SITXFIN003: You are the Assistant Manager of TIV Restaurant have been Set a Food Budget: Manage Finances Within a Budget Assignment, VU, Australia

University Victoria University [VU]
Subject SITXFIN003: Manage Finances Within a Budget

Scenario

You are the assistant manager of TIV restaurant have been set a food budget of 35% food cost. For the last 3 months, you have had an average food cost percentage of 38.96% and your manager has told you to find ways to get the food budget back to 35%. You need to find a new pricing structure for how much each menu item’s selling price is to meet this target. In the sales summary on the next page find a way to slightly increase prices of certain menu items in order to get the sales back below budget.

  1. For scenario 1 produce an excel spreadsheet the same as the one previous with the calculations showing a Total food cost percentage of 35% or below.
  2. Produce 3 more excel spreadsheet charts for the following time periods:
  • 1st Oct 2018 to 1st Jan 2019
  • 1st Jan 2019 to 1 Apr 2019
  • 1st Apr 2019 to 1st July 2019

Base these forecast budgets on the average food cost increasing by 0.75% per quarter and making sure you have food sales over costs percentage remains below 35%

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1st Jul 2019 to 1st Oct 2020

Adjust the following sales prices in the menu below to a total of 35% food cost

Menu item Sales no. Food cost Sales price Food cost % Menu cost Menu sales
Entrees
Seared scallops in champaign sauce 612 $5.20 $11.90 43.70% $3,182.40 $7,282.80
Garlic prawns 556 $5.43 $12.90 42.09% $3,019.08 $7,172.40
Bruschetta 811 $1.82 $10.90 16.70% $1,476.02 $8,839.90
Minestrone soup 423 $0.99 $9.90 10.00% $418.77 $4,187.70
Thai vegetable salad 478 $1.95 $10.90 17.89% $932.10 $5,210.20
Mains
300g wagyu rib-eye with  garlic and rosemary jus 443 $19.53 $38.90 50.21% $8,651.79 $17,232.70
Chicken and camembert in filo 682 $5.98 $23.50 25.45% $4,078.36 $16,027.00
Seafood platter 420 $23.92 $41.90 57.09% $10,046.40 $17,598.00
Vegetarian stir-fry 601 $2.97 $19.90 14.92% $1,784.97 $11,959.90
Cured salmon with coriander salsa 656 $13.98 $26.90 51.97% $9,170.88 $17,646.40
BBQ pork ribs 289 $13.34 $27.90 47.81% $3,855.26 $8,063.10
Braised beer duck 629 $9.98 $24.90 40.08% $6,277.42 $15,662.10
Desserts
Sticky date pudding with butterscotch sauce 434 $2.40 $9.90 24.24% $1,041.60 $4,296.60
Strawberries Romanoff 612 $5.98 $9.90 60.40% $3,659.76 $6,058.80
Mixed berry panacotta 645 $3.49 $9.90 35.25% $2,251.05 $6,385.50
Chocolate souffle 687 $3.87 $9.90 39.09% $2,658.69 $6,801.30
TOTAL MEALS SOLD 8978 MENU TOTALS $62,504.55 $160,424.40
TOTAL FOOD COST % 38.96%

Then discuss the following questions below.

  1. What are other ways can the food cost percentage can be lowered?
  2. What can happen to the total food cost percentage if sales decline due to prices increasing too much?
  3. What can happen to the sales if the quality of food and service declines?

Case Study Task 2

Top of the Town Hotel has asked you to calculate the variance for the following figures for the month of July and August. Also, calculate the total profit that was budgeted and actual. Analyze the findings and inform them about the variance as they are concerned and would like to monitor the income, expenditure, profit levels, budgetary performance of their Food and Beverage Department.

July August
Sales Budget Actual Variance Budget Actual Variance
Revenue 230,000 225,000 230,000 228,000
Food Costs 85000 87000 85000 86000
Beverage Costs 14000 15000 15000 15000
Labour Costs 77,000 82000 78000 82000
Fixed Costs 35000 35000 35000 35000
Total Costs 211000 219000 213000 218000
Profit 19000 6000 17000 10000

The hotel owners and managers would like to know the form you the major areas of concern where there is a deviation that needs monitoring and improvement

PART B

Answer the following questions

Q1. What are other ways can the food cost percentage can be lowered?

Q2. What can happen to the total food cost percentage if sales decline due to prices increasing too much?

Q3. What can happen to the sales if the quality of food and service declines?

Q4. Explain the importance to the owners of monitoring budgets and why do you think it will help them to manage their finance better for the business. How you will allocate the budgets according to the organisational control systems.

Q5. Explain to them the use of analysing the monthly budget and comparing the forecasted budget against the actual budgets.

Q6. Explain your findings and possible reasons for these variances.

Q7. Research and suggest what improvements do you think the owners can take to improve this situation?

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