Cost Control in Hospitality: Managing Food, Labor, and Overhead Costs

Cost control

A Business's effort to manage how much it spends

Controllable costs

Costs that are incurred only when a meal or service is provided

Non-Controllable costs

Fixed costs that are incurred regardless of whether a meal or service is provided

Operation Budget

Financial plan for a specific period of time, most cover 1 year and are broken down by months

Forecast

A tool used by managers to look at current business trends (revenues and costs) and predict how these changes will affect the operating budget in the future

Revenue forecasting

To estimate potential changes in revenue, managers look at previous sales

Moving average technique

Smoothing/averaging sales over a given time period using sales history records

Production sheet

A document that lists all menu items that will be prepared for a given date

Point-of-sales-systems

Software that allows a business to track sales and inventory and analyze sales data to save time and money and make more accurate decisions for the business

Profit and Loss report

Compilation of sales and cost information for a specific period of time, used to judge the efficiency of the operation and determine where costs have grown unexpectedly

Purchase order

Documented issue by the seller specifying details of the proposed purchase

Packing slip

A list of items, often separate from the invoice, showing quantities of items received

Invoice

A bill received by the restaurant for something purchased for use, such as food deliveries or cleaning supplies

Kitchen tools for cost control

Ladles and scoops, receiving scales and portion scales

Staffing and Labor Costs

Costs associated with employing staff, including wages for hourly workers which can fluctuate with sales

Time check

A method to monitor labor costs and efficiency

Software platforms for cost control

Various software solutions that provide one-stop shops for managing all processes, including cost control

Food and beverage costs

Costs that go up and down in direct proportion to sales

Labor costs

Costs that can go up and down with sales, but not necessarily in the same proportion

Management salary

Remains fixed regardless of sales levels

Hourly workers' wages

Do go up and down with sales