JASTH – Journal of Applied Sciences in Travel and Hospitality Vol. 1, No. 2, June 2018 188 ANALYSIS OF FOOD COST CONTROL AT THE ONE LEGIAN HOTEL I Wayan Arya Pradiptha1, Lien Darlina2, Ida Ayu Elistyawati3 123Tourism Department, Politeknik Negeri Bali email: 1aryapradiptha11@gmail.com, 2darlina@pnb.ac.id, 3ayuelistyawati@pnb.ac.id. ABSTRACT This study focuses on food costs controlling with special reference to the hospitality industry. The purpose of this research is to know the control of food cost at The ONE Legian Hotel in May, June, July 2017, and to identify the cause of food cost percentage’s variance between actual food cost and standard food cost. This research uses two methods of data analysis : 1) Quantitative method is use to determining the variance between the standard with actual food cost reconciliation, and calculating variance by using the one way methods analysis which refers to Mulyadi (1995 : 425) to know the profit or loss that caused by the variance, 2) Qualitative descriptive method by giving interpretation about data of standard and actual food cost reconciliation. Data collection method in this research are interview, observation, documentation review, literature review. The results of this research indicate that: (1) food cost controlling at The ONE Legian Hotel in May and June has been run well, but in July the implementation did not run well, this is indicated from the happening of the adverse variance between actual food cost with standard food cost, (2) an increase of the food cost reconciliation’s percentage between the actual from standard budgeted in May, June and July due to an increase in total incoming stocks, gross consumption and net consumption, beside that, the increase in food cost percentage also caused by the decrease of total opening inventory, total inventory available, total closing inventory, or decrease of elements of food adjustment, and net food sales. Key words: Cost, Cost Control, Standard Food Cost, Actual Food Cost. INTRODUCTION The main revenue source of a hotel generally comes from the sale of rooms, but there are also other sources of income that support the income of a hotel, among others; restaurant, bar, spa, gym, room service, souvenir sales, transport service, telephone rental, guest laundry, and business center. The ONE Legian Hotel benefits from other revenue sources, in addition to room sales, by selling food at The DECK restaurant, Rooftop restaurant, and room service. To maximize revenue on food sales, management must streamline the management of food production, so supervision and control of food costs by a Food & Beverage Controller must be in place so that the hotel can maximize its income in the food sales sector. Efforts that can be made in measuring the efficiency of food mailto:aryapradiptha11@gmail.com mailto:2darlina@pnb.ac.id mailto:ayuelistyawati@pnb.ac.id JASTH – Journal of Applied Sciences in Travel and Hospitality Vol. 1, No. 2, June 2018 189 cost control is to set the standard food cost (standard food cost), this is the benchmark of the success of the control of food costs. The ONE Legian Hotel management set the standard food cost at 32%, this percentage is determined by looking at the amount of payroll and profit on food sales, the percentage formula can be seen in table 1 below: Table 1 Percentage distribution to determine food cost at The ONE Legian Hotel May 2017-July 2017 period Food Revenue 100% Devider Percentage Description Payroll 20% Fixed Profit 45% Fixed Other 3% Not Fixed Standard Food Cost 32% Not Fixed Source: The ONE Legian Hotel, 2017. The percentage’s comparison between actual and standard food cost at The ONE Legian Hotel for the period of May 2017 to July 2017 can be seen in table 2 below: Table 2 Comparison Between Actual Food Cost and Standard Food Cost at The ONE Legian Hotel Period May-July 2017 Month Food Cost Actual Standard Variance % % % May 32.84 32.00 0.84 June 34.14 32.00 2.14 July 34.00 32.00 2.00 Source: The ONE Legian Hotel (processed data), 2017. Table 2 shows that there is a variance between actual food cost and standard food cost in the period May to July. Management The ONE Legian Hotel has a limit of tolerance of the difference of 