ABSTRACT
Hospitality industry is one of the business entities that budgeting must be functional and active. The method of it application or execution matters; it will be of good note to know that for effective hospitality operation and growth the food costing and control system should be extraordinary. In this study, the researchers were able to point out the basic element that facilitates the growth of business in the hospitality industry through the proper use of food costing and control, so it can be said that operational cost can be seen as the cost of starting a new business or the cost of investment in the business. Operational cost is the very cost managed by the general manager or the manager in charge of the activities in the industry and it contributes to the growth in the business and the hotel welfare or well-being. Operational cost consist importantly of selling price, which is the actual cost of food, including the accumulated cost for sales, markup for sales, sales variation and sales function. This study will be able to contribute immensely to food costing and control in the hospitality industry with Nigerian perceptive playing a majority role. It was conclude that for a successful business activities or operation to be achieved, an effective cost control and operations should be introduced in the business or organization and operators (investors) should not be in charge of managing the operations and purchases of in the industry as this can introduces bureaucratic measures through waste which cannot be controlled and managed and as a result recommendations were made that the operators of the industry should learn and learn professionals for effective food costing and control system and owners of the industry (business) should draw a clear coast between ownership and management, to help reduce management cost.
CHAPTER ONE
INTRODUCTION
Catering is defined as the business of providing food and drink, typically at social events and in a professional capacity either on-site or at a remote site. The term was originally coined by the Merchant Marines, who were among the first to employ catering officers for their vessels. These catering officers were responsible for purchasing goods, preparing food, and serving the meals and beverages to the other people on board the vessels. They also had to perform other ship-related tasks.
However the trade goes back much further than that. Catering dates back in the 4th millennium BC in China. The culture of grand eating and drinking was also present in old Egypt at that time. Most of the services were provided by slaves. The ancients Greeks are credited with making catering a trade by offering free services at their inns and hostels which continued into the Roman Empire. At this time the intent was primarily to serve soldiers. In the middle ages catering centered around monasteries and the Christian pilgrimages in Europe. The trade spread during the reign of Charlemagne. By late middle ages the new bourgeoises and a monetary economy helped the popularity of catering to flourish. When the industry drew the attention of German legislators in the 14th and 15th century, food and beer regulations began to take form. But much of the industry was still primarily seen in feasts and celebrations for kings and other noblemen. After the French revolution in the 18th century and the lack of an aristocracy, catering guilds were forced to find new ways to sell their talents and the first French restaurants were started.
In America, the catering industry is still very young. Catering started booming after the war when companies who had previously made food supplies for World War II needed something to do. As people became wealthier and the economy grew, caterers found there was a demand for their services, which has previously been reserved for the very rich.
The modern improvement of transportation, technical innovations, population increase, and sudden rise in the trade of travel and tourism has given gastronomy today an ever increasing rise in popularity and major factor in our current economy. TGIS is proud to be part of this rich and coloured history of gastronomy for nearly 25 years.
⦁ BACKGROUND OF THE STUDY:
In the catering industry food cost control is very important because as it requires proper budgeting as cost control can limit waste. Food cost and control when properly done and attention given to every detail and process in it functions and activities results into growth of the industry. The method and application of food costing and control in the industry can be achieved through placing accurate budget in the industry. This can be done by knowing and taking the price of each item or product used in the food production unit and also taking into account all the perishable goods and products in the industry. It is important to know that costing help in keeping cost low in planning ahead. More of the knowledge of the number of in-house guest makes it easier to control cost. There are various method used in the different organizations including cost plus. In preparing or making appropriate food cost and control in the industry, the general manager does the budgeting, and in some hotels the breakfast supervisor carries it out, depending on the establishment while in some, the general manager, accountant, store man, purchasing officer, food and beverage controller, food and beverage manager, supervisors, kitchen supervisor, restaurant and bar supervisors does it, while in some organization food and beverage manager and supervisors takes care of the food cost and control. It is important to operate food costing and control in the industry as far as food is involved, even if it is only staff meals, because this is part of the hotels expense and it needs to be controlled properly. Food costing can be said to be the all-time function in the industry including regular and ad-hoc function operations. Understanding control system and how to apply the system the first in first out (FIFO) system is applied in order to prevent throwing food away, we make sure all items that were brought first are used first in all functions and sales outlets including stores