CONTENTS
Food & Beverage Control Food Purchasing Control Food Receiving Control Food Storing & Issuing Control Food Production Control Food Cost Control Cost Dynamics Sales Concepts Activities and Assignments References
FOOD AD B!"!RA#! CO$RO% Defined as 'Guidance and regulation of the costs and revenue of operating the catering activity.” activity.”
%imitations
ot sufficient in itself ( depended upon correct policies and operational procedures) Re*uires constant mgt+ supervision eeds mgt+ action to evaluate the information produced and to act upon it
O,-ectives
Analysis of income and e.penditure !sta,lishment and maintenance of standards Pricing Prevention of /aste Prevention of fraud ( customers and staff ) 0anagement information Accurate and up to date information for the preparation of reports 1elps in comparison /ith set standards previously laid do/n
Pro,lems Faced Perisha,ility of the product 2npredicta,ility 2npredicta,ility of the volume of ,usiness 2npredicta,ility 2npredicta,ility of the menu mi. Short cycle of catering operations Departmentali3ation 1aving several production and secure areas Offering different produvts under different policies
F & B Control System Cycle MARKETING POLICY
FINANCIAL POLICY
B4 S!IOR 0#$+
B4 D!P$+ 1!ADS AD S2P!R"ISORS (CO$RO%)
CATERING POLICY
PURCHASING RECEIVING
STORING AND F & B CO$RO% D!P$+ ISSUING PREPARING
MANAGEMENT CONTROL AFTER THE
Fundamental of Control $1R!! BROAD P1AS!S $he planning phase Operational phase 0gt+ control after the event
P%AI# P1AS!
FIACIA% PO%IC4 5levels of profita,ility 5level of su,sidy6cost limits 5setting of targets 0AR7!$I# PO%IC4 5identification of ,road m8t+ 5identification of particular segment Identifying immediate and future customers6for various areas 55Can have the follo/ing o,-ectives ational identity identity Customer 0ar8et share $urn over Profita,ility Average spending po/er Product Customer satisfaction CA$!RI# CA$!RI# PO%IC4 Defines main objectives of F&B facilities and describes methods of achieving such objectives
5type of customer 5type of menu 5,everage provision 5food *uality standards 5method of ,uying 5type and *uality of service 5degree of comfort and d9cor
5hours of operations
$1! OP!RA$IOA% P1AS!
: main stages
P2RC1ASI# 5product testing 5yield testing 5purchase specification 5method of ,uying 5clerical procedures R!C!I"I# 5*uality inspection 5*uantity inspection 5clerical procedures S$ORI#& ISS2I#
5stoc8 records 5pricing of issues 5stoc8 ta8ing 5clerical procedures
PR!P PR!PA ARI# RI# 5vol 5volum umee fore foreca casstin ting 5pre costing 5clerical procedures S!%%I# 5a chec8ing system 5control of cash 5clerical procedures 0AA#!0!$ CO$RO% 5F&B cost procedures 5assessment 5correction
CO$RO%
Control is a process used ,y the managers to direct regiulate and restrain the action of people so that the esta,lished goals of an enterprise may ,e achieved+ AD"A$A#!S OF CO$RO% !sta,lishing control over costs and sales in F & B operations+ !sta !sta,l ,lis ishi hing ng stan standa dard rdss and and stan standa dard rd oper operat atin ingg proc proced edur ures es for for operations+ !liminating e.cessive costs in all areas to ensure profita,ility of operations 0onitoring performances against esta,lished standards+ Preventing frauds /astage and pilferage+ 0anagement reporting+ CO$RO% PROC!SS $he control process consists of ; steps< !sta,lish standards and standard operating procedures for operations $rain $rain all indivi individua duall to follo/ follo/ esta,l esta,lish ished ed standa standards rds and standa standard rd operating procedures+ 0oni 0o nittor perfo erform rman ance ce and com compare pare act actual ual perfo erform rmaances nces /it /ith esta,lished standards+ $a8e $a8e appropriate actions to correct deviations from standards+
F & B CO$RO% Food Food & Beve Bevera rage ge Cont Contro roll may may ,e defi define nedd as th thee guid guidan ance ce and and regulation of the costs and revenue of operating catering activity in 1otels restaurants and other catering esta,lishments+
OB=!C$I"!S OF F & B CO$RO%
Analysis of income & e.penditure+ !sta !sta,l ,lis ishi hing ng stan standa dard rdss and and stan standa dard rd oper operat atin ingg proc proced edur ures es for for operations+ Pricing and *uotations for ,an*uets and special events+ 0anagement reporting+ Prevention of /aste and frauds+
SP!CIA% PROB%!0S PROB%!0S OF F & B CO$RO% Perish a,ility of the product+ 2npredicta,ility 2npredicta,ility of the volume of ,usiness+ 2npredicta,ility 2npredicta,ility of the menu mi.+ Short cycle of catering operations+ 1igh degree of departmentali3ation+ departmentali3ation+
FOOD P2RC1ASI# CO$RO% Purchasing Purchasing may ,e defined as a procurement function concerned /ith sear search ch sele select ctio ion n purc purcha hase se rece receip iptt stor storag agee and and fina finall use use of commodity in accordance /ith the catering policy of the esta,lishment+
Purchasing Control !sta,lishing standards and standard procedures for purchasing+ Quality standards
Product testing yield testing standard purchasing specifications+ Quantity standards
Appropriate purchase *uatities for ,oth perisha,le and non perisha,le foods+ Methods of purchasing
By contract *uotations cash & carry etc+ Clerical procedures
Documentation and procedures Purchasing Research
$he mar8ets $he mar8eting channels $he materials $he price trends Purchasing documentations
Originating from the ,uyer side Purchase specifications Purchase re*uisition Purchase order Originating from the supplier side Invoice Delivery note
Purchasing procedure S$!PS AC$I"I$I!S Initiation of purchase Chec8 location re*uisition Chec8 authori3ation Chec8 purchase specification
O$!S 7itc 7itche hen6 n6 rest restau aura rant nt66 ,ar6 stores Chef6 F& B 0anager6 ,ar man6 Store8eeper Food ,everages From a list of approve suppliers or in*uiries to ne/ suppliers $elephone6 fa.6 mail6 internet
Determination of Select & approve sources of supply suppliers egotiate prices and delivery re*uirements Invite price *uotations Placeme ement of of or orders !v !vaaluate *u *uotati ations Prepar Preparee compar comparati ative ve Select most statements to evaluate favoura,le *uotations proposals Place purchase orders Follo/ up the orders Receiving supplies "erification of "erify *uality invoice6 delivery *uantity and price notes Invoice stamping Ac8no/ledgement of 7itche 7itchen6 n6 restau restauran rants6 ts6 the receipt of the ,ar6 stores6 cellar supplies $ransfer of comm commod odit itie iess to user user departments Clos Closur uree of purc purcha hase se Clerical procedures For/arding transactions Payments for completed paper materials /or8s to purchase office for payments
$1! P2RC1AS! $RASAC$IO Requisition fro !n !ut"ori#e$ %erson C"e&' %ur&"!se s%e&i(&!tions C"e&' %re+ious %ur&"!se of s!e, sii-!r
Pur&"!sin) o*&e re&or$s
Enquiries to ne. su%%-iers A%%ro+e su%%-iers Se-e&t su%%-iers
Det!i-s / quot!tions fro su%%-iers
Se-e&t ! su%%-ier fro ! -ist of !%%ro+e $ su%%-ier
Ne)oti!te %ri&e !n$ $e-i+er0 Pur&"!se or$er
P-!&e t"e %ur&"!se or$er
De-i+er0 note
In+oi&e
St!teent
Tr!ns!&tion Tr!ns!&tion &o%-ete$
P2RC1AS! R!>2ISI$IO $o
Item
cription
1O$!% I10 Re*uisition o o< FB FB ?@ ?@? Purchase Order o< ?:;@ Date Re*uired< August : @@
Des >$4 2I$ PRIC!62I$ $O$A% COS$
Re*uested By< + Ordered++
Approved By< ++
Date
$1! S!%!C$IO OF S2PP%I!R A supplier can ,e selected either from the e.isting list of approved suppliers of the ,uyer or form en*uiries to ne/ suppliers+ hen see8ing a ne/ supplier the follo/ing points must ,e considered< Details of the firm – name, name, address, fa, telephone telephone etc. Details of the range of items items they are selling. selling. !opies of recent price lists. Details of trading terms & conditions. conditions. Details of other customers. "ample of products. #isit to the company.
