Alcoholic Beverage Classifications Beers (lagers and ales) Wines (red, white, rose) Spirits

FB Department

Alcohol Production Processes Fermentation: Natural, chemical

process by means of which sugars in a liquid are converted to ethyl alcohol and carbon dioxide

Distillation: Process by means of which alcohol is evaporated from a fermented liquid and then condensed and collected as a liquid

FB Department

Purposes of Beverage Purchasing Controls To maintain an appropriate supply of

ingredients for producing beverage products

To ensure that the quality of ingredients purchased is appropriate to intended use

To insure that ingredients are purchased at optimum prices

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Factors Used to Establish Quantity Standards for Beverage Purchasing Frequency with which management chooses to

place orders Storage space available Funds available for inventory purchases Delivery schedules set by purveyors Minimum order requirements set by purveyors Price discounts for volume orders Price specials available Limited availability of some items

FB Department

Two Types of States for Purposes of Beverage Purchasing License states: States in which

beverage wholesalers (and sometimes manufacturers and distributors) are allowed to sell alcoholic beverages directly to foodservice establishments

Control states: States in which the state government actually sells some or all alcoholic beverages through its own network of stores, thus exercising complete control over prices

FB Department

Standards for Beverage Receiving Quantity of an item delivered must equal

the quantity ordered Quality of an item delivered must be the

same as the quality ordered Price on the invoice for each item

delivered should be the same as the price quoted or listed when the order was placed

Transparency 14-1

Standard Procedure for Beverage Receiving 1. Maintain an up-to-date file of all

beverage orders placed2. Remove the record of an order from the

file when a delivery arrives and compare it to the invoice presented by the delivery driver

3. Before the driver leaves, check brands, dates, or both, and count or weigh delivered goods

4. Compare the invoice to the order

Transparency 14-2

Standard Procedure for Beverage Receiving (continued)5. Call to the attention of management and the

delivery driver any broken or leaking containers and any bottles with broken seals or missing labels

6. Note all discrepancies between delivered goods and the invoice on the invoice itself

7. Sign the original invoice and return it to the driver.8. Record the invoice on the beverage receiving

report9. Notify the person responsible for storing

beverages that a delivery has been received

Transparency 14-2 (cont’d)

Storing Control Objectives Prevent pilferage Ensure accessibility when products are

needed Preserve quality

FB Department

To Secure Storage Areas, You Have Two Choices: Assign the responsibility for the stored

items to a single employee

Keep the beverage-storage facility locked at all times

FB Department

Beverage Issuing Objectives To ensure the timely release of

beverages from inventory in the needed quantities

To prevent the misuse of alcoholic beverages between release from inventory and delivery to the bar

Transparency 14-5

Beverage Issuing Standards and Standard Procedures Standards Carefully set issue quantities Issue beverages only to authorized

people

Standard Procedures Establish par stocks for bars Set up a requisition system

Transparency 14-6

Objectives of Beverage Production Control To ensure that all drinks are prepared

according to management’s specifications

To guard against excessive costs that can develop in the production process

Transparency 15-1

Devices for Measuring Standard Quantities Shot glass (plain or lined) Jigger Pourer Automated dispenser

FB Department

To Calculate the Cost of Straight Drinks: Method I1. Total number of ounces in bottle ÷ Standard

portion size (ounces) = Number of drinks per bottle2. Cost of bottle ÷ Result from Step 1 = Standard

drink cost

Method II1. Cost of bottle ÷ Total number of ounces in bottle =

Cost per ounce2. Result from Step 1 × Standard portion size =

Standard drink cost

FB Department

Standard Recipe Detail and Cost Cards Each card should include: Name of drink Drink sales price Drink cost Cost percent Garnishes Quantity and cost of Individual Ingredients Total quantity and cost of mixed drink Type of glassware Recipe procedure

FB Department

Ways to Monitor Beverage Production Management observes bar operations Designated employee observes others

working at the bar and reports back to management

Individuals unknown to the bartender visit the bar, observe employees, and report back to management

Closed-circuit television systems permit observation from some remote location

FB Department

Approaches for Monitoring Beverage Operations 1. The Cost Approach Cost percent methods Monthly calculations Cost calculations by category Daily calculations

