Finance & Accounting

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The Profit and Loss (P&L) Statement in the hospitality industry

This is one of the most important articles for a hospitality manager. The Profit and Loss
(P&L) Statement is the financial statement that hospitality managers need to understand
completely. It is the financial statement that they will use to measure the financial performance
of their departments and to monitor and improve the daily operations of their
departments. The P&L provides a way for managers to measure the financial performance
of their departments by comparing actual monthly operations to the budget established

Food and Beverage Cost and Sales Concepts

1. Define the terms cost and sales .
2. Define and provide an example of the following types of costs: fixed, directly variable, semivariable,
controllable, noncontrollable, unit, total, prime, historical, and planned.
3. Provide several examples illustrating monetary and nonmonetary sales concepts.
4. Describe the significance of cost - to - sales relationships and identify several cost - to - sales ratios
important in food and beverage management.
5. Identify the formulas used to compute cost percent and sales price.

Bar Codes

One of the more recent advances in inventory control is the use of bar codes
on product containers. The bar code is a series of parallel black bars of varying
width on a white background. The scanner that reads the code can be a counterlevel
model such as those found at check-out stands in supermarkets, or a handheld
wand, which is the type most useful in hospitality industry receiving so
that heavy cases do not have to be lifted to pass over the scanner.
A common bar code is the 10-digit universal product code (UPC) system,

Inventory Control

Computers can be very valuable as a tool in inventory control. Computers can
do the following:
Prepare purchase orders for suppliers. It is now also possible for the computer,
through networking, to place orders automatically with approved
suppliers who submit the best price for the items and quantities needed.
Prepare lists of items to be received from each supplier so that receiving
employees can compare what is delivered with what should be delivered.
Compare information as produce is received and product information is


Generally a point-of-sale (POS) system is a series of individual sales terminals
(such as ECRs) linked to a remote computer system. Food and beverage POS
systems may be used as stand-alone systems for each separate food and beverage
outlet, but may also be linked to other POS systems in other sales outlets.
Point-of-sale systems can be linked to other peripheral equipment, such as a
printer in the food preparation area that tells the kitchen what is to be prepared,
identified by server number or name. Obviously, the server does not walk to the

Cost / Volume / Profit Relationships in Food and Beverage Management

1. State the cost/volume/profit equation and explain the relationships that exist among its
2. Define the terms variable rate and contribution rate .
3. Apply the formulas used to determine sales in dollars, sales in units, variable costs, fixed costs,
profit, contribution rate, contribution margin, variable rate, and break - even point.

In the introduction to previous article  , statements of income were provided for two
comparable restaurants: A Taste of Tuscany and the Grandview Bistro. It was


The use of ECRs mean cashiers are no longer necessary in most establishments
because servers can act as their own cashiers. The machine records, among other
things, sales by server so that each knows how much cash to turn in at the end
of each shift. Most ECRs have some sort of video display, often just a strip window
with space for a limited number of characters. However, increasingly larger
video displays are appearing on the equipment so that, for example, the entire
bill for a group of people at a table can be seen on the monitor. More sophisticated

Hotel Accounting System Packages

Another area that lends itself well to an integrated software package, available
from a number of different vendors, is general accounting. Most businesses
with a manual system of accounting use an integrated approach for their general
ledger, sales, accounts receivable, purchases, accounts payable, payroll, and
inventory control. Hotel front-office system, reservations, registration, and guest
accounting can also be integrated into this system. Today, there are integrated
software packages available for computerization of this work.