1aving selected suppliers and placed them on an Eapproved suppliers list list and and aft after havi aving purch urchaased sed from from them hem it is nece necess ssaary t periodically evaluate their performance using a rating system+ $here are three main performance criteria /hich are normally used in a rating system< Price performance >uality performance Deliver performance
PRIC! P!RFOR0AC! $his is the a,ility of a supplier to *uote competitive prices over a period of time+
>2A%I$4 P!RFOR0AC! $his is the a,ility of a supplier to supply the ,uyer consistently /ith goods of the desired *uality as laid do/n in the purchase specification+
D!%I"!R4 P!RFOR0AC! $his is the a,ility of a supplier to meet agreed delivery schedule (time and dates) /ith the ,uyer+
S$ADARD P2RC1AS! SP!CIFICA$IO (SP!C) A Standard Purchase Specification is a concise direction of /riting of the *uality si3e /eight or count grade ,rand pac8aging and other factors re*uired for a particular food or ,everage item+ Purchase specifications are prepared ,y mem,ers of the management team for e.ample the purchasing manager head chef and the food and ,everage manager /ith reference to the menu re*uirements price structure and catering policy of the firm+ Printed copies of the
specifications should ,e freely availa,le to the purchasing staff the store man the receiving cler8 and must ,e sent to all suppliers on the approved suppliers list+
OB=!C$I"!S $he reas $he reason onss for for prep prepar arin ingg stan standa dard rd purc purcha hase se spec specif ific icat atio ionn are are as follo/s< $o esta,lish a ,uying standard for a particular commodity of an esta,lishment+ $o facilitate facilitate purchasing and internal re*uisitioning+ $o info inform rm the the supp suppli lier er in /rit /ritin ing g prec precis isel elyy /hat /hat the the purc purcha hase se re*uires+ $o inform the receiving cler8 and the store man /hat to accept+ $o o,t ,tai ainn a sta standar ndardd produ roducct for for th thee produ roducction tion and and sell selliing departments+ $o eliminate eliminate misunderstanding ,et/een the purchasing officer and the purveyors+
COC!P$S OF P2RC1AS! SP!CIFICA$IO ame of the item< $rade6 $rade6 Brand6 Standard+ Definition of the item< 2se common catering terms for ,oth the ,uyer and supplier+ #rade< Official recogni3ed grading scheme or any other e+g+ ISI A#0AR7 eight si3e or count< 7ilos pound grams etc+ e+g+ lemon ?@s Pineapples @;s Apple Apple G medium to large H H6; to ; in diameter+ 2nit of purchase< per 8g per case per pound+ >ualit >ualityy re*uir re*uireme ements nts<< degree degree of freshne freshness ss degree degree of prepar preparati ation on color te.ture etc+ Pac8 Pac8ag agin ingg re*u re*uir irem emen ents ts<< $omato mato sauc saucee G pac8 pac8ed ed @; ,ott ,ottle less to a carton+ Delivery notes< Asparagus Asparagus tips G delivered at ? degree or ,elo/
S$ADARD P2RC1AS! SP!CIFICA$IO
#rapefruit Florida 0edium to large H J to ; in diameter %ight yello/ in color $hin5s8inned tender delicate flesh o visi,le spotting or ,ruising ,ruising on s8ins Paced HK to a crate
$1! P2RC1ASI# OF FOODS $4P!S OF FOOD P2RC1AS!S $he types of foods are those foods to ,e purch rchased for any foodservice enterprise can ,e divided into t/o categories Perisha,le and onperisha,les+
P!RIS1AB%! FOODS Perisha,le foods are those food items that have a comparatively short useful life after they have ,een received+ For e+g+ various 8inds of fresh vegeta,les fruits and fresh fish etc+ perisha,le then should ,e purchased for immediate use in order to ta8e advantage of *uality desired at the time of purchase+
OP!RIS1AB%! FOODS onperisha,le foods are those food items that have longer shell5lives+ groceries or stables+ Foods that typically fall Fre*uently referred to as groceries into this category include salt sugar canned fruits and vegeta,les spices and flavorings+ $hey do not deteriorate *uic8ly as long as they are unopened and 8ept at reasona,le temperatures+ onperisha,le are typically purchased and stored in the pac8ages or containers in /hich they are received such as -ars ,ottles cans ,ags and ,o.es+ $he storage area in /hich they are 8ept usually called as Store room /ould resem,le the shelves of a supermar8et+
SO2RC! OF S2PP%4 Food service operators depend on supplier /ho can ,e grouped in the follo/ing general categories+ holesaler Retailers 0anufacturers Pac8ers %ocal farmers Cooperative associations In most instances the foodservice operator /ill deal /ith several of these sources of supply to o,tain the necessary foods+ For e.ample a restaurant may turn to local producer for dairy and ,a8ery products a pac8er for canned meats a /holesaler for fresh meats a different /holesaler for canned fruits and vegeta,les and a local farmer for eggs+
0!$1ODS OF P2RC1ASI# FOODS Purchasing ,y contract+ Purchasing ,y Daily >uotation Sheets for Daily 0ar8et %ist+ Purchasing ,y ee8ly6Fortnight >uotation Sheets+ Purchasing ,y 'Cash and Carry method+ Open mar8et purchasing+ Periodically purchasing+ Standing order purchasing+ Centrali3ed purchasing+ PURCHS!N" #$ CONTRCT
$here are t/o common types of contract used+ $hey are< Specific Period Contract
$his form of contract is concerned /ith ,uying food items for a specified period of time (H5K months) at an agreed price from an approved source of supply to safeguard the continuity of supply+ supply+ Items /ith a fairly sta,le price such as mil8 cream ,read ,iscuits etc+ can ,e contracted in this /ay+ /ay+
Specific Quantity Contract
$his form of contract is concerned /ith ,uying food items of a specific *uantity for a particular trading period at an agreed price from an approved vendor to safeguard the continuity of supply+ For e+g+ purchase of fro3en fruits and vegeta,les for use in a summer season or ,an*ueting+ Purchasing #y %aily Quotation Sheets
$his method is particularly used for purchasing perisha,le foods /here to ensure freshness they have to ,e purchased on a daily ,asis also /here the mar8et price for the commodity fluctuates daily+ daily+
Procedure $he head chef or a senior mem,er of the 8itchen staff /ould ta8e a *uic8 stoc8 ta8eoff the food items left at the completion of each meal period+ $he *uantities on hand and the *uantities re*uired to ,e purchased for the ne.t ne.t perio eriodd of th thee ,usi ,usine ness ss /oul ould ,e ent nter ered ed in the Dail aily >uotation Sheet+ $his sheet /ould then ,e passed to purchasing office for further processing+ !ach of the approved suppliers /ould then ,e telephoned and as8ed for their price *uotation for each of the items re*uired+ $he price *uoted /ould ,e /ith reference to the purchasing specification for the items previously sent to the supplier+ $he prices *uoted /ould ,e entered on the day 'Daily >uotation Sheet and then a decision made ,y the Purchasing 0anager as to /here to place the order for each item+
Purchasing &y 'ee(ly) *ortnightly Quotation Sheets+
$his method is commonly used for purchasing grocers items /here the perisha,ility of the items is not such an important factor and a delivery of once a /ee8 or fortnight is ade*uate+
Procedure< $he head store8eeper or other person responsi,le /ould chec8 the level level of all items items in the stores stores at the /ee8l /ee8ly6 y6 fortni fortnight ghtly ly period period of e.tract them directly from the store records+ $he *uantities and the *uantities re*uired to ,e purchased for the ne.t period of the ,usiness /ould ,e entered on to the /ee8ly6 fortnightly *uotation sheet+ $his sheet /ould then ,e passed to purchasing office for further processing+ $he purchasing /ould send out ,lan8 *uotation sheets to approved suppliers as8ing them to *uote their price and to return them to a spec specif ific ic date date++ $he pric pricee *uot *uoted ed /oul /ouldd ,e /ith /ith refe refere renc ncee to th thee purchasing specification for the items items previously sent to the supplier+ supplier+ On receipt of *uotations these /ould ,e entered on to a master *uotation sheet and then a decision made ,y the purchasing manager as to /here to place the order for each item+
Purchasing ,y LCash and CarryL $his method is of particular items ems to the medium and smal smalll esta,lishments /hose orders are often not large enough to ,e a,le to get regular supply from /holesalers and food manufacturers+
Advantages< Cash & carry outlets are situated near to most catering esta,lishment+ Small or large *uantities may ,e purchased at a competitive price+ $hey are useful in emergencies or /hen special offers are ,eing made+
Customers can see /hat they are ,uying as against ,uying -ust from a price catalogue+
Disadvantages< Caterers have to pay cash for the items they purchase+ Caterers have to provide their o/n staff and transport to collect the items purchased+
Open mar8et purchasing< $his is an informal method of ,uying food items that can ,e easily adopted ,y smaller esta,lishments+ It is generally used for purchasing perisha,le food li8e fresh fruits vegeta,les meat etc on a daily ,asis from the open mar8et as per re*uirements of the caterers+
