APPLYING ACTIVITY-BASED COSTING (ABC) IN RESTAURANTS

Abstract

Restaurants, operating in a highly competitive service industry, often rely on traditional costing systems that allocate overheads equally across all items, potentially misrepresenting the profitability of individual menu items. This article explores the implementation of the Activity-Based Costing (ABC) method in the restaurant industry. ABC enables more precise cost calculations, supports better menu pricing strategies, and enhances decision-making processes. A practical case study is included to demonstrate the system’s benefits and discuss the challenges of implementation in real-life settings.