MAY 2011
HOSPITALITY NEWSLETTER

Special Edition: Review of Major Fast Food Operations


   Hotel and Restaurant Accounting    Accounting for Hospitality Managers

Restaurant Industry Analysis: http://www.valueline.com/Stocks/Industry_Report.aspx?id=7256

Menu Price Quandary
Fast-food front-runners McDonald's, Yum Brands and other fast food companies don't plan to increase menu prices sufficiently to offset higher ingredient costs from their suppliers.   "Resisting menu-price increases puts greater pressure on margins for restaurant operators," said Warren Solochek, restaurant analyst at NPD Group. But we don't ever expect restaurant operators to lead that process of taking price for the food industry, it would be foolish for them to do so."

Top U.S. Sales Leading Chain Restaurants (sales shown in billions)
                         U.S. Sales       

1   McDonald’s         $32.4
2   Subway                10.6
3   Starbucks              9.1
4   Burger King            8.7
5   Wendy’s                8.3

McDonald’s
McDonald's said that it will raise prices slowly to avoid losing customers. McDonald's Corp. had first quarter 2011 earnings of $1.15 per share, a penny better than the Zacks Consensus Estimate.  McDonald’s presence is in more than 100 countries; all restaurants are operated either by the Company or by franchisees or licensees. McDonald's is the leading global foodservice retailer with more than 32,000 local restaurants serving more than 60 million people in 117 countries each day. More than 75% of McDonald's restaurants worldwide are owned and operated by independent operators.

YUM! Foods
YUM states it is delaying price increases.  Yum! Brands’ Pizza Hut chain was recently ranked the number one pizza chain in America by a survey conducted by polling company Rasmussen Reports. YUM has five brands:  KFC, Pizza Hut, Taco Bell, Long John Silver's and A&W,YUM has over 37,000 units (franchisees or licensees) in more than 110 countries and territories. Also, the Company owns non-controlling interests in entities in China who operate similar to franchisees of KFC and a non-controlling interest in Little Sheep, a Hot Pot concept.

Darden Restaurant
Darden Restaurants, as of May 30, 2010, operated through subsidiaries, 1,824 restaurants in the United States and Canada. Its United States operations Include 666 Red Lobster, 717 Olive Garden, 331 LongHorn Steakhouse, 40 The Capital Grille, 25 Bahama Breeze and 11 Seasons 52 restaurants in United States. Its Canada operations include 28 Red Lobster and six Olive Garden restaurants.  The company has franchised five LongHorn Steakhouse restaurants in Puerto Rico to an unaffiliated franchisee and 25 Red Lobster restaurants in Japan to an unaffiliated Japanese company.

Brinker International, Inc.
Brinker owns, develops, operates and franchises the Chili's Grill & Bar and Maggiano's Little Italy restaurant brands. At June 30, 2010, the Company's owned and franchised restaurants included 1,550 restaurants located in 50 states, and Washington, D.C. It also has restaurants in the United States territories of Guam and Puerto Rico and the countries of Bahrain, Canada, Dominican Republic, Ecuador, Egypt, El Salvador, Germany, Guatemala, Honduras, India, Indonesia, Japan, Jordan, Kuwait, Lebanon, Malaysia, Mexico, Oman, Peru, Philippines, Portugal, Qatar, Saudi Arabia, Singapore, South Korea, Taiwan, Turkey, United Arab Emirates and Venezuela.

Denny's Corporation
At December 30, 2009, the Denny's brand consisted of 1,551 restaurants, 1,318 (85%) of which were franchised/licensed restaurants and 233 (15%) were Company-owned and operated. Denny's restaurants are in 49 states, the District of Columbia, two U.S. territories and five foreign countries with concentrations in California (26% of total restaurants), Florida (10%) and Texas (10%). 