Periodical purchasing< $his method of purchasing permi rmits the purchasing officer com compara parati tive velly infre nfre**uent uent ord orderin eringg and is gen general erallly use used for for purchasing non5perisha,le foods that have larger shelf lives than perisha,les+ hen periodic order method is follo/ed the purchasing officer normally esta,lish /ith the advice of management regular dates for ordering /ith fi.ed intervals ,et/een them for e.ample once every /ee8s or once each month+
Standing order purchasing<
$his is a method of purchasing /here,y the purchasing officer are ma8e arrangements /ith certain purveyors for the delivery of food item itemss /ith /ithou outt spec specifi ificc orde orders rs++ $h $hes esee arra arrang ngem emen ents ts are are 8no/ 8no/nn as standing orders orders and can ,e of t/o types+
$he first arrangement calls for the delivery of a specific *uantity of given item each day+ For e.ample ?@ loaves of ,read per day+ $he num,er remains constant unless changed ,y the purchasing officer+ $he second arrangement calls for the replenishing of stoc8 each day up to a certain predetermined *uantity+ For instance the purchasing officer may arrange /ith a dairy supplier to leave a sufficient *uantity of ,ul8 mil8 each morni rning to ,ring the total supply up to a predetermined figure such as @ gallons+ Alth Althou ough gh thes thesee arra arrang ngeme ement ntss are are conv conven enie ient nt they they do pres presen entt a num,er of possi,le for /aste and e.cessive cost to develop+
Centrali3ed Purchasing< $his method of purchasing is /idely used ,y chain operators under a centrali3ed purchasing system re*uirements of individual units are relayed to central office /hich determines total re*uirements of all units & then purchasing that total re*uirement either for delivery to the in indi divi vidu dual al unit unitss ,y the dea dealer ler or for for deli eliver very to a cent entral ral /arehouse for further distri,ution+ $his method o,viously re*uires that a /hole system for distri,ution ,e maintained and operated ,y the organi3ation organi3ation doing the centrali3ed purchasing+
FOOD R!C!I"I# CO$RO% Recei,ing control
!sta,lishment $"tandards and "tandard %roceduresL ims of Recei,ing
$he receiving process is concerned /ith the tas8 of monitoring the receipt of all incoming merchandise thoroughly and systematically to ensure that the *uantity *uality and price of each item delivered conforms e.actly to the order placed+
-ocation+
Ideally Ideally receiving department should ,e located near the delivery door purchase department & store to minimi3e the time & effort in movement of goods into appropriate storage s torage areas+
Facilities< M
0oto 0o tora ra,l ,lee roa roadd up up to to the the ente entera ranc ncee (N (N fee feett to to ? ? fee feet) t)++
M
Platform form for for un unloading de delivery tr truc8s+
M
Ramp Ramp to faci facili lita tate te unlo unload adin ingg of of oth other er deli delive very ry vehi vehicl cles es++
-ayout plan+
ell ell lighted and ade*uately ventilated receiving area+ Interior distri,ution+ M
Receiving cler8s office+
M
eighing section+
M
ashing section+
M
Pac8ing section+
M
!mpties out/ard section+
Recei,ing e.uipment+
M
eig ighi hing ng scal scales es<< Pl Plat atfo form rm Coun Counte terr 1ang 1angin ing+ g+
M 1and 1and66 For8 For8 lif liftt truc truc8s 8s 0ove 0ovea, a,le le she shelv lves es $ro $roll llie iess and and cart cartss for for transporting goods+ M
Bins Bas8et aste ,ins+
M $ools such as Can opener Cro/ ,ar Cla/ hammer Short ,laded 8nife for opening containers containers and pac8ages+ M
$her $h ermo mome mete terr for for chec chec8i 8ing ng temp temper erat atur uree of of fro fro3e 3enn foo foods ds++
M
0ar8ing & $agging e*uipment+
M Office e*uipment ta,le file ca,inet calculator computer stationary etc+ Recei,ing schedule+
Perisha,les<
am to ?? am
#roceries & others
@pm to ; pm
Recei,ing documents+
Documents from the supplier< M
Delivery otes
M
Invoice6 Bills
M
Statements
M
Credit otes
Documents maintained in the receiving department< M
#oods received ,oo8s
M
Daily receiving report
M
0eat tags<
Delivery otes< $hese are sent /ith goods supplied as a mean of chec8ing that everything ordered has ,een delivered+ $he delivery note should also ,e chec8ed against the duplicate duplicate purchase ordered
Invoices6 Bills+ $hese are ,ills from a vendor for goods supplied or services rendered+ An invoice should ,e sent on the day the goods are dispatched or the services or the services are rendered or as soon as possi,le after/ards+ Invoices contain the follo/ing information+ M
nvoice+ $he /ord nvoice
M ame ame add address ress phon phonee and and fa. fa. of th the firm firm sup suppl plyi ying ng th the good goodss or services+ M ame and and add address of th the firm firm to to /ho /hom the the goo goods or se services have ,een supplied+ M
Date Date on /hic /hichh th thee good goodss or serv servic ices es /ere /ere supp suppli lied ed++
M
Part Partic icul ular ar of of good goodss or ser servi vice cess supp suppli lied ed tog toget ethe herr /ith /ith pri price ces+ s+
M
Part Partic icul ular arss of of dis disco coun unts ts if if any any and and ta. ta.es es as appl applic ica, a,le le++
Statements< $hese are summaries of all invoices and credit notes sent to clients duri during ng th thee prev previo ious us acco accoun unti ting ng peri period od usua usuall llyy one one mont month+ h+ A statement is usually a copy of a clients ledger account and does not contain more information than is necessary to chec8 invoices and credit notes+
Credit otes< $hese are advices to clients setting out allo/ance made for goods retu return rned ed or ad-u ad-ust stme ment ntss made made thro throug ughh erro errors rs of over overch char argi ging ng on invoices+
#oods Received Boo86 Daily Receiving Report< $his is used to record the details of all the deliveries of goods made ,y suppliers+
0eat $ag< $ag< In many catering esta,lishments it is common practice to tag most e.pe e.pennsiv sive food food item itemss such such as meat eat and and smo8 smo8eed salm salmon on aft after accepting it for *uantity & *uality+ A meat tag is a stoc8 card perforated for division into t/o parts used to record in duplicate the follo/ing information a,out an item+ 0eat $ag o+
Item eight Supplier 2nit price $otal $o tal value va lue Date of receipt Date of issue One part of the meat tag is attached ,y string or /ire to the food item and the second part is sent to the control office /ith the invoice to ,e used as an inventory control device+ Receiving procedure< >uantity inspection< $o ensure that the *uantity of the goods delivered is in accordance /ith *uantity listed on the purchase order6 invoice+ $his means that all goods /ill have to ,e /eighed (for e.ample fresh fruits vegeta,les meat etc+) or counted (for e.ample cases crates ,o.es sac8s etc+)+ >uality inspection< $o ensure that the *uality of the goods delivered is in accordance /ith the *uality esta,lished in the standard purchase specifications of the esta,lishment+ Price inspection< $o ensure that price stated on the invoice6 delivery note are in accordance /ith the prices on the purchase order 6 invoice+
Dispatch to stores6 user departments< $he goods having ,een chec8ed for *uantity *uality and price must ,e removed from the receiving area to appropriate stores6 user departments+ For e.ample perisha,le food items to the 8itchen and all other food items to the stores+ Clerical procedure< M
Invo Invoic icee sta stamp mpin ingg to to ac8 ac8no no/l /led edge ge th thee rec recei eipt pt of supp suppli lies es++
M
Rec Recordi ording ng in invo voiices ces on on good goodss rec receive eivedd ,oo ,oo8+
M Rais Raisin ingg Re* Re*ue uest st for for cre credi ditt note note for for shor shorta tage ges s ,re ,rea8 a8ag ages es su,5 su,5 standard items etc+ M
Fill Fi lliing out meat meat tags tags for for e. e.pen pensiv sive foo foodd ititems+ ems+
M
For/ For/ar ardi ding ng comp comple lete tedd pap paper er /or8 /or8 to purc purcha hase se offi office ce++
Invoice Receiving< $he method of receiving goods against the invoice accompanying the goods ,eing delivered ,y supplier+ #lind Recei,ing+
$he method of receiving goods against purchase order /ith *uantity column ,lan8ed out the main purpose of the system is to compel in different receiving cler8s to /eigh and count all goods coming into the esta,lishment+ $he system /or8s as follo/s+ $he receiving cler8 is sent a copy of the purchase order /hich lists the goods to ,e purchased ,ut does not sho/ the *uantities of such goods+ $he receiving cler8 is re*uired to count and /eigh all goods received and record the *uantities of all incoming goods+
'ote( )ll invoices* delivery notes, in such circumstance, circumstance, are sent direct to the accounts office. +he receiving cler has, therefore, no access to these documents.
