=Paper=
{{Paper
|id=Vol-2732/20200377
|storemode=property
|title=Cost Modeling of Business Processes and Structure of Discrete
Accounting Objects: Experience of Restaurant Business
|pdfUrl=https://ceur-ws.org/Vol-2732/20200377.pdf
|volume=Vol-2732
|authors=Viktoria Yatsenko
|dblpUrl=https://dblp.org/rec/conf/icteri/Yatsenko20
}}
==Cost Modeling of Business Processes and Structure of Discrete
Accounting Objects: Experience of Restaurant Business==
https://ceur-ws.org/Vol-2732/20200377.pdf
Cost Modeling of Business Processes and Structure of
Discrete Accounting Objects: Experience of Restaurant
Business
Viktoria Yatsenko [0000-0001-7127-1885]
Kherson State Agrarian University, str. Stritenska, 23, Kherson, 73006, Ukraine
viktorijajacenko@gmail.com
Abstract. Nowadays, the interest to integrate the concept of business process
management with the accounting system and to form accounting and analytical
procurement of customer-oriented management is increasing. Customer-
oriented management is the priority direction to increase the competitiveness of
a restaurant. Its main indicators are maximum customer satisfaction with the
menu items, the suitable balance of quality-price ratio, and cutting time of
waiting for the order. An innovative discrete approach to the structure of cost
accounting objects and business processes is defined. Costing formation by the
example of the organism’s discrete development in the natural sciences is
presented. The concept of customer-oriented management is implemented
based on the innovative discrete approach taking into account specifics of the
restaurant business. The model of cost accounting of discrete object of a meal
"Salad" and the business process of its preparation within time/level of
readiness parameters are developed based on system and process approaches. It
shows the relationship between time and costs and demonstrates the process of
direct costs accumulation of cooking at every stage of the business process.
This model will allow us to make well-considered management decisions to
improve the restaurant’s activity in the future.
Keywords. Costs, Business Processes, Accounting, Restaurant Business.
1 Introduction
The restaurant business in Ukraine has shown rapid growth in recent years. The high
level of competition does not allow the use of the price factor to increase revenue. At
the same time, customers’ requirements for product quality and cutting time of
waiting for the order are constantly increasing.
Production costs and time are the main relevant factors of competitive advantage
for restaurant businesses in the modern market. However, the real costs of meals and
operations in many restaurants are often unclear or give the wrong idea, as the
cooking and service processes go beyond the functional boundaries. There are some
constraints connected with traditional production cost accounting systems as well.
To gain a competitive advantage, restaurants have to implement innovative
Copyright © 2020 for this paper by its authors. Use permitted under Creative Commons License Attribution 4.0 International (CC BY 4.0).
modeling and interdisciplinary methods of structuring discrete accounting objects and
transforming business processes. This will transform the cost accounting system and
cost calculation.
The purpose of this paper is to describe the experience of a restaurant in a resort
town in terms of costs, based on business processes modeling and the structure of
discrete accounting objects.
Design / methodology / approach - a case study was performed in the restaurant.
Interviews have been conducted and a database of costs and activities have been
analyzed.
The scientific hypothesis of the study means that time-based cost modeling of the
structure of discrete accounting objects and business processes contributes to the
performance improvement of restaurant businesses by identifying and eliminating
non-value-added areas.
2 Related works
The social evolution has been influenced by certain factors and phenomena, which
have great importance on economic system establishing. The authors presented their
views on the civilization process development and created various theories and
concepts with the most famous A. Toffler's theory [1]. Accounting, as an integral part
of economic affairs, is directly influenced by civilizational transformations.
Evolutionary development of accounting took place according to the challenges and
requirements of historical periods that followed each other. To describe them, A.
Toffler introduced a concept of "waves": agricultural, industrial, post-industrial
(information, post-information, digital, knowledge economy).
At the same time, each country and nation have its specifics of civilizational
development that influence economic system formation and accounting system
transformation. J. Archambault and M. Archambault paid attention to this fact and
stated that cultural, social, economic, and political factors can influence the disclosure
of financial information [2].
The paper of A. Abeygunasekera, et al. provides a detailed synthesis of the
existing literature on the nexus between accounting and BPM. The paper confirms the
dearth of work that ties the two disciplines; despite the synergetic multidisciplinary
results that can be attained [3].
A comprehensive review of the scientific literature led to the following
conclusions. Research that ties BPM and financial accounting was not identified at
all. Lack of conceptual work that explores the potential nexus between accounting and
BPM, and lack of literature reviews that synthesize prior studies related to aspects of
the two areas. Authors encourage accounting researchers to see how they can
contribute to another discipline like BPM and encourage BPM researchers to see how
well-developed Accounting principles can be applied to address some of the long-
standing gaps in the BPM field [3].
They also approved the emergence of publications in the late 1980s and the
increase of interest to integrate the concept of business process management with the
accounting system since 2007 [3].
Studies of foreign scientists promoted the process approach to management and
accounting in Ukraine [4-10]. Business processes in [11-13] are analyzed as
accounting and management objects.
3. Cost Accounting System and Business Processes in Restaurants
3.1. Traditional model of cost accounting system
Kherson region has the largest seafront of the Black and Azov Seas in Ukraine. A
large number of resort towns and cities set their budgets by tourist infrastructure.
Hotels, cafes, and restaurants are densely spaced so they have equal access to the
markets for raw materials and labor, delivery channels, and production equipment.
The similarity of available food products and a relatively equal level of staff
qualifications make it impossible to differentiate the range of restaurant products and
individual pricing systems. The competition between restaurants for the most
favorable conditions of production and distribution of their products and services is
increased by the climate conditions, allowing to work on average four months per
calendar year, and the limited number of customers, determined by the places for
tourists.
We studied the characteristics of cost accounting and calculation based on the
example of the restaurant business of the Kherson region. The analyzed restaurant has
the following divisions: (1) Bar, (2) Kitchen, (3) Service, (1) Warehouse.
Let us consider the features of accounting in the kitchen. For accounting in the
kitchen is a responsible chef. His duties are not only accounting of raw materials and
products, but also controlling the shelf life of products to write it off timely. An
important aspect of the restaurant is the minimum price and maximum quality of raw
materials for cooking meals and products. Therefore, firstly restaurant considers
several suppliers, chooses better terms of supply, and prefers a particular company
according to the quality-price ratio of raw materials and regularity/volume of supply.
The high competitive level and customer requirements for the quality of products sold
by the restaurant require to cook meals from the freshest products.
An important aspect of the restaurant's activity is the menu, which significantly
determines its uniqueness and attractiveness to invite more visitors. Menu
development is the chef’s responsible. The analysis of the menu of several restaurants
in Kherson region shows a certain similarity of the assortment, which is usually
divided into two parts:
- kitchen menu: breakfasts, cold dishes, appetizers, salads, kinds of pasta, side
dishes, pizza, sushi, desserts;
- bar menu: hot drinks, wine menu, cocktail menu.
The next stage of the research is the cost accounting system. In accounting, the
costs of food, semi-finished goods, and other products used for cooking ready meals
are accumulated on the account “Production”. Other costs connected with cooking
(salaries of kitchen workers, depreciation of equipment, energy costs) are
accumulated on charges account. Each meal or product has its calculation for items of
raw materials according to the recipe.
Job order cost card is drawn up for each meal or product which forms costing per
a calculation unit based on costs of the raw material and its norms according to a
recipe. The restaurant also produces signature dishes sold exclusively in this
restaurant with a non-traditional recipe and/or chef’s technology. The next step is to
specify the value of ingredients per serving, taking into account the output of a
particular type of meal or product.
In cost accounting, special attention is paid to the norms of raw materials costs
and monitoring their compliance. To meet this goal, the restaurant develops a
technological description for each meal (product), which contains the following
information: (1) product name and use area of the technological map; (2) list of raw
materials to produce the meal; (3) requirements for the quality of raw materials; (4)
norms of gross and net weight of raw materials, norms of the output of semi-finished
product and finished product; (5) description of cooking technological process.
The percentage of premiums over the purchase price reflects the complexity of the
meal and the cost of service. The organization of production is focused on cooking
meals based on a certain set of ingredients. The traditional model of the cost
accounting system involves the accumulation of direct costs (the cost of ingredients)
and price-setting by a fixed trade margin (%).
