PRINCIPLES OF FOOD, BEVERAGE, AND LABOR COST CONTROLS

594 � CHAPTER 21 MONITORING PERFORMANCE AND TAKING CORRECTIVE ACTION
Monitoring Labor Costs
Many foodservice operations monitor labor costs by comparing forecasted
and actual sales with forecasted payroll percentages and actual payroll costs
in a similar fashion to the food Menu Pre - cost and Abstract discussed in
Chapter 10 . This requires that previously discussed employee schedules be
prepared for both fixed - cost and variable - cost employees. Every employee ’ s
wage or salary is calculated for the period based on the prepared employee
schedule, and a total labor cost figure is calculated, including Social Security,
Medicare costs, and employee benefits. The forecasted labor cost is compared
with the forecasted sales for the period, and it becomes the payroll percentage
goal for the establishment. Adding Social Security, Medicare, and employee
benefits to wages and salaries allows the organization to come up with a labor
cost percentage that is realistic and can be added to food and beverage cost
percentages to arrive at a prime cost, as discussed in Chapter 1 . At the conclusion
of the period, the actual labor cost is compared with actual sales to arrive
at an actual labor cost percentage. This is compared with the forecasted labor
cost percentage to determine the accuracy of the forecast. Those operations
that use computers can obtain programs such as the one from Barrington
Software. These programs make it considerably easier and less time- consuming
to forecast and compute labor costs and cost percentages.
As a result of the various monitoring methods, techniques, and procedures
described and discussed here, information is available that must be
evaluated, normally by a capable, experienced manager. Increasingly, the person
who does this evaluation has completed coursework in a post - secondary
institution and has acquired the knowledge and skill to make the necessary
judgments. Judgment is the key word here. Today, a foodservice manager
must be able to read financial and statistical reports, evaluate related data,
make judgments about the significance of the information, and determine
which of various possible courses of corrective action to pursue in order to
improve operational performance in the near term and over the long term.
� TAKING CORRECTIVE ACTION TO ADDRESS
DISCREPANCIES BETWEEN STANDARDS
AND PERFORMANCE
If actual performance brings results that deviate significantly from those anticipated
by established standards and standard procedures, some corrective
action must be taken to bring actual performance into line with the standards.