Assessing Performance and !fficiency of the Receiving Department< $he purc $he purcha hasi sing ng off officer icer must must ,e resp respon onsi si,l ,lee for for the rece receiivi vinng department and for its operating efficiency in order to discharge his responsi,ility responsi,ility he must consider the follo/ing points< 0aintain a very close /or8ing relationship /ith the start receiving department+ Conduct spot5 chec8ing different suppliers deliveries every /ee8 for *uantity *uality and price+ Chec8 if all the necessary paper/or8 is done properly and in time+ !nsure that the receipt of goods is done as *uic8ly assessa,le and sent direct to the stores celler or any other user department+ Hygiene / Cleanliness of the Recei,ing area
$he foll $he follo/ o/in ingg poin points ts must must ,e cons consid ider ered ed to ensu ensure re hygi hygien enee & cleanliness of the receiving area+ Receiving area should ,e /ell lighted and ade*uately ventilated+ Receiving areas must ,e clean & free from f rom litter+ aste aste ,ins empty return ,o.es etc should ,e 8ept tidy and safe+ aste ,ins must ,e 8ept /ith lids on and empty fre*uently and 8ept clean+ All receiving e*uipment should ,e 8ept clean and functional+
-$OUT P-N O* RECE!0!N" %EPRTMENT
Q Q Q Q Q Q Q Q FOOD CO$RO% CO$RO% COP4Q COP4Q Q Q Q Q Q Q
Q Q Q Q Q Q Q Q FOOD S$OR! COP4Q Q Q Q Q Q Q Q S!D $O FOOD CO$RO% O DA4 OF ISS2! $O 7I$C1! I"OIC! S$A0P
I"OIC!
S$A$!0!$
!A0P%! OF A $4PICA% R!>2!S$ FOR CR!DI$ FOR0
!A0 !A0P% P%! ! OF A !$R !$RAC AC$ $ FRO0 FRO0 A #OOD #OODSS R!C! R!C!I" I"!D !D BOO75
FOOD S$ORI# & ISS2I# CO$RO% !NTRO%UCT!ON
$he ,asic aim of a food store is to maintain an ade*uate supply of foods for the immediate needs of the ,usiness /ith the very minimum loss through spoilage and pilferage+ STOR!N" CONTRO-
!sta,lishing standards and standard procedures for storing in general the standards esta,lised for storing food should address the follo/ing pricipal concerns+ concerns+ location of storage facilities+ layout of storage facilities+ condition of facilities and e*uipments+ arrangement of foods+ security of storage areas+ • • • • •
?+) %OCA$ %OCA$IO OF S$ORA#! FACI%I$I!S FACI%I$I!S henever possi,le the storage facilities for ,oth perisha,le and non perisha,le foods should ,e located near to receiving department and /here necessary to goods lift+ a properly located storage facility /ill have the effect of 5 speeding the storing and issuing of food+ 5 ma.imum security+ 5 reducing la,our re*uirements+ @+) %A4 %A4O2$ OF S$ORA#! FACI%I$I!S5 FACI%I$I!S5 $he internal layout of storage facilities include5 5 refrigerated area+ 5 non5refrigerated area+ 5 order processing area+ area +
H+) CODI$IO OF FACI%I$I!S AD !>2IP0!$5 $he factors involved in maintaining proper internal conditions are5 1STOR"E TEMPERTURES1
Food must ,e stored at correct temperatures+ Follo/ing are generally accepted optimum temperature for storing foods indicated5 P!RIS1AB%! FOODS5 5fresh meat 5fresh products 5fresh fish 5fro3en food
H; to HK deg+ f H; to HK deg+ f H; to HK deg+ f 5? to deg+ F
O P!RIS1AB%! FOOD5 K: $O deg deg F STOR"E STO R"E CONT! CONT!NER NER 5fo 5 food
must ust ,e sto tore redd in appro ppropr priiate ate
containers+ 5food 5food deliv delivered ered in unseal unsealed ed cont contain ainers ers55 paper paper ,ags ,ags ,o.e ,o.es s and and snac8s should ,e transferred to suita,le airtight containers (glass or plastic) e.ample5 her,s and spices+ 5,ul8 dry foods (pulses cereals flour sugar salt etc) should ,e stored in suita,le ,ins /ith tight5fitting lids+ 5sac8s or cases of commodities shoul, ,e stored on doc8 ,oards so as to permit a free circulation of air+ SHE-0!N"1
FOR P!RIS1AB%! FOODS5 Shelving should ,e slatted to permit ma.imum circulation of air in refrigerated facilities+ FOR O P!RIS1AB%!5 Solid steel shelving is usually preferred+ C-EN-!NESS O* STOR"E RES1
5a,solute cleanliness is a condition that should ,e enforced in all food storage facilities at all times+ 5store rooms should ,e s/ept and cleaned daily+
5/aste and ru,,ish should not ,e allo/ed to accumulate+ 5professional e.terminator should ,e ,rought in on a regular ,asis to prevent rodents and vermin+ H)+ RRN"EMENT O* *OO%S1 the fact factor orss in invo vollved ved in main mainta tain in ing an appr approp opri riaate int nter erna nall arrangement of foods include5 5categori3ing types of food received (perisha,le and non perisha,le)+ 58eeping the most fre*uently used items closest to the entrance+ 5fi.ing definite location for each commodity+ 5using Efifo method of stoc8 rotation+ 5grouping similar commodities together e.ample5 canned items+ 5coding commodities in a logical se*uence (alpha,etical or numerical se*uence)+ :+) SECUR!T$ O* STOR"E RES1 appropriate security must ,e maintained in storage areas at all times+ 5store room should never ,e left open to unattended+ 5proper 8ey control should ,e implemented+ 5employees access to store room should ,e restricted+ 5store room should ,e 8ept open during specified periods+
S$OC7 CO$RO% !sta,l !sta,lish ishing ing standa standards rds and standa standard rd proced procedure uress for stoc8 stoc8 contro controll address the follo/ing concerns ?+stoc8 ta8ing @+detremining the value of stoc8 held in stores H+comparing actual physical stoc8 value /ith the ,oo8 value of the stoc8 ;+dtermining rate of stoc8 turn5over :+esta,lishing stoc8 levels K+maintaining stoc8 records Stoc( Ta(ing
$he stoc8 ta8ing is an important tas8 and should ,e underta8en ,y the staf stafff from from the the cont contro roll or acco accoun unts ts depa depart rtme ment nt toge togeth ther er /ith /ith the the mem,ers of the food and ,everage management team+ Stoc( Ta(ing Ta(ing Methods Met hods 23 Monthl Monthly y !n,entor !n,entory y Method Method
$he process of ta8ing a physical inventory of products on hand in all storage areas at the end of the month or the trading period is called a monthly inventory+ $he physical inventory /ould involve physically counting or /eighing the goods held in stoc8 and recording the information accurately in the stoc8 ta8ing sheet for management reporting+ @+ Perpetual !n,entory Method $he process of maintaining a continuous record of all purchases and issues is called a perpetual inventory+ $he perpetual inventory may ,e maintained on cards or in ,oo8s usually in the control office for each commodity of item held in stoc8+ $he perpetual inventory provides the ,oo8 value of stoc8 for comparison /ith physical inventory+
#oo( 0alue of the stoc( is calculated &y the formula+1
"alue of opening stoc8 stoc8 purchases during period G re*uisition made made in the same period Q value of closing stoc8
Rate of stoc8 turnover is calculated ,y the formula<5
Cost of food consumed 6 average value of stoc8 at cost price Q rate of stoc8 turnover in a given period For !.ample< in a @N day trading period the cost of food consumed /as rs+H65 +$he opening stoc8 on day ? /as rs+N65 and the closing stoc8 on day @N /as rs+65 Rat of stoc8 turnover Q (H) 6 (N6@) Q H 6 : Q ; times $his means that in the @N day trading period the total value of stoc8 turned over four times and that an average of one /ee8s stoc8 /as held during the period+
P!RP!$2A% I"!$OR4 CARD I$!0 COD! TTTTTTTTTTT I$!0 A0! TTTTTTTTTTT DA$! ORD!R
2I$ SIU! TTTTT 2I$ COS$TTTTT R!C!I"!D
PAR S$OC7 TTTTTTTTTTTT R!ORD!R POI$ TTTTTTTTTTT ISS2!D BA%AC!
