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Income Statement Analysis for Fine Dining Restaurant

Paper Type: Free Essay Subject: Finance
Wordcount: 1511 words Published: 23rd Mar 2021

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This report is going to discuss the income statement for a specific period at William Blue Dining, which is a fine dining restaurant located at The Rocks that owned and operated by Torrens University. It has been set at the beginning of the year by the campus director to buy a wine fridge, which going to use the restaurant profits. These funds are available if only is the restaurant meets financial budget that has been set. With this in mind, it is important as a restaurant manager to review on the profit and loss report for monitoring business activity. It emphasises where the industry is succeeding and where it is necessities to be improving ("Understanding profit and loss reports", 2016). If the supervisor manages the restaurant based on budget that has been set, then that may have a positive effect on business profit.

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Overview of Profit and Loss Report

As an example, in Figure 1, William Blue Dining had financial budgeted $240,000 of both fixed and valuable costs, and actual expenses are $225,000. The difference between the budgeted amount and the actual result in the report is equivalent to (15,000) It is also evident that most of actual expenses are higher than budgeted including food and beverage costs, labour costs, maintenance and as well as laundry operations costs. As a result, the manager need to develop a business plans to ensure that the following areas reach the targets.












Food Costs



Beverage Costs



Labour Costs






Equipment Costs







(Figure 1: Profit and Loss for a 3-month period at William Blue Dining)

Strategies to Overcome the Budget

Manage Supplier

It can take time to find the right suppliers for business, but once found the right one, it is important to develop a productive and professional relationship. The manager should understand the key point to develop professional relationships such as communication, establish solid processes and build a good relationship with supplier. For example, communicate regularly with supplier about performance and expectations will help when it is time to renegotiate contracts or even discuss any issues or concerns in an open and honest way to find a solution ("Build a stronger relationship with your suppliers", 2018).

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Avoid Wasteful Use of Resources

Waste arising from production process can have a significant effect on profitability. The challenge is to reduce this waste without undermining the effectiveness of the process. Some typical problems include the excessive consumption of energy or raw materials, losses in production process itself, rejection at the inspection stage or return from retailers and consumers. However, good work practice, in any industry can reduce the wastage that occurs through accidental damage, spillage, spoilage, errors, poor use of time, sub-standard quality, over-use and over-production. It is unlikely that any business can afford to throw things away unnecessarily. As a manager, it is significant to find a solution, in order to reduce wastage. Also, it is suggested that, staff are the best asset when it comes to making changes to business processes (Gray, 2015).

Reduce Labour Cost

Most of business owners consider employees as a burden and a massive expense. Although labour and employee salaries are a significant portion to any business budget, they are still necessary to the success of the organisation. However, there is a way to reduce labour costs and keep company growing and successful. It is common in a restaurant to have peak times and periods (Khera, n.d.). So, the manager should review on the roster and select the right people for the right job.

Reduce Utilities Bill Costs

Just like controlling food portions, there is a way to control utility usage. The first thing to do to lower restaurant’s utility costs is to pinpoint the biggest energy users followed by finding potential energy wasting systems or areas. Electricity is a variable utility since its depending on various factors including weather. Also, gas is considered as a variable cost as well, as its price may change depending on global markets. In spite of not being able to control global markets and the weather that may affect utility bill, there is a few ways to lower restaurant’s utility costs (Sams, 2019).

The Effect of Leadership Styles

According to … there are eight different types of leadership styles. Each leadership quality has unique characteristics that determine the leadership abilities and strengths of the people who manifest that quality. The premise is that all people can lead, though talents and every successful business system enjoys success as a result of the collective talents of its leaders (Glanz, 2002). Although these systems must have the leadership of Coordinating Leadership Style, it is a type of multi-tasking, active listener and dealing with obstacles.

Another characteristics that a manager should have as a leader is Guiding Leadership Style, which including productivity, team selection and vision.


Restaurants typically employ large number of workers. In addition, given the importance of employee judgement in interactions with customers in service firms, it is expected that a service employee’s discretionary behaviour or positive behaviour that is not specifically required by the job that might be especially important in influencing customer satisfaction. Service workers in restaurants are the primary point of contact with customers and thus can be a major influence on firm performance. Hence, it is suggesting that the restaurant manager should provide employee a well training, in order to meet consumer satisfaction and to meet the target profits.




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