The success of a foodservice establishment is the result of serving a consistently

good product, meeting customer expectations, and using proper cost controls.
There are two areas of control on which managers must focus: sales
and cost. Sales is the amount of money brought into the foodservice
operation by customers paying for goods and services. Cost is the
amount of money paid out by the foodservice operation to
produce food and to serve its customers. Each is important
to the profitability of a foodservice operation.
 Cost Controls
KEY TERMS
food cost
beverage cost
cost of sales
There are four major areas of cost that foodservice operations must manage:food,beverage,
labor cost
overhead cost labor,and overhead.Well-run foodservice operations that use cost-saving tools and techniques
operating expenses to control these costs are often profitable and have high customer satisfaction.
standardized recipe
edible portion
standard yield
Types of Costs
standard portion Food cost is the total dollar amount spent by the foodservice operation to purchase food and bev-
formula
baker’s percentage
erages needed to prepare menu items intended for sale. Food cost includes all produce, meats,
poultry, seafood, grocery, and baking goods needed to prepare a recipe. Beverage items may also
53
be included in food cost when the beverage is an ingredient in the recipe, such as wine used for
recipe conversion
cooking. The amount of money spent to purchase these products may vary from one type of food-
conversion factor
service operation to the next, depending on the characteristics of the market segment being
trim
served. Food cost typically ranges from 20%–35% of the money earned through food sales.
shrinkage
Beverage cost is the total dollar amount spent by the foodservice operation to purchase all the
edible yield percentage ingredients needed to produce a beverage item. Beverage cost may include alcoholic beverages,
yield test nonalcoholic beverages, and food items needed to produce the beverage recipe. Beverage costs
AP weight typically represent 15%–20% of money earned through beverage sales. When food cost and bev-
trim loss erage costs are combined, they are called the cost of sales. Cost of sales is the total amount spent
edible yield to purchase all food and beverage products needed to produce total sales.
invoice Labor cost is the cost of paying employees wages, salaries, and benefits. Labor cost normally
invoice cost per unit represents 25%–35% of the total sales earned by the foodservice operation. Overhead costs
recipe cost per unit include all other expenses needed to operate a foodservice operation. Examples of overhead costs
Q factor include utilities, linens, mortgage, paper goods, glassware, and many others. Overhead costs often
represent about 15%–25% of the total sales. The combination of labor and overhead costs are
recipe cost
operating expenses.
portion cost
A foodservice operation must serve enough customers and bring in enough sales to pay these
plate cost
major areas of costs. If sales are greater than costs, the foodservice operation has a profit. If sales
preliminary selling price
are less than costs, the foodservice operation sees a loss.
economies of scale
product specification Managing Food Costs
open market
The most important cost-control tool used in a commercial kitchen is a standardized recipe. A
single-source buying
standardized recipe is a written formula customized to meet the needs of a foodservice operation.
purchase order
The standardized recipe describes the quality and quantity of ingredients, as well as the method of
receiving preparation, cooking techniques, and temperatures required to make a menu item. See Figure 5-1
parstock on page 54. Using the standardized recipe as a tool allows a foodservice operation to create a
periodic ordering method consistent product. Before standardized recipes are used, they are tested repeatedly for consis-
perpetual inventory tency and quantity. They are also tested to ensure that directions are easy to follow and that the
requisition ingredients are listed accurately.
daily production report
For the sake of clarity, recipe conversion examples are in U.S. Standard
measurements. These examples also apply to metric measurements. See
the appendix for metric conversions.

