Prepare and Monitor Budget: Restaurant and Bar Analysis Report

This report presents a comprehensive analysis of budget preparation and monitoring for a restaurant and bar. It begins with an introduction outlining the importance of budget tools for organizational success. Task 1 provides a detailed budget forecast, including revenue projections and expense analyses for various divisions like rooms, catering, food, banquets, room service, mini-bar, and bar. Task 2 focuses on budget forecasting with turnover analysis, customer numbers, and average spend calculations, along with profit and overhead breakdowns for each month. Task 3 explores scenarios related to inaccurate forecasting, identifying issues such as unidentified production units, wrong assumptions, and external factors like changes in consumer tastes, competition, legal factors, recession, and inflation. The report concludes with insights on methods for determining external factors and their impact on trends. This report is a valuable resource for understanding financial planning and analysis in the hospitality industry.

PREPARE AND MONITOR
BUDGET

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................3
TASK 3............................................................................................................................................5
Scenario 1:...................................................................................................................................5
Scenario 2....................................................................................................................................6
Scenario 3....................................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
In any organisation to achieve desired success and its objectives, there is a need of
implementing some analytical tools. One of them is budget tool which is very useful for any
organisation. By preparing various budgets and compare them with actuals figures, a company
can identify the areas where it need to give time to remove the negative variances
(Thangavelautham, 2018). This report is divided into three task and each task is having different
scenario. First task and second task describes about the making budgets of restaurant & bar
company by taking different divisions revenues while in third task different issues are addressed
in different scenarios.
TASK 1
Budget Forecast
Total Revenue
2016
$1,12,13
,138.73
$1,30,40
,730.97
Forecaste
d 2017
Room Budget Forecast
$
Forecast
%
Expenses Analysis
Rooms
Available
63875 100% 61320 96% COGS $11,03,76
0.00
15%
Rooms
Occupied
51548 49056 Staff
costs
$14,71,68
0.00
20%
Total Occupancy
%
80.70 80.70
%
80% 80% Other
Expense
s
$5,88,672
.00
8%
Revenue Per
Available Room
$134.80 $150.00 111% Total
Expense
s
$31,64,11
2.00
Total Room
Revenue
$69,48,8
97.21
$73,58,4
00.00
105.89
1

Total Catering
Revenue
$42,64,2
41.52
$56,82,3
30.97
Food Budget
(Restaurants)
Expenses Analysis
Total Revenue $20,19,3
70.53
$23,02,7
28.07
COGS $6,86,443
.24
29.8
1%
Food Revenue $17,40,1
12.81
86.17
%
$20,01,1
29.73
115% Staff
costs
$10,13,20
0.35
44%
Beverage
Revenue
$2,79,25
7.72
13.83
%
$3,01,59
8.34
108% Other
Expense
s
$1,61,190
.96
7%
Total
Expense
s
$18,60,83
4.55
Banquet Budget Expenses Analysis
Total Revenue $13,13,9
40.16
$23,21,5
39.45
COGS $6,03,600
.26
26%
Food Revenue $11,30,2
03.33
86.02
%
$20,00,0
00.00
177% Staff
costs
$4,41,092
.50
19%
Beverage
Revenue
$1,83,73
6.83
13.98
%
$3,21,53
9.45
175% Other
Expense
s
$3,25,015
.52
14%
Room Service
Budget
Expenses Analysis
Total Revenue $4,17,44 $4,67,81 COGS $1,18,075 25.2
2

2.15 1.65 .66 4%
Food Revenue $3,35,79
6.64
80.44
%
$3,86,16
6.14
115% Staff
costs
$1,59,055
.96
34%
Beverage
Revenue
$34,668.
69
8.31% $34,668.
69
100% Other
Expense
s
$26,057.1
1
5.57
%
Other Revenue $46,976.
82
11.25
%
$46,976.
82
100%
Mini Bar Budget Expenses Analysis
Total Revenue $1,46,47
1.02
$1,46,47
1.02
COGS $35,782.8
7
24.4
3%
Beverage
Revenue / Mini
bar
$1,46,47
1.02
100% $1,46,47
1.02
100% Staff
costs
$55,512.5
2
37.9
0%
Other Revenue $- $- Other
Expense
s
$18,894.7
6
12.9
0%
Bar Budget Expenses Analysis
Total Revenue $3,67,01
7.66
$4,43,78
0.79
COGS $1,38,015
.82
31.1
0%
Food Revenue $67,191.
88
18.31
%
$83,989.
85
125% Staff
costs
$1,59,761
.08
36%
Beverage
Revenue
$2,99,82
5.78
81.69
%
$3,59,79
0.94
120% Other
Expense
s
$79,880.5
4
18%
TASK 2
Budget Forecast
Tur Cus Ave Food Aver Bev Total Profit Over COG Staff Other
3