Starbucks
Starbucks is now the third sales leading chain restaurant.  Starbucks operates in more than 50 countries. Starbucks purchases, roasts, and sells whole bean coffees; sells handcrafted coffee and tea beverages, plus a variety of fresh food items through Company-operated retail stores. The Company also licenses its trademarks. Its portfolio includes the Starbucks brand, Tazo Tea, Seattle's Best Coffee, and Starbucks VIA Ready Brew. In October 2010, the Company acquired Magic Johnson Enterprise's remaining 50% interest in Urban Coffee Opportunities.

Wendy’s and Arbys
Wendy's/Arby's Group, Inc. is the parent company of its wholly owned subsidiary holding company, Wendy's/Arby's Restaurants, LLC . The Company owns or franchises over 10,000 restaurants in the U.S. and 26 other countries and U.S. territories worldwide with annual sales of $12 billion.  The Company operates in two business segments:  Wendy's/Arby's Restaurants is the parent company of Wendy's International, Inc. (Wendy's) and Arby's Restaurant Group, Inc. (ARG), As of January 3, 2010: the Wendy's restaurant system consisted of 6,541restaurants; 1,391 were owned and operated by the Company; the Arby's restaurant system consisted of 3,718 restaurants; 1,169 were owned and operated by the Company..

Burger King
Burger King is the second largest fast food hamburger chain in the world. The Company operates more than 12,000 restaurants in 50 states and in 76 countries and U.S. territories. 90 percent of BURGER KING restaurants are owned and operated by independent franchisees.  


HOTEL AND RESTAURANT ACCOUNTING NEW 7th EDITION AVAILABLE IN JUNE 2011

Scope of the text:  Hotel and Restaurant Accounting is a bona fide hospitality principles and systems text presenting topics such as hotel accounting, restaurant accounting, fast-food accounting, and several introductory managerial accounting chapters.  It is not a glorified accounting text posing as a hospitality accounting text.This hospitality industry text is a product of recommendations from hospitality academia and hotel/restaurant industry executives.  The text’s organized content and writing style is easily understandable by students, yet sufficiently comprehensive to provide the vocabulary and financial skills necessary to achieve success.  The text offers state of the art hospitality accounting; for example, a demonstrative example of computerized general ledger accounting is given full coverage with supporting documents and illustrations.

Hotel and Restaurant Accounting escalates hospitality accounting into the 21st century; presenting topics such as:
·        Specialized accounting topics for hotels, restaurants and fast-food operations
·         Forecasting, budgeting, financial analysis
·         Credit cards, debit cards, petty cash, bank reconciliation, cashier’s report
·         Computer processing procedures that replace  obsolete manual procedures and forms
·         Depreciation methods, simple interest, cash discounts, compound/present values
·         Governmental agencies and new laws affecting  financial reporting

Today’s business technology and competitive environment demand much more from hospitality accounting texts than just focusing on the traditional methods of accounting.  It is imperative that accounting is not treated as a glorified bookkeeping course.  Debits and credits, journalizing, and lackluster accounting processes are not enough to meet today’s business and employer standards.

Computers, point-of-sale devices, the Internet, and other technology cannot be ignored in the hospitality industry.  It is essential that accounting texts realize and accentuate the interrelationship of business principles and accounting.

 Highlights of the Text
--- There are 17 Chapters to the text: Scroll down to Table of Contents
--- Every chapter has a case study: Scroll down to Case Studies 
--- Detailed chapter information is available: Scroll down to Representative Chapter Topics
--- Each chapter concludes with Internet Site references for further topical research and study

TABLE OF CONTENTS - HRA 
Chapter
  1   Accounting: A Management Resource
  2   Business Formation: Important Decisions
  3   Survey of Financial Statements
  4   Exploring the Balance Sheet
  5   Exploring the Income Statement
  6   The Bookkeeping Process
  7   Computerized Accounting System: An Introduction
  8   Computerized Accounting Cycle: A Demonstration
  9   Restaurant Accounting and Financial Analysis
10  Hotel Accounting and Financial Analysis
11  Depreciation and Amortization Methods
12  How to Analyze Hospitality Financial Statements
13  Annual Report to Shareholders
14  Credit and Debit Cards
15  Introduction to Budgeting and Forecasting
16  Internal Control of Cash
17 Business Math Topics for Hospitality Managers