1%. If the actual food cost exceeds 1% of the standard food cost, then the sale of food does not run efficiently as planned and can reduce profits. Otherwise, if actual food cost in accordance with the target or not exceed 1% of the standard food cost, the food production process is running efficiently and can be sure the profit from the sale of food can be maximized. Any variance above the tolerance value needs to be analyzed for known the causes, then take corrective action and find the right solution to solve the problem. JASTH – Journal of Applied Sciences in Travel and Hospitality Vol. 1, No. 2, June 2018 190 The food cost is all food ingredients used to produce a kind of food (Wiyasha, 2007: 10). Kasavana and Smith to Suarsana (2007: 4) states that, "The food cost is the cost that occurs during processing until the presentation or so that the food is ready to be served to guests". Based on the statement, it can be concluded that food cost is the amount of the cost of food stuffs used to produce a food type that will be served to customers (guests). According to Mulyadi (1995: 424) the difference in the cost of raw materials is the difference in costs caused by the variance between the cost of raw materials that actually occur with the cost of standard raw materials. This cost difference could be due to: (1) The variance between the real price and the standard price. (2) The variance between the actual quantity and the standard quantity. Of the two causes above, to calculate the profit or loss caused by the variance of food cost reconciliation according to Mulyadi (1995: 425) can be solved by the one way model, can be calculated by the following formula. St = (Hst × Kst) – (Hs × Ks) Description : St = Total Variance Hst = Standard Cost Hs = Actual Cost Kst = Standard Quantity of Food Sold Ks = Actual Quantity of Food Sold If Ks > Kst = loss variance (controlling run unwell) If Ks < Kst = profit variance (controlling run well) RESEARCH METHODS The research was conducted for the period May, June, July 2017 at The ONE Legian Hotel. The data used are food cost reconciliation report and food sales data in May, June, July 2017. This research uses quantitative analysis technic and descriptive qualitative analysis technic to analyze research data. In quantitative analysis, it is use to determining the variance between standard and actual food cost reconciliation, using the following formula: Variance elemen food cost reconciliation = actual elemen - standard elemen JASTH – Journal of Applied Sciences in Travel and Hospitality Vol. 1, No. 2, June 2018 191 Percentage variance elemen = Variance elemen x 100% Standard elemen In addition, quantitative analysis technic can also be calculated using the one-way method, according to Mulyadi (1995: 425) can be calculated by the following formula: In qualitative analysis descriptive activities undertaken to solve problems is to provide interpretation of data from the variance between standard and actual food cost reconciliation. Data collection methods in this research were interviews, observation, documentation study, literature study, and data analysis techniques using quantitative analysis technic and qualitative descriptive analysis technic. RESULTS AND DISCUSSION By comparing food cost reconciliation between standard food cost which is budgeted with actual food cost, it shows the existence of percentage variance in May 2017 period, where actual food cost happened 32,84% exceeded 0.84% from standard food cost that is 32.00%, but difference in May is still within the tolerance level of management because it does not exceed 1%. In June 2017 the actual food cost incurred by 34.14% exceeded 2.14% of the standard food cost of 32.00%. In July 2017 the actual food cost that occurred at 34.00% exceeded 2.00% of the standard food cost of 32.00%. Table 3 Comparison of Food Cost Reconciliation between Standard and Actual Period of May 2017 Description Standard Actual Variance Variance (Rp) (Rp) (Rp) (%) Total Opening Inventory 126,231,855.37 77,071,672.91 (49,160,182.46) -38.94 Total Incoming Stocks 256,713,647.82 220,002,970.5 2 (36,710,677.30) -14.30 Total Returned Stocks - - - 0.00 Beverage For Cooking 2,625,000.00 - (2,625,000.00) -100.00 St = (Hst × Kst) – (Hs × Ks) JASTH – Journal of Applied Sciences in Travel and Hospitality Vol. 1, No. 2, June 2018 192 Total Inventory Available 385,570,503.19 297,074,643.4 3 (88,495,859.76) -22.95 Total Closing Inventory 111,053,516.66 93,709,459.65 (17,344,057.01) -15.62 Gross Consumption 274,516,986.53 203,365,183.7 8 (71,151,802.75) -25.92 Total Compliment Cost 11,368,648.00 6,618,441.55 (4,750,206.45) -41.78 Total Department Expenses 20,721,057.51 24,902,649.48 4,181,591.97 20.18 Total Food Adjustment 32,089,705.51 31,521,091.03 (568,614.48) -1.77 Net Consumption 242,427,281.02 171,844,092.7 5 (70,583,188.27) -29.12 Net Food Sales 757,607,503.00 523,296,567.7 7 (234,310,935.23 ) -30.93 Cost : Sales 32.00% 32.84% 0.84% The increase in food cost percentage by 0.84% in May 2017 is due to: There was a decrease of opening inventory by 38.94% from standard, incoming stocks decreased by 14.30% from standard, cost of beverage for cooking decreased by 100.00% from standard, total inventory available decreased by 22.95% from standard, total food adjustment decreased by 1.77% from standard, net consumption decreased by 29.12% and net food sales decreased 30.93% from the target. Actual food cost in May 2017 was 32.84% beyond the standard food cost causing the percentage difference of 0.84%. This difference is still within the tolerance limit of 1% applied by management. Table 4 Comparison of food cost reconciliation between standard and actual period of June 2017 Description Standard Actual Variance Variance (Rp) (Rp) (Rp) (%) Total Opening Inventory 111,053,516.66 93,709,459.65 (17,344,057.01) -15.62 Total Incoming Stocks 271,760,192.64 204,126,224.50 (67,633,968.14) -24.89 Total Returned Stocks - - - 0.00 Beverage For Cooking 2,625,000.00 875,926.89 (1,749,073.11) -66.63 Total Inventory Available 385,438,709.30 298,711,611.04 (86,727,098.26) -22.50 Total Closing Inventory 113,677,112.02 106,336,137.94 (7,340,974.08) -6.46 Gross Consumption 271,761,597.27 192,375,473.10 (79,386,124.17) -29.21 Total Compliment Cost 11,368,648.00 3,991,936.54 (7,376,711.46) -64.89 JASTH – Journal of Applied Sciences in Travel and Hospitality Vol. 1, No. 2, June 2018 193 Total Department Expenses 20,721,057.51 26,096,381.54 5,375,324.03 25.94 Total Food Adjustment 32,089,705.51 30,088,318.08 (2,001,387.43) -6.24 Net Consumption 239,671,891.76 162,287,155.02 (77,384,736.74) -32.29 Net Food Sales 749,038,589.00 475,381,085.12 (273,657,503.88) -36.53 Cost : Sales 32.00% 34.14% 2.14% The increase in food cost percentage by 2.14% in June 2017 is due to: Decreased opening inventory by 15.62% from standard, incoming stocks decreased by 24.89% from standard, cost of beverage for cooking decreased by 66.63% from standard, total inventory available decreased by 22.50% from standard, total food adjustment decreased by 6.24% from standard, net consumption decreased by 32.29% from standard , and net food sales decreased by 36.53% from the target. Actual food cost in May 2017 was 34.14% beyond the standard food cost causing the difference in percentage by 2.14%. This difference exceeds the 1% margin of tolerance applied by management. Table 5 Comparison of food cost reconciliation between standard and actual period of July 2017 Description Standard Actual Variance Variance (Rp) (Rp) (Rp) (%) Total Opening Inventory 113,677,112.02 106,336,137.94 (7,340,974.08) -6.46 Total Incoming Stocks 277,512,404.14 215,155,875.95 (62,356,528.19) -22.47 Total Returned Stocks - - - 0.00 Beverage For Cooking 2,625,000.00 1,529,363.32 (1,095,636.68) -41.74 Total Inventory Available 393,814,516.16 323,021,377.21 (70,793,138.95) -17.98 Total Closing Inventory 91,953,358.36 92,458,587.40 505,229.04 0.55 Gross Consumption 301,861,157.80 230,562,789.81 (71,298,367.99) -23.62 Total Compliment Cost 11,368,648.00 5,716,736.97 (5,651,911.03) -49.71 Total Department Expenses 52,810,763.02 30,216,128.85 (22,594,634.17) -42.78 Total Food Adjustment 64,179,411.02 35,932,865.82 (28,246,545.20) -44.01 Net Consumption 237,681,746.78 194,629,923.99 (43,051,822.79) -18.11 Net Food Sales 742,827,184.00 572,435,020.01 (170,392,163.99) -22.94 Cost : Sales 32.00% 34.00% 2.00% JASTH – Journal of Applied Sciences in