Main characteristics of F&B operation  Technical

 A vital part of everyday life Internal Factors
 Major contributor of economy
 Food and beverage
 Highly fragmented and complex
 Staff
 Creates employment
 Control
 Encourage Entrepreneurship
 Promotes diversity through many different The Management Process
food concepts and cuisine  Planning
 Innovative  Organizing
 Consumer oriented  Coordinating
 High competition  Staffing
 Fulfils basic needs  Directing
 Controlling
Primary/ Commercial business
 Evaluating
characteristics
 Also known as Market oriented business
 High % in fixed cost, for example rent, Operational Challenges
 Financial Management
management salaries, depreciation of
buildings and equipment  Pricing
 Reliance on sales rather than decreases in  Staffing
costs
 Marketing Communication
 An unstable market demand for the product
 Flexible pricing policy  Increased Competition
Secondary/ Welfare business characteristics  Quality Expectation
 Also known as Cost oriented business  Healthier Eating Trend
 Lower % of fixed costs, but a higher
 Intangible Nature of service
percentage of variable costs

such as F & B costs
 Reliance on decreases in cost rather than
increases in sales
 A relatively stable market demand for the
product
 Fixed pricing policy

Factors Affecting F&B Operation
External Factors
 Government/ Political
 Economic
 Social
The objectives of food and beverage  Controls Receiving
control  Menu Selection
 Regular Inventory Keeping
 Analysis of income and expenditure  Wisely Ordering
 Establishment and maintenance of  Control Wastage and Portion Size
 Training
standards
 Sales Recording
 Pricing 
 Prevention of waste
 Prevention of Fraud
 Source of Management Information
Essentials of a control system
 Menu planning
 Production control
 Stock management
 Purchase ordering
 Menu analysis
 Financial management reporting
F&B Control Process
 Establishing Standard
 Observing Performance
 Deciding
 Implement Corrective Action
 Follow through
Special Problems of F&B Control
 Perishability of the product
 Business volume unpredictability
 Menu mix unpredictability
 Food and beverage operation short cycle
 Departmentalization
Persons involve and responsible for
control
 Owners
 Managers
 Chef
 Steward
Activities performed to control the cost of
food and beverage business
 Maintain Variety of Vendors / Suppliers
Standard costing tools Importance of Yield
 Menu  To determine product pricing
 To set purchase specification and
 Standard Purchase Specifications
receiving standards.
 Standard Recipes  To forecast purchase quantity and
 Standard Yields ordering levels.
 Standard Portion Sizes  Establish standard recipe and portion
size.
 Standard Portion Costs
 For setting control standards.
A detailed formal specification includes  Comparison of vendor price and quality.
the following information  Monitoring the usage of raw materials.

 Intended use Yield Terminology
 Product name  As Purchased Weight (AP weight)
 Grade  Edible Portion Weight (EP weight)
 Product size  Production Loss
 Packaging
Recipe Conversion Issues
 Product characteristics
 Acceptable substitutions (“or equal”)  Cooking Equipment
 General instructions to bidders  Timing
 Temperature
Advantages of standard recipe
 Moisture Loss
 Consistent food quality  Recipe Error
 Predictable yield 
 Customer satisfaction
 Consistent nutrient content
 Food cost control
 Efficient purchasing procedures
 Inventory control
 Labor cost control
 Increased employee confidence
 Reduced record keeping
Developing Standard Recipe
 Generate ideas
 Develop recipe ingredients
 Develop method and procedure
 Develop serving presentation
 Give marketable name
 Standardize the recipe
o Tested
o Adjusted
o Re-tested
o Yield Adjustment
o Fix in a Standardized Recipe format
Purchasing Control points to be considered  Menu engineering
 Product testing  Billing and sales report (daily/ weekly/
 Yield testing
monthly)
 Purchase specifications
 Method of buying Preventing Pilferage Theft of Revenue
 Clerical procedures  Install security cameras
Purchase Cycle  Conduct audits and review reports
 Limit access to the POS system
 Recognizing need
 Maintain tabs on inventory
 Preparing specifications
 Set and enforce cash handling procedures
 Selecting a supplier
 Monitor employee access to vulnerable
 Ordering the goods or services
 Receiving the goods or services areas

