Introduction
Both management and financial accounting concepts are instrumental in the running of a business. Primarily, management accounting is utilized in running a business and helping managers in making critical financial decisions while accountants prepare financial reports which are sent to managers and executives. Management accounting and financial accounting all serve various roles in a business. Notably, these concepts will become significant for my role as the hotel manager because I am responsible for running the restaurant and ensure sustainability and profitability.
Cost control in a Food and beverage outlet
Accordingly, menu engineering is one of the approaches I would incorporate in the restaurant. Ideally, a menu does not only reflect a list of food items but is also applied as a marketing tool. Additionally, I will establish ambiance and equip the staff to offer amazing services to clients to keep them coming to the restaurant. Incorporating manure engineering is my priority because the menu provides the first impression to clients. Research also reveals that a client spends approximately 109 seconds evaluating the menu and two minutes in reading the details of every description provided, implying that it is critical to ensure every second counts through menu engineering.
Menu engineering is the empirical analysis of the restaurant menu pricing using the hotel’s data to influence the design of the menu and content decisions. It is the grouping of all menu elements into one of the categories of menu engineering according to the profitability and popularity of the individual items. Utilizing this technique implies that I will need to have comprehensive knowledge about our clients. Additionally, I will also conduct a detailed analysis of the cost of food, prices of menu items, and contribution margins. This will be instrumental in establishing the elements that contribute a considerable portion of the profit and those items with small or negative margins for elimination or restructuring. Moreover, the menu engineering data will be critical in guiding the clients during the decision-making process and influence them to select items with substantial profit margins to the firm. The use of menu engineering will also ensure that the profitability of the hotels is increasing every year.
I will apply five steps in ensuring the success of menu engineering at the facility. Firstly, I will select a time frame for redesigning the menu and give priority to the most profitable items. The process will take time, but the time invested in making the design will pay off. I intend to be redesigning the menu quarterly because various menu engineering evaluations are better compared to one due to the dynamic nature of the hotel business.
Secondly, I will design it to have the capacity to measure profitability and popularity. According to the pioneer of the menu engineering, it is prudent to use contribution as the benchmark that depicts the profitability of a menu. Besides the contribution margin, I will also use menu item food cost and food cost percentage for the menu items in helping determine profitability. Moreover, I will ensure the point of sale calculates food costs and profit for particular menu items in the system. I will also perform menu audits to ensure compliance.
The next important thing is the grouping of the menu items after knowing the amount obtained from each item at a specific period. This will also provide figures for profits derived from each item to enable the computation of popularity and profitability in the menu engineering matrix. This is the ideal point of using the menu engineering spreadsheet that will help obtain the four menu engineering categories. The categories include stars, puzzles, plowhorses, and dogs.
Fourthly, I will design while having my menu engineering findings in mind. Some of the approaches that will be critical in obtaining the findings is talking to some trusted clients about particular menu items and learn from the feedback they provide. Finding the types of clients that prefer specific orders will also be essential. The findings will be utilized in the redesigning the menu.
Finally, I will appraise the menu engineering to establish the success of the new menu. The specific area I will emphasize on is the impact of the menu engineering on the sales. Depending on the performance, I can decide to do another menu engineering round while making a few adjustments on the menu. This will be instrumental in ensuring constant profitability for the organization.
Financial accounting concept
Fundamentally, I will use the income statement as one of the financial accounting concepts in running the restaurant. The income statement displays the profits or losses earned by a business. This will be helpful for me to understand how the restaurant is performing at a specific time. The income statement is essential in showing business milestones like the physical perception of the company. Additionally, it provides an understanding of when profits are lost and gained.
Notably, I will break the restaurant’s income statement into three for easier interpretation. These will be revenue, cost of sales, and operating expenses. The revenue part will entail the money that has been earned by the facility at a particular time. Moreover, I will apply the accrual method of accounting where all revenues recognized for a specific period are included in the section. This will incorporate the invoices that have been sent regardless of whether cash has been collected.
The cost of the sales section displays the expenses incurred in delivering products or services to clients. The cost of sales for a business usually varies, implying that it will be an area I will watch keenly to add value to the restaurant. An increase in the cost of sales should correspond to an increase in sales. The cost of sales is essential in the calculation of the gross profit of the restaurant.
Finally, the operating expenses depict the expenses incurred in the daily running of the business. It incorporates everything that is not classified under revenue or cost of sales. Some of the operating expenses for the restaurant include rent and office supplies. However, I will also institute controls on the operational costs so that I eliminate the non-value adding expenses to ensure enhanced profitability to the restaurant.
Conclusion
In summary, both management and financial accounting concepts are instrumental to the running of a business, and I will incorporate these concepts into my role as a hotel manager. Under cost control, I will use the menu engineering in redesigning the menu to make it appealing to clients while prioritizing the most profitable items on the menu. Besides, I will emphasize on the income statement to monitor the performance of the restaurant in terms of revenue and costs.