Hi Joe,
I think no matter how you answer that interview question you have to back it up with an explanation to make it sensible. Personally, I think they are all equally important and certainly completely intertwined. Therefore, there is no way to isolate these as three separate entities.
As far as the warehouse is concerned would it be helpful to discuss the concept of averaging a price for items that are coming from the warehouse that has in inventory product that was purchased at varying prices?
Thank you,
Paul
Thanks for your feedback Paul. These 3 priorities are completely intertwined. You are 100% right. I see better food quality in kitchens with less waste and spoilage. Customers love to receive a consistent portion size. If a researcher studied the relationship between food quality and food cost control for a focused menu, they would find better food cost results at restaurants with higher food quality. Top quality food sells better and higher volume helps your percentage.
Properly trained and supervised employees are needed to make everything work. Good financial results and happy customers result from a motivated staff.
As far as using average costs in a complex organization, I'd certainly recommend a consistent cost method with all transfer activity priced on an average. In a period of price volatility, this is the fair method. The goals of a tight transfer model are simple: control flow of food and allocate the costs based on usage. An average cost fairly measures the unit operators control over usage. The central purchasing management is responsible for getting all the profit centers better prices.
