The Main Costs in Catering

In the foodservice industry, the term cost control has come to mean control over all items of income and expenses concerned with the functioning of any foodservice operation. Applying the definition of control to this specific field, the manager is concerned with:

• Setting goals and standards for financial achievement (revenue and expenses), usually through a planned budget.
• Knowing what is being accomplished (revenue and expenses) through data (a system of records) that gives accurate data on current and historic operational performance.
• Evaluating the information from daily, monthly, and annual reports that compares the actual achievement to budget; and
• Taking corrective measures to bring operations in line with expected standards.

Sales concepts

In food service there are many terms used to describe sales or revenue. These are usually used to set budgets and forecasts and to assist managers to identify ways to increase sales. They are also often used as a measure of success. Let us look at some of the terms used.

Sales are defined as: Revenue resulting from the exchange of products and services for value.

We usually express sales in monetary terms and non-monetary terms, although there are other possibilities.

Monetary Terms

Total Sales: Total sales is a term that refers to the total volume of sales expressed in monetary terms for a period, daily, monthly, quarterly, annually, for example we made total sales of $56 000 this month.

Total sales by category: This is where sales are broken down into a specific category, for example food sales or total beverage sales. It is the monetary value of sales for all items in one category.

Total sales by server: Total sales per server / per waitron, per shift, per day, per month and so on.

Sales price: Sales price refers to the amount charged to each customer for a particular item.

Average sale: It is determined by adding all sales to determine a total and then dividing that total by the number of sales. For example, if you had 50 sales and made $6 500, then your average sale would be $130.

Average sale (spend) per customer/head: Is the result of dividing the total sales by the number of customers / heads. For example, if you made $3 000 in sales for the day and you had 80 customers, then your average spend per customer would be $37.50.

Revenue per available seat (Revpas): This metric gives you an idea of how much you can expect an average customer to spend. It is useful to use to identify ways to get customers to spend more. You can also do this calculation by table as well. Divide the total sales over a period by the number of people or tables over the same period. It is a similar calculation to average spend per customer.

Revenue per available seat hour (Revpash): This tells you how much each seat can be expected to generate and useful for establishing whether you are over or under seating. Here is a handy calculator for the formula. Download

Non-Monetary terms

Total number sold: Managers usually determine the popularity of an idem by looking at the number sold, for example total number of steaks sold.

Covers: Is a term used to describe one diner regardless of the quantity of food they consume.

Total covers: The total number of clients served in a given period Average covers: is calculated by dividing the total number of covers for a given time period by some other number. For example:

Average covers per hour: Total covers divided by the number of hours of operation.

Average covers per day: Number of covers in a period for example a month, divided by the number of days.

Covers per server: Total covers divided by the number of servers.

Sales mix: Describes the quantity sold of a menu item compared to other items in the same category.

For example: