Financial Management and Cost Control Practices: Esphysiol Eatery

This report analyzes the financial management and cost control practices implemented at Esphysiol Eatery & Cafe, based on an interview with the Food and Beverage Manager. The study explores both front-of-house operations, focusing on menu audits and expert consultations to manage market fluctuations, and back-of-house operations, emphasizing outsourcing to reduce overhead costs. The report also highlights the use of budgets for financial control, LED lighting for energy savings, and strategic partnerships with trade unions to stabilize raw material costs. The manager underscores the importance of continuous evaluation and leveraging technology, such as MySmartMoney and POS software, to enhance efficiency and accuracy in financial management. Surveys and feedback mechanisms are also utilized to refine cost control strategies, aiming for continuous improvement in business operations. Desklib provides a platform for students to access similar solved assignments and study resources.

Running head: FOOD AND BEVERAGE MANAGEMENT
Financial management and cost control practices in Esphysiol Eatery and Cafe
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Table of contents
Analysis of the interview findings.............................................................................................2
Evaluation of the findings and their effectiveness in managing the foodservice operations.....3
Appendix....................................................................................................................................6
References..................................................................................................................................8

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Analysis of the interview findings
An interview was conducted on the Food and Beverage Manager of Esphysiol Eatery
and Cafe. This seemed to be data collection by a researcher regarding the cost control
operations in the hospitality industry. Specifically, responses were gathered regarding the
cost control options adopted by the manager in the front of the house and back of the house
operations. Firstly, the manager was asked about the hospitality enterprise, which he
manages. He responded that he is in charge of the food and beverage segment (Davis et al.
2018). The manager enlightened the knowledge of the researcher that the operations of the
cafe are divided into front of the house and back of the house operations. In order to collect
relevant data, the researcher asked the manager to elaborate on the cost control operations
individually for front of the house and back of the house operations.
The manager took pride in being a part of such a famous cafe in Melbourne. He
pointed out the huge responsibilities, which he possesses towards the management of the
cafe. He emphasized on menu audits for tackling the front of the house operations. Along
with this, he also pointed out that experts are hired for assisting the managers in tackling with
the sudden changes in the market valuation (Wood 2018). When asked about the back of the
house operations, the managers elaborated the act of outsourcing. He specifically highlighted
the action of reducing the overhead costs, which eases the burden of the back of the house
operations.
The researcher also posed questions before the manager regarding the financial
control methods. In this direction, he projected the importance of budgets, which enhances
the awareness about the cash flows from the internal environment to the external environment
(Dopson and Hayes 2015).

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Evaluation of the findings and their effectiveness in managing the foodservice
operations
Hospitality is a vast sector, serving to cater to the needs, demands and requirements of
the customers. These operations are mainly divided into the front of the house and back of the
house operations. Balance between these operations results in enhancement of the overall
business of organizations like Esphyiol Eatery and Cafe. Front of the house operations
includes customer service and promotional activities. In these operations, management is a
crucial aspect in terms of ensuring that the activities are carried out efficiently and effectively
(Dopson and Hayes 2016). As a matter of specification, cost control is a vital aspect for
catering to the needs, demands and requirements of the customers.
According to the statements of the manager, menu audits are carried for controlling
the costs. These audits help in reviewing the effectiveness, feasibility and appropriateness of
the prices of the food items. Hiring experts for this purpose helps in averting the arrears
within the calculations. Along with this, audits are beneficial for examining the profits earned
through the sales revenue. Maintaining consistency in these reviews assist the cafe personnel
in ranking the dishes (Burke 2018). Audits are crucial for reviewing the affordability of the
customers and changing the price if needed. Moreover, audits help in discovering the
potential risks, which acts as an obstacle in the execution of the business activities.
Special care is taken by the manager towards hiring those candidates, who are skilled
and efficient in maintaining the pace with the variable market valuations. Adhering to the HR
policies of recruitment and selection proves fruitful in averting the illegal instances and
scandals.

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Other department is that of the back of the house operations. This includes the
services of housekeeping, food and engineering among others. The guests are not directly
involved with these operations. Legislations, policies and procedures are crucial in this sector
for the provision of quality services to the customers. The manager of the Esphysiol Eatery
and Cafe is of the opinion that outsourcing is one of the main activities of the back of the
house operations (Chen, Abercrombie and Sheldon 2015). The data entries prepared by the
staffs are sent to that directors for their awareness about the services offered to the guests.
Utilizing latest and modern software for this purpose helps in automatizing the activities.
Training is provided to the housekeeping staffs, which enhances their skills, expertise
and knowledge about customer service. Along with this, training also proves fruitful in
making the staffs aware of maintaining the security of the cafe properties. Mention can be
made of the latest software, about which the staffs are acquainted. Post training tests helps the
managers in assessing the capability of the staffs (Xu and Gursoy 2015). This is to assess the
extent, to which the staffs can make practical application of the learnt skills into the
workplace operations.
The manager of the cafe also pointed out about reducing the overhead costs, which
helps in tackling with the intense pressure of the back of the house operations. Overhead
costs include building, utility, supply, storage, handling, travel, supervisory and
administration costs. Addition of all these aspects makes up the manufacturing cost. Herein
lays the appropriateness of budgets, which helps in gaining awareness about these supporting
costs. Along with this, the budgets are assistance towards gaining an insight into the cash
flows (Melián and Bulchand 2016). Cash flow statements are prepared and sent to the
Directors for making them aware of the expenditures. These interactions stabilize the
financial parameter.

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The manager was of the view that budget aids in identifying the areas, where there
have been extra spending. Awareness in this direction acts as an evaluation for the total
expenditure. Meetings, conferences and open forums prove beneficial in gaining an insight
into the approach of the cafe personnel towards the expenditure. Indulging in partnership with
the members of the trade union is advantageous for the cafe personnel. This partnership
extends a supportive hand towards the personnel regarding tackling with the instances of
fluctuation in the prices of raw materials, inflation and high exchange rates (Payne et al.
2018).
Strategic approach helps in systematizing the business activities. The food and
beverage manager pointed out using LED lights in the cafe has reduced the electric expenses
by 40% annually. Indulging in long term agreements with the trade union members has
resulted in stabilizing the financial parameter. Specifically, the agreement has increased the
negotiation power, enhancing the stability in the relationship between the cafe and the
associate partners. Using apps like MySmartMoney helps the cafe manager to calculate the
budget automatically. This reduces the manual labor towards calculations, which possesses
the tendency of mistakes and arrears (Wang et al. 2015). Mention can also be made of POS
software, which aids the cafe personnel to perform the calculations even when they are
checking out of the portals.
Surveys and feedback forms are uploaded in the website, which helps in gaining an
insight into the effective ways of controlling the costs. The manager points out the
importance of negotiating with the operational cost. This approach helps in controlling the
generation of wastes. In the statements of the managers, evaluation seemed a common aspect,
which helped me in upgrading the standards and quality of the business operations (Xu and
Gursoy 2015). Maintaining consistency in the evaluation would assist the cafe personnel to
reach to the benchmark level of performance.

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Appendix
Interviewer: Hello sir
Interviewee: Hello
Interviewer: I am a researcher by profession. I have been assigned a project on financial
management and cost control operations in the hospitality industry. I have selected your cafe
as an example.
Interviewee: That’s sounds great.
Interviewer: Firstly, tell me what kind of hospitality enterprise do you manage?
Interviewee: I am the Food and beverage manager of the cafe.
Interviewer: That means you have huge responsibilities.
Interviewee: Yes.
Interviewer: Can you tell me how do you look after the cost control of the front office and
back office operations?
Interviewee: Specifically, we pay attention to three different areas: food cost, beverage cost,
sales and labor cost. The operations are divided into front and back house operations. In the
front of the house operations, we conduct menu audits and hire experts for tackling with the
sudden changes in the market valuations.
Interviewer: Ok, I got it. What about back office operations?

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Interviewee: I feel proud to say that we conduct outsourcing for regulating the operations of
the back office operations. Here, reduction of the overhead costs is used for tackling the
intense pressure of the back house operations.
Interviewer: That sounds very systematic.
Interviewee: We have to be systematic for achieving loyalty, trust and dependence from the
customers.
Interviewer: Yes, you are right. Now, can you kindly tell me about the financial control
methods of this cafe?
Interviewee: Sure. Budget is the main agent, which helps in controlling the business
operations.
Interviewer: Thank you very much sir for your precious time. Your valuable feedback would
be used in the research judiciously.

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References
Burke, R.R., 2018. Virtual Reality for Marketing Research. In Innovative Research
Methodologies in Management (pp. 63-82). Palgrave Macmillan, Cham.
Chen, Q., Abercrombie, R.K. and Sheldon, F.T., 2015. Risk assessment for industrial control
systems quantifying availability using mean failure cost (MFC). Journal of Artificial
Intelligence and Soft Computing Research, 5(3), pp.205-220.
Davis, B., Lockwood, A., Alcott, P. and Pantelidis, I.S., 2018. Food and beverage
management. Routledge.
Dopson, L.R. and Hayes, D.K., 2015. Food and beverage cost control. John Wiley & Sons.
Dopson, L.R. and Hayes, D.K., 2016. Managerial accounting for the hospitality industry.
Wiley Global Education.
Melián-González, S. and Bulchand-Gidumal, J., 2016. A model that connects information
technology and hotel performance. Tourism Management, 53, pp.30-37.
Payne, C.R., Niculescu, M., Guthrie, J.F. and Mancino, L., 2018. Can a better understanding
of WIC customer experiences increase benefit redemption and help control program food
costs?. Journal of Hunger & Environmental Nutrition, 13(2), pp.143-153.
Wang, X.L., Yoonjoung Heo, C., Schwartz, Z., Legohérel, P. and Specklin, F., 2015.
Revenue management: Progress, challenges, and research prospects. Journal of Travel &
Tourism Marketing, 32(7), pp.797-811.
Wood, R.C., 2018. Strategic questions in food and beverage management. Routledge.

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Xu, X. and Gursoy, D., 2015. A conceptual framework of sustainable hospitality supply chain
management. Journal of Hospitality Marketing & Management, 24(3), pp.229-259.