You also probably would track total purchases and total labor costs. In this business,
purchases of food items and supplies and labor represents the bulk of your variable costs.
Similar to sales, these items can be compared to the budget, with any significant
deviations being followed up. Finally, by tracking sales, purchases, and labor costs, you
monitor your weekly contribution margin; again, this enables you to assess any increases
or decreases relative to the budget.
Non-Financial Performance Measures:
Here, you probably would track things like customer complaints and employee
absenteeism/turnover (complaints and absent employees are early warning signs that
something is wrong). You also might track materials usage, which is important both to
ensure that customers are not getting short-changed in the amount of food served and to
prevent pilferage. Finally, you would track the cleanliness of the restaurant and facilities
and assure general adherence to daily procedures (e.g., employees wear gloves, all doors
are locked at days end, counters are wiped down).
Non-financial measures are more immediate (timely) and actionable (specific); they
ensure that people are doing what they are supposed to be doing and that processes are
performing as expected. Such measures can help identify and correct problems before
they become severe (e.g., for a sports analogy, if players are not showing up for practice,
this decreases the chances of doing well).
Balakrishnan, Managerial Accounting 1e
FOR INSTRUCTOR USE ONLY