the food, and her staff appeared to
be loyal and helpful in every way. The truth was that Joan Bailey was operating a popular, but not very profitable, food and beverage business. At the end
of the second full year of operation, the statement of income prepared by her
accountant revealed a restaurant profit of $48,455 (see Figure 1.1).
It quickly became apparent to Joan, her family, and her accountant that
unless something could be done to make the restaurant more profitable, the
operation would not be worth the effort required.

The Grandview Bistro
Just a few miles down the road from A Taste of Tuscany, the Grandview Bistro
is owned and operated by Bill Young. After four years in the Air Force, Bill had

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INTRODUCTION

ᨸ

5

• FIGURE 1.1 •
A Taste of Tuscany Income Statement, Year Ended December 31, 20XX

Sales
Food
Beverage
Total sales
Cost of Sales
Food
Beverage
Total cost of sales
Gross Profit
Controllable Expenses
Salaries and wages
Employee benefits
Other controllable expenses
Total Controllable Expenses
Income before Occupancy Costs,
Interest, Depreciation, and
Income Taxes
Occupancy Costs
Interest
Depreciation
Total
Restaurant Profit

$1,686,740
$297,660

$1,984,400
$708,431
$95,251
$803,682
$1,180,718
$535,788
$133,947
$242,660
$912,395
$268,323

$132,608
$27,060
$60,200
$219,868
$48,455

worked for an insurance company for a few years before enrolling in a nearby
college to study hospitality management. His interest in the food and beverage
sector of the hospitality industry began during his high school days, when he
worked part time at the local unit of a national fast-food chain. Although his
interest had grown steadily over the years, it took considerable courage for him
to give up a fairly promising insurance career to go back to school. He earned
a degree in hospitality management and then went to work as the assistant
manager in a local restaurant. Over the next several years, he worked in three
food and beverage operations in the area, including A Taste of Tuscany, before
deciding that he was ready to own and operate his own restaurant.
With the help of his family and a local bank, Bill was able to purchase
the Grandview Bistro, a fairly popular establishment with the same type

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6

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CHAPTER 1

COST AND SALES CONCEPTS

of menu as A Taste of Tuscany, as well as comparable prices and hours of
operation. The only differences to the casual observer were size and location:
The Grandview Bistro had only 75 seats and was in a somewhat less favorable
location. The menu for the Grandview Bistro is illustrated in Figure 1.2.

• FIGURE 1.2 •
The Grandview Bistro Menu
SOUPS

Anasazi Bean and Roasted Corn with Chilies
Beautiful purple beans with corn, chilies,
celery, onions, and just enough spice
$4.95

MANHATTAN STYLE FISH CHOWDER
Traditional New York style tomato-based soup
with haddock, swordfish, shrimp, and scallops

$8.25
APPETIZERS

DUCK EMPANADAS
Tender roast duck encased in an empanada purse,
served with roasted poblano vegetable sauce
$7.65

GNOCCHI GRILLED VEGETABLE TARTLETS
Semolina and potato tartlet shells filled with grilled sliced eggplant, zucchini,
fennel, and fire-roasted tomato, garnished with shaved parmesan
$6.50

SMOKED SALMON CHEESECAKE
Smoked salmon and Gruyère cheese baked in a savory crust
served with Cucumber Dill Cream Sauce
$8.20

OYSTERS ROCKEFELLER
Six Chesapeake Bay oysters baked on the half shell
with spinach, onions, and hollandaise sauce
$9.35

EGGPLANT ROULADE
Thinly sliced fresh eggplant stuffed with ricotta, mozzarella, and
goat cheese and served with a tomato basil sauce
$5.50

SHIITAKE MUSHROOMS
Sautéed wild mushroom and goat cheese layered in phyllo dough

$5.50

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INTRODUCTION

7

SALADS

Mesclun Greens Topped with Hazelnuts
Warm herbed chevre cheese and Dijon vinaigrette
$4.95

CRACKED WHEAT SALAD
Tossed with a citrus and green onion vinaigrette
$4.75

CAESAR SALAD
Topped with roasted garlic cornbread croutons and a Southwest-inspired dressing
$5.45
ENTRÉES

All entrées served with vegetables du jour and your choice of pasta, baked potato,
or wild rice and choice of house salad or traditional Caesar salad.

