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Hosp1044 Assignment

The document discusses food costing and budget planning for a restaurant called Splendid Burgers. [1] It provides calculations to determine the actual cost of sales and sales cost percentage for March. [2] Daily customer counts, sales, average check per customer, and food and labor cost budgets are presented for a week. [3] The purpose of budgets and forecasts is explained as planning for funds utilization, goal achievement, decision making, and predicting future performance. [4] Issues at a struggling steakhouse are analyzed, such as using family recipes designed for larger groups and basing food costing on sale price rather than portion size.

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Harish
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55 views5 pages

Hosp1044 Assignment

The document discusses food costing and budget planning for a restaurant called Splendid Burgers. [1] It provides calculations to determine the actual cost of sales and sales cost percentage for March. [2] Daily customer counts, sales, average check per customer, and food and labor cost budgets are presented for a week. [3] The purpose of budgets and forecasts is explained as planning for funds utilization, goal achievement, decision making, and predicting future performance. [4] Issues at a struggling steakhouse are analyzed, such as using family recipes designed for larger groups and basing food costing on sale price rather than portion size.

Uploaded by

Harish
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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HOSP_1044 Food costing and Budget Planning

Student Name – Harish joshi


Student id – 500219663
Professor's Name – Ajinkya Narkar
In Class Assignment

1) Splendid Burgers restaurant had monthly purchases of $20,000 in March. The


operation had an opening inventory of $5,200 and closing inventory of $9,400. It
als1o offered employee meals valued at $1,200 and generated $2,800 from
grease sales
a) What is the actual cost of sales for Splendid Burgers?
b) If the restaurant had $40,000 in sales, what is the sales cost percentage for
Splendid Burgers?
Answer -:
(A) Formula to find out actual cost of sale is: -
 Actual cost of sales = Purchase + Opening Inventory - Closing inventory -
Employee meals + Grease sales
 Purchase = $20000
 Opening inventory = $5200
 Closing inventory=$9400
 Employee meals=$1200
 Grease sales=$2800
 Actual cost of sales=$20000+$5200-$9400-$1200+$2800= $17400
Therefore, the actual cost of sale for splendid burger is $17400

(B) Sales cost percentage = (Cost of Sales / Total Sales) * 100


Given sales = $40,000
Actual cost of sales = $17400
Hence, the percentage is = ($17400 / $40000) * 100 = 43.5%
2) Question 2
Answer-:

Sunday Monday Tuesday Wednesday Thursday Friday Saturday Totals/Avg

Custom
er count 149 62 76 135 146 200 252 1020

Daily $3,300. $2,563.0 $1875.6 $5184.0 $6,628.0


sales ($) 00 0 8 $3,694.00 $5,151.00 0 0 $28395.68

Average
check
per
custome
r ($) $22.12 $41.33 $24.68 $27.27 $35.28 $25.92 $26.35 $28.99

Food
cost (%) 27% 21% 29% 23% 30% 31% 33% 27.71%

Food
cost
budget $1,606.7
($) $891.00 $537.64 $543.94 $854.32 $1545.3 3 $2187.24 $8166.17

Labor
cost (%) 25% 17% 30% 21% 29% 30% 32% 26.28%

Labor
cost
budget $1,554.9
($) $825.00 $437.64 $562.70 $781.26 $1493.79 0 $2120.96 $7740.25

Prime
cost (%) 52.00% 38.00% 59.00% 44.00% 59.00% 61.00% 65.00% 54.00%
3) Question 3 Explain the purpose of budgets and forecasts?
Answer: - Budget is all about creating a spending plan for money based on revenue and
expenses. Simply, Budget is like having a financial plan that helps you to achieve short-
term and long-term goals [1] [2]. Following are the purpose of budgets:

1) Proper utilization of funds


2) Achieving long term and short-term goals
3) Financial Aid
4) Resource allocation
5) Decision making

Forecasting is the process of using historical data to predict the future in any term
or event i.e., Finance, Inventory etc. [2] Forecasting is important in the following ways: -
1. Formulating strategic plans
2. Risk analysis
3. Operational consistency
4. Estimate of future performance

4) Question 4 Chef Paul was recently hired by a local steakhouse. During his first
week of work, Chef Paul asked the restaurant's general manager about the state of
the business. She told him that the restaurant was struggling. In fact, the
establishment had not turned a profit for the past three years. Chef Paul was puzzled.
His first impression was that the restaurant had a pleasant ambiance, experienced
staff, and appropriate equipment. He wondered why the restaurant was struggling.

The general manager explained that the restaurant uses family recipes that are ideal
for a party of four. In addition, the food costing is based on the sale price of a dish.
Customers like the restaurant’s generous portions, but the operation continues to lose
money. Thanks to his training and experience, Chef Paul recognized several places
where procedures could be improved to make the restaurant profitable again. He
suggested that he and the general manager sit down and discuss the issues in more
depth, and then draw up an action plan.

A. What are some of the things that the general manager overlooked in her
explanation? Explain.
Answer: A) according to the case study, the general manager did not consider the
following aspect: -
1. Food pricing strategy: This method of restaurant has flaws. It is based on the sale
price of a dish, which could result in incorrect cost estimates.
2. Staff development: It is essential to make sure that staff members are well trained
to do their job effectively and efficiently.
3. Portion size: Although customers like to have large portions, it is important to
make a balance between portion size and price.
4. Recipes: Although family recipes may be designed for larger gatherings, the
restaurant should think about providing options for smaller parties or individuals.

B) What corrective actions can the general manager take together with Chef Paul?
Answer: According to make business profitable, the general manager should take
following corrective actions together with chef Paul: -
1. Conduct operational review: The general manager and chef Paul should review all
aspects of the restaurant's operations, like menu, cost, portion and kitchen
procedures.
2. Create action plan: Based on the review, they should work together to develop an
action plan that describes specific measures and initiatives to take to solve the
issue that were found.
3. Monitor the performance: keep a close eye on the restaurant's operational and
financial performance to make sure that the implemented actions are having the
desired effect.
Chef Paul and the general manager may improve the restaurant's financial situation and
ensure its long-term success by cooperating and putting these corrective measures into
place.
References

1. (2023, September 11) Indeed Editorial Team. Forecast vs Budget plus how to forecast a budget.
https://ca.indeed.com/career-advice/career-development/forecast-vs-budget
2. Osman, M. (2023, March 12). Budgeting vs. forecasting: A comparison. HubSpot Blog |
Marketing, Sales, Agency, and Customer Success Content. https://blog.hubspot.com/the-
hustle/budgeting-vs-forecasting

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