chapter 3 - managing the cost of food
DESCRIPTION
Cost of FoodTRANSCRIPT
Chapter 3
Food and Beverage Cost Control
Managing the Cost of Food
CHAPTER OUTLINE
Part One Menu Item Forecasting Standardized Recipes Inventory Control Purchasing
Part Two Receiving Storage Determining Actual Food Expense
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
CHAPTER OUTLINE
Technology tools Apply what you have learned Key terms and concepts Test your skills
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
LEARNING OUTCOMES
Use sales histories and standardized recipes to determine the amount of food products to buy in anticipation of forecasted sales
Purchase, receive, and store food products in a cost-effective manner.
Compute the cost of food sold and food cost percentage.
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
MENU ITEM FORECASTING
Projection of how many food items you will produce.
The percentage of total guests choosing a given menu item from a list of menu alternatives.
POPULARITY INDEX
POPULARITY INDEX =
Total Number of a Specific Menu Item
SoldTotal Number of all
Menu Item Sold
______________________________
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
MENU ITEM SALES HISTORY
MENU ITEM
MON TUE WED THU FRI TOTALWEEK’S
AVERAGE
Roast Chicken
70 72 61 85 77 365 73
Roast Pork 110 108 144 109 102 573 115
Roast Beef 100 140 95 121 106 562 112
TOTAL 280 320 300 315 285 1500 300
Dogelio’s Steak House - MENU ITEM SALES HISTORYJuly 1 - 5
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
FORECASTING ITEM SALES
The quantity of a specific menu items likely to be sold given an estimate of the total number of guests expected.
Predicted Number To Be Sold
Predicted Number of That Item To Be Sold
=Number of
Guest s Expected
XItem
Popularity Index
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
FORECASTING ITEM SALES
MENU ITEM GUEST FORECAST
POPULARITY INDEX
PREDICTED NUMBER TO
BE SOLD
Roast Chicken 300 0.243 73
Roast Pork 300 0.382 115
Roast Beef 300 0.375 112
TOTAL 300
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
FACTORS INFLUENCING MENU ITEM FORECASTING
Competition
Weather
Special Events
Holidays
Facility OccupancyFood and Beverage Cost ControlChapter 3 - Managing the Cost of Food
FACTORS INFLUENCING MENU ITEM FORECASTING
Your own advertising and promotional offers
Your competitor’s advertising and promotional offerings
Quality of service
Changes in operating hours
Operational ConsistencyFood and Beverage Cost ControlChapter 3 - Managing the Cost of Food
STANDARDIZED RECIPES
It controls both the quantity and the quality of what the kitchen will produce.
It details the procedures to be used in preparing and serving each of the menu items.
It ensures that each time guests order an item from your menu, they receive exactly what you intended them to receive.
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
CONTENTS OF STANDARDIZED RECIPES Menu item name Total yield Portion size Ingredient list Preparation/method section Cooking time and
temperature Special instructions, if
necessary Recipe CostFood and Beverage Cost ControlChapter 3 - Managing the Cost of Food
STANDARDIZED RECIPE - SAMPLES
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
STANDARDIZED RECIPE - SAMPLES
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
ARGUMENTS IN STANDARDIZED RECIPES They take too long to use My employees don’t need recipes; they
know how we do things here. My chef refuses to reveal his or her secrets. They take too long to write up. We tried them but lost some, so we
stopped using them. They are too hard to read, or many of my
employees cannot read English.Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
ADVANTAGES OF STANDARDIZED RECIPES
Accurate purchasing is impossible without the existence and use of standardized recipes.
Dietary concerns require some foodservice operators to know the exact ingredients and the correct amount of nutrients in each serving of a menu item
Accuracy in menu laws require that foodservice operators be able to tell guests about the type and amount of ingredients in their recipes.
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
ADVANTAGES OF STANDARDIZED RECIPES
Accurate recipe costing and menu pricing is impossible to do without standardized recipe.
Matching food used to cash sales is impossible to do without standardized recipes.
New employees can be better trained with standardized recipes.
The computerization of a foodservice operation is impossible unless the elements of standardized recipes are in place; thus, the advantages of advanced technological tools available to the operation are restricted or even eliminated.
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
STANDARDIZED RECIPES
The cornerstone of any serious effort to produce consistent, high-quality food products at an established cost.
Without it, const control efforts become nothing more that raising selling prices, reducing portions sizes, or lessening quality.
