operations management ~ intro
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FA introductionTRANSCRIPT
Operations Management ~ Intro
Instructor – Will Bohmann
New England Culinary Institute
AOS Culinary Arts
Mod 4
Instructor & Student Intros
Briefly:
Intro Any experiences with Financial Analysis What do you hope to get out of this class
Class Overview
We’ll focus on the business concepts, information, and attitudes that are relevant for new culinary professionals entering the food service industry. The key to success, as a culinary professional, is to maximize your business expertise.
This course will enhance your capacity to envision, anticipate and orchestrate what will happen in business through the study of the income statement.
Expectations for the Class
Be on time! Casual attire for class is acceptable. Be prepared for “respectful engagement.” Ask questions… if you are wondering,
someone else is too.
Industry Overview
Serving Our Nation
Industry Highlights
High annual revenue Largest Employer Growth Food Dollar
Industry Highlights
High annual revenue Largest Employer Growth Food Dollar
$566 Billion Dollars
The Final Project
You are planning an 80 seat restaurant. It may be located in Burlington or Montpelier You are open for dinner only. You are open 7 days a week. 2 Parts:
Portfolio – Written evidence Presentation – Oral evidence
The Final Project - Portfolio Review
Concept Paper What kind of restaurant will it be? Who is my customer/guest
Menu Requirements 3 appetizers 5 entrees 3 desserts 5 beverages
Cost Recipes Recipes to include:
Plate costs and sub-recipes
The Final Project - Portfolio Review
Menu Surveys At least 25 people Each person must select one app, one entrée,
one dessert and one beverage Staffing Guidelines
Busy, Average & Slow Shifts Scatter plots – Menu Engineering Income Statement A ten minute Power Point Presentation
The Final Project - Portfolio Review
Things that will help you Exceed Standards: Draw a floor plan Incorporate images that represent your concept
(ie. Logo, décor, etc.) Use special paper that would be representative of
your concept Print all, or part of your presentation in color Include a separate menu in cover Be creative in the design of the portfolio
The Final Project - Presentation Review
10 Minute oral presentation
Power Point 10 slide minimum
Concept Summary Target Market review Menu overview Costing summary Staffing summary Labor costs
Survey summary Menu engineering Income Statement
Prime costs review Profit or (Loss) review
Include extras! Photos of décor Animation Floor Plan Graphs
Basic Financial Terms & Concepts
Vocabulary
Formulas
The Income Statement
Income Statement = Profit & Loss = P&L This is a snap shot of how the business is
performing financially. It can be generated any time, but usually is
done monthly and rolled up into one annual statement.
It includes: revenue, expenses and profit
Parts of the Income Statement – Sales & COGS
Income Statement
SalesFood $ 590,000
Beverage $ 130,000
Total $ 720,000
Cost of Goods (COGS)
Food $ 199,003
Beverage $ 33,054
Total $ 232,057
Gross Profit $ 487,943
Sales, or revenue, appear at the top of the income statement.
For a restaurant there are two general revenue centers: food and beverage. (sometimes retail)
Directly below the sales, appear the Cost of Goods Sold (COGS).
These are also broken down for food and beverage.
Below this is Gross Profit – the total sales minus the COGS (Sales – COGS = Gross Profit)
Gross profit is sometimes called Gross Revenue
Parts of the Income Statement – Operating Expenses
Labor ExpenseFixed Payroll $ 79,854
Variable Payroll $ 132,000
Total Payroll $ 211,854
Taxes & Benefits $ 38,115
Total Labor $ 249,969
Other ExpensesControllable Expenses $ 102,000Fixed Expenses $ 92,000
Total Other Expenses $ 194,000
Profit or (Loss) $ 43,974
The second largest operating expense is: Labor Expense.
It appears separately just below the COGS
Operating expenses are broken down into two categories:
Controllables - FluctuatingFixed – Occupancy costs
Profit or (Loss) is the last line on the income statement.
Income StatementSales %
Food $ 590,000
Beverage $ 130,000
Total $ 720,000
Cost of GoodsFood $ 199,003
Beverage $ 33,054
Total COGS $ 232,057
Gross Profit $ 487,943
Labor ExpenseFixed Payroll $ 79,854
Variable Payroll $ 132,000
Total Payroll $ 211,854
Taxes & Benefits $ 38,115
Total Labor $ 249,969
Other ExpensesControllable Expenses $ 102,000Fixed Expenses $ 92,000
Total Other Expenses $ 194,000
Net Income $ 43,974
Part / Whole = %or
Cost / Sales = Cost %******
What is the % for each?
Formulas
Part / Whole = %
Cost / Sales = Cost %
-OR-
Basic Financial Terms & Concepts
Imagine a $1 bill.
Every penny that goes into that dollar is a percentage point.
So, when we say 30% food cost, we are talking about 30 pennies in a dollar.
Vocabulary
Dollars [$] versus Percents [%] $ give meaning to the numbers
How much $ you have to pay the bills & how much profit you made. How do you know if it was good enough? You had a profit of $43,974 for the month. What does it mean?
% gives numbers meaning Part (Expenses & Profit) ÷ Whole (Revenue).
Budgeted 10% profit and made 5%. What does that mean?
Income StatementSales
Food $ 590,000 81.9%
Beverage $ 130,000 18.1%
Total $ 720,000 100.0%
Cost of GoodsFood $ 199,003 33.7%
Beverage $ 33,054 25.4%
Total COGS $ 232,057 32.2%
Gross Profit $ 487,943 67.8%
Labor ExpenseFixed Payroll $ 79,854 11.1%
Variable Payroll $ 132,000 18.3%
Total Payroll $ 211,854 29.4%
Taxes & Benefits $ 38,115 5.3%
Total Labor $ 249,969 34.7%
Other ExpensesControllable Expenses $ 102,000 14.2%Fixed Expenses $ 92,000 12.8%
Total Other Expenses $ 194,000 26.9%
Net Income $ 43,974 6.1%
We budgeted a 10% Profit.How did we do?
…More Vocabulary
Revenue Income or Sales
NOT PROFIT !
Expenses Money spent on operating our business
Profit “Bottom Line” Money leftover after bills are paid
The Bottom Line
The Bottom Line is the last line of the Income Statement.
It is referred to as Net Profit. The process of revenue going through the
lines of the Income Statement (expenses) is called Flow Through.
• Read 7 P’s of marketing• First draft of your concept
• Bring rough draft to next class
HOMEWORK