Cost control The Barley Vine Rail Co. (BVR) is a Casual, Canadian Bistro located
ID: 2749946 • Letter: C
Question
Cost control
The Barley Vine Rail Co. (BVR) is a Casual, Canadian Bistro located in the heart of downtown Orangeville. It seats 80 in the main dining room, 30 in the bar and has a private dining space in the basement which can accommodate upwards of 100 people. It is located on Broadway, the main thoroughfare within the city. The Orangeville Theatre is located directly across the street and the local Farmers Market is located in the BVR parking lot on Saturdays and Sundays when weather permits. Broadway Street is the main highway used by cottage commuters and encompasses numerous boutique shops and restaurants, attracting tourists and locals year round.
The BVR maintains a small, loyal and experienced staff comprising of 6 FOH employees and 8 BOH employees. There is 1 FOH Manager (also the owner/operator), 1 Chef and 2 Sous Chefs. The menu is small in size but is rotated on a seasonal basis, with the most popular menu items remaining. Daily specials are also run to ensure seasonal and local ingredients are continuously showcased.
The BVR opened in October of 2013 and has celebrated a significant amount of success throughout its first year of operation. It has been featured in the Globe and Mail as well as numerous local papers and publications throughout Orangeville. Recently, it was selected and featured on the Food Network's, 'You Gotta Eat Here.' The restaurant is also heavily involved in social media, participates in local Podcasts, and features the work of local artists throughout the restaurant while employing local entertainment on Friday and Saturday evenings.
As the restaurant enters its second year of operation, the owners plan to scrutinize the financials to determine which costs need to be more effectively controlled by management. Your group will act as consultants to the BVR, pinpointing areas of the income statement which are being inefficiently managed, what costs need to be more effectively controlled and offer suggestions and recommendations to increase probability and ensure future success.
1 Introduction
2 Background Research on Restaurant and Demographics
3 Analysis of Income Statement
4 Identification of Costs to be Controlled
5 Recommendations
Profit & Loss Statement Start Date 1-Oct-14 19-Oct-13 End Date 30-Sep-15 1-Oct-14 Balance Balance Actual vs PY % of % of Actual Sales Actual (PY) Sales Amt. % SALES Beverage Sales Liquor Sales 133,347 19.0% 104,269 26.0% 29,078 0.0% Beer Sales 266,694.90 59.0% 208,538.10 52.0% 58,157 0.0% Wine Sales 112,832.46 22.0% 88,227.66 22.0% 24,605 0.0% Total Beverage Sales 512,875 100.0% 401,035 100.0% 111,840 0.0% Food Sales N/A Beverages 61,544.98 8.0% 90,232.83 15.0% (28,688) 0.0% Food Sales- Apps 100,010.59 13.0% 60,155.22 10.0% 39,855 0.0% Food Sales - Mains 476,973.56 62.0% 360,931.32 60.0% 116,042 0.0% Food Sales - Dessert 30,772.49 4.0% 24,062.09 4.0% 6,710 0.0% Food Sales - Private Dining 100,010.59 13.0% 60,155.22 10.0% 39,855 0.0% Total Food Sales 769,312 100.0% 601,552 100.0% 167,760 0.0% TOTAL SALES 1,282,187.00 100.0% 1,002,587.00 100.0% 279,600 0.0% COST OF SALES Beverages Costs Liquor Costs 32,003 26.0% 22,939 26.0% 9,064 0.0% Beer Costs 64,007 52.0% 45,878 52.0% 18,128 0.0% Wine Costs 27,080 22.0% 19,410 22.0% 7,670 0.0% Total Beverage Cost 123,089.95 24.0% 88,227.66 22.0% 34,862 0.0% Food Costs N/A Beverages 51,236 18% 36,815 18% 14,421 0.0% Food Costs 233,409 82% 167,713 82% 65,697 0.0% Total Food Cost 284,645.51 37.0% 204,527.75 34.0% 80,118 0.0% Labour Costs FOH Labour 141,041 9.5% 110,285 11.0% 30,756 BOH Labour 179,506 14.0% 135,349 13.5% 44,157 Management Labour 150,000 11.7% 140,362 14.0% 9,638 Benefits 89,753 7.0% 70,181 7.0% 19,572 Total Labour Cost 560,300 42.2% 456,177 45.5% 104,123 0.0% TOTAL COST OF SALES 968,035 75.50% 748,932 74.70% 219,103 0.0% GROSS PROFIT 314,152 24.50% 253,655 25.30% 60,497 0.0% OPERATING EXPENSES Controllable Expenses Smallwares Smallwares, China 500 0.0% 205 0.0% 295 0.0% Smallwares, Glassware 680 