Food

&FRE
&
E
BPOWERPO
Beverage
INT
Management

Dhananjay Vaidya
 Food & Beverage Control

Definition & Nature

•Food and beverage control refers to the guidance and regulation of the costs and
revenue of operating the catering activity in hotels, restaurants.

•Sales in the food and beverage operations often account for half of the total
revenue of the hotels.

• Most of the operations are market oriented. The financial success depends upon
price levels, covers served, sales mix, gross profits etc.

• Controlling a catering operation will involve revenue as well as cost control.

• F&B sales usually account for one third sales of the total revenue. For stand
alone ops – F&B sales are the only source of income. The cost of operations is
usually 30-45%.

• Welfare operations have to perform within a limited budget and so cost control
is the biggest challenge.
•The extent of control depends upon the scale of operations.
Food & Beverage Control
Objectives
• Analysis of income and expenditure.
Income analysis is made at the level of an individual selling unit covering information on food
and beverage sales volume, sales mix, average customer spending power for different times of a
day, and total number of customers served in a given period.
Cost analysis is made at the departmental level for food and beverage costs, per portion cost,
and labour cost.
The performance of the individual selling unit or department is expressed and integrated in
gross profit—revenue less cost of food and beverage sold, net margin—net profit divided by
the net revenues, and net profit—gross profit less all expenses incurred in the food and
beverage operations.
Q: What is the benefit of these measures to a manager?

• Establishment and maintenance of standards

Implementation of standards specifically applicable to a specific operation such as bar or
restaurant operations.
Without standards, managers and employees have no idea what objectives they have to
accomplish and what process they will use in the performance of their tasks.
Food & Beverage Control
Objectives
Standards provide the measure by which performance is evaluated.
standards are set out in manuals covering all standard operating procedures
accessible to all managers and employees.
Maintenance is ensured by conducting regular training programs and getting
comments from customers on the service and the service providers.
Information on food and beverage control reflects on the maintenance of
standards.

• Pricing and Quotations.

Food and beverage control provides basis for menu for both regular operations
and for special functions.
The determination of an accurate food and beverage pricing depends upon
concurrently reliable information from food and beverage control viz the costs,
spending power of most customers, prices of competitors, acceptable market
prices.

• Prevention of Waste
Performance standards in the food and industry operations are achieved
through the establishment of cost, revenue and profit targets.
The desired performance level is achieved through the minimisation of waste of
all resources.
Food & Beverage Control
Objectives
Wastage is prevented through the implementation of a detailed and focused food and bevera
ge control that links plans with actual implementation.

• Fraud prevention.
Fiduciary relationship should exist between managers and employees as well as the business
firm and its customers.
An important consideration is to prevent opportunities for the commission of fraud.
Common fraudulent acts employed by customers are leaving without paying, claiming
substandard food and beverage ingredients and preparation.
Staff may overcharge, undercharge or steal from the firm.
Control systems serves as audit mechanism dissipating the possibility of fraud.

• Information management.
Creation of periodic data for management reports on the operations of the business.
The information should be accurate and timely in order to become an important source of
information for strategy formulation and decision-making.
Information reported is compared with standards set for the period to evaluate the extent of
compliance with budget and profit standards.
Food & Beverage Control
Problems in Food & Beverage controls
• Unpredictability of volume of business
Inherent sales instability.
Demand for food and drink vary during the business period.
Variation in the volume of business through the week.
Seasonal nature influences turnover.
When operations work at full capacity, it limits the advantage of surplus demand for its food
and beverage due to limited seating capacity.
In off season, empty seating capacity puts burden on operating costs.
Sales instability presents a challenge of relating quantity produced to fluctuating demand.

• Perishability of Supplies
Both raw and finished or prepared products are perishable.
This calls for avoiding over buying for highly perishable ingredients.
Quantity produced for each service should be consistent with forecast demand. Disposing
Overproduced food may be quite disadvantageous.
Perishability of beverages is less acute.
Food & Beverage Control
Problems in Food & Beverage controls
Daily variation in production
Continuous variation in assortment of meals produced.
This variation is observed from one meal period to another.
Emphasis on menu items vary within days of the week. This entails problems relating to all
phases of control cycle.

Short cycle of operation

This feature presents acute control problem in the short cycle of operation.
The speed of the operation allows no time for desired control procedures to be followed.

Multiplicity of low volume transactions

Predictions of total sales, stores and cellar control, menu / wine list pricing, cash collections,
credit sales make implementation more difficult.

Departmentalisation
Larger the number of sales outlets, more complicated the problem of control.
Each sales outlet will have specific trading results.
 Yield Calculations
Yield
It is the net weight or volume of the finished product i.e. ready to eat food expected
to be sold to guest.
Yield of an ingredient is calculated after processing it as per standard recipe or a
standard method of preparation.
Volume of output desired is defined as Yield.
High cost ingredients and volume consumption ingredients will be considered for
yield calculations.