Receiving Control points to consider
 Quantity inspection
 Quality inspection
 Clerical procedures
Receiving process
 Inspection against the Purchase Order
 Inspection against the Invoice
 Acceptance or Rejection of Order
 Completion of Receiving Record
 Removal to Storage
Types of store rooms
 Perishable stores
 Dry stores
 Beverage stores
Storing Control points to be considered
 Stock records
 Pricing of items
 Stocktaking
 Clerical procedures
Food preparation controlling tools
 KOT/BOT
 Standard recipe
 Portion control
Serving controlling tools
 KOT/BOT
 Portion control
Food Service Control Points  Objective Pricing Methods
 Menu Planning
 Purchasing /Ordering o Desired Food Cost Percentage
 Receiving
Pricing Method
 Storage
 Issuing
 Preparation o Profit Pricing Method (Contribution
 Production Pricing Method)
 Serving
Menu planning objectives o Simple Mark-up Pricing Method
 To meet or Exceed guest’s Expectations
 To meet Quality Standards o Ratio Pricing Method
 To Attain Marketing Objectives
 To be Cost Effective
o Simple Prime Cost Method
 To be Accurate
Factors that influence menu planning/
o Specific Prime Cost Method
Principles of Menu Planning
 Location of the establishment Menu Categories for menu engineering
 Type of establishment
 Type of customer
 Stars
 Seasonal availability
 Plow-horses
 Availability of equipments in the kitchen
 Puzzles
 Capability of kitchen and services staff
 Dogs
 Leftovers in hand
 Cost of the menu
 Policy of the establishment Guidelines to consider menu engineering
 Service hours and design to turn it into a profit center
 Nutritional factor
 Occasion
 Use visual cues to highlight the items that
need to sell most
Menu Pricing Methods
 Don’t list prices in a column down the right
side of menu
 Subjective Pricing
 Recognize that there is a science to listing
each menu section’s items
o The Reasonable Price Method  Take advantage of customers’ eye-
movement patterns
o The Highest Price Method  Use menu item descriptions to the
advantage
o The Loss Leader Method  Think outside the menu

o The Intuitive Price Method
Purpose of Budgeting  List items for expenditure with costs for each
 A forecast of income and expenditure (and items, both fixed and variable costs.
thereby profitability)  Set budget priorities with justifications
 Means to monitor business performance  Write the budget for presentations (to
 A tool for decision making approve from senior management and
Importance of Budgeting department heads)
 Examine the facts to achieve desired profit Purposes/Objectives of cost volume profit
levels. analysis
 Provides standard for comparison  To calculate the breakeven point
 Prepare for future business conditions
 Means to analyze alternative course of action  To forecast the profit by the analysis of cost
 Periodically carry out a self-evaluation and volume of sales
toward its financial objectives.  To show the effects of changes in price, cost
 Provides a communication channel to its
and profit
various departments.
 Establish departmental operating objectives  To measure the elements or factors that

and evaluation techniques and tools. affect profit
 Provides management with reasonable  To select the best alternate for maximizing
estimates of future expense levels and profit
serves as an instrument for setting proper
prices.
Types of Budgets
 Capital budgets
 Operating budgets
Basic Steps in Budget Development
 Collect data (from records and reports
regarding revenue expenses and profits)
 Study and evaluate data (from the previous
three to four years)
 Analyze and discuss factors affecting future
operations. (The factors may be internal or
external in nature)
 List all sources of income with anticipated
changes
Common definitions of quality Service quality dimensions
 Conformance to specifications  Timeliness/ Promptness
 Fitness for use
How long a customer must wait for service; if
 Value for price paid
 Support services it is completed on time or not?
 Psychological criteria  Completeness
Product quality dimensions Is everything the customer asked for
 Performance provided or not?
The basic operating characteristics of  Courtesy
product How are customers being treated by
 Features employees?
The extras that are included beyond the  Consistency
basic characteristics Is the same level of service provided to every
 Reliability customer each time?
That the product will function as expected  Accessibility and convenience
without failure How easy is it to obtain the service?
 Conformance  Accuracy
The degree to which a product characteristic Is the service performed right every time?
meets preset standards  Responsiveness
 Durability How well company reacts to usual/ unusual
Expected operational life of the product/ life situations?
span before replacement Quality Management Cycle: A Systematic
 Serviceability Approach to Quality Management
How readily a product can be repaired  Planning
 Aesthetics  Doing
 Checking
How product looks, feels, sounds, smells or  Acting
tastes Concept of TQM can be explained as:
 Safety  Customer Focus
The assurance that the customer will not  Continuous Improvement
 Employee Empowerment
suffer from injury or harm from the product
 Use of Quality Tools
 Other perception  Product Design
Of customer such as expectation fulfillment,  Process Management
 Managing Supplier Quality
goodwill etc