Bistro 44: Variance, Overtime, and a Price Increase
Bistro 44 is closing the books on a four-week period with sales of $248,000. Opening inventory was $21,000, purchases $76,400, and closing inventory $20,100. The POS mix report prices the menu at a 30.2% theoretical food cost. Payroll for the period totals $84,214: 4,760 scheduled hours plus 250 overtime hours, at a straight-time average of $16.40. The steak frites sold 640 units against a spec of 8 oz raw strip per portion, and the meat count shows 380 lb of strip consumed; strip costs $9.20/lb. The GM's only comment is that "a 3% price increase fixes both lines."
1. Compute the actual food cost percentage and the dollar variance against theoretical, then assess what the steak data explains and what it does not.
Read the worked answer
Usage = $21,000 + $76,400 − $20,100 = $77,300, or $77,300 ÷ $248,000 = 31.2%. Theoretical at 30.2% = $74,896. Variance = $2,404, about a full point.
Steak: 640 × 8 oz = 5,120 oz = 320 lb at spec, against 380 lb consumed. That is 60 lb over, or $552 at $9.20/lb.
So the steak explains about 23% of the variance and proves the method works. The remaining $1,852 sits in items nobody measured - portion drift elsewhere, unrecorded waste or spoilage, a POS price not updated after a cost increase, a delivery received but not invoiced, or an error in either count.
Don't stop at the steak. Recount closing inventory before drawing conclusions, then run the same spec-versus-consumption comparison on the next two proteins and the two highest-waste produce items - that is where the rest of the money is.
2. Compute the labor cost percentage and the overtime exposure, then recommend three actions in priority order.
Read the worked answer
Labor = $84,214 ÷ $248,000 = 34.0%, against a 30% target. At 30%, labor would be $74,400, so the gap is $9,814, roughly 598 straight-time hours.
The 250 overtime hours cost $6,150 where 250 straight-time hours would cost $4,100 - $2,050 of pure premium, before counting the quality and turnover cost of a tired crew.
- Cap overtime. Written approval only, with two cross-trained part-timers covering the gap. Recovers most of the $2,050 immediately.
- Rebuild the schedule. The 4,760-hour schedule alone costs $78,064 against a $74,400 target - $3,664 over before anyone stays late. Schedule to covers per hour by daypart, not by habit.
- Audit punches against the schedule. The 250-hour gap between scheduled and worked is either an unrealistic schedule or unapproved stay-over. Thirty minutes a day per employee is 250 hours a period.
3. Evaluate the GM's proposal to raise prices 3% and fix both lines.
Read the worked answer
Run the numbers first. A 3% increase on $248,000 adds $7,440 of revenue. If covers hold, food cost becomes $77,300 ÷ $255,440 = 30.3% - back to theoretical - and labor becomes $84,214 ÷ $255,440 = 33.0%, still three points over target. So price fixes the food line on paper and leaves labor where it was.
It also assumes covers hold. A 3% increase on $11–14 entrées in a competitive market that loses 4% of covers loses more revenue than it gains - and the 60 lb of strip and the 250 overtime hours are still there, just measured against a bigger denominator.
This is a control problem, not a pricing problem. Fix portions, counts, and the schedule first; then price on value, with a menu-engineering look at which items actually carry the mix, rather than a blanket increase that taxes the dishes that were already working.