cost control

Read Case Study 1 at the end of Chapter 10, “Cost Control: Dollars  and Sense” and answer the following questions. Respond substantively to  at least two of your classmates' postings.

1. Given the situation described, how would you present your concern  without creating panic among junior-level staff or revealing figures  that would likely find their way into the local paper or a competitor’s  boardroom?
2. How would you go about identifying cost of sales problems?
3. What corrective steps would you take to address cost of sales problems?

This is the case study

Michael’s Bistro has being losing one cent on the dollar for a number of years, and Joe William, the owner, is tired of writing checks to cover losses. This exercise will show you how to trace where loss is occurring and put a stop to it.In 2005, Michael’s profit and loss statement looked like this:

                                                    Actual Dollars     Percent of SalesSALESFood Sales$407,77479Beverage Sales$108,39621Total Sales$516,170100EXPENSESCost of Food Sales$152,78637.5 (percentage by category)Cost of Beverage Sales$43,35840 (percentage by category)Total Cost of Sales$196,14438 (percentage of total sales)LABORPayroll Wages$144,52828 (percentage of total sales)Tax and Benefits$25,80818 (as a percentage of wages)Total Payroll Cost$170,33633 (percentage of total sales)OTHER EXPENSESAll other expenses$154,85130 (percentage of total sales)TOTAL REVENUE$516,170100TOTAL EXPENSES−$521,331−101NET PROFIT AND LOSS−$5,161−1According to the annual National Restaurant Association Operating Report, the median cost percentages for full-service restaurants are as follows:The Restaurant Industry Dollar: Full-Service RestaurantsPercentageWhere it came from:Food and Beverage Sales100Where it went:Cost of Food and Beverage Sales(Note: Beverage is 40 percent of revenue) 33Salaries and Wages, Including Benefits 33Operating Expenses  6Corporate Overhead  3General and Administrative Expenses  3Depreciation and Insurance 18Income Before Income Taxes  4

(Ojugo 206-207)

Ojugo, Clement. Practical Food and Beverage Cost Control,  2nd Edition. Cengage Learning, 20090331. VitalBook file.