P14SICA% I"!$OR4 S1!!$ >$4 I 2I$ I$!0 2I$ 1AD D!SCRIP$IO COS$
$O$A% I"!$OR4 "A%2!
DA$ DA$! TTTT TTTTTT TTTT TTTT TTTT $A7! 7! B4 TTTT TTTTTT TTTT TTTT TTTT TTTT TTT T B!#II# I"!$OR4 RS TTTTTT Stoc( -e,els
$he level at /hich an item of stoc8 is to ,e held in stores6cellars at any point in time of the ,usiness in a particular trading period+ %eterminants of stoc( le,els • • • • • • • •
$he forecasted usage figures for the trading period $he economic ordering *uantity (!O>) $he reordering time for the item (lead time) $he rate of stoc8 turnover $he ,udget availa,le $he mar8et trends $he storage space availa,le $he shelf life of the item
Minimum stoc( le,el
It indicates the minimum figure of inventory *uantity held in stoc8 at any time+ Minimum le,elQRO% G (average usage average reordered period) 0a.imum stoc8 level It indicates the ma.imum figure of inventory *uantity held in stoc8 at any time+ Ma4imum Ma4imum le,el Q RO% !C> G (minimum usage minimum reordered period) Reorder level It indicates the level at /hich fresh orders should ,e placed for replenishment of stoc8+ Reorder level Q ma.imum usage ma.imum reorder period O$!< Average stoc8 level Q V (minimum stoc8 level ma.imum stoc8 level) Average reorder period Q V (minimum reorder period ma.imum reorder period) Illustration $he information given ,elo/ is in respect of a product U!D< 0onthly demand of U!D Q ? units Cost of placing an order rs+? Annual Annual carrying cost per unit rs+?: ormal usage : units per /ee8 0inimum usage @: units per /ee8 0a.imum usage : units per /ee8 Re5order period ; to K /ee8 Compute from the a,ove Re5order *uantity(!C>) Re5order level 0inimum level 0a.imum level Average stoc8 level Economic order .uantity (!O>)
$he !O> is the optimum are the most favoura,le *uantity /hich should ,e purchased each time /hen the purchase are to ,e
made made++ In other other /ords /ords the !O> !O> determ determin ines es ho/ much much to ,uy at particular time+ $he !O> can ,e computed ,y using the follo/ing formula !O> Q W@2O 6 IC here < 2 Q annual usage 2nits O Q ordering cost i+e+ cost of placing an order I Q carrying cost percentage of inventory C Q carrying cost (storage cost) i+e+ annual carrying cost per unit Illustration Calculate the !O> from the follo/ing information Consumption of material per annum< ? 7g+ Order placing cost per order < Rs+ : Cost per 7g+ of ra/ material < Rs+ @ Storage cost < NX on average inventory Solution W(@.?.:) 6 (@ N6?) WK@: !O> Q @:8g+ $RASF!R O$! (FOOD6B!"!RA#! $RASF!R 0!0O) FRO0 DA$! DA$! TTTTTTTTTTT TTT TTTTTTTT $O TTTTTTTTTTT >$4 D!SCRIP$IO 2I$ PRIC!
TTTTTTTTTTT A0O2$
$O$A% S!$ B4 TTTTTTTTTTTTTTTTTT TTTTTTTTTTTTTTTTTT R!C!I"!D B4 TTTTTTTTTTTTTTT !ssuing Control
!sta,lishing standard and standard procedure for issuing control should address the follo/ing concern < ?+ Setting up a re*uisition system @+ Pricing the re*uisition r e*uisition Setting up a re.uisition system
A re*uisition system is a highly structure method for controlling issu issues es++ All storer storeroo oom m issu issued ed should should ,e made made agains againstt a /rit /ritte tenn re*uisition signed ,y an authori3ed person+ Often the chef /henever practical it is advisa,le that re*uisition ,e su,mitted in advance to ena,le the storeroom cler8 to prepare the order /ithout haste+ $he items listed on re*uisition fall into t/o categories+ Directs < $he food category charged to food costs as received+ !g+ Perisha,le food items+ Stores < $he food category charged to food costs as issued+ !g+ Staples and tagged items+ Pricing the re.uisition re.uisition
$he various method of pricing the re*uisitions are as follo/s< ?+ Actual purchase price< $his method involves pricing of commodities at as purchased price+ @+ Simple average price< $his method involves pricing of commodities at a simple average price+
H+ eighted average price< $his method involves pricing of commodities ta8ing into account ,oth *uantities as /ell as prices thus giving a more accurate average price+ ;+ FIFO 0ethod< $his method involves pricing of commodities at the earliest purchased price $his may ,e applied to items /hich have a fluctuating mar8et price+ :+ %IFO 0ethod $his method involves pricing of commodities at the latest purchased price+ $his also may ,e applied to items /hich have a fluctuating mar8et price+ K+ Standard Price< $his method involves pricing of commodities at a standard price for a specified time period usually H5K months+ + Inflated price< $his method involves pricing of commodities at an inflated price i+e+ cost plus say ?X or ?:X to recover the cost of handling and storage charges+
FOOD PROD2C$IO CO$RO% I$ROD2C$IO Food Food prod produc ucti tion on cont contro roll impl implie iess esta esta,l ,lis ishi hing ng 'Sta 'Stand ndar ards ds and and Stan St anda dard rdss proc proced edur ure e for for prod produc ucti tion on cont contro roll in a food food serv servic icee operation+ $he four main stages are ?+ Production Planning @+ Standard yields
