Chapter 3 - Purchasing and receiving. This chapter presents the following content: Forecasting food sales, forecasting beverage sales, importance of standardized recipes, purchasing food, purchasing beverages, purchase orders, receiving food and beverage products, technology tools.
Chapter 3 Managing the Cost of Food © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Main Ideas Part 1 Menu Item Forecasting Standardized Recipes Inventory Control Purchasing Receiving Part 2 Storage Determining Actual Food Expense Technology Tools © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Part Menu Item Forecasting Menu item forecasting addresses the questions: “How many people will I serve today?” “What will they order?” © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Figure 3.1 Menu Item Sales History Date: 1/1 - 1/5 Menu Item Roast Chicken Roast Pork Roast Beef Total Menu Items Sold Mon 70 110 100 280 Tues 72 108 140 320 Wed 61 144 95 300 Thurs 85 109 121 315 Fri 77 102 106 285 Total 365 573 562 1,500 Week’s Average 73 115 112 300 © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Menu Item Forecasting Popularity index is defined as the percentage of total guests choosing a given menu item from a list of alternatives Popularity Index =Total Number of a Specific Menu Item Sold Total Number of All Menu Items Sold © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Menu Item Forecasting Individual menu item forecasting, based on an item’s individual sales history: Number of Guests Expected x Item Popularity Index = Predicted Number of That Item to Be Sold The predicted number to be sold is simply the quantity of a specific menu item likely to be sold given an estimate of the total number of guests expected © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Figure 3.2 Forecasting Item Sales Menu Item Roast Chicken Roast Pork Roast Beef Total Guest Forecast 300 300 300 Predicted Number Popularity Index to Be Sold 0.243 73 0.382 115 0.375 112 300 © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Menu Item Forecasting Factors influencing number of guests: Competition, weather, special events in your area, facility occupancy, your own promotions, your competitor’s promotions, quality of service, and operational consistency Sales histories track only the general trends of an operation. They are not precise © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Standardized Recipes The standardized recipe controls both the quantity and quality of what the kitchen will produce It details the procedures to be used in preparing and serving each of your menu items © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Standardized Recipes Good standardized recipes contain the following: Menu item name Total yield (number of servings) Portion size Ingredient list Preparation/method section Cooking time and temperature Special instructions, if necessary Recipe cost (optional) © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Figure 3.23 Formula for Cost of Food Sold Beginning Inventory Plus Purchases =Goods Available for Sale Less Ending Inventory =Cost of Food Consumed Less Employee Meals =Cost of Food Sold © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Determining Actual Food Expense Beginning inventory is the dollar value of all food on hand at the beginning of the accounting period Purchases are the sum cost of all food purchased during the accounting period Goods available for sale is the sum of the beginning inventory and purchases Ending inventory refers to the dollar value of all food on hand at the end of the accounting period © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Determining Actual Food Expense Cost of food consumed is the actual dollar value of all food used, or consumed, by the operation Employee meal cost is actually a laborrelated, not foodrelated cost. Free or reducedcost employee meals are a benefit much in the same manner as medical insurance or paid vacation It is important to note that ending inventory for one accounting period becomes the beginning inventory figure for the next period © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Figure 3.24 Recap Sheet Cost of Food Sold Accounting Period: Unit Name: Beginning Inventory PLUS Purchases Goods Available for Sale LESS Ending Inventory Cost of Food Consumed LESS Employee Meals Cost of Food Sold to $ $ $ $ $ $ $ © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Determining Actual Food Expense Food or beverage products may be transferred from one food service unit to another – kitchen to bar