 CASE STUDIES - Hotel and Restaurant Accounting
 Chapter 
  1    Seeking employment
  2    Applying for a bank loan
  3    Principles of Utilitarianism, Rights, and Justice 
  4    Dishonesty in a class examination
  5    Skimming business revenue
  6    Fraudulent financial information
  7    Taking credit for a system’s benefit that is the work of someone else
  8     Purchase of a computer
  9     Discrepancy in financial statement workpapers  10    Successful company ethics analysis
 11    Irregularity in company’s annual report
 12    Submitting false statistics to an industry association
 13    Preparation of an Annual Report to Shareholders
 14    Credit Card Processing Principles and Credit Card Fraud
 15    Budgeting: Planning, Preparation, and Implementation 
 16    Ideological and Operational issues
 17    Vendor selection and purchase discounts


REPRESENTATIVE CHAPTER TOPICS 

 Chapters contain  the following:
·  Key Terms    · Review Questions   ·  Internet site references    · Problems   · Case Study

 Chapter 1:  ACCOUNTING: A MANAGEMENT RESOURCE
  ·      The necessity for Accounting
·         Why financial statements are necessary?
·         The corporate accounting department
·         Business transactions
·         Accounting equation
·         Financial statements
·         Consolidated financial statements
·         Accounting income vs. taxable income
·         The accounting profession
·         The certified public accountant
·         Influence of government and professional organizations
·         Generally accepted accounting principles 
 Chapter 2:  BUSINESS FORMATION: IMPORTANT DECISIONS
·         Feasibility Study· 
          Legal business structure (Corporation, Partnership, Proprietorship, LLC)
·         Buying a franchise
·         Taxation of business income
·         C corporation & S corporation
·         Appendix: North Carolina instructions -  how to incorporate 

 Chapter 3:  SURVEY OF FINANICAL STATEMENTS
·         Basic financial statements (annual & interim)
          Statement of income, equity statements, balance sheet, cash flows
·         Demo explaining financial effect between corporation and proprietorship form of business
·         Internet reference Sites

Chapter 4:  EXPLORING THE BALANCE SHEET
·        Preparation of the balance sheet
          Asset classification
·         Current asset accounts & noncurrent asset accounts
·         Liability classification
·         Current liability accounts & long term liability accounts
·         Bonds
·         Bond discounts & bond premium
·         Bond sinking fund
·         Equity classification
·         Proprietorship, partnership, corporation equity accounts 

 Chapter 5:  EXPLORING THE INCOME STATEMENT
·         Preparation of the income statement
·         Revenue classification
·         Sales accounting
·         Expense classification
·         Cost of sales expense
·         Inventory systems
·         Other business expenses & depreciation 

 Chapter 6:  THE BOOKKEEPING PROCESS
·         Origin of bookkeeping
 ·         Double entry accounting
·         Bookkeeping accounts
·         Computer processing of accounts
·         General ledger
·         Analyzing business transactions
·         Analyzing 21 universal transactions
·         Computer audit trail
·         Debit and credit rules
·         Recording 21 universal transactions 

 Chapter 7:  GENERAL LEDGER SOFTWARE
·        Advantages/disadvantages of computerized systems
 ·        Input and output forms
·         On-line accounting system
·         Point-of-sale terminals, electronic cash registers, bar codes
·         Features of accounting package
·         Standard general ledger modules
·         Selecting general ledger accounting software 

 Chapter 8:  COMPUTERIZED ACCOUNTING CYCLE: A DEMONSTRATION
·         Computerized vs. Manual Accounting Cycle
          Tower Restaurant: A Computerized Demonstration
·         Conversion from Manual to Computer System
·         Journalize the Monthly Business Transactions
·         Computerized Posting of the Special Journals
·         End of Month Accounting
·         Computation of Net Income or Loss
·         Computerized general ledger, financial statements, year-end processing
·         Appendix 1: Preparing the Manual Worksheet
·         Appendix 2: Reversing Entries 