2. The Liquid Measure Approach Ounce-control method

3. The Sales Value Approach Actual sales record method Average sales value method Standard deviation method

FB Department

Cost Percent Formulas and Equations

Opening beverage inventory+ Beverage purchases this month= Total available for sale this month– Closing inventory this month= Value of beverages issued to the bar

 

Bar inventory value at the beginning of the month– Bar inventory value at the end of the month= Bar inventory differential

 

Value of beverages issued to the bar+/– Inventory differential= Cost of beverages consumed

Beverage cost percentage = Beverage cost ÷ Beverage sales

FB Department

Adjustments to Beverage Cost Added to beverage cost Food to bar (directs) Storeroom issues Mixers

Subtracted from beverage cost Managers’ drinks Special promotions

FB Department

To Calculate Bottle Sales Values: 1. Determine bottle size and drink size2. Calculate drinks per bottle3. Multiply drinks per bottle by drink price to get sales

value per bottle 

ExampleBottle size : 1 liter; drink size : 1 ounce = 30 ml33.3 drinks per bottle33.3 × 55,000 = 1,831,500

FB Department

Formulas To Calculate Beverage Cost Purchase Price (Cost in IDR) Selling Price

Cost in %Purchase Price X 100 = %

Selling Price

FB Department

To Calculate Beverage Cost1. 1 Coke price is IDR 4,5002. Selling Price 1 Coke is IDR is 21,000

How much does the cost of 1 portion of Coke in IDR? IDR 4,500

How much does the cost of 1 portion of Coke in %? 4,500 X 100 =………..% 21,00

21.42 %

 

FB Department

To Calculate Beverage Cost1. 1 Coke price is IDR 4,5002. Selling Price 1 Coke is IDR is 21,000

How much does the cost of 1 portion of Coke in IDR? IDR 4,500

How much does the cost of 1 portion of Coke in %? 4,500 X 100 =………..% 21,00

21.42 %

 

FB Department

Mixed Drink Differential

FB Department

By comparing the price of the alcohol sold as straight drinks to the price of the mixed drink, a more accurate picture of potential sales values emerges

Mixed Drink Differential (continued)To find the differential:  Sales value of bottle of alcohol ÷ Number of ounces in bottle =

sales value/ounce

Sales value/ounce x Number of ounces in mixed drink = Sales value of alcohol sold as straight drinks

If sales value of alcohol sold as straight drinks > sales price of mixed drink, then the difference between the two figures is the negative mixed drink differential

If sales value of alcohol sold at straight drinks < sales price of mixed drink, then the difference between the two figures is the positive mixed drink differential

Finally, multiply the +/– differential by the number of mixed drinks sold to determine the adjusted total bottle sales value for spirits

FB Department

Inventory Turnover Calculations1. Average inventory = (Opening inventory +

Closing inventory) ÷ 2

2. Turnover rate = Cost of beverages sold for a period ÷ Average inventory for the period

Generally accepted turnover ratesSpirits - 1.5Beers - 2.0

FB Department

Objectives of Beverage Sales Control Optimize the number of sales Maximize profit Control revenue

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Reasons That People Patronize Beverage Establishments To socialize To conduct business To eat To enjoy entertainment To relax or kill time

FB Department

In Beverage Operations, Profit Maximization Is Accomplished by: Establishing drink prices that will

maximize gross profit Influencing customers’ selections

FB Department

Alcoholic Consumption: A Changing Landscape Dram shop laws are state statutes that hold

the serving establishment and the server financially liable for damages to third parties resulting from the serving of alcoholic beverages to intoxicated customers

Given these laws and changing social attitudes that encourage responsible drinking, managers try to optimize sales rather than maximize them

FB Department

Unacceptable Bartender Work Habits Working with an open cash drawer Under-ringing sales Overcharging customers Undercharging customers Overpouring Underpouring Diluting bottle contents Bringing one’s own bottle into the bar Charging for drinks not served Drinking on the job

FB Department

Major Types of Compensation Current Compensation

- Direct: salaries, wages, tips, bonuses, commissions- Indirect: paid vacations, health benefits, life

insurance, free meals, free living accommodations, use of employer-operated recreational facilities, discounts on accommodations at other properties within a chain