F i g u r e 5 - 1
The standardized recipe is an
important cost-control tool.
The quantities of ingredients in a stan-
dardized recipe are stated in an edible portion
form. Edible portion means that the
quantities of ingredients are in their ready-
to-use state.If a standardized recipe calls for
eight ounces of carrots, it means eight
ounces of peeled, trimmed, usable carrots.
By using the standard quantity and quality
of ingredients, the standardized recipe
yields a consistent amount of product,
called standard yield. The product is then
divided into standard portions, the
amount of food that is served for each order.
Portion control is an essential component
of controlling food costs, and it is also
important for customer satisfaction.Serving
too much food in each portion reduces prof-
its, but serving too little may drive away cus-
tomers. A set method of preparation helps
the kitchen staff consistently prepare a
known quantity and quality of the food
item.By using standards in the food produc-
tion cycle, the foodservice operation can
serve a consistent product that allows for
customer satisfaction and profitability.
In baking, a standardized recipe is
referred to as a formula. Although formu-
las and recipes are similar, there are signifi-
cant differences. In recipes, ingredients are
listed in order of use followed by the proce-
dures. In formulas, precise measures of
ingredients are listed in order by decreasing
weight and are often seen as percentages,
often called a baker’s percentage. The
baker’s percentage includes the percent-
age of each ingredient in relationship to the
weight of the flour in the final baked
key is to maintain consistent quality so that
the customers get what they expect.
Truth in menu Properly informing
customers of the ingredients used, prepa-
ration and cooking methods, and portion
size is important to customer satisfaction
and operational success. The National
Restaurant Associations (NRA) Accuracy
in Menu paper identifies guidelines that
foodservice operators may use in menu
planning and preparation.
Truth in menu includes proper
identification of an item’s quan-
tity, quality, weight, and product
ingredients, to name a few.
Adherence to ingredient specifi-
cations in a standardized recipe
product. Baker’s percentages make it easy to
increase or decrease the quantity of indi- ensures that what is supposed to
vidual ingredients. be in the recipe is, in fact, in the
See Chapter 29: Fundamentals recipe. Customers can then make
of Baking and Pastry for more
information on formulas and informed decisions. People with
baker’s percentages.
food allergies, in particular, need
Benefits of Standardized Recipes to know what is in their food.
The benefits of standardized recipes This can be a life-threatening
include consistency, cost control, quality issue. Failing to properly inform
control, and truth-in-menu advertising.
someone who asks about a spe-
Consistency A key reason to use standard-
cific ingredient can also have
ized recipes is that customers equate consis-
tency with quality. See Figure 5-2. When serious financial implications.
customers order a menu item, they expect
that the item they order today will be the
same quality and quantity as the one they
F i g u r e 5 - 2
enjoyed last week. Many successful foodser- Standardized recipes ensure
consistent results.
vice operations have stuck to a simple, well-
defined menu that is consistently executed.
Cost control Cost control is another ben-
efit of using standardized recipes. By speci-
fying the specific ingredients and portion
size of a recipe, foodservice operators are
able to forecast the costs and profits associ-
ated with a menu item. Adding more or
using less of an ingredient than the stan-
dardized recipe specifies can increase costs,
distort inventory, and displease customers.
Quality control Quality control is
achieved through standardized recipes by
carefully specifying the quality and quantity
of ingredients used.The quality of the ingre-
dients used is closely related to the market
position of the foodservice operation. The
Recipe Conversion
Cooking Temperatures
Cooking temperatures can be affected by a
change in equipment.The use of a convection
oven as opposed to the conventional oven
Changing a recipe to produce a new amount or yield is called recipe conversion. called for in the recipe will require a change in
cooking time because convection ovens cook
Before the yield of a standardized recipe can be changed, a conversion factor has to be estab- more quickly than conventional ovens.
lished. The conversion factor is the number that results from dividing the desired yield (the
Trim and Shrinkage
quantity of portions needed) by the existing standard yield. The conversion factor is obtained
Trim is the percentage of food lost during
by this calculation:
the preparation of the food product.
Shrinkage is the percentage of food lost
during cooking. The amount of trim and
Desired yield
Standard yield  Conversion factor
shrinkage affects not only the edible yield
of the product but also the portion cost.
Increasing the desired yield of a recipe yields a conversion factor greater than one. Using the
Knowing how much trim and shrinkage
standardized recipe found in Figure 5-1, the standardized recipe for roast leg of lamb yields 10
loss can be expected allows for the correct
portions. If the desired yield is 30 portions, the conversion factor is calculated as follows:
amount of ingredients to be used per por-
tion. For example, corned beef generally
shrinks almost 50% when it is cooked, so
Desired yield (30)
Standard yield (10)  Conversion factor (3)
this must be considered when it is pur- 55
The conversion factor is 3. Each ingredient quantity is multiplied by the conversion factor chased. If 10 pounds of cooked corned beef
to obtain the new quantity needed to produce the desired yield. For example, if the recipe calls is needed to make sandwiches, 20 pounds
for 5 pounds of lamb, the recipe would be converted as follows: of corned beef must be used to prepare the
forecasted portions.
5 lbs. lamb  3  15 lbs. lamb
Edible portion is the amount of food
Decreasing a recipe results in a conversion factor of less than one.Using the recipe in Figure 5-1, product that is servable after preparing the
to decrease the desired yield to 5, if the existing yield is 10, the same formula is used: ingredient for use. Waste, including peel-
ings, stems, and trim, and shrinkage in
cooking are factors that affect product
Desired yield (5)
Standard yield (10)  Conversion factor (0.5) yield. The percentage of a food product that
is left after trim and/or shrinkage is called
The conversion factor is 0.5. Each ingredient quantity is multiplied by the conversion factor the edible yield percentage. Yield tests
to obtain the new quantity of ingredients needed to produce the desired yield. For example, if or cooking loss tests are often performed to
a recipe calls for 5 pounds of lamb, the recipe would be converted as follows: determine how much product will be lost
5 lbs. lamb  0.5  2.5 lbs. lamb through preparation or cooking.
Recipe conversion is a skill used daily in the commercial kitchen.Accuracy and consistency Yield Test
in making conversions is important for maintaining quality. Yield tests are performed on food products
that are prepared for use or service in their
Considerations When Converting Recipes raw form. For example, the outermost
Mathematical recipe conversions do not take into account adjustments that must be made to leaves of a head of lettuce are trimmed and
certain ingredients, equipment, cooking temperatures, trim, and shrinkage that may occur discarded when cleaning the lettuce.
when altering standardized recipes. When such adjustments are needed, they should be noted Another example would be the cutting and
on the recipe. trimming of individual filets from tenderloin
of beef.
Adjustments to Ingredients
Follow these steps to conduct a yield test:
Ingredients such as spices are often stated on standardized recipes as to taste, pinch, dash, as
1. Weigh the product before trimming
needed, and so on. Expertise must be used to carefully adjust the quantities of these ingredi-
to determine the AP weight. AP
ents to maintain a consistent product.
weight is the weight of the product
Adjustments to Equipment when purchased.
Recipes usually indicate the size of equipment needed to prepare the food product. If a recipe 2. Trim and prepare the product for
is increased or decreased, the size of the equipment can become a factor. The wrong equip- use. Weigh the by-product material
ment can affect the outcome of a recipe.Always use the proper equipment to accommodate the that was trimmed from the pur-
recipe conversion. chased product. This number is
See Chapter 7: Equipment for more information on equipment. called the trim loss.
 3. Weigh the usable product. This number is the edible yield, the weight of the product
in its edible portion form.
4. Divide the edible yield weight by the AP weight.The result is in the edible yield percentage. Edible portion (50 oz.)
80 ounces as purchased (80 oz.)
To follow the yield test procedure for a one-pound bag of carrots, the carrots would first be