0.1% 321 0.0% 359 0.0% Smallwares, Cutlery 490 0.0% - 0.0% 490 0.0% Smallwares, Misc. 390 0.0% - 0.0% 390 0.0% Smallwares Total 2,060 0.2% 526 0.1% 1,534 0.0% Laundry/Uniform Laundry, F.O.H. 5,129 0.4% 2,567 0.2% 2,562 0.0% Laundry, B.O.H. 6,411 0.5% 1,578 0.1% 4,833 0.0% Uniforms 5,129 0.4% 4,432 0.3% 697 0.0% Laundry/Uniform Total 16,668 1.3% 8,577 0.7% 8,091 0.0% Guest Related Expenses Promotion 2,564 0.2% 4,278 0.3% (1,714) 0.0% Office Supplies 1,282 0.1% 1,974 0.2% (692) 0.0% Menu Printing 3,847 0.3% 5,012 0.4% (1,165) 0.0% Cleaning Supplies 3,205 0.3% 5,997 0.5% (2,792) 0.0% Kitchen Supplies 5,129 0.4% 8,429 0.7% (3,300) 0.0% Live Entertainment 18,000 1.4% 8,000 0.6% 10,000 Complimentaries 3,847 0.3% 6,231 0.5% (2,384) Take Away Containers 2,564 0.2% 2,507 0.2% 57 0.0% Dining Room Supplies 1,282 0.1% 1,644 0.1% (362) 0.0% Credit/Debt Card Fees 19,233 1.5% 15,039 1.2% 4,194 0.0% Guest Related Total 41,720 3.3% 44,072 3.4% (2,352) 0.0% Total Controllable Expenses 60,449 4.7% 53,175 5.3% 7,274 0.0% Non-Controllable Expenses Repairs & Maint. 27,578 2.2% 9,470 0.9% 18,108 0.0% Computer Software/Silverware POS 7,693 0.6% 5,905 0.6% 1,788 0.0% Dues, Subscriptions, Licences 3,847 0.3% 3,675 0.4% 172 0.0% Advertising 'Outside' 1,282 0.1% 3,502 0.3% (2,220) 0.0% Bank Charges 2,564 0.2% 2,506 0.3% 58 0.0% Equipment Leasing 3,847 0.3% 3,179 0.3% 668 0.0% Telephone & Internet 3,847 0.3% 3,683 0.4% 164 0.0% Vehicle Gas & Maint. 5,129 0.4% 5,111 0.5% 18 0.0% Training & Development Exp 6,411 0.5% 1,286 0.1% 5,125 0.0% In House Marketing/Social Media 2,564 0.2% 3,245 0.3% (681) 0.0% Legal Representation 45,000 3.5% - 0.0% 45,000 0.0% Total Non-Controllable Expenses 109,761 8.6% 41,562 4.1% 68,199 0.0% OCCUPANCY COSTS Rent Expenses Building Minimum Rent 66,000 5.1% 60,000 6.0% 6,000 0.0% Total Occupancy Costs 66,000 5.1% 60,000 6.0% 66,000 0.0% Facility Related Expenses Insurance 3,847 0.3% 3,008 0.3% 839 0.0% Realty & Business Taxes 5,129 0.4% 4,205 0.4% 924 0.0% Total Facility Related Expenses 8,975 0.7% 7,213 0.7% 1,763 0.0% Utility Expenses Utilities, Gas 3,205 0.3% 3,658 0.4% (453) 0.0% Utilities, Hydro 3,847 0.3% 4,201 0.4% (354) 0.0% Utilities, Water 2,564 0.2% 3,008 0.3% (444) 0.0% Total Utilities Expenses 9,616 0.8% 10,867 1.1% (1,251) 0.0% TOTAL OPERATING EXPENSES 254,802 19.9% 172,817 17.2% 81,985 0.0% NET OPERATING INCOME/(LOSS) 59,350 4.6% 80,837 8.1% (21,488) 0.0%Explanation / Answer
1 Introduction
The Barley Vine Rail Co. (BVR) is a Casual, Canadian Bistro located in the heart of downtown Orangeville.Since its opening BVR has celebrated a significant amount of success throughout its first year of operation. It has been featured in the Globe and Mail as well as numerous local papers and publications throughout Orangeville.
The restaurant is heavily involved in social media, participates in local Podcasts, and features the work of local artists throughout the restaurant while employing local entertainment on Friday and Saturday evenings.
2 Background Research on Restaurant and Demographics
Whether it’s couples or families or both, it’s imperative that a restaurant owner takes steps to understanding them. Knowing the demo is key to improving business as well as attracting and retaining customers.
Tips for discovering customer demographics:
Remember, information is power and knowing your demo is critical to maximizing your chances of realizing your goals and achieving success.
3 Analysis of Income Statement
The Income statemnet shows a profit of 59,350 as on 30 Sep.2015 which is less by 21,488 in the previous year.
Though the profit percentage is good which is over 4% and the total sales are great at 1,282,187.00 which exceeds last year's sales by 279,600. Both the Beverage sales and food sales have done great business.
4 Identification of Costs to be Controlled
5 Recommendations
Try getting a new suplier for Beverage & Food Supply.
We can cut on the BOH labour staff.
Laundry BOH can be controlled.
Live Entertainment expenses can be cut short by involving current staff in gaming / involvement activities with the customers.