Food Cost Control Presentation

Food service operation Food service operation requires following requires following

Money,Materials,equipments, personnel.

The objectivesThe objectives

1.Analysis of income and expenditure

2.Establishment and maintenance of standards

3. Pricing4. Prevention of waste5. Prevention of fraud6. Information

Special Problems Of Special Problems Of F &B Control F &B Control

1 The perishability of produce2 The unpredictability of the volume of business

3 The unpredictability of the menu mix.

4 The short cycle of catering operations

5 Departmentalization.

Definition of ControlDefinition of Control

Establish standards

Measure the performance

Note the deviation

Take corrective action

Considerations in Considerations in designing a control designing a control

systemsystem 1. Accuracy:

2. Timeliness:

3. Objectivity:

4. Consistency:

5. Priority:

6. Cost:

ConsiderationsConsiderations

7. Realism: 8. Appropriateness: 9. Flexibility: 10.Specificity: 11. Acceptability:

WHO IS RESPONSIBLE FOR WHO IS RESPONSIBLE FOR CONTROLCONTROL

Owner General manager Food and beverage manager Accounting department Chef Purchasing agent All employees

Financial Policy Marketing Policy

Catering Policy

Basic PoliciesBasic Policies

Operating Budgets

Food and beverage salesCost of food and beverageCost of labourCost of overheads

Capital Budgets

Fixed/ heavy equipmentsSmall plantCash

Master Budgets

Trading AccountProfit and loss accountBalance sheet

The Management Process:The Management Process:Planning develops goals and objectives creates action plans to attain the goals and

objectives to accomplish this a manager must have... accurate information good communication flexibility an implementation plan

The Management ProcessThe Management ProcessOrganizing establishes the flow of authority and

communication within the organization empowerment

Coordinating the task of assigning work organizing people and resources to achieve goals

and objectives delegation

The Management ProcessThe Management ProcessStaffing recruitment and hiring of highly qualified

workers

Directing supervising, scheduling, and disciplining

Controlling developing and implementing control systems

The Management ProcessThe Management ProcessEvaluating measuring progress to a goal comparing the measurement to a predetermined

standard

determining if corrective action is needed implementing change evaluating the effectiveness of the change

Basic PoliciesBasic Policies

Financial Policies

The marketing policy

The catering policy

Financial PolicyFinancial Policy

To determine levels of profit, costs,From various operationsTo determine level of subsidy and

contribution margin from various operations

To set targets for the departments

Marketing PolicyMarketing Policy

The marketing policy will identify the broad market the operation is intended to serve and the particular segment(s) of the market upon which it intends to concentrate.

To identify the immediate and future consumer requirements on a in order to maintain and improve business performance.

Marketing PolicyMarketing PolicyNational identity Profile of guestMarket ShareTurn overProfitabilityAverage sprnding powerSatisfaction levelsProduct

Catering PolicyCatering Policy

Type of customer: Age etc Type of menu Beverage requirement Food quality standards Methods of Purchasing Type and quality of service Hours of Operation Décor, comfort levels etc

Control PhasesControl Phases

Planning and Pre control

Operational Control

Control after the event

FOOD AND BEVERAGE FOOD AND BEVERAGE CONTROL CYCLECONTROL CYCLE

Purchasing

receiving

Issuing

Storing

Service

Production

Menu

The Menu's Influence:The Menu's Influence:

menu planning is a dynamic, ongoing activity

stimulate revenues and increase guest check averages

sales, merchandising, and marketing tool -- it reflects the image of the restaurant

Marketing Plan and Strategies

Menu

Products

PurchasingReceiving

StoringIssuing

ProductionService

EquipmentsLay out

Production delivery systems

Preventive Maintenance

Personnel

Personnel Administration

Training

EnergyOther

Resources

Accounting and record keeping systems

OPERATING CONTROL

OPERATING CONTROL

Planning, organising., coordination, staffing,directing, controlling, evaluating

Menu ImpactMenu Impact

1. Product requirements and control procedures

2. Cost control procedures

3. Production requirements

4. Equipment needs

5. Sanitation requirements

Menu ImpactMenu Impact

6.Layout-space requirements

7.Staffing needs

8.Service-style requirements

9.Sales-income-controlprocedures

Menu PlanningMenu Planning

marketing implications the menu communicates the operation's marketing

plans

theme and atmosphere (ambiance) the complexity of the menu planning process

depends on the ambiance of the operation

menu planning strategiesmenu planning strategies

diversify by adding new menu items increases the number and variety of

ingredients rationalization ==> limits the menu to only

those items that enhance the operation's image

cross utilize ingredients


building the menu entrees typically selected first need to consider cost, preparation methods, and

compatibility with ambiance next plan appetizers and soups then starch items, vegetables, and salads finally breads, beverages, and desserts


dining trends grazing -- choosing a variety of appetizers,

soups, salads, and desserts rather than an entree

menu variability -- especially important when clientele is highly repetitive

menu design menu design

single sheet menu

single fold menu

two fold menu

menu changesmenu changes

external factors consumer demand economic conditions the competition suppliers and ingredient variety industry trends

menu changesmenu changes

internal factors operation's meal patterns concept and theme operation system menu mix

