Sample Paper on Financial Controls used in food & Beverage Operations

Understanding the concept of financial control in food and beverage operations

1.0 Introduction

The area of food and beverages has gained increasing reputation in the hospitality industry in the recent past. Indeed, the hospitality industry is largely determined by the various types of foods that are available for various groups of people around the globe. The creation of recipes is one of most challenging aspect in food provision and development in the hospitality industry. Various researches have been conducted to establish ways of coming up with the best menus for various occasions. While no research has settled on a single formula, various experts have argued that the ability to come up with the best menu for an occasion is determined by the level of creativity in one as well as ones knowledge of various foods. Planning for cocktails among people of different ages requires a lot of creativity and expertise in order to ensure that the visitors are fed to their satisfaction. A desired menu has to cater for the needs of both adult guests as well as the younger guests

According to Robinson (2007) it deems hard to prepare a suitable menu for a few peoples party compared to feeding thousands of people attending a similar party. This is because the few people party requires the availability of food that caters for the needs of many different varieties containing few numbers of people. As Robinson, (2007) mentions, many ingredients are used din such cases leading to one spending a lot of money than the when throwing a party to a large group of people. It is based on this argument that FSG Social Impact Advisors (2006) urges that one need to use a lot of wits when preparing a menu for a few people compared to cases where the party involves many people. Adequate financial planning and management is akin to the extent of food requirements and, therefore, financial statements are better tools to use in food and beverages operations. The planning process, as Porter & Mark, (2006) notes should go hand in hand with the available finances so that every requirement is catered for within the limits of the available funds. In this paper, I have devised a menu for a 60 people party, 50 adults and 10 children using a budget of £1000. Besides, I have given a financial justification for the budget as well as elaborately illustrated the uses of cost and pricing processes in food and beverages industry. Moreover, I have also provided an analysis of the purchasing process taking into consideration the compilation an elaborate menu for such hospitality events. Finally, I have also provided a justification behind the suitability of the recipe for the menu chosen.

2.0 Financial statement and its function in the food and beverage industry

Financial statements are a requirement in every sector of operations. The food and beverages industry, for instance, is one area in which proper and well-prepared financial statements are a key requirement. Financial statements in the hospitality industry play a wide array of roles. Among these are discussed in the subsequent sections of this paper. To begin with, financial statements have been seen as a suitable tool for helping the food processors face various financial challenges common in today’s world hence make them grow stronger in the food industry. Among these challenges are the abnormal swings in world commodity prices that are often affected by periodic changes in fuel prices as well as transportation costs (Food and Beverage Service 2012). Moreover, the consumer behavior also keeps changing over time in response to the economy, as a result, food shoppers continually pinch their shoes to turn to private labels to reach convenient and healthier dishes. It is based on these arguments that we find the preparation of financial statements more suitable for the hospitality industry in order to cater for the changing needs taking place in the society.

In addition, good financial statements provide suitable and timely information necessary for informed decision making. The food and beverage industry require radical but accurate decisions on the changing aspects of the customers. The rule of business suggests that the customer is often superior to the seller. The customers’ choice, therefore, remains superior and must be taken into account to make sure that all needs are taken into account. Quality financial statements can, therefore, help event organizers to effectively and accurately make well informed decisions on various aspects of the events with regard to food requirements. Robinson (2007) has investigated the suitability of properly designed financial statements for various events. He argues that using the financial statement, one can adequately validate the number of event attendees and ask relevant questions that can help the organizers to mitigate and uncover opportunities hence contain risks. In this regard, the financial reports act as the best and insightful procedure upon which accurate decisions can be made.