weighed in the as-purchased form (16 oz.). After peeling and trimming the carrots, the usable
Edible yield 62.5% (0.625)
product is weighed (12.8 oz.). The trim loss would be the difference between the AP weight and
the yield weight (3.2 oz). Then the edible yield weight (12.8 oz.) is divided by the AP weight
Using the recipe in Figure 5-1 on page 54,
(16 oz.).The edible yield percentage would be 80% (0.8).Because each foodservice operation has
a yield test would be performed on the
its own standards for how workers should trim products, edible yield percentages may differ.
onions, carrots, and celery to determine
the yield percentage, and a cooking loss test
would be performed on the leg of lamb.
AP weight (16 oz.)  Edible yield weight (12.8 oz.)  Trim loss (3.2 oz.) Knowing the edible yield percentage of a
product not only aids the chef in using the
proper quantity of ingredients to prepare a
standardized recipe but also can help the
Edible yield weight (12.8 oz.)
AP weight (16 oz.)  Edible yield percentage
(.8 or 80%) foodservice professional order the correct
quantity of foods to meet production needs.
Cooking Loss Test
A cooking loss test is performed on products that must be cooked before the edible yield Recipe Costing
weight is determined. To determine how cooking affects yield percentage, follow these steps: When costing a standardized recipe, the
1. Weigh the product before trimming to determine the AP weight, or as-purchased weight. following items must be understood and
2. Trim and prepare for cooking. provided in order for kitchen staff to do
3. Determine precooked weight. their jobs well. See Figure 5-3.
4. Cook, following methods of preparation on the standardized recipe. • Recipe name—The name of the recipe
5. Trim after cooking. should be the same as that listed on
6. Weigh edible portion. the menu.
7. Divide the edible portion weight by the AP weight. The result is the edible yield percentage. • Standard yield—The standard yield is
To follow the cooking loss test procedure for a 5-pound leg of lamb, weigh the leg of lamb in its the number of servings that one prepa-
as-purchased form (80 oz.). Then prepare and trim the leg of lamb to ready it for the cooking ration of the recipe yields.
process, and weigh it again (75 oz.).After it is cooked, trim and prepare the lamb for service, and • Standard portion—Standard portion
weigh it in its edible portion form (50 oz.). is the standard amount of the food item
that is served to each customer, usually