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
ADJUSTING RECIPES
It is important that measurement standards be consistent.
Weighing with a pound or an ounce scale is the most accurate method of measuring many ingredients.
The food item to be measured must be recipe-ready, means, it must be cleaned, trimmed, cooked, and generally completed.
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
TWO MAJOR METHODS IN ADJUSTING RECIPES
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
FACTOR METHOD =
Desired Yield_________________
Current Yield
Example:
CONVERSION FACTOR =
125_________________
50= 2.5
FACTOR METHOD
INGREDIENT
ORIGINAL AMOUNT
CONVERSION FACTOR
NEW AMOUNT
A 4 lb. 2.5 10 lb.
B 1 qt. 2.5 2 ½ qt.
C 1 ½ T 2.5 3 ¾ T
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
TWO MAJOR METHODS IN ADJUSTING RECIPES
It deals with the recipe weight rather than with a conversion factor.
It is more sometimes more accurate than using a conversion factor alone.
It involves weighing all ingredients and then computing the percentage weight of each recipe ingredient in relation to the total weight of all ingredients.
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
PERCENTAGE METHOD
TWO MAJOR METHODS IN ADJUSTING RECIPES
First, identify the total amount required.
Second, get the percent of total (% of Total)
Last, get the new recipe amount
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
PERCENTAGE METHOD
TWO MAJOR METHODS IN ADJUSTING RECIPES
First, identify the total amount required. Total Amount Required = Desired Yield x
Weight per Serving
Total Amount Required = 75 servings x 4 oz. per serving
Total Amount Required = 300 oz
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
PERCENTAGE METHOD
TWO MAJOR METHODS IN ADJUSTING RECIPES
Second, get the percent of total (% of Total)
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
PERCENTAGE METHOD
% of Total =
Item A Ingredient Weight________________________________
Total Recipe Weight
% of Total =
108 oz._____________
168 oz.= 0.619
(61.9%)
TWO MAJOR METHODS IN ADJUSTING RECIPES
Last, get the new recipe amount
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
PERCENTAGE METHOD
New Recipe Amount =
Item A % of Total x Total Amount Required
New Recipe Amount =
61.9 % x 300 oz. = 185.70 oz.
PERCENTAGE METHOD
Ingredients
Original Amount Ounce
s% of Total
Total Amount Require
d
% of Total
New Recipe Amount
A 6 lb. 8 oz.
104 61.9 300 oz. 61.9 185.7 oz.
B 12 oz. 12 7.1 300 oz. 7.1 21.3 oz.
C 1 lb. 16 9.5 300 oz. 9.5 28.5 oz.
D 2 lb. 4 oz.
36 21.5 300 oz. 21.5 64.5 oz.
TOTAL 10 lb. 8 oz.
168 100.0 300 oz. 100.0 300 oz.
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
INVENTORY CONTROL
Desired inventory level is simply the4 answer to the question, “How much of each needed ingredient should I have on hand at any one time?”
Inventory management seeks to provide working stocks and safety stocks.
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
INVENTORY MANAGEMENT
Working Stocks The amount of an ingredient you anticipate using
before purchasing that item again.
Safety Stocks (minimal) The extra amount of that ingredient you decide to
keep on hand to meet higher than anticipated demand.
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
DETERMINING INVENTORY LEVELS
Storage capacity Item perishability Vendor delivery schedule Potential savings from increased purchase size Operating calendar Relative importance of stock outages Value of inventory dollars to the operator
Food and Beverage Cost ControlChapter 3 - Managing the Cost of Food
INVENTORY CONTROL
A desired inventory level is simply the answer to the question,
“How much of each needed ingredient should I have on hand at any one time?”
INVENTORY CONTROL
Can be answered if your sales forecast is of good quality and your standardized recipes are in place so you do not “forget” to stock a necessary recipe ingredient.
INVENTORY CONTROL
● Working stocksThe amount of an ingredient you
anticipate using before purchasing that item again
● Safety stockThe extra amount of that ingredient you
decide to keep on hand to meet higher than anticpated demand.
RESULTS OF TOO LITTLE INVENTORY● Running out of products resulting to
guest dissatisfaction.