nove
r
tom
er
nu
mbe
rs
rag
e
Spe
nd
(Fo
od)
Reve
nue
age
Spen
d
(Bev
erag
e)
erag
e
Rev
enu
e
head
s
S -
Foo
d &
Beve
rage
Costs Overh
eads
Jan
uary
200
0
$3
8.0
0
$76,
000.
00
$5.7
0
$11
,400
.00
$87,4
00.00
$8,740.00 $78,
660.
00
$27,
968.
00
$27,
094.
00
$23,5
98.00
Feb
ruar
y
845 $2
9.8
0
$25,
181.
00
$5.5
0
$4,
647.
50
$29,8
28.50
$1,193.14 $28,
635.
36
$9,5
45.1
2
$10,
439.
98
$8,65
0.27
Mar
ch
756 $2
5.6
0
$19,
353.
60
$5.5
0
$4,
158.
00
$23,5
11.60
$940.46 $22,
571.
14
$7,5
23.7
1
$8,2
29.0
6
$6,81
8.36
Apri
l
258 $2
6.0
0
$6,7
08.0
0
$5.5
0
$1,
419.
00
$8,12
7.00
$325.08 $7,8
01.9
2
$2,6
00.6
4
$2,8
44.4
5
$2,35
6.83
May 658 $2
4.5
0
$16,
121.
00
$5.5
0
$3,
619.
00
$19,7
40.00
$789.60 $18,
950.
40
$6,3
16.8
0
$6,9
09.0
0
$5,72
4.60
Jun
e
758 $2
7.2
0
$20,
617.
60
$5.5
0
$4,
169.
00
$24,7
86.60
$991.46 $23,
795.
14
$7,9
31.7
1
$8,6
75.3
1
$7,18
8.11
July 489 $2
9.1
0
$14,
229.
90
$5.5
0
$2,
689.
50
$16,9
19.40
$676.78 $16,
242.
62
$5,4
14.2
1
$5,9
21.7
9
$4,90
6.63
Aug
ust
879 $2
8.0
0
$24,
612.
00
$5.5
0
$4,
834.
50
$29,4
46.50
$1,177.86 $28,
268.
64
$9,4
22.8
8
$10,
306.
28
$8,53
9.49
4

Sept
emb
er
105
7
$2
7.6
0
$29,
173.
20
$5.5
0
$5,
813.
50
$34,9
86.70
$3,498.67 $31,
488.
03
$11,
195.
74
$10,
845.
88
$9,44
6.41
Oct
ober
989 $2
8.1
0
$27,
790.
90
$5.5
0
$5,
439.
50
$33,2
30.40
$1,329.22 $31,
901.
18
$10,
633.
73
$11,
630.
64
$9,63
6.82
Nov
emb
er
125
9
$3
2.5
0
$40,
917.
50
$5.5
0
$6,
924.
50
$47,8
42.00
$4,784.20 $43,
057.
80
$15,
309.
44
$14,
831.
02
$12,9
17.34
Dec
emb
er
165
9
$3
2.8
0
$54,
415.
20
$5.5
0
$9,
124.
50
$63,5
39.70
$6,353.97 $57,
185.
73
$20,
332.
70
$19,
697.
31
$17,1
55.72
Cros
sche
ck
$4,19
,358.4
0
$30,800.4
4
$3,8
8,55
7.96
$1,3
4,19
4.69
$1,3
7,42
4.70
$1,16
,938.5
7
Tota
l
$3,5
5,11
9.90
$64
,238
.50
$4,19
,358.4
0
$30,800.4
4
Cros
schec
k
Revised Budget Forecast
Tur
nove
r
Cus
tom
er
nu
mbe
rs
Ave
rag
e
Spe
nd
(Fo
od)
Food
Reve
nue
Aver
age
Spen
d
(Bev
erag
e)
Bever
age
Reve
nue
Total Profit Over
head
s
COG
S -
Food
&
Beve
rage
Staff
Costs
Other
Overh
eads
Jan
uary
185
0
$4
5.0
$83,
250.
$9.7
0
$17,
945.0
$1,0
1,19
$10,119.
50
$91,
075.
$32,
382.
$31,
370.
$27,3
22.65
5