and purchasing various things, like in portion control and audit, stock taking, sales, cash control, cashiering and reporting, prevention of theft, and pilfering etc. In the hospitality industry different portion control methods are involved and it affects the industry positively, when it is well applied or done through weighing of items and making sure that each plate that leaves the kitchen has the exact same amount of items on them and extra has to be charged extra, these methods help to standardize things. Monthly figure and operating statements are involved in the hospitality industry, just to access, evaluate and monitor the operations and to determine where you stand in business either you are making it or losing and also determine the levels of your progress, if you targets are been meet or not, as this will help in overview of the revenue and expense, been a very important aspect of controlling. To understand the rationale behind feeding and its effects on food cost, percentage is necessary so that you can determine, amend, moderate or reposition and re-strategize on your food and beverage operations as this helps food cost controlling to be done properly. Food cost involves cost of production and labour which actually looks at purchasing within season and purchasing outside season, cost of extra labour within and outside season and management decision on causal staff. Management cost is not over looked where the cost of supervision and control is considered, the input of the management staff per hour and their monetary value. Operational cost is also an important factor in food cost and control; here the cost of labor is the chief operating factor, involving expense on production, time and wage, expense on maintenance and services and expense on disposal. Also of importance is the selling price, which is the actual cost of food, including the accumulated cost for sales, mark-up for sales, sales variation and sales function, this is of importance in this study as it help in contributing immensely to food costing and control in the hospitality industry with the Nigeria perspective playing a major role. ⦁ STATEMENT OF PROBLEM OF STUDY:
Effective control of food and beverages has been a major phenomenon which the catering and hospitality industries in Nigeria has over looked over the time. Effective control of food and beverages is a way through which catering industries determines how to place price tags on their food and drinks taking all factors of its production into consideration. The negligence of this has contributed immensely to the down fall of many catering industries in Nigeria. This project work therefore will focus on throwing more light on the essence of effective control of food and beverages in the catering industry with a view on how to encourage and educate catering and hospitality industry owners to key into this concept.
⦁ OBJECTIVE OF THE STUDY:
The following forms the objectives of this study;
⦁ To find out the effectiveness of effective cost control in the catering and hospitality industry
⦁ To investigate the methods used by catering industry owners in controlling and fixing their products prices.
⦁ To throw more light on what effective control cost of food and beverages is in the catering and hospitality industry
⦁ To devise a means of encouraging catering and hospitality industry owners to key into the idea of effective cost control.
1.4. SIGNIFICANCE OF THE STUDY:
This research work is expected to be of a great importance to the students of catering/hotel management as well as students of hospitality management as it will help them to understand more about effective control as is used in the catering industry and hospitality industry. It is expected also to be of a direct benefit to catering industry and hospitality industry owners who are yet to key into the idea of practicing effective cost control management to realize the degree of importance of effective cost control management.
1.5. RESEARCH QUESTION:
During the course of the project research, the researcher deemed it necessary to generate some questions which will act as a guide throughout the course of the study. It is however believed that through the answering of the research questions, a better understanding of the project topic will be enhanced.
The research question includes the following;
⦁ To what extent has effective control management in the catering industry and hospitality industry boosted the profitability of the industry?
⦁ What are the methods used to implement effective cost control management in the catering and hospitality industry?
⦁ Why do most catering and hospitality industry owners frown at the adoption of effective cost management?
1.7. RESEARCH HYPOTHESES:
The following forms the research hypotheses of the study;
H1: Effective cost control management enhances and improves the chances of profitability in the catering and hospitality industry
H0: Effective cost control management does not enhance or improve the chances of profitability in the catering and hospitality industry
H1: The adoption of cost control management in the catering and hospitality industry is a good practice
H0: The adoption of cost control management in the catering and hospitality industry is not a good practice.
1.8. SCOPE OF THE STUDY:
The rest of the project work is sectioned in such a way that the chapter one of the study presents the introductory rudiments of the study, chapter two presents the literature review of the study where previous research attempts was made by other researchers. Chapter three presents the research method that the researcher used to gather facts on the research topic. Chapter four deals with the result gathered using the method proposed in chapter three and chapter five which is the last chapter presents the summary, conclusion and recommendation of the study.
1.9. LIMITATION OF THE STUDY:
During the course of this project work, the researcher encountered some challenges which form the limitation of the study. The challenges encountered include;
⦁ Financial constraints
⦁ Limited research materials
⦁ Accessing the limited research materials
⦁ Limited time for the research work.