RESULTS OF TOO MUCH INVENTORY● Waste● Theft● Spoilages
DETERMINING INVENTORY LEVELS
● Storage capacity● Item perishability● Vendor delivery schedule● Potential savings from increased
purchase size● Operating calendar● Relative importance of stock outages● Value of inventory dollars to the
operator
DETERMINING INVENTORY LEVELS
● Storage capacity– Inventory items must be purchased in
quantities that can be adequately stored and secured.
● Item Perishability– Shelf life, the amount of time a food
item retains its maximum freshness, flavor, and quality while in storage.
DETERMINING INVENTORY LEVELS● Shelf Life
ITEM STORAGE SHEL LIFE
Milk Refrigerator 5 – 7 days
Butter Refrigerator 14 days
Ground Beef Refrigerator 2 – 3 days
Steaks (fresh) Refrigerator 14 days
Bacon Refrigerator 30 days
Canned Vegetables Dry Storage 12 months
Flour Dry Storage 3 months
Sugar Dry Storage 3 months
Lettuce Refrigerator 3 – 5 days
Tomatoes Refrigerator 5 – 7 days
Potatoes Dry Storage 14 – 21 days
DETERMINING INVENTORY LEVELS
● Vendor delivery schedule
● Potential savings from increased purchase size– You should determine your ideal
product inventory levels and then maintain your stock within that needs range.
DETERMINING INVENTORY LEVELS
● Operating calendar– It can be said that an operator who is
closing down either for a weekend or for a season should attempt to greatly reduce overall inventory levels as the closing period approaches.
● Relative importance of stock outages– 86 rhymed with “nix,” a Cockney term
meaning “to eliminate.– Too much 86 items, the reputation of the
restaurant and the ability to manage will suffer.
DETERMINING INVENTORY LEVELS
● Value of inventory dollars to the operator– Operators overbuy or “stockpile”
inventory, causeing too many dollars to be tied up in a non-interest-bearing food products, then managers incur opportunity costs.
– Opportunity cost is the cost of forgoing the next best alternative when making a decision.
SETTING PURCHASE POINT
● Purchase point, as it relates to inventory levels, is that point in time when an item should be reordered.
● Two Methods– As needed (just in time)– Par level
SETTING PURCHASE POINT
● As Needed– Also known as “just-in-time”– Method of deremining inventory level,
basically purchasing food based on your prediction of unit sales and the sum of the ingredients necessary to produce those sales.
SETTING PURCHASE POINT
● Par Level– Set predetermined purchase points.
PURCHASING
● What shoud be purchased?
● What is the best price to pay?
● How can a steady supply be ensured?
WHAT SHOULD BE PURCHASED?
● It is impossible to manage costs where purchasing is concerned without the use of product specifications, or also known as specs.
PRODUCT SPECIFICATIONS / SPECS
● Is simply a detailed description of an ingredient or menu item.– A way to communicate in a very precise way
with a vendor so that your operation receives the exact item requested every time.
INFORMATIONS IN A FOODSERVICE SPECIFICATIONS● Product name or specification number● Pricing unit● Standard or grade● Weight range / size● Processing and / or packaging● Container size● Intended use● Other information such as product yield
WHAT IS THE BEST PRICE TO PAY?
● Best price– Is more accurately stated as the lowest price
that meets the lont-term goals of both the foodservice operational and its vendor.
WHAT IS THE BEST PRICE TO PAY?
● Bid sheet– When you have a choice of vendors, each
supplying the same product, can be subject to comparison.
– Includes vendor information, buyer information, item description, unit of bid, bid price, salesperosn's signature and date.
– “fixed”, means the dates that the supplier agrees to keep the bid price in effect.
WHAT IS THE BEST PRICE TO PAY?
● Price Comparison Sheet– Typically has a
place to list the catergory being bid, namely:
● Produce● Dairy products● Meats● Name of the
vendors available to bid
● Bid date● Item description● Unit of purchase● Best bid price
PRICE COMAPARISON
WHAT IS THE BEST PRICE TO PAY?
Bid sheets and price comparison sheets may be used to determine the specific vendor who can supply the lowest price, but they do not give enough information to determine the best price.
HOW CAN A STEADY SUPPLY BE ENSURED?● Suppliers have many prices, not just
one● Suppliers reward volume guests● Cherry pickers are serviced last● Slow pay means high pay● Vendors can help reduce costs● One vendor versus many vendors
PURCHASING ETHICS
● Is it legal?● Does it hurt anyone?● Am I being honest?● Would I care if it happened to me?● Does it compromise my freedom as a
buyer?● Would I publicize my action?