Financial Management in Hotels for Food Beverages - myassignmenthelp

Question: Discuss about theFinancial Management in Hotels for Food Beverages. Answer: Food and beverage management is the anchor in hospitality management (Brymer, 1976). It aims at providing high quality and affordable food and beverage while maintaining reasonable profit margins (Erkoc, Iakovou and Spaulding, 2005). The interviewee is the Food and Beverage manager at Stamford Plaza hotels in Brisbane. From the interview the manager explained the staff organization of where he worked and in his job description, he explained that he was in charge of all the operations that involved food and beverage. This was from the dining and room service at their main hotel, to the fast foods outlets. His responsibility was to oversee the purchase, safe and secure storage and the use of ingredients and other foods. He works closely with the senior chefs, accountants and operations mangers who report to him. Financial management and cost control practices are among his job responsibilities and this made him relevant to the interview. The manager clearly explained the importance of financial management and cost control practices in hospitality. He explained that in any business resources are rare and they include financial and human resources. He made emphasis on financial resources saying that money has a link to all the other resources. Because these resources are rare adequate financial management and cost control is of tremendous importance especially in food and beverages. This was in line with the arguments of (Jayaraman, 2016), who said that Financial management is the success ladder of any business. Cost control practices are of importance in food management (Umurzakov, 2017). He described how proper staffing is done in the front of house operations to ensure no excess number of staff and therefore reduced labor cost. He also added that there were standard operating procedures (SOPs) for the activities done in the front of the house. These SOPs would ensure minimal accidents during the operations and hence reduce on the potential cost involved in repairs of these items. He further emphasized that the SOPs are not only in the front house but also on every other department in the hotel including the Kitchen. Procurement of items is a key step in business and it ensures minimal costs (Sealey, 1978). In the food and beverage industry, the manager explained that focus is put in deciding what to buy. Factors that are considered include the customer needs, quality of the items and finally the cost of the item. He added that items in the hotel where he works are procured in bulk and this enables them to get quantity discounts on the items. Other discounts result when they pay for the goods ordered in good time. Good public relations also ensures discount offers from the clients. The manager emphasised that good storage practices and inventory management are key aspects in cost control. He said that proper storage will keep items in good order and prevent them from spoiling and hence protection from potential losses. He also emphasized on good inventory management and record keeping to track the items avoiding possible theft and losses. In the case where food staff spoilt, the hotel would recover this by selling the spoilt food to farmers who breed pigs and would feed the pigs. The manager talked about the Menu in their hotel and how different personnel are involved in making the menu. Notably he said the accountants are involved and they determine the contribution margins and prime costs which are important in cost control. In addition, the interviewee said that once in a while they would introduce a new item on special days that would build on the customers interests and motivate them to come frequently on such days with anticipation. Concerning the recipes, the manager said that the hotel operates on standard recipes that are very important in cost control and financial manage. With this statement he was trying to make sense of (Todorovic and Kalenjuk, 2016), words where, he said that Standard recipes determine the standard price of buying a menu item. . He also added that chefs and cooks in the kitchen have all rounded skills and often the do continuous professional development to improve those skills. Therefore the hotel does not require additional staff hence saving on its labor costs. For the Entrees the hotel has a standard factor the use in calculating the cost per plate and the selling price. For the dessert and appetizers, the factor is not inclusive but only the ingredient factor. This makes the cost of desserts and appetizers to be cheaper than entres and therefore attract lots of customers. The manager concluded by giving a list of financial management skills which he is involved in. They include: cons istency, accountability, transparency, integrity, financial stewardship and accounting standards. Consistency in food and beverage management ensures the same quality and same cost of producing an item in the menu. By maintaining a constant cost of production or if best minimizing, the profits margin increase as the demand increases. Accountability refers to the act of taking full responsibility of a certain role or activity. It means that if anything goes wrong then you will take the blame. This results in responsible staff who are careful so as not to increase the costs involved in the hotel. Transparency and integrity go hand in hand and in food management it included activities that are fraud free and no money is lost in terms of theft. This ensures quotation of the exact and real amounts that are not escalated due to personal gains. Financial stewardship refers to conserving, maintain and protection of financial resources. In food and beverage industry all resources are under care from damage and this in the long run reduces the costs of operation and of production therefore maintaining profit goals. Accounting standards ensures standardization of accounting practices in all businesses including food and beverage. This ensures consistency in work output and this maintains the costs involved introducing new procedures and therefore improve on the profits. Like most companies, Food and beverage need cost control procedures and financial management. According to (Himme, 2012). Four financial ratios are important in any business. Liquidity ratio is the possibilities of a hotel in this case to meet its short term financial targets. In food and beverage short term targets includes increasing the number of sales of a particular item. This can be achieved by putting up posters of a new item in the menu so as to attract customers. Other important ratios include solvency ratio, activity and profitability ratio. Accounting statements are important in food and beverage management. They include balance sheets and income statement. These statements make economic sense of a restaurant. Clear records should be kept and audits done at least annually. In addition to the statements and audits, daily records of sales should be written down (Sealey, 1978). Prime costs are indicators of a restaurants profit potential and how cost management is well done. It is part of a good hotel management system to have control over prime costs. For effective management, it should be calculated weekly. It includes payroll taxes, benefits, beverage, salaries and food cost. A standard rule is that prime costs should not run more than 65% of total sales (Contents: European Financial Management 1/2016, 2016). With all this put into consideration, Cost control and financial management are important events in the running of hotels. References Brymer, R. (1976). Full House Management. 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