Deferred Compensation- Pension benefits- Social Security

FB Department

Determinants of Total Labor Cost Labor turnover rate Training Labor legislation Labor contracts Use of part-time staff Outsourcing Sales volume Location Equipment

Layout Preparation Service Menu Hours of operation Weather Competent

management

FB Department

Chapter Formulas Labor turnover rate = Number of departing

employees ÷ Total number of employees on staff

 Break-even for staying open an additional

hour = Fixed costs ÷ (1 – Variable rate)

FB Department

Saving Money by Using Part-Time Staff

FB Department

With all full-time staff:

Wages: 4 dishwashers × 35 hours × $7 per hour = $980Benefits: $980 × 20% = $196

Total labor cost: $1,176

Saving Money by Using Part-Time Staff (continued)

FB Department

With full-time and part-time staff:

Full-time dishwashers

Wages: 2 dishwashers × 35 hours × $7 per hour = $490

Benefits: $490 × 20% = $98

Part-time dishwashersWages: 10 shifts × 7 hours × $4.50

per hour = $315Benefits: $315 × 10% = $31.50

Total labor cost: $934.50

Steps for Establishing Standards and Standard Procedures for Employee Performance 1. Organize the enterprise2. Prepare job descriptions3. Schedule employees

FB Department

Job Analysis

Job objectives Specific tasks required to achieve

objectives Performance standards Knowledge and skills necessary Education and experience requiredTransparency 19-2

Interviews and observations are designed to provide information about the following:

Job Descriptions: Answer three questions What is to be done? When is it done? Where is it done?Contain three parts1. Heading that states the job title and the

department in which the job is located2. Summary of the duties of the job (typically in

paragraph form)3. List of the specific duties assigned to the job

Transparency 19-3

Calculating Standard Work Hours 1. Determine the number of employees needed to

serve a specified number of covers in a certain time periodExample: 8 servers for 500 covers in a three-hour lunch period

2. Standard work hours = Number of servers × Number of hours8 servers × 3 hours = 24 work hours

FB Department

Calculating Standard Cost

Number of standard work hours × Hourly wage = Standard cost

Example: 24 hours × $4.00 per hour = $96 standard cost

FB Department

Most Training Plans Should Include: Objectives Approaches to training Training methods Instructional timetables Location Lesson plans Trainer preparation Trainee preparation Training session(s) Evaluation

FB Department

Approaches to Training

On-the-job versus off-the-job Structured versus unstructured Individual versus group

Transparency 20-2

In general, trainers first select a training approach; then they employ a variety of training methods that compliment the approach

Training Methods

By hearing information (oral) By seeing information (visual) By doing the skill (kinesthetic)

Transparency 20-3

Studies show that people tend to prefer learning things in one of three ways:

Training Methods (continued)

Lecture Demonstration Role playing Individual assignments Field trips Seminars Case studies Panels Programmed instruction Transparency 20-3 (cont’d)

Therefore, an effective training should use a variety of methods:

Are Trainees Ready to Learn?

Objectives of the training Instructional method being used Skills trainees will learn

FB Department

Since people learn better when they understand the need for learning, an introduction to any training should always include:

Training Manuals Typically Include:1. General background2. Specific duties of a job3. Specific procedures for carrying out the

duties4. Summary

FB Department

Four Sources of Information for Indirect Monitoring Performance 1. Customers2. Employees3. External agencies/organizations/groups4. Managers

FB Department

External Agencies/Organizations/Groups Government agencies Chain organizations Food critics Rating organizations

FB Department

The Five-Step Approach to Identifying Causes and Solving Problems 1. Meet with appropriate staff to point out the

problem and to determine its cause2. Identify all appropriate corrective measures that

might be adopted3. Select the best corrective measure from among

the alternatives4. Institute the selected measure5. Monitor performance to be sure that the corrective

measure has the desired effect

FB Department

Possible Reasons for Performance Discrepancies Inadequate performance Unsuitable standards Inappropriate organization

FB Department

Causes of Inadequate Performance Improper materials provided to workers Lack of required equipment or tools Need for additional training Inadequate management or supervision Poor union/management relations Personal problems away from the job Difficulties with interpersonal relations on the job Inadequate compensation Illness Poor working conditions Improper work schedules

FB Department