Hospitality industry is one of the business entities that budgeting must be functional and active. The method of it application or execution matters; it will be of good note to know that for effective hospitality operation and growth the food costing and control system should be extraordinary. In this study, the researchers were able to point out the basic element that facilitates the growth of business in the hospitality industry through the proper use of food costing and control, so it can be said that operational cost can be seen as the cost of starting a new business or the cost of investment in the business. Operational cost is the very cost managed by the general manager or the manager in charge of the activities in the industry and it contributes to the growth in the business and the hotel welfare or well-being. Operational cost consist importantly of selling price, which is the actual cost of food, including the accumulated cost for sales, markup for sales, sales variation and sales function. This study will be able to contribute immensely to food costing and control in the hospitality industry with Nigerian perceptive playing a majority role. It was conclude that for a successful business activities or operation to be achieved, an effective cost control and operations should be introduced in the business or organization and operators (investors) should not be in charge of managing the operations and purchases of in the industry as this can introduces bureaucratic measures through waste which cannot be controlled and managed and as a result recommendations were made that the operators of the industry should learn and learn professionals for effective food costing and control system and owners of the industry (business) should draw a clear coast between ownership and management, to help reduce management cost.
CHAPTER ONE
INTRODUCTION
Catering is defined as the business of providing food and drink, typically at social events and in a professional capacity either on-site or at a remote site. The term was originally coined by the Merchant Marines, who were among the first to employ catering officers for their vessels. These catering officers were responsible for purchasing goods, preparing food, and serving the meals and beverages to the other people on board the vessels. They also had to perform other ship-related tasks.
However the trade goes back much further than that. Catering dates back in the 4th millennium BC in China. The culture of grand eating and drinking was also present in old Egypt at that time. Most of the services were provided by slaves. The ancients Greeks are credited with making catering a trade by offering free services at their inns and hostels which continued into the Roman Empire. At this time the intent was primarily to serve soldiers. In the middle ages catering centered around monasteries and the Christian pilgrimages in Europe. The trade spread during the reign of Charlemagne. By late middle ages the new bourgeoises and a monetary economy helped the popularity of catering to flourish. When the industry drew the attention of German legislators in the 14th and 15th century, food and beer regulations began to take form. But much of the industry was still primarily seen in feasts and celebrations for kings and other noblemen. After the French revolution in the 18th century and the lack of an aristocracy, catering guilds were forced to find new ways to sell their talents and the first French restaurants were started.
In America, the catering industry is still very young. Catering started booming after the war when companies who had previously made food supplies for World War II needed something to do. As people became wealthier and the economy grew, caterers found there was a demand for their services, which has previously been reserved for the very rich.
The modern improvement of transportation, technical innovations, population increase, and sudden rise in the trade of travel and tourism has given gastronomy today an ever increasing rise in popularity and major factor in our current economy. TGIS is proud to be part of this rich and coloured history of gastronomy for nearly 25 years.
⦁ BACKGROUND OF THE STUDY:
In the catering industry food cost control is very important because as it requires proper budgeting as cost control can limit waste. Food cost and control when properly done and attention given to every detail and process in it functions and activities results into growth of the industry. The method and application of food costing and control in the industry can be achieved through placing accurate budget in the industry. This can be done by knowing and taking the price of each item or product used in the food production unit and also taking into account all the perishable goods and products in the industry. It is important to know that costing help in keeping cost low in planning ahead. More of the knowledge of the number of in-house guest makes it easier to control cost. There are various method used in the different organizations including cost plus. In preparing or making appropriate food cost and control in the industry, the general manager does the budgeting, and in some hotels the breakfast supervisor carries it out, depending on the establishment while in some, the general manager, accountant, store man, purchasing officer, food and beverage controller, food and beverage manager, supervisors, kitchen supervisor, restaurant and bar supervisors does it, while in some organization food and beverage manager and supervisors takes care of the food cost and control. It is important to operate food costing and control in the industry as far as food is involved, even if it is only staff meals, because this is part of the hotels expense and it needs to be controlled properly. Food costing can be said to be the all-time function in the industry including regular and ad-hoc function operations. Understanding control system and how to apply the system the first in first out (FIFO) system is applied in order to prevent throwing food away, we make sure all items that were brought first are used first in all functions and sales outlets including stores and purchasing various things, like