BLACK ANGUS NEW YORK STRIP STEAK
12-ounce prime steak charbroiled and topped with crimini mushrooms
$23.65

TOURNEDOS ROSSINI
Two 3-ounce fillets of beef pan-seared and topped
with foie gras, truffles, and a Madeira sauce
$24.75

ROASTED MUSCOVY DUCK BREAST
Maple-infused jus lie, cashew and scallion rice, and spaghetti squash prima vera
$21.40

LAMB CHOPS SALTIMBOCCA
Succulent lamb chops sautéed with thin slices of prosciutto and served with a sage
white burgundy butter sauce over angel hair pasta
$21.50

LOIN OF PORK À MAISON
Tender pork served with our sauce du jour
$20.50

SAUTÉED GINGER SHRIMP*
Gulf shrimp, bean sprouts, snow peas, enoki mushrooms, and scallions
in an Asian glass noodle salad with a light ginger-sesame dressing
$18.00

VEGETARIAN PORTOBELLO BURRITO*
Grilled portobello mushrooms and monterey jack cheese baked in a flour tortilla

with chipotle aioli and jicama and sweet potato cole slaw
$16.50

TEA-SMOKED SALMON*
Atlantic salmon lightly smoked and finished in the oven, accompanied by Italian white
beans, fusilli, and saffron broth served with lemon baby spinach
$19.20
(Continued )

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8

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CHAPTER 1

COST AND SALES CONCEPTS

PAN-SEARED CHICKEN*
Breast of chicken, sliced Canadian bacon, and toasted pine nuts
with a Honey Adobo Chipotle Sauce
$16.50

PARMESAN-CRUSTED VEAL STEAK*
Provimi-veal à la Francaise accompanied by braised bok choy and roasted potatoes
$20.85

STEAK DIANE WITH A FIVE-PEPPER CREAM SAUCE
Prime New York Sirloin prepared to your specifications with a
rich flavorful sauce, duchesse potatoes, and asparagus
$24.75

CHICKEN ALBUFERA
Chicken breast sautéed with shallots and artichoke hearts in a
brandy cream sauce finished with red pepper butter
$16.45

TROUT GRENOBLOISE
Sautéed brook trout served with lemon and capers
$19.00

SHRIMP À LA MARSEILLE
Large shrimp served in a light tomato sauce, seasoned with our fine herbs and pernod
$19.95

FRUITS DE MER
Lobster, shrimp, and scallops tossed in a light basil cream with
fresh romano, served over thin pasta
$21.40

CATCH OF THE DAY
Fresh fillet of fish sautéed and served with lemon
$16.50
DESSERTS

Ginger-Lime Cheesecakelettes

Served with crystallized ginger
$3.85

CHOCOLATE TORTE WITH CHERRY ICE*
Chocolate, walnuts, and vanilla baked in a soufflé cup served
with a cherry, ricotta, and maple syrup ice
$4.40

FRESH FRUIT TART
Prepared with the finest and freshest fruit of the season
$2.75
*Heart-healthy items

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INTRODUCTION

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9

Under the previous owner, the restaurant had shown a profit of $65,000
per year. But Bill felt sure he could increase the profit by applying the principles he had learned in the college’s hospitality management program. The
employees he inherited with the restaurant were both loyal and cooperative,
and he found them receptive to the changes that he made gradually over the
first year of operation. None of the changes were dramatically apparent to
the customers; in fact, at the end of the first year, most had not noticed any

changes at all. In general, they were as pleased with the establishment as they
had been when Bill first took it over, and they continued to return. In addition,
newcomers tried the restaurant, liked it, and became regular customers. At
the end of the first full year of operation, Bill’s accountant presented him with
a statement of income showing a restaurant profit of $128,702 (see Figure 1.3).
• FIGURE 1.3 •
The Grandview Bistro Income Statement, Year Ended December 31, 20XX

Sales
Food
Beverage
Total Sales
Cost of Sales
Food
Beverage
Total Cost of Sales
Gross Profit
Controllable Expenses
Salaries and wages
Employee benefits
Other controllable expenses
Total Controllable Expenses
Income before Occupancy Costs,
Interest, Depreciation, and Income
Taxes
Occupancy Costs
Interest
Depreciation
Total occupancy costs, interest, and
depreciation

Restaurant Profit

c01.indd 9

$891,687
$157,356
$1,049,043
$312,090
$39,339
$351,429
$697,614
$209,809
$47,207
$162,602
$419,618
$277,996

$89,169
$13,875
$46,250
$149,294
$128,702

7/25/08 9:48:32 AM