0 00 0 5.00 50 40 45
Feb
ruar
y
200
0
$3
7.0
0
$74,
000.
00
$9.7
0
$19,
400.0
0
$93,
400.
00
$9,340.0
0
$84,
060.
00
$29,
888.
00
$28,
954.
00
$25,2
18.00
Mar
ch
700 $4
2.0
0
$29,
400.
00
$9.7
0
$6,7
90.00
$36,
190.
00
$1,447.6
0
$34,
742.
40
$11,
580.
80
$12,
666.
50
$10,4
95.10
Apri
l
120
0
$4
8.0
0
$57,
600.
00
$9.7
0
$11,
640.0
0
$69,
240.
00
$6,924.0
0
$62,
316.
00
$22,
156.
80
$21,
464.
40
$18,6
94.80
May 120
0
$3
6.5
0
$43,
800.
00
$9.7
0
$11,
640.0
0
$55,
440.
00
$5,544.0
0
$49,
896.
00
$17,
740.
80
$17,
186.
40
$14,9
68.80
Jun
e
600 $3
5.0
0
$21,
000.
00
$9.7
0
$5,8
20.00
$26,
820.
00
$1,072.8
0
$25,
747.
20
$8,5
82.4
0
$8,3
14.2
0
$8,85
0.60
July 950 $3
4.0
0
$32,
300.
00
$9.7
0
$9,2
15.00
$41,
515.
00
$1,660.6
0
$39,
854.
40
$13,
284.
80
$12,
869.
65
$13,6
99.95
Aug
ust
800 $3
8.0
0
$30,
400.
00
$9.7
0
$7,7
60.00
$38,
160.
00
$1,526.4
0
$36,
633.
60
$12,
211.
20
$11,
829.
60
$12,5
92.80
Sept
emb
er
900 $2
9.0
0
$26,
100.
00
$9.7
0
$8,7
30.00
$34,
830.
00
$1,393.2
0
$33,
436.
80
$11,
145.
60
$10,
797.
30
$11,4
93.90
Oct
ober
650 $2
9.5
0
$19,
175.
00
$9.7
0
$6,3
05.00
$25,
480.
00
$1,019.2
0
$24,
460.
80
$8,1
53.6
0
$7,8
98.8
0
$8,40
8.40
Nov
emb
er
980 $3
5.5
0
$34,
790.
00
$9.7
0
$9,5
06.00
$44,
296.
00
$1,771.8
4
$42,
524.
16
$14,
174.
72
$13,
731.
76
$14,6
17.68
6

Dec
emb
er
220
0
$4
8.0
0
$1,0
5,60
0.00
$9.7
0
$21,
340.0
0
$1,2
6,94
0.00
$12,694.
00
$1,1
4,24
6.00
$40,
620.
80
$39,
351.
40
$34,2
73.80
Cross
check
$6,9
3,50
6.00
$54,513.
14
$6,3
8,99
2.86
$2,2
1,92
1.92
$2,1
6,43
4.46
$2,00
,636.4
8
Tota
l
$5,5
7,41
5.00
$1,3
6,091
.00
$6,9
3,50
6.00
$54,513.
14
Cros
schec
k
TASK 3
Scenario 1:
Reasons for Inaccurate forecasting
While evaluating the budget it is evaluated that managers conclude all the three year's
budget combine without categorising their range and development nature. The food cost and the
cost of goods sold get increased due to combining the forecasted results and the beverage sales.
The hotel manager figures out the operations which were remain same for both the years.
Following are the different areas of investigation along with examples, as follows;
Unidentified production or manufacturing units
Production area is one of the essential element in terms of managing the budget needs.
For example the vast majority of assembled production units frequently state situation regarding
production process. It invests more energy arranging their work, before development really
began. might be quick to begin, however if manager find out spare time over the long haul by
investing more energy in arranging in the beginning times.
Consuming long time to build a budget
It's a lot less demanding to change things on an arrangement, than it is to begin moving
blocks and mortar or changing pipes and wiring. The vast majority who've assembled frequently
state they wish they'd invested more energy arranging their work, before development really
began. For example, in a construction project, It's a lot less demanding to change things on an
arrangement, than it is to begin moving blocks and mortar or changing pipes and wiring.
7

