Revenue control is an essential management policy that establishes proper oversight of all receipts and receivables, ensuring sound financial management practices. To effectively manage the revenue of an article, particular attention must be paid to the major factors influencing profitability.
Controlling these main factors is critical to the financial success of the business. Various systems are employed in revenue control, which can be either manual or automated.
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Manual Revenue Control Systems
The methods used in a manual revenue control system include:
1. Sales Checks System
This is one of the simplest methods of revenue control. It involves recording each item ordered and its selling price on the waiter’s sales check, typically in duplicate or triplicate. For efficiency, checks should be numbered and tightly controlled, with accountability for cancelled or missing checks. Beyond serving as a control measure, this system:
- Reminds waiting staff of orders taken.
- Provides a record of sales for compiling portion sales, sales mix, and sales history.
- Assists the cashier and facilitates easy verification of prices charged.
- Shows customers a detailed list of charges.
The duplicate or triplicate checking system aids control by:
- Providing the kitchen, buffet, or bar with a written record of orders issued.
- Authorizing the kitchen, buffet, or bar to issue beverages.
- Allowing comparison between the top copy and duplicate to ensure all issued beverages are charged and paid for.
2. The Cashier’s Responsibilities
In addition to adhering to the article’s rules for revenue transactions, a cashier operating a manual system typically:
- Issues check pads to waiting staff before a meal period, records the number of each pad issued, and obtains the staff’s signature.
- Receives unused check pads after the meal, records their numbers, and signs for those returned.
- Verifies pricing, extensions, and sub-totals on all checks, adds government tax charges, and calculates the total amount due.
- Receives and verifies money or approved signatures for payment of the total amount due for each check.
- Completes the missing check list for each meal period.
- Completes the restaurant sales control sheet for each meal period.
- Deposits all necessary cash according to the article’s established practice.
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Challenges of Manual Control Systems
The primary challenges of manual beverage operation control include:
- The short time span between purchasing, receiving, storing, processing, selling, and obtaining cash or credit for the product, often only a few hours.
- A high number of items held in stock at any time.
- Production of numerous finished items from a combination of stock items.
- A large number of transactions occurring hourly.
- The need for quick, meaningful control information for efficient management.
- The costly and time-consuming nature of full manual control, with data often produced too late for effective management action.
- Infrequent updates to standard recipe costing, gross profit calculations, and detailed sales analysis due to time and labor constraints.
Other operational issues include:
- Poor handwriting by waiting staff, leading to incorrect orders, wrong food offered, incorrect pricing, or poorly presented bills.
- Human errors causing mistakes like incorrect charges on bills.
Automated Revenue Control Systems
1. Pre-Checking Machine Systems
These machines resemble standard cash registers but operate only when a sales check is inserted into the printing table. Their advantages include:
- Recording sales checks on audit tape before items are obtained from the bar or kitchen.
- Analyzing total sales by waiter on the audit tape at the end of each shift.
- Eliminating the need for a cashier, as waiters act as their own cashiers, retaining collected money until the shift ends.
- Restricting machine access to waiters with security keys, ensuring pre-checks are used to obtain items from the bar or kitchen.
Electronic Cash Registers (ECRs)
These high-speed machines, originally developed for supermarkets, were adapted for high-volume catering operations. Their advantages include:
- Pricing customers’ checks via pre-set prices or price look-ups.
- Printing checks, including previously entered items.
- Allowing price adjustments through special keys when needed.
- Providing sales analysis by product type and hour, if required.
- Analyzing sales by waiter per hour or shift.
- Analyzing sales by payment method.
- Automatically calculating taxes, cover, and service charges.
- Offering limited stock control.
- Providing waiter check-in and check-out facilities.
- Supporting operator training without disrupting stored data.
- Restricting access to the ECR and till drawer via keys or codes.
- Displaying prices for individual transactions on rotating turret displays.
- Eliminating the need for a cashier, as waiters handle payments and reconcile exact amounts at shift’s end.
Point of Sale (POS) Control Systems
A point of sale control system is a modern ECR with additional printers at locations like the kitchen or dispense bar. Some systems replace the ECR with server terminals placed at multiple locations within the bar or restaurant. This modification removes cash-handling features, making the terminal smaller and less conspicuous.
Microcomputer Systems
A microcomputer is a compact computer with a microprocessor as its central processing unit, smaller than mainframe or minicomputers. In the hospitality industry, microcomputers were initially used for front office, reservations, and accounting functions, with limited focus on food and beverage management.
The transition from manual systems to mechanical and electronic cash registers has led to fully computer-aided control systems. With careful selection of computer-based systems, management gains quick access to accurate, comprehensive business data, allowing ample time for analysis and action.
Key Control Operating Metrics
Several operating ratios are used in beverage revenue control, including:
1. Total Food and Beverage Sales
Total food and beverage sales should be recorded, checked, and compared against budgeted figures for the period. These are typically analyzed daily, with food and beverage sales separated per outlet and meal period.
2. Departmental Profit Calculation
Departmental profit is calculated by deducting departmental expenses (cost of food and beverages sold, labor, and overhead costs) from departmental sales, expressed as a percentage of sales:
Departmental profit × 100 / Food and beverage sales
This should be measured against budgeted figures for the period.
3. Ratio of Food/Beverage Sales to Total Sales
Separating food and beverage sales and expressing each as a percentage of total sales measures performance against budgeted standards and highlights business trends, prompting necessary action when trends are identified.
4. Average Spending Power (ASP)
ASP measures the relationship between food and beverage sales and the number of customers served. For example:
- If food sales are N350.00 for 70 customers, the average spend per customer is N5.00.
- For beverages, ASP is calculated based on the number of items recorded on the till roll, not customers. If beverage sales are N200 with 400 drinks sold, the average spend per drink is 50 kobo.
This distinction accounts for customers ordering multiple drinks in one outing, making the average spend per drink more relevant.
5. Sales Mix Analysis
Sales mix measures the relationship between components of total sales:
| Sales Mix | % |
|---|---|
| Coffee shop sales: food | 20 |
| Coffee shop sales: beverages | 5 |
| Restaurant sales: food | 25 |
| Restaurant sales: beverages | 15 |
Sales mix can also be calculated for food and beverage menus under group headings (e.g., spirits, cocktails, beers, wines) to identify popular and unpopular items, explaining gross profit variations despite high business volume.
6. Payroll Cost Management
Payroll costs, expressed as a percentage of sales, are typically high and require tight control. Control measures include:
- Establishing a head count of employees per department or total employee hours per department based on business volume.
- Strictly controlling overtime, permitting it only when necessary.
7. Index of Productivity
Calculated as: Sales / Payroll (including staff benefit costs)
This index varies by operation type. Fast-food restaurants with takeaway services have a high index due to low payroll costs, while luxury restaurants with skilled staff and high staff-to-customer ratios have a lower index. A standard index can be established to measure the relationship between payroll and business volume.
8. Stock Turnover Rate
Calculated as: Cost of beverages consumed / Average stock value (food and beverage) at cost
The stock turnover rate indicates how many times the average stock level turns over in a period.
Excessive turnover suggests low stock levels and frequent small purchases, which are costly and time-consuming, preventing price advantages from bulk supplier offers.
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