Travel and Hospitality Vol. 1, No. 2, June 2018 194 The increase in food cost percentage by 2.00% in July 2017 is due to: There was a decrease of opening inventory by 6.46% from standard, incoming stocks decreased by 22.47% from standard, cost of beverage for cooking decreased by 41.74% from standard, total inventory available decreased by 17.98% from standard, total food adjustment decreased by 44.01% from standard, net consumption decreased by 18.11% from standard, and net food sales decreased by 22.94% from the target. Actual food cost in May 2017 amounted to 34.00% beyond the standard food cost which resulted in 2%% difference in percentage. This difference exceeds the 1% margin of tolerance applied by management. To know the profit or loss of a food cost control, it can be calculated by using the one way method. 1. The one way analysis for food cost in May 2017 can be calculate as follows : St = (Hst × Kst) – (Hs × Ks) = (Rp 242.427.282 x 8.500) – (Rp 171.844.093 x 9.546) = Rp 2.060.631.897.000 – Rp 1.640.423.711.778 = Rp 420.208.185.222 (profit variance) means controlling run well. 2. The one way analysis for food cost in June 2017 can be calculate as follows : St = (Hst × Kst) – (Hs × Ks) = (Rp 239.671.892 x 8.000) – (Rp 162.287.155 x 9.431) = Rp 1.917.375.136.000 – Rp 1.530.530.158.805 = Rp 386.844.977.195 (profit variance) means controlling run well. 3. The one way analysis for food cost in July 2017 can be calculate as follows : St = (Hst × Kst) – (Hs × Ks) = (Rp 237.681.747 x 8.000) – (Rp 194.629.924 x 10.188) = Rp 1.901.453.976.000 – Rp 1.982.889.665.712 = – Rp 81.435.689.712 (loss variance) controlling run unwell. CONCLUSIONS AND SUGGESTIONS From the discussion results about food cost control at The ONE Legian Hotel it can be concluded that: (1) An increase in the percentage of food cost JASTH – Journal of Applied Sciences in Travel and Hospitality Vol. 1, No. 2, June 2018 195 reconciliation between the actual from standard budgeted in May, June and July was due to an increase in total incoming stocks, gross consumption and net consumption. Beside that, the increase in food cost percentage is also caused by the decrease of total opening inventory, total inventory available, total closing inventory, or decrease of elements of food adjustment, and net food sales. (2) There is an increase in the cost of standard food cost reconciliation’s elements from the budgeted due to: (a) Incompatibility in the processing of food raw materials in the field with standard recipe and standard portion size has been established. (b) Market survey and price discrepancy are rarely done by the purchasing and cost control. In ordering goods only based on price list submitted by suppliers, so the price of goods tends to be more expensive and make the level of raw material purchases not in line with the level of food sales revenue. (3) Spoil food items are not recorded in detail, so that it will affect the profit from the sale of food. (4) From the results of the one way analysis, it can be stated that The ONE Legian Hotel has implemented food cost controls well in May and June because it produced a profit variance, but in July control of food cost was not implemented well because it resulted a loss variance. Based on the calculation of the variance of standard and actual food cost reconciliation, as well as the one way analysis, showing an adverse variance, this means that the cost of the company is bigger than the budgeted standard, so (1) The Cost Controller section should further improve the cooperation with F & B Department in this case F & B Manager and Executive Chef, to monitor the use of food items to be processed in accordance with standard recipe and standard portion size. The most important thing to be observed in this case is the meat processing done by the Butcher section. (2) The Cost Controller section should further improve the cooperation with the Purchasing to control the purchase price of food items so that the price obtained is the lowest price without reducing the quality of materials that should be used, so that the level of raw material purchases in line with the level of food sales revenue. 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