H+ Standard recipes ;+ Standard portion si3es
PROD2C$IO P%AI# Production planning or volume forecasting is the forecasting the volume of sales for an esta,lishment for specified time period eg+ A day a /ee8 a month Aims and o,-ectives ?+ $o facilitate food cost control @+ $o facilitate purchasing and internal re*uisitioning H+ $o reduce the pro,lem of over and under production ;+$o ena,le a comparison to ,e made ,et/een actual and forecasted volume of sales+ Aids or 0anagement $ools $ools to assist production planning Cyclic menus Sales 1istories Advance ,oo8ing Current events Current $rends
S$ADARD S$ADARD 4I!%DS $he standard yield of particular food product may ,e defined as the edi,le or the usa,le part of that product /hich is availa,le after the preparation or preparing and coo8ing+ coo8ing+ !g+ $he standard yield for a /hole fillet of ,eef is the num,er of fillet stea stea8s 8s th that at /ill /ill ,e avai availa la,l ,lee for for coo8 coo8in ingg and and fina finall sale saless to th thee customer after preparation and coo8ing+ Aims and O,-ectives ?+ $o determine the most appropriate and advantageous si3e6/eight to ,uy a particular commodity+ commodity+ @+ $o esta,lish a standard for the *uantity and num,er of portions o,taina,le from a specific item of food+ H+ $o Assist in food costing and menu pricing+ ;+ $o facilitate purchasing and internal re*uisitioning :+ $o act as a safeguard against pilferage and /astage+
4I!%D $!S$ S200AR4 R!POR$ I$!0< S0O7!D SA%0O !I#1$ AS P2RC1AS!D< H%B+ ;OU+ P2RC1AS! P2RC1AS ! SP!CIFICA$ SP!CI FICA$IO< IO< ;H TTTTTTTTT S$ADARD S$ADARD R!CIP! O+ :@ Y + COO7I# AD PR!PARA$IO !I#1$ D!$AI% %B+ OU+ AS P2RC1AS!D !I#1$ ; ? (%!SS)II$IA% Z ?+H PR!S!$A PR!S! $A$ $IO !I#1$ ?? N@+ (%!SS)2S!R"AB%! ?? @?+@
$O$A% $O$A% RA $O$A% $O$A% COS$< COS$ P!R %B< P!RC!$A#! ORI#IA% !I#1$ H $RI00I# @
!I#1$
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$O$A% S!R"A S!R"AB%! !I#1$ !I#1$ @ K?+: RA$IO OF S!R"AB%! !I#1$ $O ORI#A% !I#1$ Q S!R"AB%! $+6ORI#IA% $+ Q@%B OU6H%B ;OU Q H@6:@ Q K?+X COS$ P!R %OB! Q AS P2RC1AS! P2RC1AS!D D PRIC! P!R %OB! %OB! 6 X ORI#IA% ORI#IA % $+ $+ Q Y + 6 K?+:X Q Y + 6 +K?: Q Y??+HN Y??+HN COS$ FAC$OR Q COS$ P!R S!R"AB%! %B 6 AS
P2RC1AS!D PRIC! P!R %B Q Y ??+HN 6 Y + Q ?+K@ POR$IO COS$(A$ @ OU POR$IO SIU!) QCOS$ P!R S!R" S!R"AB%! %B 6 O+ OF POR$IOS P!R S!R"AB%! %B QY ??+HN 6 (?K6@) Q Y ?+;@
S$ADARD R!CIP!S A standard recipe is a /ritten schedule for producing a particular menu item of specified *uality and *uantity for use in a particular esta,lishment+ Aims and o,-ectives $o pre determine the *uantities and the *uality of the ingredients to ,e used in a standard recipes $o pre determine the yield o,taina,le from a recipe if a standard yield has not ,een prepared $o pre determine the food cost per portion $o pre determine the nutritional nutritional value of a particular dish $o facilitate menu planning $o facilitate facilitate purchasing and internal re*uisitioning $o facilitate facilitate food f ood preparation $o facilitate portion control $o provide an accurate source of reference to all staff concerned
S$ADARD POR$IO SIU!S A standard standard portion is the *uantity of a particular food item that /ill ,e served to the customer in relation to the food cost and selling price of the item+ $he *uantity may ,e measured in terms of< eight5 eight5 for eg+ ?@ gm of meat mea t per person "olume5for eg+ ?: ml of soup per person Count5for eg+ @ ,read rolls per person $he portion si3e may vary for different mealsmenu outlets 0enu5A %a Carte $a,le de 1ote
0eals5,rea8fastlunch or dinner Outlet5coffe shopspeciality restaurant $he portion si3es of the food items are determined ,y managements in con-unction /ith the heads of ,oth 8itchen and resta stauran rant departments+ Aims and o,-ectives $o facilitate facilitate food production control $o esta,lish standard portion si3es for each menu item $o reduce customer dissatisfaction $o ensure ensure food cost control $o act as a safeguard against pilferage and /astage S$ADARD R!CIP! R!CIP! R!CIP! D!$AI% AD COS$ CARD P1O$O#RAP1 S$ADARD O+ OF $O$A% SA%!S R!CIP!TTTT POR$IOST COS$TTTTTTTTTTTT PRIC!TTTTT TTT TTTTTT TT TTTTTT S$ADARD POR$IO POR$IO COS$ FOOD COS$ R!CIP!TTTTT SIU! TTTTTTTTTTT X TTTT TTTTTTTTTTT R+$+C R+$+! TT + DA$!TTTTTT TTT I#R!DI 2 >$4+ 2I$ A0O !$S I$ COS 2$ $
$O$A% PR!PARA$IO AD S!R"IC!
DA$!TTTTT DA$!TTTTTT TTTT TTTT 2 A0O 2I A0O2 I$ 2$ $ $ CO CO S$ S$
?+ @+ H+ $O$A% PR!PARA$IO AD TTTTTTTTTTTTTTTTTTTTTTTTTTTT TTTTTTTTTTTTTTTTTTTTTTTTTTTT BI CARD BI TTTTTTTTTTTTTTT S$OC7 TTTTTTTTTTTTTTTT TTTTTTTTTTTTTTTT I$!0 0A+S$OC7TTTTTTTTTTTTTTTTT DA$! R!C!I"!D ISS2!D
COO7I#
0I+ TTTTTTTTTTTTTTTT BA%AC!
S$OR!S R!>2ISI$IO D!PAR$0!$TTTTTTTTTTTTTT DA$!TTTTTTTTTTTTTTT R!>2IR!DTTTTTTTTTTTTTTTTTT >2A$I$4 I$!0S >2A$I$4 R!>2IR!D ISS2!D
$I0!
