Controlling costs, setting budgets, and pricing goods are essential for success in any hospitality or culinary business. Food and Beverage Cost Control provides the tools required to maintain sales and cost histories, develop systems for monitoring current activities, and forecast future costs.

Labor costs are controlled by forecasting how many customers can be expected for meal times and how many employees are needed to meet foodservice schedules. Explain why forecasting is important to a restaurant or foodservice operation. In order to control menu costs, managers must forecast sales of menu items.

Cost control is an important factor in maintaining and growing profitability. Outsourcing is a common method to control costs because many businesses find it cheaper to pay a third party to perform a task than to take on the work within the company.

1. Food cost controlFood cost control • It can be defined as guidance and regulation of cost of operations. • Under taking to guide and regulate cost needs to ensure that they are in accordance of the predetermined objectives of the business.

In the short-term, many factors affect food prices, making them volatile. These factors include supply and demand, weather, disease outbreaks, war, and natural disasters.

Obstacles to food and beverages Control: In off season the cost of raw material is always more. b) In case a large quantity of goods (raw material) are ordered then the cost of each unit is much less as compare to when a small quantity of goods (raw material) is ordered.

What is Cost Control?

1. Create a baseline. Establish a standard or baseline against which actual costs are to be compared.
2. Calculate a variance. Calculate the variance between actual results and the standard or baseline noted in the first step.
3. Investigate variances.
4. Take action.

Here are different methods, you might be able to cut down your expenses with:

• Less Printing: Printing isn’t a cheap operation.
• Outsource Bookkeeping processes:
• Pay Your invoices early:
• Reduce inventory levels:
• Use internet marketing:
• Hire interns:
• Less traveling:
• Consider Letting Employees work remotely:

Read on to find out five ways smart investment can be used as a cost control technique that can improve quality and that help your procurement process flourish.

• Invest in Training.
• Implement an eProcurement System.
• Supply Chain Consolidation.
• Identify Primary and Secondary Sourcing.
• Consider Outsourcing.

Two expense types are controllable costs and non-controllable costs. Controllable costs are those over which the company has full authority. Such expenses include marketing budgets and labor costs. By contrast, non-controllable costs are those that a company cannot change, such as rent and insurance.

One example is the the manager’s salary. Controllable costs are things the executive, manager, or department even can control or change. If the executive, manager or department cannot change or control the cost, it is an uncontrollable cost.

Examples of controllable costs are:

• Advertising.
• Bonuses.
• Direct materials.
• Donations.
• Dues and subscriptions.
• Employee compensation.
• Office supplies.
• Training.

A non-controllable cost is an expense that is not within the sphere of control of a manager. The cost may be controllable at a higher level of the organization, but it is not controllable from the perspective of the person in question. For example, a manager cannot alter his own salary.

Revenue

1. subtract Cost of Sales.
2. subtract Payroll & Employee Benefits.
3. subtract Controllable Expenses.
4. equals Controllable Profit.
5. subtract Occupancy & Depreciation Expenses.
6. add Other non-operating Income.
7. subtract Interest Expenses.
8. equals Net Income Before Taxes.

Controllable cost refers to a cost that can be altered based on a business decision or need. On the other hand, uncontrollable cost refers to a cost that cannot be altered based on a personal business decision or need.

Normal costing is used to derive the cost of a product. This approach applies actual direct costs to a product, as well as a standard overhead rate. It includes the following components: Actual cost of materials. Actual cost of labor.

A sunk cost refers to a cost that has already occurred and has no potential for recovery in the future. For example, your rent, marketing campaign expenses or money spent on new equipment can be considered sunk costs.

Your sunk costs are everything you spend money on for your business that is not recoverable, including: Labor: Salaries and benefit costs, like health insurance and retirement fund contributions, are sunk costs, as soon as they are paid out, as there is ordinarily no prospect of cost recovery for these expenses.

A sunk cost refers to money that has already been spent and which cannot be recovered. A sunk cost differs from future costs that a business may face, such as decisions about inventory purchase costs or product pricing.

Total the cost of labor put into the project to-date. Add the cost of labor (which cannot be recovered), the cost of equipment that cannot be salvaged and the equipment sunk cost. The total is the sunk cost for the project.

In accounting, finance, and economics, all sunk costs are fixed costs. The defining characteristic of sunk costs is that they cannot be recovered. It’s easy to imagine a scenario where fixed costs are not sunk; for example, equipment might be resold or returned at the purchase price.

A sunk cost is a cost that cannot be recovered or changed and is independent of any future costs a business might incur. Because a decision made today can only impact the future course of business, sunk costs stemming from earlier decisions should be irrelevant to the decision-making process.

Sunk cost, in economics and finance, a cost that has already been incurred and that cannot be recovered. In economic decision making, sunk costs are treated as bygone and are not taken into consideration when deciding whether to continue an investment project.

Some other ways you can avoid the sunk cost trap include:

1. Review your investment with an eye toward analysis. Take a hard, honest look at the investment.
2. Create an investing strategy.
3. Review your portfolio regularly.
4. Consider different order types to limit losses.

How to Make Better Decisions and Avoid Sunk Cost Fallacy

1. Develop and remember your big picture.
2. Develop creative tension.
3. Keep track of your investments, be it time or money, and be ready to cut your losses when the numbers don’t look good.
4. Get the facts, not the hearsay.
5. Let go of personal attachments.

An imputed cost is a cost that is incurred by virtue of using an asset instead of investing it or undertaking an alternative course of action. An imputed cost is an invisible cost that is not incurred directly, as opposed to an explicit cost, which is incurred directly.