Calculating Menu Selling PricesCalculating Menu Selling Prices

1) Subjective Pricing – based on assumptions, hunches, and guesses

the reasonable price method -- what would the guest pay?

highest price method -- what is the highest price the guest would pay?

loss leader method -- very low price for one item stimulates purchase of additional items

intuitive method -- gut feel


1. Simple Mark-Up Pricing use the following mark-up formula to determine

an item's menu price... item plate costmenu price = ----------------- desired FC%

menu price = (item plate cost) x multiplier


variations include: prime-ingredient mark-up (need a higher multiplier since only counting the cost of the main ingredient)


1. Contribution Margin Pricing involves a 2-step process 1. determine the the average CM required per

guest...

1. non-food costs + required profit average CM\ guest = ------------------------- number of expected guests

2. determine the base menu selling price...menu price = (item plate cost) + (average CM per guest)


1. Ratio Pricing involves a 3-step process 1. determine the ratio of food costs to all other

costs plus required profit (all non-food costs) + (required profit)ratio = ----------------------------------------- food costs

2. calculate the amount of non-food costs plus required profit for the menu itemnon-food costs plus desired profit = (item plate cost) x (ratio)

3. determine the base menu selling price...menu selling price =(non-food cost plus profit) + (item plate cost)


1. Simple Prime Cost Pricing : involves a 3-step process 2. determine the labor cost per guest...

labor costslabor cost per guest = --------------------- number of expected guests

3. determine the prime cost per guest...prime cost per guest = (labor cost per guest) + (item plate cost)

4. determine the menu item's base selling price... prime cost per guestmenu price = ---------------------- desired prime cost %


1. Specific Prime Cost Pricing develop multipliers for menu items so that the menu selling

price covers plate costs and their fair share of labor costs the first step is to divide the menu items into 2 categories 1. those that require extensive labor preparation 2. those that do not require extensive labor preparation determine appropriate food and labor cost percentages based

on the categories above

menu price is determined by taking the item plate and labor costs and multiplying by the appropriate multipliers

Menu EngineeringMenu Engineering1. looks at a menu item's popularity and profitability need 3 pieces of information to perform this analysis 1. the selling price of the item 2. the quantity sold of each item for a specified period 3. the plate cost for each menu item determine if a menu item's popularity and profitability is either high or low the cutoff for popularity is determined by the following...

1popularity cutoff = ---------------------- x 70% number of menu items

the profitability cutoff is determined by calculating the average contribution margin... total CMaverage CM = ---------------------------- total number of items sold

Menu EngineeringMenu Engineeringmenu analysis classifies each menu item

into one of the following four categories

dog > low popularity and low profitability star > high popularity and high profitability puzzle > low popularity , high profitability plowhorse=high popularity,low profitability

Menu EngineeringMenu Engineering

strategies for each menu item are developed based on 2 criteria:

1. which category the menu item falls into and 2. where exactly in the category the menu item

falls

Developing F&B Developing F&B StandardsStandards

Standards:

are levels of expected performance help identify variances the more specific the standard the more

time needed to develop and monitor

Pre control Pre control

1. Standard recipes

2. StandardPurchase Specifications

3. Standard yields

4. Standard portion sizes

5. Standard portions costs

Standardized RecipesStandardized Recipes

are used for consistency and portion control contain the following pieces of information 1. ingredients and required quantities of each 2. preparation instructions 3. equipment needed to prepare 4. cooking times and temperatures

5. portion size and portioning equipment 6. yield

Advantages of Advantages of following a Standard following a Standard

reciperecipe.. 1. Consistency: 2. Yield calculations: 3. Requirement of equipment: 4. Time management:

Advantages of Advantages of following a Standard following a Standard

reciperecipe..5.Indenting and receiving 6.Supervision 7.Non-availability of personnel 8.Potential Cost

Developing a standard Developing a standard Recipe:Recipe:

Decide on desired yield required from the recipe

List the ingredients in order of use:

Decide the way of measuring ingredients

Developing a std. recipeDeveloping a std. recipeThe use of utensils Step by step methodTime and Temperatures Provide direction for presentation,

portioningDocumentation with photographTraining to staff

Purchase Specifications:Purchase Specifications: based on menu requirements and pricing policies

give a concise description of the following product features:

1. quality 2. size

3. weight 4. count 5. yield

used to compare similar products from competing vendors

Product test and Product test and Kitchen test Kitchen test

FRUIT AND VEGETABLES Count and weight

Waste/ peel, thickness of peelShapeColourFirmnessSmellTaste

Product testProduct test

CANNED ITEMS

Drained weight Density for juices Colour Taste Appearance No. of portions

BUTCHERY TESTBUTCHERY TEST or Yield Testor Yield Test

•

•Waste

• Yield /usable meat• Bones• Feel to touch• Firmness of flesh• Colour of flesh• Bone structure, colour of bones