Yield % = Servable weight / Original weight X 100.

Cost of 1 kg servable weight = Cost of original weight / yield % X100
Question: How much raw ingredient needs to be purchased for a gathering requiring
50 portions of 200 gms each?

RW = DSW / SW X OW.
 Yield Calculations
Applications of Yield Calculations…

❖ Determines most appropriate & advantageous size, weight, and price of the
commodity.
❖ Helps determine requirement of raw ingredient for anticipated production levels
and therefore assist in purchasing of appropriate ingredient.
❖ Assist in receiving of desired raw ingredient.
❖ Safeguards pilferages and wastages occurring in the kitchen. It is an indicator of
efficiency of kitchen department.

Cost Factor
Factor used for converting new purchase prices into revised cost per servable kg.
C F = Cost per servable kg / original cost price.
Whenever original cost price of an ingredient changes, new cost per servable kg
Can be calculated.
Applications of Yield Calculations…

Adjusted cost factor

This factor is worked out when yield is required to be increased or decreased
From a standard recipe.
Ex. A recipe yields 200 portions of a given weight and size. If 350 portions of same
weight and size is required then –
A C F = Desired yield / original Yield OR 350 / 200 = 1.75
In order to get desired yield of any recipe, original quantity of ingredient should
be multiply by the adjustment factor. IE
Original Recipe Adjustment Factor revised recipe
Butter 400 gms 1.75 700 gms
R. Flour 500 gms 1.75 875 gms.
 Methodology of Control
Method applied in the development of an effective system to control food and
beverage.

Decision
Operational
making
phase
phase

Control after the

event.
 Methodology of Control
PHASE I – BASIC POLICY DECISION
Food and beverage control is an outcome of two considerations
1. Profitability
2. Customer.
Profitability is the ultimate objective. This is achieved by providing
food and beverage of satisfactory standard to the customer.
Therefore, before a system of control is developed, it is essential to
develop or evolve:
Financial Policy
Determination of management intention w.r.t. expected profitability
of the establishment. It involves setting of profit targets, departmental
profit margins & differential profit margins in respect of each menu
& wine lists.
Marketing & Catering Policy
Define the target markets and deciding how to cater the markets.
 Methodology of Control
Determination of Financial Policy
• Determine the overall profit targets or return on investment

• Determine percentage of net profit on sales to be aimed at.

• W.r.t budgeted volume of sales, type of service and degree of

comforts to be provided.

• Identify percentage of income required to cover cost of sales,

labour cost and overhead expenses.

• Determine cost of sales for each department of business.

• identify differential profit margins for each group of items.

 F&B Management in Welfare Catering.

Basic Policies
• Provision of food and beverage to employees of an organization at the
place of work.

•The provision of food and beverage may vary from automats dispensing
limited food and beverage to table service.

•Industrial catering facility have become an important benefit to employee

since it provides meals at subsidized rates or discounted rates.

• This facility may either be on contract basis or under direct control of

management.

• Variety of catering facilities available in an industrial situation includes

Cafeteria, Snack Bar, Plated service restaurant, table service restaurant,
Automats, remote catering facility or function facility.
 Basic Policies

•Formulations of basic policies depend upon whether the company itself will
run the operation or contract it.

• If the company is managing the catering facility, then basic policies will be
formulated by the company.

• If the facility is contracted then broad guidelines will be drawn within which
the company and the contractor will have to work.

•The basic policies are determined by the objectives company wishes to

achieve in providing the catering facility to its employees.

• Provision of catering facility may be for

1. Prestigious reasons,
2. Unavailability of catering outlets in the vicinity of company,
3. Added benefit for prospective employees,
4. As a social responsibility for employees etc.
 The Financial Policy

1. Amount of investment to be made in the catering facility.

2. Extend to which cost of providing meals should be borne by the

company.

3. Provide complete free meals or to recover the complete cost of meal

from the employee or to recover only food cost or recover food and
labour cost from employees etc.

4. In most Indian company’s there is a trend to recover only food, labour

and sundry element through sales,

5. Size and variety of catering facility determined by number of employees

expected to use the service

6. Level of subsidy to be budgeted for catering activity

7. Location and accessibility of employee’s residence to company location

6. Design and ergonomics.

 The Marketing Policy
1. Mode of advertising
– use of posters, leaflets, issue of complementary meal coupons on
joining the organization, monthly meal coupons, word of mouth etc.

2. Launching of loyalty schemes to increase average spend,

3. Direct advertising.
– print media, trade journals.

4. Collection of feedback from the employees about the catering service

provided.
– through suggestion box, through dept. in charge or committees.