and vice versa Transfers out of the kitchen are subtracted from the cost of food sold and transfers into the kitchen are added to the cost of food sold © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Figure 3.25 Recap Sheet Cost of Food Sold Accounting Period: 1/1 to 1/31 Unit Name: Your Ice Cream Store Beginning Inventory $ 23,225 PLUS Purchases $ 39,000 Goods Available for sale LESS Ending Inventory LESS Transfers Out PLUS Transfers In Cost of Food Consumed LESS Employee Meals Cost of Food Sold © 2011 John Wiley & Sons $ 62,225 $ 27,500 $ 4,500 $ 3,775 $ 34,000 $ 725 $ 33,275 Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Determining Actual Food Expense A foodservice operation’s cost of food consumed is affected by a variety of factors. One such factor relates to the “source reduction” decisions made by the operation’s suppliers “Source reduction” is utilized by suppliers to minimize the amount of resources initially required to package, store and ship the items they sell. The result of effective source reduction is a lessened impact on the environment and lower product costs © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Determining Actual Food Expense The formula used to compute actual food cost percentage is as follows: Cost of Food Sold Food Sales © 2011 John Wiley & Sons = Food Cost% Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Determining Actual Food Expense Food Cost % represents that portion of food sales that was spent on food expenses The physical inventory may be taken as often as desired to estimate the daily cost of food sold © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Determining Actual Food Expense Sixcolumn form used to estimate food cost % on a daily or weekly basis Six Column Food Cost % Estimate 1. Purchases Today Sales Today = Cost % Today 2. Purchases to Date Sales to Date = Cost % to Date © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Figure 3.26 Six-Column Form Date: Weekday Today To Date Today To Date Today To Date © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Figure 3.27 Six-Column Food Cost Estimate Date: 1/1–1/7 Weekday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Total Sales Today To Date $ 850.40 $ 850.40 920.63 1,771.03 1,185.00 2,956.03 971.20 3,927.23 1,947.58 5,874.81 2,006.41 7,881.22 2,404.20 10,285.42 10,285.42 Purchases Today To Date $1,106.20 $1,106.20 841.40 1,947.60 519.60 2,467.20 488.50 2,955.70 792.31 3,748.01 286.20 4,034.21 4,034.21 4,034.21 Cost % Today To Date 130.0% 130.0% 91.4 110.0 43.8 83.5 50.3 75.3 40.7 63.8 14.3 51.2 39.2 39.2 © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Technology Tools This chapter focused on managing foodrelated costs by controlling the areas of purchasing, receiving, storage, and issuing There are a variety of software programs that are available that can assist in these areas such as: Recipe Software can maintain and cost standardized recipes as well as maintain and supply dietary information by portion Menu Programs can create and print physical menus and even produce purchase orders based on selected menus © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Technology Tools Purchasing Software can compare bids and make purchase recommendations based on best cost/best value Receiving Software can prepare a daily receiving report and maintain receiving histories Storage/Inventory Assessment Programs can maintain product inventory values by food category and even compute LIFO or FIFO inventory values Cost of Goods Sold Programs can compare forecasted to actual cost of goods sold as well as well as maintain employee meal records © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Summary Part 1 Menu Item Forecasting Standardized Recipes Inventory Control Purchasing Receiving Part 2 Storage Determining Actual Food Expense Technology Tools © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller ... Shelf Life 5-7 days 14 days 2 -3 days 14 days 30 days 12 months months months 3- 5 days 5-7 days 1 4-2 1 days © 2011 John Wiley & Sons Food? ?and? ?Beverage? ?Cost? ?Control, 5th Edition Dopson, Hayes,? ?& Miller... 16 36 168 61.9% 7.1 9.5 21.5 100.0 30 0 oz 30 0 oz 30 0 oz 30 0 oz 30 0 oz 61.9% 7.1 9.5 21.5 100.0 185.7 oz 21 .3 oz 28.5 oz 64.5 oz 30 0.0 oz © 2011 John Wiley & Sons Food? ?and? ?Beverage? ?Cost? ?Control, 5th ... 140 32 0 Wed 61 144 95 30 0 Thurs 85 109 121 31 5 Fri 77 102 106 285 Total 36 5 5 73 562 1,500 Week’s Average 73 115 112 30 0 © 2011 John Wiley & Sons Food? ?and? ?Beverage? ?Cost? ?Control, 5th Edition Dopson, Hayes,? ?& Miller