Consequently, the activity of the restaurant business is connected with different
heterogeneous costs neither in composition nor in purpose within cost accounting. In
the “as-is” model the first stage is the development of meals from the menu, the
second includes calculation and costing, the last stage determines its price. The usage
of a fixed trade margin can lead that the price will be much higher than competitors
have. As a result, there is a high risk that a particular meal will not be in demand
because of the high price and time for order processing. In other words, the traditional
model takes into account one of the indicators of customer-oriented management -
quality, others - the customer-friendly price and waiting time are not taken into
account in the model.
3.2. Modeling of the structure of discrete production cost accounting objects and
optimizing business processes
In the previous paragraph, we have analyzed the existing production cost accounting
model and identified its drawbacks. Only costs and time can be considered as relevant
factors for a highly competitive restaurant business. The price of restaurant products
is determined by the market and competitive environment. Therefore, the current
economic and industry situation requires using a target price, which will focus on the
restaurant. As a result, the pricing formula is changed (Fig. 1).
Target = Costing * Estimated (variable) trading margin (%)
price
Fig. 1. Pricing formula with a focus on a target price (author’s development)
Thus, the retail price for a meal becomes fixed, costing will consist of the market
price of the ingredients, while the trade margin becomes a variable component
calculated by dividing the target price and costing. Since cooking technology cannot
be dramatically changed and savings of the products will consequently lead to loss of
quality, the problem solving belongs to innovative methods such as business process
modeling and the structure of discrete accounting objects.
Business process modeling is prospective, but a relatively new area of accounting
compared to other disciplines. It is an interdisciplinary approach to identifying,
designing, executing, documenting, measuring, controlling automated, and non-
automated business processes to achieve target results according to desired goals.
Cost accounting is a part of management accounting and focuses on the use of
financial and non-financial information to plan and control activity and information
support of the managerial decision-making process. It refers to identification and
accumulation of costs connected with a product, process, or service. Business process
modeling is used to improve, redesign, or re-engineer existing business operations to
improve overall performance or effectiveness. Accounting and business process
management work for the same purpose – to increase business efficiency by
identifying productive activities and eliminating unproductive ones.
Let's focus on the kitchen menu. The menu has the "favorite" or "outsider"
categories. Favorites include well-known meals with the classic recipe, designed to
clients who are not risky enough and have traditional preferences. Meals of “outsider”
categories are designed to customers group who prefer to experiment and visit
restaurants in search of new exotic flavors, and what is the most important, they are
willing to pay a higher price for it. Based on the results of the restaurant visitors
interviewing we made the following conclusions: (1) factors such as price, variety,
creativity in the recipe and serving meals influence the client’s choice; (2) the number
of consumers who prefer exotic meals and want to taste something unusual is
significantly less than traditional visitors. Based on the presented meals classification,
the chef creates a menu of meals that have a classic recipe and signature dishes of a
restaurant. Food freshness and the shortest term of cooking are necessary for standard
and signature dishes, therefore, it is necessary to form the largest number of dishes
with the same raw material base and to optimize the term of cooking. So, the choice
of meals and the creation of the menu has a radically different design: the maximum
number of meals with a minimum set of products.
Therefore, to design a menu of a restaurant it is necessary to take into
consideration that it should contain a various range of meals and ingredients available
in the region. Since foods usually have a short shelf life, especially in the summer, the
chef should offer a maximum range of different meals with a minimum set of
identical ingredients. Another direction is to optimize the process of cooking a
meal/product and identify items that will shorten the cooking time. Accordingly, a
discrete structure of finished goods (meal, product, etc.) and a business process
reflecting the flow of cost formation in stages become the objects of the cost
accounting system.
3.3. The architecture of an innovative cost accounting model and results of the
implementation
Gotze and Mikus [14] identify three directions of management to improve
performance efficiency: to improve product quality, to reduce service time, and
reduce product unit cost. Each theory becomes more clear and available if it can be
applied to solve practical problems. We will present the analysis and synthesis of
discrete accounting objects (a meal and its cooking process) in restaurants. We will
use elements of combinatorics and build a model of cost accounting of production and
costing of a meal within customer-oriented management on the example of Caesar
salad by classic recipe.
A meal “Caesar salad” according to the classic recipe consists of a certain set of
ingredients. Firstly, we combine certain ingredients into components such as salad
mix, dressing, and other ingredients. The salad mix contains a set of standard greens.
In this approach, the salad mix (basil, dill, parsley, green onion, another salading, etc.)
should become the first component of a subgroup of salad groups.
