THE CONTROL

PROCESS
Chapter 2

By: Ms. Emmery P. Balbas, MBA

Introduction (why do we need to control?)
• The control in the F&B industry really means controlling people action.
These are the factors:
• Food does not disappear by itself, without help
• Excess quantity of food and beverage into the plate and glass.
• Employees’ wages calculation are not based on the wrong numbers of hours
unless someone gives the wrong information.
• Food are not consumed by pest unless made available by human
• Customer seldom leave without paying unless make possible
Criteria for a Food Service Managers
• The person must be able to grab opportunities & profit oriented
• A unique salesperson
• Good personality with the guest
• Hard working person and most important
• The person is the controller or regulator of the operation to achieved
maximized profits and minimize costs

Note: It is important that the foodservice manager must be a talented

individual
Managing Income and Expenses
Income Expenses
• Same as revenue that arises from • It is the cost of the items required to
producing and selling products and operate the business.
services.
• The outflows of assets of an
• It can be increase by increasing the establishment
number of customers and the
amount of money they spent through • Food cost. Beverage Cost, Labor Cost
suggestive selling, creative menu and Operating cost
pricing and discount. Operating cost- includes all
expenses referring to general or
administrative expenses, marketing or
• The goal for cost control is not sale selling expenses. Ex. Rent, utilities,
but controlling expenses. franchise fees etc.
Perspective of Control
• Traditional Perspective
Revenue – Expenses = Profit
Target Costing ( Cost Control Perspective)
Revenue – Desired Profit = Ideal Expenses/ Target Cost
Target Costing- is the process of determining the maximum allowable cost for a new product
or services.
Ideal Expense/ target cost- is the management’s view of appropriate amount of expenses to
generate a given quantity of revenue.
Desired Profit- is define as the profit that the owner wants to achieve on that predicted
quantity of revenue
Profit- also known as net income, the positive amount determined by deducting expenses
from revenues
The Control Process
[Link] of Control
Control is a process used by managers to direct, regulate and restrain the actions of
people so that the established goals of an enterprise may be achieved.
[Link] Control Defined
Cost Control defined as the process used by managers to regulate cost and guard
against excessive costs. It is an ongoing process throughout the operation. The
principal causes of excessive cost are:
a. inefficiency
b. waste
c. fraud
d. errors
The Control Process
3. Sales Control
Sales Control is important to ensure that all sales results in appropriate income to the
business. Therefore, it is important to require that each employees record each sales
accurately. (Checks, duplicates, bills or etc.)

4. Responsibility For Control

Responsibility is clearly falls onto the management, but the task on controlling differ
due to the nature of the establishment.
Small establishment the control responsibility usually taken by the management but for
larger establishment it is delegated to the assistant manager or controller
The Control Process
• Instituting Control
Food & beverage establishment usually involves process of raw material purchased,
received, stored and issued for the purpose of manufacturing products for sale and
services.
At each stage of operation, it is necessary to institute control in order to stop pilferage
or problems.
Each control must be suitable to each of the operation, depends on the nature of
material and service requiring control and on the degree of difficulty inherent
(fundamentals) in instituting the control.

Apply control in production flow, service flow and other areas of operation.
 The Control Techniques
1. Establishing Standard
•Standard are defined as rules or measures established for making comparisons
and judgments.
a. Quality Standards are used to define the degree of excellence of raw materials,
finished products and by extensions, work performed.
b. Quantity Standard are defined as measures of weight, count or volume used to
make comparisons and judgment.
Standard Cost is defined as the cost of goods or services identified, approved and
accepted by management in order to make judgment and comparisons of the
effectiveness of the operation. Thus standard cost must be calculated as accurately
as possible.
“determine what is supposed to happen”
The management determines who, what, when, where, how and why for all the
aspects of the operation.
 The Control Techniques
2. Establishing Procedures
Procedures are the method employed to prepare products or perform jobs.

Standard Procedures are those that have be established as the correct methods,
routines and techniques for day-to-day operations.

