BSAD 322charley Family Steak House

CHARLEYS FAMILY
STEAK HOUSE
Class Announcements
Traditional Assignment:
Service Learning Assignment:
Assignment #3 due April 10, 2012; available on-line

Final Report is due April 10, 2012
Cost of an Egg:
Assignment details on-line
Class Objectives
1.
2.
Understanding performance measurement

both financial and non-financial effectiveness
Assessing performance and compensation in
context
Charleys Family Steak House
Company Context:
Charley
Turners four steak restaurants

Located in a rapidly growing mid-size city in Texas
Restaurant goal best steak house in the city
Characterized by:
Pleasant
atmosphere
Fast and courteous service
High quality food
Freshly prepared good
Reasonable prices
Innovative express lunch option
Company Context: Unit 2

Alex
Pearson is the manager of Charleys

Steakhouse Unit 2 (since one year)
Seating for 150 customers
Employs 18-20 people
Menu featured 4-6 items in each of four
categories ranging in price from $1.99 (Small
salad) to $16.99 (Lobster dinner)
Feature an express service for frequent lunch
time customers
Company Context: Customer Segments

Community
Located
Business
next to a shopping mall
community
Offices
are nearby
No eating establishment within one mile radius
Hotel
100
room budget motel with no restaurant within

walking distance
Company Context: Evaluation

Plans
to implement a new bonus plan
25%
of salary in bonuses
Specific performance measures not yet determined
Suggestions from managers not solicited
Comparison
Original
between budget and actual
budget prepared was aggressive and

optimistic
Profit is $46,490 less than planned
Severity of the recent recession
Issues:
How did actual sales compare with planned
sales?
Profit is $46,490 less than planned
Actual sales vs planned sales variance analysis
Sales mix analysis
Customer use of coupons
How well were costs and expenses controlled?
Actual expenses vs planned expenses variance analysis
Performance Evaluation
Comparison of planned vs actual
New bonus plan

Charley's Family Steak House
Operating Profit Statement
Actual
1994
Gross Sales
1,936,025
Net Sales (net coupons) 1,726,725
Food
1,025,870
Labour
207,000
Expenses
152,450
Contribution
341,405
Advertising
78,625
Miscellaneous
3,320
Depreciation
24,000
Insurance
9,780
Taxes and licenses
10,940
Rent (Base)
72,000
Rent (Overage)
26,980
Management
98,000
Operating Profit
17,760
% of
Sales
100.0%
89.2%
53.0%
10.7%
7.9%
17.6%
Planned
1994
1,861,860
1,761,760
1,024,020
220,000
148,950
368,790
65,165
3,000
24,000
9,400
11,700
72,000
23,275
95,000
65,250
% of
Sales
100.0%
94.6%
55.0%
11.8%
8.0%
19.8%

Actual
1994
Gross Sales
1,936,025
Food
1,025,870
Labour
207,000
Expenses
152,450
Contribution
341,405
Advertising
78,625
Miscellaneous
3,320
Depreciation
24,000
Insurance
9,780
Taxes and licenses
10,940
Rent (Base)
72,000
Rent (Overage)
26,980
Management
98,000
Operating Profit
17,760
% of
Sales
100.0%
89.2%
53.0%
10.7%
7.9%
17.6%
Planned
1994
1,861,860
1,761,760
1,024,020
220,000
148,950
368,790
65,165
3,000
24,000
9,400
11,700
72,000
23,275
95,000
65,250
% of
Sales
100.0%
94.6%
55.0%
11.8%
8.0%
19.8%
Variance
1994
74,165
-35,035
1,850
-13,000
3,500
-27,385
13,460
320
0
380
-760
0
3,705
3,000
-47,490

Actual
1994
Gross Sales
1,936,025
Food
1,025,870
Labour
207,000
Expenses
152,450
Contribution
341,405
Advertising
78,625
Miscellaneous
3,320
Depreciation
24,000
Insurance
9,780
Taxes and licenses
10,940
Rent (Base)
72,000
Rent (Overage)
26,980
Management
98,000
Operating Profit
17,760
% of
Sales
100.0%
89.2%
53.0%
10.7%
7.9%
17.6%
Planned
1994
1,861,860
1,761,760
1,024,020
220,000
148,950
368,790
65,165
3,000
24,000
9,400
11,700
72,000
23,275
95,000
65,250
% of
Sales
100.0%
94.6%
55.0%
11.8%
8.0%
19.8%
Variance
1994
74,165
-35,035
1,850
-13,000
3,500
-27,385
13,460
320
0
380
-760
0
3,705
3,000
-47,490
Flexible
1994
1,936,025
1,831,938
1,064,811
228,763
154,883
383,480
65,165
3,000
24,000
9,400
11,700
72,000
23,275
95,000
79,940
% of
Sales
100.0%
94.6%
55.0%
11.8%
8.0%
19.8%

Actual
1994
Gross Sales
1,936,025
Food
1,025,870
Labour
207,000
Expenses
152,450
Contribution
341,405
Advertising
78,625
Miscellaneous
3,320
Depreciation
24,000
Insurance
9,780
Taxes and licenses
10,940
Rent (Base)
72,000
Rent (Overage)
26,980
Management
98,000
Operating Profit
17,760
% of
Sales
100.0%
89.2%
53.0%
10.7%
7.9%
17.6%
Planned
1994
1,861,860
1,761,760
1,024,020
220,000
148,950
368,790
65,165
3,000
24,000
9,400
11,700
72,000
23,275
95,000
65,250
% of
Sales
100.0%
94.6%
55.0%
11.8%
8.0%
19.8%
Variance
1994
74,165
-35,035
1,850
-13,000
3,500
-27,385
13,460
320
0
380
-760
0
3,705
3,000
-47,490
Flexible
1994
1,936,025
1,831,938
1,064,811
228,763
154,883
383,480
65,165
3,000
24,000
9,400
11,700
72,000
23,275
95,000
79,940
% of
Sales
100.0%
94.6%
55.0%
11.8%
8.0%
19.8%
Variance
1994
0
-105,213
-38,941
-21,763
-2,433
-42,075
13,460
320
0
380
-760
0
3,705
3,000
-62,180

