Restaurant Management: Costs, Pricing, and Organizational Structure

Restaurant Business Fundamentals: Definitions

The term restaurant means any establishment that offers customers food and beverage services.

The Service Offer

The Offer must align with customer expectations to achieve satisfaction.

It is important to determine the offer by analyzing its interaction with other core business activities, including:

• Production system
• Work equipment
• Service system
• Buying (Procurement)
• Storage of raw materials
• Financial management

Key Financial Concepts

Cost Definition

Cost refers to the assessment of resources (carried out or planned) used through the application of factors necessary to obtain the product or service.

Fixed Cost

A Fixed Cost is independent of changes in production volume over time (it remains constant).

Variable Cost

A Variable Cost changes in direct relation to actual production or processing time.

Total Cost = Fixed Cost + Variable Cost

Price Determination

The Price is what the customer pays for consuming a food or beverage. The price depends on several factors:

1. Product cost
2. What the customer is willing to pay (demand)
3. Price competition or similar products in the market

Break-even Point

The Break-even Point is the exact level of sales required to cover all costs, marking the threshold before profits are generated.

Types of Food Service Establishments

A Restaurant is generally defined as an establishment that serves food and beverages for a price, consumed on the premises. However, there are several specialized categories:

• Café: An establishment primarily serving coffee, tea, cold drinks, and often light meals or grilled dishes.
• Bars, Cafés, or Similar: Establishments (excluding institutional settings like school canteens) that serve drinks, snacks, tapas, and portions, consumed locally for a price.
• Fast Food: Characterized by a quick and easy food supply process and low service levels.
• Delivery Food: Similar to fast food, but the product is sent directly to the customer's home or location.
• Groups (Institutional Catering): Companies engaged in providing food and beverage services, typically in canteens or large institutional settings.
• Catering: A business that provides food, beverage, and related services (including necessary equipment supply) for consumption at remote locations or specific events (e.g., transport, parties).
• Franchise: A company that pays a fee to use another established brand, system, and operational model.
• Vending: Automated food and beverage dispensing via vending machines.

Organizational Structure and Management

Organization Defined

An Organization is an alternative to the market, involving the rational and coordinated arrangement of activities, often hierarchically.

Organizational Components

Organizations typically consist of two main parts:

1. Line Organization: Encompasses the strategic apex, the midline, and the operating core (the primary hierarchy).
2. Staff Organization: Provides internal support and specialized services (non-hierarchical).

Environmental Settings

The organization operates within two key environmental settings:

• General Environment: The broad set of external conditions that affect the organization.
• Specific Environment: The set of conditions immediately relevant to the organization, depending on its economic sector.

Structural Differentiation

Organizational structure involves two directions of differentiation:

1. Horizontal Differentiation: Dividing tasks among bodies at the same level, which increases quality and work efficiency. This adheres to the principle of unity of direction.
2. Vertical Differentiation: Establishing hierarchical levels, which allows for better oversight and adheres to the principle of unity of command.

Functional Departmentalization

Functional Departmentalization groups activities and personnel based on specific functional areas or departments, aligning with horizontal differentiation.

Span of Control

The Span of Control is the number of subordinates reporting directly to a superior manager.

Organizational Chart

The Organizational Chart is the graphical representation of the departmental structure adopted by the organization.

Direction and Management Functions

The Direction and Management of an organization are carried out by managers, who fundamentally perform three core functions:

1. Planning
2. Organization
3. Control