 Chapter 9:  RESTAURANT ACCOUNTING and FINANCIAL ANALYSIS
·        Fast food & full-service accounting
·         Restaurant income statements: full service & fast food
·         Food sales accounting
·         Coupons, service charges
·         Beverage sales accounting
·         Cashiering single price, sales tax included
·         Cost of sales
·         Employee meals and officers’ checks
·         Perpetual system & periodic system
·         Operating expenses
·         Restaurant balance sheet
·         Chart of accounts for restaurants
·         Food and beverage ratio analysis
·         Food & beverage sales statistics
·         F&B sales analysis by meal period
·         F&B sales analysis by facility (outlet)
·         Average food check, Average food sale per seat, Seat turnover
·         Beverage/food sales ratio
·         Beverage sales by type 

Chapter 10:  HOTEL ACCOUNTING and FINANCIAL ANALYSIS
·        Hotel financial statements for external users
·         Hotel and departmental financial statements for internal users
·         Departmental revenue accounting (including package plans)
·         Departmental expense accounting
·         Operating ratios and percentages
·         Casino department and income statement
·         Pre-opening expense accounting
·         China, glassware, silver, linen, uniforms accounting
·         Chart of accounts for hotels
·         Hotel balance sheet
·         Appendix A: Restaurant Chart of Accounts 

 Chapter 11:  DEPRECIATION and AMORTIZATION METHODS
·         Depreciation terms
          Straight-line Depreciation Method
·         Declining Balance Depreciation Method
·         MACRS Depreciation Method

Chapter 12:  HOW TO ANALYZE HOSPITALITY FINANCIAL STATEMENTS
·        Financial Statement Package
·         Notes to Financial Statements
·         Accountant’s Letter
·         Audit, Review, Compilation Service
·         Money Illusion and Misconception
·         Reading & Analyzing Financial Statements
·         Income Statement, The Balance Sheet, Statement of Cash Flows
·         Ratio Analysis of Income Statement & The Balance Sheet
·         Common Size & Horizontal Analysis 
   
Chapter 13: ANNUAL REPORT TO SHAREHOLDERS
 ·         Content of annual reports 
 ·         The SEC
·         10-K Report
·         Sarbanes-Oxley Act
·         Certification of annual report by public auditing firm
·         Different types of "opinion" for audited financial statements
·         Certification of annual report by company executives 

Chapter 14:   CREDIT  AND DEBIT CARDS
·         Credit/debit card systems, Point-of-sale systems 
 ·         Merchant accounts, How to set up a merchant account
·         Selling on the Internet
·         Real time credit card processing
·         Payment gateway, Holdbacks, Fees and charges 

Chapter 15:  INTRODUCTION TO BUDGETING AND FORECASTING
·         Budgeting of expenses
·         Fixed, variable, semi-variable expenses
·         Forecasting of food sales, room sales
·         Forecasting and budgeting for a new business
·         Forecasting and budgeting for an existing business
·         Break-even point analysis
·         Achieving a profit target. 

 Chapter 16: INTERNAL CONTROL OF CASH 
·         Definition and Objectives of Internal Control
·         Internal Control of Cash Receipts
·         Daily Cashiers Report
·         Internal Control of Cash Disbursements
·         Bank Reconciliation 

 Chapter 17:  BUSINESS MATH TOPICS FOR HOSPITALITY MANAGERS
        Calculating simple interest (years, days, months)
        Cash Discounts (Including ROG, EOM, PROX)
        Compound Value, Present Value, Compound and Present Value with Annuities
           

HOW TO ORDER

Publisher: Educational Institute of the American Hotel and Lodging Association

EI/AHLA ORDER DEPARTMENT EMAIL CONTACT INFORMATION:
USA and Canada Customers: VP Mari Behrendt. Email: mbehrendt@ahla.com 
International Customers (Excluding Canada): Maggie Li.  Email: mli@ahla.com 

 
Educational Institute of the AHLA, 2113 North High Street , Lansing, MI 48906
USA  Phone: 517-372-8800USA Toll Free: 800-344-4381  USA Fax: 517-372-5141