2.1 The uses of cost and pricing in food and beverage operations

The cost and pricing process is a detailed and complex process that is used in various occasions including in our daily lives. The suitability of the cost and pricing process in various aspects of life, especially in the financial sector is what makes its applicability more suitable for the hospitality industry. Food and Beverage Service (2012) presented a wide range of functions played by cost and pricing process in food and beverages industry. Among these are the provisions of organized estimates of future financial expenses including the hiring of manpower, purchase of or hiring of equipments while factoring in any eventuality such as breakages. Besides, cost and pricing processes help event organizers to provide as well as coordinate their management policies on both short and long-termed basis as expressed in accounting terms. This involves the coordination of the events needs from the beginning to the end of the party while taking into account the occurrence of any eventuality in the course of the provisions. Moreover, the process also acts as a method of control where event organizers can compare the actual commodity prices with the budgeted costs and take corrective measures where necessary. The three fundamentals are the basic requirements for the cost and pricing processes that make the process suitable and of great necessity to the food and beverages industry.

2.2 Analysis of the purchasing process

Various theories and hypotheses have been developed by an increasing number of people to help explain the purchasing process in various sectors of life. Porter & Mark (2006) for, instance, gives an 8-step procedure for conducting the purchasing process. These include the placement of a purchase request, selection of a company where the purchases are to be made, conducting cost estimation for the purchase requests, and submission of the estimates followed by a stern negotiation on the estimated costs after which the purchasers conclude the purchase process. The purchased commodities are then delivered to the buyers who then remit the payments back to the sellers after inspections on the status and suitability of the purchased goods. The eight steps are necessary and need stern consideration to ensure that only suitable commodities are purchased and at a fair price. This helps event organizers and other buyers to minimize costs and settle on the best goods of higher quality suitable for their varied needs.

2.3 Party menu

A simple menu is suggested for this light party although satisfying and caters for the needs of all attendants. Both the children, as well as the adults, will have their meals to their satisfaction and make sure they have their full enjoyment. Since only little money is available for the party, light meals will be most suitable. My suggested menu will look as described in the following sections.

2.3.1 Appetizers

On average, each guest is expected to consume 5hors d’oeuvres per adult and 3 hors d’oeuvres per child per hour for the first two hours and 3 and 1 hors per adult and child respectively per hour for the subsequent hours. The party is designed to last for three hours and so 720 hors d’oeuvres will be required since the session will be followed by a meal.

2.3.2 Pizza

The pizza recipe will be provided at 6- ounce portions of dough for each 8- inch pizza in addition to toppings. The pizza will be provided following the 1 to ½ pounds formula to provide adequate pizza for the entire party. In this regard, 3 8-inch pizzas will be required to feed at least 2 people or even fewer. Besides, about 20 bottles of wine will be required for the entire party

2.4 Reasons for the choice of menu choice

The even described in the scenario is intended to be small but thrilling in nature. All attending visitors are expected to enjoy their stay at the party to their fullest. Besides, both children as well as adults are expected to be in attendance. Light meals are, therefore, chosen for this particular event owing to the little money allocated for the event. Little appetizers are needed at the beginning of the celebrations as followed by light pizzas that will cater for the main dishes (Food and Beverage Service 2012). Owing to the little money allocation for the entire party, working within the budgetary allocation is of prime importance. The chosen menu will be effectively contained within the budget and cater for the needs of all attendees.

2.5 Conclusion

In conclusion, effective development of a small party event requires adequate and efficient observation of the required commodities alongside their costs. Effective cost and pricing processes need to be taken into account to make sure that only suitable goods are purchased at suitable prices. Besides, proper financial statements need to be developed in order to account for all expenditure.

2.6 References

Food and Beverage Service., 2012, September, 7. Initiatives to Help Reduce Direct Operating Losses Can Be Enhanced by Overall Plan.

Food and Beverage Service. 2012. Opportunities Exist to Build On Program Improvement Initiatives. Congressional Testimony.

FSG Social Impact Advisors. 2006. The Nestle Concept of Corporate Social Responsibility As Implemented in Latin America. Vevey, Switzerland: Nestle.

Porter, M. E., & Mark, R. K. 2006. Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility. Havard Business Review, 84 (12), 76- 92.

Robinson, S. 2007, May. Supply Chains: India’s Food Fight. Time Magazine, 31.