in portion control and audit, stock taking, sales, cash control, cashiering and reporting, prevention of theft, and pilfering etc. In the hospitality industry different portion control methods are involved and it affects the industry positively, when it is well applied or done through weighing of items and making sure that each plate that leaves the kitchen has the exact same amount of items on them and extra has to be charged extra, these methods help to standardize things. Monthly figure and operating statements are involved in the hospitality industry, just to access, evaluate and monitor the operations and to determine where you stand in business either you are making it or losing and also determine the levels of your progress, if you targets are been meet or not, as this will help in overview of the revenue and expense, been a very important aspect of controlling. To understand the rationale behind feeding and its effects on food cost, percentage is necessary so that you can determine, amend, moderate or reposition and re-strategize on your food and beverage operations as this helps food cost controlling to be done properly. Food cost involves cost of production and labour which actually looks at purchasing within season and purchasing outside season, cost of extra labour within and outside season and management decision on causal staff. Management cost is not over looked where the cost of supervision and control is considered, the input of the management staff per hour and their monetary value. Operational cost is also an important factor in food cost and control; here the cost of labor is the chief operating factor, involving expense on production, time and wage, expense on maintenance and services and expense on disposal. Also of importance is the selling price, which is the actual cost of food, including the accumulated cost for sales, mark-up for sales, sales variation and sales function, this is of importance in this study as it help in contributing immensely to food costing and control in the hospitality industry with the Nigeria perspective playing a major role. ⦁ STATEMENT OF PROBLEM OF STUDY:
Effective control of food and beverages has been a major phenomenon which the catering and hospitality industries in Nigeria has over looked over the time. Effective control of food and beverages is a way through which catering industries determines how to place price tags on their food and drinks taking all factors of its production into consideration. The negligence of this has contributed immensely to the down fall of many catering industries in Nigeria. This project work therefore will focus on throwing more light on the essence of effective control of food and beverages in the catering industry with a view on how to encourage and educate catering and hospitality industry owners to key into this concept.
⦁ OBJECTIVE OF THE STUDY:
The following forms the objectives of this study;
⦁ To find out the effectiveness of effective cost control in the catering and hospitality industry
⦁ To investigate the methods used by catering industry owners in controlling and fixing their products prices.
⦁ To throw more light on what effective control cost of food and beverages is in the catering and hospitality industry
⦁ To devise a means of encouraging catering and hospitality industry owners to key into the idea of effective cost control.
1.4. SIGNIFICANCE OF THE STUDY:
This research work is expected to be of a great importance to the students of catering/hotel management as well as students of hospitality management as it will help them to understand more about effective control as is used in the catering industry and hospitality industry. It is expected also to be of a direct benefit to catering industry and hospitality industry owners who are yet to key into the idea of practicing effective cost control management to realize the degree of importance of effective cost control management.
1.5. RESEARCH QUESTION:
During the course of the project research, the researcher deemed it necessary to generate some questions which will act as a guide throughout the course of the study. It is however believed that through the answering of the research questions, a better understanding of the project topic will be enhanced.
The research question includes the following;
⦁ To what extent has effective control management in the catering industry and hospitality industry boosted the profitability of the industry?
⦁ What are the methods used to implement effective cost control management in the catering and hospitality industry?
⦁ Why do most catering and hospitality industry owners frown at the adoption of effective cost management?
1.7. RESEARCH HYPOTHESES:
The following forms the research hypotheses of the study;
H1: Effective cost control management enhances and improves the chances of profitability in the catering and hospitality industry
H0: Effective cost control management does not enhance or improve the chances of profitability in the catering and hospitality industry
H1: The adoption of cost control management in the catering and hospitality industry is a good practice
H0: The adoption of cost control management in the catering and hospitality industry is not a good practice.
1.8. SCOPE OF THE STUDY:
The rest of the project work is sectioned in such a way that the chapter one of the study presents the introductory rudiments of the study, chapter two presents the literature review of the study where previous research attempts was made by other researchers. Chapter three presents the research method that the researcher used to gather facts on the research topic. Chapter four deals with the result gathered using the method proposed in chapter three and chapter five which is the last chapter presents the summary, conclusion and recommendation of the study.
1.9. LIMITATION OF THE STUDY:
During the course of this project work, the researcher encountered some challenges which form the limitation of the study. The challenges encountered include;
⦁ Financial constraints
⦁ Limited research materials
⦁ Accessing the limited research materials
⦁ Limited time for the research work.
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