COOKING TESTS:COOKING TESTS:

Cooking time Cooking losses Taste after cooking Appearance after cooking Flavour after cooking Shrinkage factor Storing factors Reheating factors

HOTEL ABCSTANDARD PURCHASE SPECIFICATIONS

NAME OF PRODUCT___________________________INTENDED USE ______________________________GRADE/ QUALITY ____________________________UNIT ________________ PRICE PER UNIT ________AVAILABILITY: SEASONAL/ ALL YEAR ROUND

APPEARANCE:______________________________________TEXTURE: _________________________________________COLOUR __________________________________________FLAVOUR _________________________________________PACKING __________________________________________SIZE AND SHAPE ____________________________________NO. PER KG __________________ANY OTHER REQUIREMENT __________________________

SIGNATURE OF S & P OFFICER DATE

HOTEL ABCSTANDARD PURCHASE SPECIFICATIONS

NAME OF PRODUCT: TomatoesINTENDED USE For SaladsGRADE/ QUALITY Grade AUNIT : kg PRICE PER UNIT Rs. 6.50/ kgAVAILABILITY: ALL YEAR ROUND

APPEARANCE: Shining, Free from spots, bruises, dirtTEXTURE: Firm COLOUR : Bright RedFLAVOUR Ripe flavour (Free from overriped smell). PACKING to be packed in corrugated boxes of 5 kg SIZE AND SHAPE Round or oblong NO. PER KG 5-6 in a kg ANY OTHER REQUIREMENT : Should be transferred in to different trays in front of the receiving personnel.

SIGNATURE OF S & P OFFICER DATE

Standard yieldStandard yieldyield means the net weight- volume of a food item after it has been processed and made ready for consumption of guest.

production loss. There are three steps: Preparation, cooking holding and portioning. The loss can occur in any or all of these steps.

Standard YieldStandard Yield

Standard yield results when an item is produced according to established standard production procedures outlined in the standard recipe. They serve as a base against which to compare actual yields.

YIELD CARDSR. NO. DATE SUPPLIER GODREJ NAME OF PRODUCT: BR. CHICKEN GRADE : A RATE 60.00 KG

RATE AMOUNT

% COST FACTOR

A.P. R.T.C. R.T.S.

BROILER CHICKEN WITH SKIN BROILER CHICKEN W/ OUT SKIN WEIGHT OF LEGS AND BREASTS BONELESS CHICKEN CHICKEN TIKKA

1 KG 850 GMS 450GMS 350 GMS300 GMS

60.00 70.58 133.00 171.00 199.00

60.00 100 % 85 % 45% 40 % 33%

1.17 2.21 2.80 3.33

NO OF PORTIONS 2

COST PER PORTION 30.00

SELLING PRICE 180.00

COST % 16.6 %

Standard PortionsStandard Portions

Decided before actual operation Expressed in weight, number,scoops,slices etcStandard portion size brings in the consistency in product

Helps maintain std costsTools for std portions: ladles,spoons,sauce boats,scoops

Standard Portion SizesStandard Portion Sizes

advantages... portion costs are known and consistent guests always receive the same value

(remember, value is the relationship between price and quality)Encourages to make use of portion control tools

STANDARD PORTION COSTSSTANDARD PORTION COSTS

Combination of std recipe and std portion sizes

Recipe gives a cost figure at a particular yield

total recipe coststandard portion cost = ---------- number of portions

Standard costs and Actual costs

The Purchasing Cycle: An Audit The Purchasing Cycle: An Audit TrailTrail

1. An F&B department needs something (e.g., food items, beverage items, wine glasses, menus, salt shakers, etc.)

a requisition form is created

2 Purchasing Department is notified check to see if product is in stock if product is not in stock need to decide on a supplier to

purchase from this creates a purchase requisition form

An Audit TrailAn Audit Trail3 Contact a supplier a purchase order form is created

4 Supplier sends items requested supplier generates an invoice

5 Receiving checks items sent by supplier receiving creates a daily receiving report

6 Items are moved wither into the storeroom or directly to production

7 Accounting collects copies of all of the above control documents

when Accounting determines the bill from the supplier is legitimate, a check is issued to pay the supplier for the product ordered and delivered

Purchasing ObjectivesPurchasing Objectives::

based on the 5 rights -- an F&B operation should always purchase the...

1. right product at the

2. right quality in the 3. right quantity at the

4. right price from the

5. right source.

Purchasing Purchasing Responsibilities:Responsibilities:

generally the domain of the food and beverage manager

in smaller operations often done by the general manager or owner

large operations may have a position entitled, purchasing agent

Selecting Suppliers:Selecting Suppliers:1. location

2. quality of the supplier's operation - sanitation, handling of orders quickly and reliably, size of stock

3. technical ability of the supplier's staff - do they know their stuff; can they help you solve problems

Selecting SuppliersSelecting Suppliers4 value - relationship between price and

quality

5 compatibility

6 honesty and fairness

7 delivery personnel - appearance, attitude, and courtesy

Food Cost Control Presentation

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