Wrong assumptions:
Ambiguous or low quality documentation can influence the exactness of the statement get
by managers. It implies that everybody associated with the citing procedure needs to make
suppositions. This leaves space for mistake and costing errors. For example, if assumption in
terms of managing the cost of material and resources are considered in excess than it become
difficult for managers to forecasting the figures for budgets.
Under-cast and overcasting of budget
It may, impact a large portion of organisation to have a restricted budget plans. It spares
time and cash over the long haul (Cull, 2017). In any case, organisation also need to
comprehend the cost change of the decisions make. For instance, high roofs will require non-
standard windows and could likewise expand the expense of inward coating, outer cladding,
lighting and framework. It cautiously considers the underlying choices of organisation make. A
decent developer ought to have the capacity to help direct the organisers through this procedure
Regular changes in budgets
Regulatory and management committee is the main area that is required to considered in
the budget. If the variation made on continuously basis it is analysed that figures also present
differences with last year's forecasted results and information. It is essential to maintain an
adequate level and constant structure of making the budget for getting accurate results.
Scenario 2
1. Change in consumer taste and preference:
One of the major factor which can influence trends is unfavourable changes in taste and
preference. Change in consumer taste and preference can affects revenue of hotel. If facilities or
additional services are not provided by hotel as per change in requirement of customers than this
will affect a large customer group.
2. Competition
Competition is another factor that influence trends. A large competitor with new ideas
and more resources creates a tuff competition, and affects revenue of exiting Hotels.
3. Legal Factors
An unfavourable change in the law and order affect company's trends. New regulations
imposed by regulatory authorities can affect profits and budgeted figures. Increase in taxes and
8

increase in cost of essential items for hotel, are also coming under these factors which can affect
trends of Hotel.
4. Recession:
Recession is also an indicator which creates negative trends in near future. Due to
recession in economy, sudden decrease in customers, revenue or net profit can be happen.
5. Inflation:
Inflation means uneven rise in prices and wages, that results in decrease in purchasing
power of customers (Gromski, 2019). Customer tries to avoid spending money for luxurious
facilities provides by hotel to customers, due to to reduction in purchasing power of customers.
There are following methods which helps to determine the external factors which could
contribute towards opposite or negative trends:
Qualitative Method
In this method is based on subjective approach, under this management analyse industry,
market research, and expert opinion to forecast possible trends seems to be occurred. In
qualitative data less importance is given towards quantitative data of past years. A scenario is
deeply analysed by management to forecast incoming trends.
Quantitative Method:
This method emphasises on quantitative or monetary data of past years. Result from this
method is required for forecasting of trends for short period and for planning purpose
(Orimoloye, 2019). Deep analysis of quantitative data or information is done through various
budgets, memorandum reports or statements, comparison with industry data or competitive
performance etc.
Causal method:
Under this method estimation of factors and possible trends are done through analysing
relationship between major things like upturn or downturn in sales, increase or decrease in
decrease in purchasing power of customer, change in inflation etc. using monetary and non
monetary values or trends. Such analysis of relationship helps to identify the factors and possible
trends.
Scenario 3
1. Reports preparation in various conditions:
9

After observing above two issues as given in the brief, there is need to provide two type
of report which are as follows:
Budget variance analysis report:
Variances are identified by management after preparation of budget. At this time,
variances from the budget are identified, and the management has to dig deep to find out the
reasons for such variances (Ray, Alhalhooly and et., 2019). This analysis also requires
investigation of these variances which helps the management to interpret as to why such variance
or differences occurred.
In the given issue, there is a variance of $ 13467 between budget and actual figures for
Kitchen/food cost. The budgeted figure of this cost is 28% of total revenue and actual is 32% of
total revenue. This means that there is a negative performance of this department of organisation.
This report should also describe the reasons behind this negative variance.
Inventory Report:
An inventory report is a summary of stock items that a company kept belonging to a
business, industry, organization, or home. It provides a comprehensive account of the stock or
supply of various items. This reports include list of each and every items of company along with
its unit price. It also includes details about any extra cost or savings which incurred at the time of
purchase.
In the given problem, cash flow problem is generated due to excess purchasing of bottles.
Although, there is a savings of $ 30 per bottle. Therefore, this issue need to be addressed in this
report.
2. Required major essentials:
As the appointment of F&B manager it purchased 240 bottles at the rate of $90 which
represents a saving of $30 per bottle. It increases the stock level by 220 bottles and created a
cash flow problem. So store manager and F&B manager should involve in this matter because
there was a variance of (-) $ 13467 in budget and actual (Yang, Kumara, Bukkapatnam and
Tsung, 2018). It is not beneficial for hotel because it faces the problem of cash so store manager
of organisation should know how to maintain the inventory so that this huge variance does not
create in budget and actual. It should able to analyse the stock requirements and monitor it on
regular basis as a result appropriate order can be placed which help to control the unnecessary
inventory. Unnecessary expenses can also be minimized which can resolve the problem of cash
10