R!>2ISI$IO DA$! 2I$ COS$
$O$A% COS$
$O$A% R!>2ISI$IO!D B4TTTTTTTTTTTTTTTTTTTTTTTTTTT B4TTTTTTTTTTTTTTTTTTTTTTTTTTT
Cost -pense incurred for goods or services hen the goods are consumed or the services rendered
!lements of Cost 0aterial cost %a,our cost Overhead cost 0A$!RIA% HX %ABO2R HX O"!R1!ADS @X !$ PROFI$ @X $O$A% $O$A% COS$ Q NX SA%!S Q ?X
Classification of Cost B4 A$ A$2R! 2R! 0aterial cost 5cost of food and ,everage consumed 5cost of additional items 0A$!RIA% COS$ Q (D+P+ S$OC7 COS$ OF P2RC1AS!S ) G ( C%OSI# S$OC7 COS$ OF S+0+ ) %a,our cost 5salaries and /ages 5,onuses
5commissions and other cash payment 5staff meals and accommodation 5pension funds 5employer contri,ution to govt+ ta.es
Overhead cost 5rent6rate 5insurance 5Depreciation 5repairs 5printing and stationary 5fuel and electricity B4 B!1A"IO2R Fi.ed cost 5rent6rate 5insurance 5depreciation 5managerial and supervisory salaries 5other la,our costs
Semi fi.ed cost 5fuel cost 5electricity 5telephone 5laundry
"aria,le cost 5cost of food 5cost of ,everages 5cost of cigarettes and to,acco
Food Cost !onsists of cost of food consumed less the cost of staff meals
Formula Q OS ( P G S0 ) G CS Q FOOD COS$ here< OS G opening stoc8 of material P G cost of purchase S0 G cost of staff meals CS G closing stoc8 of material 7ey elements in food cost determination Cost of food issued Cost of food consumed Cost of food sold Cost of employee meals Ad-ustments < $ransfers I & O2$ Inter unit transfer Intra unit transfer #rease sales Ste/ard sales #ratis to ,ar Promotion e.pense
Food Cost Determination
Opening inventory purchases 6 total availa,le for sale G closing inventory Q Cost of food ADD< coo8ing li*uor $ransfer from other units S2B$RAC$< C$< food to to ,a ,ar (d (direc rects) $ransfer to other units #rease sales Ste/ard sales #ratis to ,ar Promotion e.pense Q Cost of food consumed %!SS< cost of employee meals Q Cost of food sold
Food Cost Control Food Cost $his refers to the cost of food incurred in preparing the meals served Food Cost Determination Fre*uency< Daily6ee8ly60onthly 7ey !lements< Cost of food issued $he sum of opening inventory and purchases less the value of closing inventory+ Cost of food consumed $hee cost $h cost of food food issu issued ed pl plus us or minu minuss all all ad-u ad-ust stme ment nts s e.ce e.cept pt employees meals+ Cost of food sold Cost of food consumed less the cost of employees meals+ Cost of employees 0eals
$he cost of foods consumed for employees meals+ It is deducted from food cost and added to la,our costs+ Ad-ustments< $ransfer $ransfer In & Out Inter52nit transfers $ransfer from one unit to another in chain organi3ations+ Inter52nit $ransfers ,et/een 7itchen $o 7itchen Bar $o Bar 7itchen $o Bar Bar $o 7itchen #rease Sales Sale of ra/ fat generated in 8itchens (,utcher shop) to rendering companies for conversion into industrial fats and oils+ Ste/ard sales Sale of food items to employees at cost e+g+ meat cuts tur8ey+ #ratis to Bar 1ot6Cold 1orsdveure given free to customers at the ,ar+ Promotion !.pense Complimentary on the house entertainment e.penses+
Standard Costing Standard Cost is the predetermined cost under each element of cost i+e+ (material la,our & overheads) ,ased on a technical estimate for a selected period of time and for a prescri,ed set of /or8ing conditions+ Standard costing is a method of costing used for the purpose of cost control /ith a vie/ to maintain ma.imum efficiency in production+ O,-ectives of Standard Costing
$o ascertain standard cost under each element of cost i+e+ material la,our & overheads+ $o compare compare actual cost /ith the standard cost+ $o measure measure the variations from standard cost+ $o analyse the causes of variations+ $o ta8e appropriate action /here necessary+
S$ADARD COS$I# S1!!$ SCS < POR$IOS< I$!0S< I#R!DI!$S
O+ OF >$4
2I$
POR$IO POR$IO SIU!< 2I$ PRIC! A0O2$
$O$A% COS$ COS$ P!R POR$IOS
FOOD COS$ D!$!R0IA$IO
OP!I# I"!$OR4 P2RC1AS!S
Q $O$A% A"AI%AB%! FOR SA%! C%OSI# I"!$OR4
Q COS$ OF FOOD ISS2!D ADD< COO7I# %I>2OR $RASF!R FRO0 O$1!R 2I$S S2B$RAC$S< FOOD $O BAR (DIR!C$S) $RASF!R FRO0 O$1!R 2I$S #R!AS! SA%!S S$!ARD S$!ARD SA%!S #RA$IS #RA$IS $O BAR PRO0O$IO !P!S! Q COS$ OF FOOD COS20!D %!SS< COS$ OF !0P%O4!! 0!A%S Q COS$ OF FOOD SO%D
1O$!% I10 FOOD COS$ R!POR$ 0onth< Date< $oday
Day<
$o date
$oday
$o date
Description
Re*uisition
Amount(Rs)
Amount(Rs)
Food Sales Cost of Food consumed Add< Re*uisition $ransfers(I)
0eat Fish Poultry !ggs Dairy "egeta Fruits
Su, $otal [A\ %ess< Staff 0eals Fruit Bas8ets Complimentary Spoilage $ransfers(out)
#rocer Ba8ery Others $otal Invent
Su, $otal [B\ et Food Cost [A5B\
Openin Invent Re*uis $otal [ Closin Invent
et Food Cost X Budgeted X "ariance (])
Date<
SD65 +
FOOD COS$ CO$RO% 2sing data given in column [A\ compute information given in column [B\+ CO%20 [A\ Sales figure for the ??: month Opening inventory ?: Purchases ;; Closing inventory @ Coo8ing li*uor @
CO%20 [B\
CO0P2$!< Cost of food issued+ Cost of food consumed+
Consu Rema
$ransfer from other units Food Food to ,ar ,ar (dir (direc ects ts)) $ransfer to other units #rease sales Ste/ard sales #ratis to ,ar (s) Promotion e. e.pense Cost of employee meals
Z: ? ? N K N @Z @: ?:
Cost of food sold+ Food cost per cent+ Inventory turnover ratio+
!!RCIS!< Comp Comput utee the the dail dailyy cost costs s cumu cumula lati tive ve Food Food Cost Costs s Sale Saless and and the the corresponding Food Cost Percentages from the follo/ing data< DAI%4 FOOD COS$ R!POR$ DA$! DIR!C$ S$OR! B!"+ FOO $O$A S S $O D $O % FOO B!" COS$ D $ODA 4 $O DA$! RS+ ?:6@6Z Z H
RS+ ?H N
RS+ ; K
RS+ ;
RS+
$O$A % SA%! S $ODA 4 $O DA$! RS + @ ?
FOOD COS$ X $ODA 4 $O DA$! RS+
?K6@6Z Z ?6@6Z Z ?N6@6Z Z ?Z6@6Z Z @6@6Z Z
; KK ; H@
?K ?@ ? ?@
5 5 @
H : 5 K
@ ?: ?: @
POR$IO CO$RO% Portion control is the 8ey to via,le catering portion control refers to the achievement to the 'standard portion si3es to ensure production control+ $he control of standard portion si3es is essential if the desired gross profit is to ,e achieved from the 8itchen+ Standard portion si3es A standard standard portion is the *uantity of a particular food item that /ill ,e served to the customer in relation to the food cost & selling price of the item+ $he *uantity may ,e measured in terms of eight5 eight5 for e+g+ ?@gm of meat per person "olume5 For e+g+ ?:ml of soup per person Count5 For e+g+ @ ,read rolls per person $he portion si3e 0ay vary for different meals menu & outlets 0enu5 A la carte ta,le d hote 0eals5 Brea8fast %unch Or dinner Outlet5 coffee shop specialty restaurant $he portion si3es of the food items are determined ,y management in con-unction /ith the heads of ,oth 8itchen and restaurant department )ims and objective
$o facilitate food production control+ +$o esta,lish standard portion si3es for each menu item $o reduce customer dissatisfaction $o ensure ensure food cost control $o act act as safeguard against pilferage and /astage+ +echni/ues +echni/ues of monitoring portion control
By providing correct portion control e*uipment in production and service areas+ By using portion control guides+ By foll follo/ o/in ingg stan standa dard rd yiel yields ds and and stan standa dard rd reci recipe pess and and stan standa dard rd portion si3e+ By spot chec8ing some menu items at each meal period for standard portion si3e+ By ,uying in pre5portion items for e+g+5pre /rapped pac8s of ,utter and condiments etc+ By ,uying in food items in ,ul8 and portioning in production 8itchen ,efore service for e+g+ pre5platting salads to ,e served in the display ca,inet in the cafeteria+ By portioning food items as they are ,eing served to the customer for e+g+ pre5plated service in a cafeteria "tandard portion cost
Calculated or planned portion costs are ,est
8no/n ,y the term standard
Standard portion cost is defined as the rupee amount that a standard portion should cost given the stan standa dard rd and and stan standa dard rd proc proced edur ures es for for its its prod produc ucti tion onth thee stan standa dard rd portion cost for a given menu item can ,e vie/ed as ,udget for the production of one portion of that item+ item+ O,-ectives $o ascertain ascertain standard portion cost+ $o facilitate food cost control+ $o facilitate menu pricing+ $o match real or actual cost /ith standard cost+ %ortion cost.
