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Chapter 1 - Key Terms Assignment

The document defines key terms related to costs, sales, and other restaurant business concepts. It provides definitions for terms like average check, cost percent, covers, fixed costs, labor costs, sales mix, total covers, and variable costs.

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iorfino.joseph
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24 views

Chapter 1 - Key Terms Assignment

The document defines key terms related to costs, sales, and other restaurant business concepts. It provides definitions for terms like average check, cost percent, covers, fixed costs, labor costs, sales mix, total covers, and variable costs.

Uploaded by

iorfino.joseph
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 1: Cost and Sales Concepts

KEY TERMS IN THIS CHAPTER

Average number of covers – The average number of covers in a given


period.
Average sale – Total dollar sales for a period divided by the number of
sales.
Average check – Average amount spent by each cover.
Average sale per server – Total dollar sales attributable to a particular
server in a given period, divided by the number of customers served.
Controllable costs – A cost that can be changed by management in the
short term. Examples include food cost, beverage cost, and labor cost.
Cost – The expense incurred for the goods or services when the goods
are consumed, or the services rendered.
Cost per dollar of sale – The cost percent expressed as a dollar figure,
or the ratio of cost to sales expressed as a dollar figure.
Cost percent – The ratio of cost to sales, expressed as a percent.
Cover – A diner; one customer who has purchased food in a restaurant,
regardless of the number of items purchased.
Directly variable costs – A cost that varies directly with sales volume,
such that every change in sales volume brings a corresponding change
in that cost.
Fixed costs – A cost that is normally unaffected by changes in sales
volume; a fixed cost does not increase or decrease significantly as
business volume changes and thus is said to have little direct
relationship to the volume of business.
Historical cost – A past cost that has been documented in business
records.
Labor costs – Payroll cost, which includes salaries, wages, and
employee benefits.
Noncontrollable costs – A cost that management cannot change in the
short term. Examples include rent, real estate taxes, and license fees.
Overhead – All costs other than prime costs.
Planned cost – an anticipated cost, projected by management, that
reflects business plans for the future.
Prime cost – The sum of food cost, beverage cost, and labor cost for a
given date.
Sales – Revenue resulting from the exchange of products and services
for value.
Sales mix – The ratio of the number of sales of one menu item to the
total number of sales of all menu items. Usually calculated for
particular segments of a menu (e.g., appetizers, entrees, or desserts).
Sales price – The dollar amount charged for each unit of any given
product or service sold.
Seat turnover – The number of seats occupied during a given period
divided by the number of dining seats in the restaurant; the number of
customers (or covers) served in a given period, divided by the number
of dining seats available.
Semivariable cost – A cost that has both fixed and variable elements,
such as that one component would not change as sales volume
changes, whereas the other component would change.
Total costs – The sum of all unit costs for a given period of time.
Total covers – The total number of all covers for a period, usually a
meal or a day.
Total dollar sales by category – The total volume of sales revenue for a
given period of time for a particular category of food, such as entrees,
beverages, and so on.
Total number sold – The total number of a menu item sold during a
given period of time.
Total sales – Total volume of sales revenue for a given period of time,
expressed in terms of dollars or units.
Total sales per seat – Total dollar sales for a given time period, divided
by the number of seats in the establishment.
Total sales per server – Total dollar volume of sales for which a given
server has been responsible in a given time period.
Unit costs – The cost of one or many like units, such as one portion of
a particular menu item (e.g., one steak or one martini) or one hour of
labor.
Variable costs – A total cost that changes when sales volume changes.
Variable costs are linked to business volume, such that total variable
cost increases and decreases as sales volume increases and
decreases.

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