An investigation of cost controls in food and beverage production and sales in selected categories of 2-5 star hotels in Nairobi, Kenya
Gesage, Methuselah B.
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Costs of food and beverage should be in line with pre-determined goals. Any unfavourable variances should be investigated because they have adverse economic consequences. The purpose of the study therefore was to determine the types of cost control measures operational in 2 - 5 star hotels and establish if these measures were effective in keeping the cost of sales within acceptable limits. The study sought to achieve the following objectives: to determine the factors that increase costs in food and beverage production and sales in 2- 5 star hotels in Nairobi, to find out the types of cost controls and accounting records used in food and beverage control, to establish the operating standard and actual food and beverage costs in 2- 5 star hotels in Nairobi, to assess the extent to which the target food and beverage cost controls are achieved and to determine whether relationships exist between selected variables in food and beverage control. The study was carried in 2-5 star hotels within Nairobi. Nine hotels were studied. Data collection instruments included interview schedules administered to hotel managers, chefs, supervisors and control staff, questionnaires were used for waiters and barmen and cashiers. Chi-square tests were used to highlight whether relationships or differences existed between selected variables. Analysis of variance was performed to test if there were significant relationships between the actual and standard food and beverage cost percentages. Qualitative analysis consisted of content analysis and formation of themes in line with interview guides. Once themes and patterns were identified, the researcher then drew conclusions. The results revealed that there were huge gender disparities amongst the respondents with almost 90% of staff being male. More than two thirds of all respondents were certificate holders. More experienced staffs were most likely to be found in higher ranked hotels than the lower ranked ones. Staff fraud, theft and poor bar portion control were common in all the hotels. This implied lax cost controls and the consequent increase in the cost of sales. A majority of the hotels did their bar stock taking either once weekly or once daily. This frequency could encourage fraud. The mean actual food cost percent was 35.82%. The mean standard food cost percent was 33.33%. Similarly, the mean actual beverage cost percent was 34.12%. The mean standard beverage cost percent was 40%.There were significant differences between actual and standard beverage costs amongst all the star hotel categories. The hotels surveyed were not able to meet their beverage costs. The food costs were not effectively maintained as there were significant differences between actual and standard food costs amongst all the hotels. Higher star rated hotels were more likely to meet their food and beverage costs than their lower rated counterparts. Higher rated hotels did not have a serious costs side problem and could make more profits by giving more attention to the demand side. Lower ranked hotels appeared to have cost side problems. Therefore more profits can be realized by these hotels if they institute more stringent cost control measures.