$o analy3e the cause variation and ta8e appropriate action /here necessary+ Calculating standard portion cost the follo/ing methods can ,e used for calculating standard cost Formula Standard portion cost Qpurchase price per unit o+ of portion per unit Standard recipe card (recipe detail and cost card) A form used used to record record a standa standard rd recipe recipe and to calcul calculate ate a standard standard cost of produsing produsing the *uantity *uantity stipulate stipulatedd in the recipe as /ell as the standard cost and standard cost percent for one standard portion+ Butcher test card a form used to record and determine the standard cost a one standard portion of a product portion ,efore coo8ing+it used for product that cann cannoot ,e port portio ionn as purch urchaased sed ,ut th that at re* re*ui uire re some some furt furthher processing ,efore portion are produce+ $he processing may include trimmi trimming ng ,utche ,utcherin ring g fillet filleting ing etc+ etc+ For e+g+5m e+g+5meat eatfis fisha handp ndpoul oultry try portioned in5house from /holesale cuts+ cuts+ Coo8ing loss test card A form used to record & determine the standard cost of one standard portion of a product portioned after coo8ing+ It is used for products that can not ,e portioned until after cooing is complete+For e+g+ portions of roast lam,+ Forecasting $his is the method of predicting the volume of sales for a future period in order to ,e of practical value the the forecast must Predict the total no+ of covers(customers) Predict the choice of menu items+ Forecasting is in t/o stages< Initial forecasting
$his is done once a /ee8 in respect of each day of the follo/ing /ee8+ It is ,ased on sales histories information related to advance ,oo8ings and current trends+ hen this has ,een completed the predicted sales are converted into the food6ingredients re*uirements+ Purchase orders are then prepared and sent to suppliers+ $he final forecasting $his normally ta8es place the day ,efore the actual preparation and service of the food+ $his forecast must ta8e into account account the latest developments developments such as the /eather and any food that need to ,e used up if necessary suppliers order need to ,e ad-usted+ Sales forecasting is not a perfect method of prediction ,ut does help /ith production planning+ Fi.ing of Standards Standards may ,e defined as rules or measures esta,lished for ma8ing comparisons and =udgments+ Definition of Standards >uality Standards Rules or measure esta,lished for ma8ing comparisons a,out the degree degree of e.cellence e.cellence of ra/ materials materials finished finished products products or /or8+ For e.ample Standard purchase specifications for commodities+ >uantity Standards 0easures of /eight count or volume used to ma8e comparisons or -udgments+ For e.ample Purchase units e.pressed in terms of 7g %itre or um,er+
COS$ D4A0ICS $he cost of operating esta,lishment may ,e analysed under three headings as follo/s<
0A$!RIA%S HX %ABO2R HX O"!R1!ADS $hee elem $h elemen ents ts of Sales ?X @X cost< $otal cost !$ PROFI$ NX @X 0aterial costs %a,our costs Overhead costs 0aterial costs $his refers to the three principal costs^ food costs ,everage costs and the cost of sundry sales such as cigarettes and to,accos+ Food Costs consists of the cost of the food consumed less the cost of staff meals+$he formula for the calculation of food cost is therefore< OS5(P5S0)5CSQFOOD COS$ here OSQopening stoc8 of materials^ PQcost of purchases^ S0Qcost of staff meals^ CSQ closing stoc8 of materials+ $he calculation of ,everage cost follo/s similar lines+ e ta8e the opening stoc8 of ,everages add the purchases during the period concerned and deduct the closing stoc8 of ,everages+ hilst in the case of food cost /e have to deduct the cost of staff meals in the case of ,everage cost deduction from the cost of ,everages consumed /ould have to ,e made in respect of authori3ed official entertaining and any transfers of ,everages to other departments e+g+ the 8itchen %a,our costs %a,our costs include all the renumeration of the employees ,oth in the form of cash and 8ind+ $hus in addition to /ages salaries ,onuses commissions and similar cash payements la,our costs incl includ udee staf stafff meal meals s staf stafff acco accomm mmod odat atio ionn and and simi simila larr non5 non5ca cash sh ,enefits+ Overhead costs
Overhead costs are all costs other than materials and la,our costs+ For e.ample rents rates ta.es insurance repairs prinitng and stationary etc+
Classification of Costs By nature 0aterial Costs %a,our Costs Overhead Costs
By Behaviour Fi.ed Costs @+Semi5fi.ed Costs H+"aria,le Costs
Fi.ed Costs $hese are costs /hich remain fi.ed irrespective of the volume of sales+ For e.ample rent rates insurance depriciationand managerial and supervisory salaries+ Semi5fi.ed Costs $hese are costs /hich move in sympathy /ith ,ut not in direct proportion to the volume of sales+ For e.ample fuel costs electricity electricity telephone laundry+ "aria,le Costs $hese are costs /hich vary in proportion to the sales6output of the esta,lishment+ For e.ample cost of food ,everages and cigarettes and to,accos+ Basic Concepts of Profit $hre $h reee main ain con concep cepts of profi rofitt are norm normal allly used used in cat cateri ering esta,lishments gross profit net profit and after /age profit #ross Profit
#ross Profit may ,e defined as the e.cess of sales over the materials+ #ross Profit is also referred to as 8itchen profit or ,ar profitdepending on /hether it is the gross profit on food operations or ,everages operations+ #ross ProfitQ $otal sales5 Cost of materials et Profit et Profit may ,e defined as the e.cess of sales over total costs et ProfitQ $ota $otall sales G $otal $otal Costs Costs (materialsla,ouroverheads) After5/age profit (net margin) After5/age profit amy ,e defined as the e.cess of sales over the cost of materials and la,our costs+ After5/age profitQ $otal $otal sales5 (materialla,our costs)
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SA%!S COC!P$S Sales Defined< $he term $he term is defi define nedd as reve revenu nuee resu result ltin ingg from from th thee e.ch e.chan ange ge of products and services and value+ In our industry Food and Bveerage sales are e.change of the products and services of a restaurant ,ar or related for value+ ays of !.pressing Sales $here are t/o ,asic groups of trems normally used in F&B Operations+ !.press sales concept< 0onetary $erms on50onetary $erms $erms 0onetary $erms $otal $o tal volume of sales e.pressed in Rupee terms $otal sales ,y category e.pressed in rupee terms e+g+ food sales ,everages sales $otal sales per cover $otal sales per meal period Sales price Average sales on50onetary $erms $erms $otal $o tal num,ers sold e+g+ soups stea8s coc8tails $otal covers Covers5per hour per day per server Seat turnover Sales mi.
0!2 PRICI# Cost Plus Pricing
$his method involves adding a given percentage of mar8 up to the portion cost of any menu item to determine the the menu pricing Formula< P Q Cf (C ) here PQ menu price c5 portion cost FQ X mar8up #iven< Portion cost< Rs+ ?65 0ar8up< ?:X $herefore< PQ??:X(?65) Q Rs+ @:65 Cost5Percent 0ethod of Pricing $his method involves dividing the portion cost of any menu item ,y the desired Food CostX to determine the menu price 0enu PriceQ Portion Cost Food CostX #iven< Portion Cost< Rs ?65 Food CostX< ;X $herefore 0enu PriceQ ?_;XQRs+ @:65 Competitors ,ased Pricing $his $h is meth method od invo involv lves es pric pricin ingg menu menu item itemss foll follo/ o/in ingg comp compet etit itor orss prices rather than on company cost or demand+ For e.ample< if a near,y competitor manages to stay in ,usiness ,y say selling ,urgers for Rs+ ?@+: then can do the same+ Promotional Pricing $his method involves pricing menu items ,elo/ the list price and sometimes even ,elo/ cost to increase short term sales+ For e.ample loss leaders cash re,ates special event pricing happy hours+ Contri,ution 0argin 0ethod of Pricing $his method involves adding average contri,utions margin (C0) to portion costs of menu items to determine their menu prices+ prices+ #iven< Food Sales H
(5)Cost of Food Sold ? Q#ross Profit (C0) @ um,er of customers served : $heerefo $h refore re ASP per cust custom omer erss H H 6: 6: QRs+ K65 Average C0 per customer @6: QRs+ ;65 $his method suggests that each menu item should ,e priced at Rs+ ;65 a,ove portion costs other than food and providing profit For e.ample< A sand/ich /ith a portion cost of Rs+ N65 /ould ,e priced at Rs+ ?@65 and a soup /ith portion cost of Rs+ @+: /ould ,e priced at Rs+ K+: Item
Portion Costs
Avg+ C0
A B C D
?+N H+: K+: @+:
;65 ;65 ;65 ;65
0enu (Rs+) :+N +: ?+: K+:
Price
If this approach /ere follo/ed and if sales volume matched or e.ceeded forecasts the minimum accepta,le amount of profit /ould ,e assured provided the costs /ere 8ept strictly under control in all areas+