Market research

If the organization decides to undertake its own research, questionnaires

can be distributed to its entire staff to be completed. On analysis the
results can prove valuable sources of information as they often obtain the
views of the silent majority and are a source of objective information.
 The Catering policy

1.Standard of food and beverage to be provided,

2. Type of service to be provided in shifts – cafeteria service, self service,

automats etc,

3. Determination of other possible uses of Catering facility – staff training

sessions, send off parties, welcome parties, demonstrations etc,

4. Provision of catering outlets for different level of management or

provision of only one outlet (preferred by most companies as it could
be one time managers can interact with employees) ,

5. Type, Size, variety of catering facility to be provided,

6. Procedure to be followed when amending any aspect of catering

service.
7. Customers of the catering facility: organizational employees

8. Product - limited menu in terms of choice, more emphasis on

nutritionally rich meal at affordable price, easy preparation, easy control,
low price, cyclic menus, Provision of type of Beverage.
 The Catering policy
•Menu - In Industrial catering, the menu is usually changed daily.
•This is particularly applicable to starters, main courses and desserts.
• Items always available would include soup, fruit juices, salads, desserts.
•Because of the very short cycle of menus offered there is a considerable
amount of flexibility afforded to industrial caterers. In addition to offering
different standard dishes daily, special diet foods and beverages may be
introduced, such as low calorie or vegetarian foods.

•Food Production - cook-serve method of food production is still the most

widely used, Cook chill or Cook freeze methods may also be used.

• The foods used may be purchased directly from a central production unit.

• order food and beverages directly from the food manufacturers to their own
specifications, cooking equipment is mainly of the heavy industrial type, like
large convection ovens, brat pans, fryers, steamers, etc.

• Clearance of soil is eighter manual tank method or conveyer belt systems.

 The Catering policy

• Service styles - Most widely used method of food service in industrial

catering is the self service cafeteria.

•Traditionally the straight line arrangement was commonly used but the
free flow system is now more common as it allows a considerable number
of customers to enter the cafeteria and begin to make their choice of
food and beverage items at the appropriate service points.

•Second to the self service arrangement is the plated method of food

service in which the customer’s food is plated in the kitchen and brought
to their table by a waiter. Because this is a slower method of food service
and more costly to provide, it is mainly confined to a fairly limited
number of employees, usually those of a certain status within the
organization such as the middle management upwards.

• The use of silver service is again restricted in this instance to mainly

senior management only. Food may be carried manually or in preheated
trolleys.

•Beverage service will be generally self service or through automats.

Staffing Patterns –
• It may be organized along basic staff hierarchy structure, or, it may be
an autonomous department within an organization with its own staffing
and management hierarchy.

• In any case, the staffing is responsibility of personnel dept. The staff may
be hired by the company or will be deputed by the contractor at site.

•Increasing use of machinery for food production and dispensing of food i

nfluences the structure as well as number of people employed in the
operation.

• A large number of unskilled staff is employed by the company run or

contracted industrial operation.

• Where silver service may be used, the ratio of customers to staff can be
as low as 1:8.

• In the middle management or supervisory dining room where plated

service is often used, the ratio may increase to 1:15 or 1:20

• .In the cafeteria with a self service system the ratio may be as high as
1:30 or 1:40.
 Control methods

•Coupons distributed against deduction of meal allowance are collected and

sales or customer turnover determined.

•Cash payment for chargeable food or beverage items, Cash against meal as in
cafeteria service, Cash after meal service etc.

•Control on the catering activity is mainly through budgetary control.

•Standards are laid down for comparison.

• In formulating a catering budget the services being provided within the

establishment first be identified.

•The menus for the respective outlets be reviewed and if possibly weekly or
monthly cycle menus may be introduced.

•Sales and cost of outlet must be recorded separately.

•The Cost of operating an industrial catering includes Material cost, labor cost,
Maintenance cost, Fuel cost, replacement cost.

•All the steps involved in the operational phase of the control cycle must be
implemented in industrial catering.
 Performance measurement
Parameters:
•Maintenance of operational cost within the limits.
• Acceptable level of price level for material purchased
• Maintaining standard of food and beverage served.
• Maintenance of hygiene and sanitation standards, efficient handling of
garbage disposables.

•The Contract:

•Cost plus contract is an arrangement in which all the cost is borne by the
company and a fixed management fees is paid to the contractor.

•Fixed price contracts company pay a fixed price to the contractor for provision
of service.

•Performance guarantee contracts the labor and material cost is borne by com
pany while the overheads are borne by the contractor.

•Partnership contracts based on sharing of cost and revenue in a certain perce

ntage.

•Concession rent contract require the contractor to pay a fixed rent to the com
pany for utilizing and providing catering facility.