Actual
% of Planned % of Variance Flexible % of Variance
1994
Sales
1994
Sales
1994
1994
Sales
1994
Gross Sales
1,936,025 100.0% 1,861,860 100.0% 74,165 1,936,025 100.0%
0
Net Sales (net coupons) 1,726,725 89.2% 1,761,760 94.6% -35,035 1,831,938 94.6% -105,213

Actual
% of Planned % of Variance Flexible % of Variance
1994
Sales
1994
Sales
1994
1994
Sales
1994
Gross Sales
1,936,025 100.0% 1,861,860 100.0% 74,165 1,936,025 100.0%
0
Net Sales (net coupons) 1,726,725 89.2% 1,761,760 94.6% -35,035 1,831,938 94.6% -105,213
Coupons
209,300
10.8%
100,100
5.4% 109,200
104,087
5.4% 105,213

Supporting Data
Average Weekly customer count
% customers - lunch
% customers - dinner
Gross average check - lunch
Net average check - lunch
Gross average check - dinner
Net average check - dinner
$
$
$
$
Actual
1994
4,025
50%
50%
7.50
6.50
11.00
10.00
Planned
1994
3,870
40%
60%
$
7.50
$
7.00
$
10.50
$
10.00
Variance
1994
155.00
10%
-10%
$
-$
0.50
$
0.50
$
-

Supporting Data
% customers - lunch
Contribution margin - overall
Contribution margin - lunch
Contribution margin - dinner
$
$
$
$
$
$
Actual
1994
4,025
50%
50%
7.50
6.50
11.00
10.00
Planned
1994
3,870
40%
60%
$
7.50
$
7.00
$
10.50
$
10.00
17.6%
1.32 $
1.94 $
Variance
1994
155.00
10%
-10%
$
-$
0.50
$
0.50
$
-
19.8%
1.49 -$
2.08 -$
-2%
0.16
0.14

Supporting Data
% customers - lunch
$
$
$
$
$
$
Actual
1994
4,025
50%
50%
7.50
6.50
11.00
10.00
Planned
1994
3,870
40%
60%
$
7.50
$
7.00
$
10.50
$
10.00
17.6%
1.32 $
1.94 $
341,405
138,407
202,998
Variance
1994
155.00
10%
-10%
$
-$
0.50
$
0.50
$
-
19.8%
1.49 -$
2.08 -$
370,706
119,583
251,123
-2%
0.16
0.14
-29,301
18,825
-48,126

Supporting Data
% customers - lunch
$
$
$
$
$
$

Weighted Contribution Margin
Actual
1994
4,025
50%
50%
7.50
6.50
11.00
10.00
Planned
1994
3,870
40%
60%
$
7.50
$
7.00
$
10.50
$
10.00
17.6%
1.32 $
1.94 $
341,405
138,407
202,998
1.63 $
Variance
1994
155.00
10%
-10%
$
-$
0.50
$
0.50
$
-
19.8%
1.49 -$
2.08 -$
370,706
119,583
251,123
1.84 -$
-2%
0.16
0.14
-29,301
18,825
-48,126
0.21
Conclusions: Budget vs Actual

Actual operating profit for Unit 2 is $47,490 less
than anticipated
Actual profit for Unit 2 is $62,180 less than the
flexible budget
Customer mix change from 40/60 to 50/50 which
changed weighted contribution margin from $1.84
to $1.63 per customer
Customers made use of coupons in greater
number than anticipated perhaps because of the
recession ($105,213 more than anticipated).
Conclusions: Evaluation System

Participatory no consultation
Inventive and risk none communicated
Goal congruence not linked to overall except
generally (e.g. best steak house in town)
Fair and objective unknown measures
Attainable Optimistic and aggressive, high
expectations.
Conclusions: Evaluation System Controllability

Prices - are set (over 10%) by Charley
Ordering - of food done centrally
Coupons (discount) - good at all four locations
Recent economic recession -was not
forcastable
Advertising - is managed by Charley
Management charge - is assessed by Charley

BSAD 322charley Family Steak House

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CHARLEYS FAMILY

Service Learning Assignment:

Assignment #3 due April 10, 2012; available on-line

Assignment details on-line

Understanding performance measurement

Charleys Family Steak House

Turners four steak restaurants

Charleys Family Steak House

Company Context: Unit 2

Pearson is the manager of Charleys

Charleys Family Steak House

Company Context: Customer Segments

next to a shopping mall

room budget motel with no restaurant within

Charleys Family Steak House

Company Context: Evaluation

to implement a new bonus plan

between budget and actual

budget prepared was aggressive and

Charleys Family Steak House

How well were costs and expenses controlled?

Actual expenses vs planned expenses variance analysis

Charleys Family Steak House

Charleys Family Steak House

Charleys Family Steak House

Charleys Family Steak House

Charleys Family Steak House

Charleys Family Steak House

Charleys Family Steak House

Charleys Family Steak House

Charleys Family Steak House

Charleys Family Steak House

Contribution margin - overall

Charleys Family Steak House

Conclusions: Budget vs Actual

Charleys Family Steak House

Conclusions: Evaluation System

Charleys Family Steak House

Conclusions: Evaluation System Controllability

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