The second component will be dressing. Each salad has its dressing, but the set of
ingredients is almost identical except for the single spices that determine the
individual taste. The third component is a set of standard salad products (eggs, cheese,
etc.). The allotted time for cooking any salad from the restaurant menu is 30 minutes.
The pace of life of modern people is very fast, so the time of salad cooking should be
reduced. Another reason is to free up time for a customer to order an extra meal, even
if he has not planned it. Let’s consider the model of cost accounting and costing in
time/availability parameters (Fig. 2).
100% Greens Salad mix Salad Time, min
- 15 0 15
Costs of salad cooking,
Readiness
UAH
Costs of salad mix cooking,
UAH
0%
Fig. 2. Model of the discrete cost accounting object of a “Salad” and business process of its
cooking in time/level of readiness parameters
It should be noted that the perception of the model will be different from the
observer’s status. The observer in the internal system (restaurant) will see two
separate processes of cooking, and therefore the costing formation. The first stage is
the cooking of a salad mix from a set of standard greens. If it is ready, in the
accounting system the salad mix will be entered in records as an own produced semi-
good. During the salad cooking process “Salad mix” is displayed as one of the
components of the meal. Whereas, the salad, as an object of accounting for
production, begins to accumulate costs from scratch.
Time as a category is equal to pronounced 30 minutes with a gap in the middle of
the timeline, which allows preparing the mix in advance before the order is received
from the restaurant hall. For the observer from the external system, in our case, the
client, salad is perceived as the one object with the cooking time in 15 minutes.
Let's introduce the implementation of the proposed model in the software
environment (Fig. 3). To reflect the costs of cooking in the model, it is necessary to
create a base of ingredients in the program to form the costing of the modifiers and
the meals. In an item master data a group of "Semi-finished goods" is formed, which
will include components of future meals. All other ingredients for cooking are
included in the group “Raw materials for the kitchen”.
Caesar salad
Dressing Caesar Salad mix
Fig. 3. The job order cost card "Caesar salad with chicken"
The item master data will record as well the name of finished goods: meals, drinks
and others, so it is intended to form a full list of products used in the restaurant in the
database. The use of the item master data allows accruing a trading margin on the
purchase price of raw materials.
The costing writing off the process of a sold meal is done in an algorithm. The
first step is to receive an order from a customer. The waiter accepts the order from the
guest, puts it in the monobloc, then the order goes to the kitchen through the printer.
The program already contains information about the structure of the meal in the job
order cost card. The costing of the meal is written off the costs simultaneously with
the revenue reflecting from sales at the time of recording the order. If information is
recorded timely and correct, data on the value of sold products and residue stock in
the kitchen will be the most accurate and available online.
4 Conclusions and Suggestions
The traditional cost accounting system and costing of meals of the restaurant are
based on the direct costs of production while costing of self-made meals/products is
determined by the prices of raw materials and purchased semi-finished goods and
retail margin. Other costs are considered indirect. The retail price of a meal is based
on costing and a fixed margin expressed as a percentage. As our restaurant is not a
VAT taxpayer, it is not included in the calculation. The traditional model of cost
accounting means the accumulation of direct costs (product costs), which determine
the cost of a meal, and the formation of prices by a fixed trade margin (%). However,
the methodology does not take into account indicators of customer-oriented
management.
The obtained results confirm the scientific hypothesis and allow us to formulate
the following conclusions: to gain competitive advantages aimed at maintaining a
positive image of the restaurant, we proposed innovative transformations for the
maximum customer satisfaction within the shortest possible period of time. To
implement the innovation, an innovative structured approach for the cost accounting
model was developed: (1) modeling the structure of discrete accounting objects, the
business process optimization, and establishing the interrelation of the structural
elements of the accounting objects and stages of the business process with the time
factor; (2) the architecture of an automated cost accounting system based on financial
accounting data to implement innovation and automated software development.
The proposed innovative approach was implemented in the restaurant and has
created specific economic benefits. A new understanding of accounting (discretion)
and technological process (business process) is the result of research that qualitatively
differs from its previous comparables, creates new consumer values, and promotes a
positive image of the restaurant and economic impact. The use of a target price for a
meal/product radically changes the pricing method, namely, the retail price becomes
fixed and is set according to the market situation and the price of competitors. The
trade margin becomes a variable indicator calculated by dividing the target price and
costing, which allows managing the relevant factors.
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