Example: Production procedures must be standardized for several reasons. One of

the most important of these is customer satisfaction. Any given item should be
produced by the same method and with the same ingredients every time it is
served. It should also be served in the same quantity each time, partly so that
regular customers will be given the same quantity each time they order the item,
and partly to maintain cost standards
 The Control Techniques

3. Training
• Training is a process by which managers teach employees how work is to be done,
given the standards and standards procedures established.

Example; if management has established a standard 4 - ounce portion size for

hamburgers, then all employees responsible for producing portions of hamburgers
must be made aware that 4 ounces is the correct portion size
 The Control Techniques
4. Setting Example

Employees in an operation follow the examples set by the manager — the manager ’ s
behavior, manner, responses to questions, and even a failure to speak or take action in
some situations.
The behavior of individuals in a group tends to be influenced by the actions,
statements and attitudes of their leaders.
Work Habits, attitudes, behavior, spirit of a manager are the evident.

If the manager who has occasion to help employees plate food for the dining room
serves incorrect portion sizes, employees will be more likely to do the same when the
manager is not there. Similarly, if a manager is inclined to wrap parcels of food to take
home for personal use, employees will be more likely to do so
 The Control Techniques

5. Observing and Correcting Employee Actions

One of a manager ’ s important tasks is to observe the actions of all employees
continually as they go about their daily jobs, judging those actions in the light of the
standards and standard procedures established for their work.
If any employees are failing to follow the standards, it is a manager’s responsibility to
correct their performance to the extent necessary at the appropriate time
Note: measuring the performance and identifying things that needed attention the
determine what to do about it.
 The Control Techniques

6. Requiring Records and Reports

Recording and reports is an important element in control as these information
helps in decision making, judgment & comparisons of the operations.
One such report is the statement of income.

Example; it is important to recognize that managers need timely information to

determine whether primary goals and sub goals are being met. If timely records and
reports are not available, opportunities for taking corrective action may be lost
 The Control Techniques

7. Discipline Employees

Discipline is defined as action taken to give a warning, punish or telling off an

employee for work performance or personal behavior incompatible with established
standards.
It is seldom practice but only used as a deterrent or if corrective action failed.
By selecting the right people for the various jobs — those with the experience, skill,
and personal characteristics that match the job requirements the number of
individuals requiring some level of discipline can be reduced to a bare minimum.
However, every manager must face the fact that, at times, an individual staff
member must be disciplined
 The Control Techniques

8. Preparing and Following Budgets

Budget is defined as a financial plan and may be describe as a realistic expression of
management’s goals and objectives expressed in financial terms. (Cash flow budget,
capital equipment budget and advertising budget.)

Operation Budget is the most important budget for F&B manager. It is a forecast of
sales activity and an estimate of cost that will be incurred in the process of
generating those sales
Preparing an Operating Budget
1. An operating budget is normally prepared using historical information from
previous budget and other financial records.
2. The second step is to calculated the percentage and analysis of the previous
records.
3. Then making assumption or judgment base on all the influencing factors that
might affect the business operation during the forecasted period, and
computing into the new budget.

Flexible budget normally prepared for levels of business volume above and below
the expected level. (See Illustration)
Computation:
Food Sales + Beverage Sales = Total Sales
Food Cost + Beverage Cos= Total Cost of Sales or Cost of Good Sold
Total Sales– Total Cost Sales = Gross Profit
Add all controllable expenses to get the total Controllable Expenses
Gross Profit– Controllable Expenses = Income before Fixed Expenses / gross income
Total Sales – Total cost of sales, Total Controllable Expenses, and fixed expenses= Profit or Loss

Food Sales / Total Sales x 100 = % of Sales ( same computation for beverage sales)
Food Cost / Food Sales x 100 = % of Sales ( same computation for beverage sales)
Gross Profit / Total Sales x 100 = % of Sales
All other particulars like salaries and wages, rent, depreciation the denominator will be Total
Sales x 100 = % of Sales
The Control Process Summary
Consist of the following four steps:
1. Establish standard and standard procedures for
operation.
2. Train all individual to follow established standards and
standard procedures.
3. Monitor performance and compare actual
performance with established standards.
4. Take appropriate actions to correct deviations from
standards
THANK
YOU!