F i g u r e 5 - 3 stated in ounces or count.
A recipe costing form helps determine
and control costs.
 • Ingredient—This section of the recipe edible yield percentage of 80% previously determined, the 8 ounces of edible weight would
cost card specifies the ingredients and be divided by the edible yield percentage to determine the as-purchased weight. The as-
the proper amount of ingredients purchased quantity is the weight of the unprepared product that would be used to yield the
needed to produce the standard yield. quantity of edible product.
• Edible yield percentage—This repre-
sents the part of the purchased product
that is usable after trimming or cooking. 8 oz.
80% (0.8)  10 oz. of as-purchased carrots
• Invoice cost per unit—This is the
purchase cost and unit of purchase of This formula indicates that 10 ounces of carrots in their as-purchased form would need to
each ingredient in the recipe. This be used to yield 8 ounces of usable carrots. Therefore, the 10 ounces of as-purchased carrots
price can be obtained from regularly should be used when calculating the ingredient cost for carrots.
used purveyors or from the most Again looking at Figure 5-1 on page 54, the recipe requires a 5-pound leg of lamb to
recent invoice, or bill, for purchased achieve ten 5-ounce servings. The professional writing this recipe has already taken into con-
products. sideration that the lamb is going to lose almost 2 pounds through the cooking process. To
confirm this, multiply the standard yield by the standard portion.
Determining the Portion Cost
Calculating the Ingredient Cost
Standard yield  Standard portion  Amount needed
The first step in calculating a recipe’s portion
Example: 10 portions  5 oz. each  50 oz.
cost is to transfer all ingredients and quanti-
ties to the costing form. See Figure 5-3 on
This formula informs us that 50 ounces of edible product is needed to serve 10 portions.
57
page 56. The costing process can then begin.
However, the standardized recipe calls for 5 pounds of lamb, which is equal to 80 ounces. It
Individual ingredient cost It is impor- has been estimated that approximately 30 ounces (almost 2 pounds) will be lost during the
tant to determine the cost of each ingredient cooking process, which results in a 62.5% edible yield percent.
in the recipe. This step helps identify the
Changing the invoice cost per unit to the recipe cost per unit The invoice cost per
excessive cost of an ingredient and where a
unit is the cost to purchase an ingredient in the specified unit in which it is purchased. The
less-expensive ingredient may be substituted
recipe cost per unit is how much one recipe unit of the ingredient costs. For example, lamb
without affecting quality. In order to achieve
is purchased at $4.25 per pound. The recipe unit is a pound, so in this case the invoice cost per
the standard yield, the quantity of ingredi-
unit and the recipe cost per unit are the same. If 5 pounds are needed, calculate as follows:
ents must be measured in edible portion
form.If the ingredient is not purchased in the
edible portion form, an edible yield percent-
As purchased quantity  Recipe cost per unit  Individual ingredient cost
age must be applied to that ingredient.
5 lb.  $4.25/lb.  $21.25
Therefore, it is important for the food-
service professional to understand edible
To calculate the ingredient cost of carrots, the foodservice professional would first need to
yield percentages. Refer back to yield and
calculate the recipe unit cost, which is an ounce. If carrots are purchased at $9.75 for a 25-
cooking loss tests.
pound bag, and there are 400 ounces in a 25-pound bag (25 lb.
16 oz.), the cost per ounce
As-purchased quantity As standard- for carrots would be:
ized recipes list the quantity of ingredients
in the edible portion form, the foodservice
professional costing the recipe must be able Invoice cost per unit
Ounce in purchase unit  Recipe cost per unit
to determine how much of the product is $9.75/25 lb.
400 oz.  $0.024/oz.
needed to yield that quantity. In Figure 5-3,
ingredients such as salt and pepper are It was previously determined that 10 ounces of as-purchased carrots would be needed to
already in their usable form, so they have an yield 8 ounces of edible carrots.
edible yield percentage of 100%. To complete the individual ingredient cost for carrots:
Ingredients that are not purchased in the
edible form must have the edible yield per-
centage applied to determine how much As-purchased quantity  Cost per unit  Individual ingredient cost
product would actually be needed to yield 10 oz.  $0.024/oz.  $0.24
the quantity listed. For example, the recipe
for leg of lamb calls for 8 ounces of washed Total Ingredient Cost
and peeled carrots. To determine how After all the individual ingredient costs have been determined (illustrated in the formula
many ounces of carrots must be used to above), they are totaled. The total ingredient cost for the leg of lamb is $23.73.
yield 8 ounces of usable carrots, a yield test
may be performed on the carrots. Using the
Q Factor
A Q factor (questionable cost) is a cost that covers all ingredients that have a measure but are
insignificant in cost, such as salt, and ingredients that are regularly adjusted, such as flour as
needed. A Q factor is usually applied as a percentage of the total ingredient cost to achieve the
recipe cost. In Figure 5-3 on page 56, a 3% Q factor is applied, and would be calculated as follows:

Total ingredient cost  Q factor %  Q factor amount

$23.73  3.0%  $0.71

Recipe Cost
The recipe cost is the total cost to prepare the recipe, after having calculated the measurable
ingredients and estimated the cost of the immeasurable ingredients by using a Q factor. The Q
factor amount is added to the total ingredient cost to determine the recipe cost as follows:

Total ingredient cost  Q factor amount  Recipe cost

$23.73  $0.71  $24.44

Portion Cost
The portion cost is the cost of one portion of the standardized recipe.The recipe cost is divided
by the standard yield (number of portions) to determine the cost per portion as follows:

Recipe cost
Standard yield  Portion cost

$24.44
10  $2.44

Plate Cost
Often the portion costs of several recipes need to be determined so that they may be added
together to determine the plate cost of a menu item. If a portion of lamb is served with
5 ounces of roasted red potatoes ($0.42 per portion) and 4 ounces of green beans ($0.65 per
portion), the two additional portion costs would be added to the entrée to determine the cost
of the plate as follows:

Lamb  Potatoes  Green beans  Plate cost

$2.44  $0.42  $0.65  $3.51

Preliminary Selling Price

The preliminary selling price is the lowest suggested selling price to list on the menu.
There are two basic mathematical approaches to setting the preliminary selling price: the
desired cost percentage and the pricing factor.
Desired cost percentage One method to determine the preliminary selling price is to
divide the plate cost by the food cost percentage the restaurant is trying to achieve. If a restau-
rant’s goal was 25% food cost, the formula would be as follows:

Plate cost
Food cost %  Preliminary selling price

$3.51
25%  $14.04
 Pricing factor The second method to calculate the preliminary selling price is to use the of the foodservice operation, taking into
pricing factor. Again using the food cost percentage goal of 25%, the formula to calculate consideration the foodservice concept,
the pricing factor, thus the preliminary selling price, is as follows: clientele, and competition.When setting the
menu selling price, there are three areas of
importance: to make certain that all costs
100%
Food cost %  Pricing factor are covered; to determine that the price is
100%
25%  4 fair and reasonable to the business in terms
of profit; and to know that the price is fair
Plate cost  Pricing factor  Preliminary selling price and reasonable to the customer.
$3.51  4  $14.04
See Chapter 6: Menu
Development for more informa-
Both processes will provide the same preliminary selling price. It is rare that the preliminary tion about menu design.
selling price is the selling price found on the menu. The foodservice professional would use his
or her expertise to adjust (mark up) the preliminary selling price to meet the financial demands

recipe ingredient. A well-written standard- 59

ized recipe will specify the exact quality,
such as a grade for fruits and vegetables, or
the classification of prime or choice for beef-
steaks, and quantity of the ingredients to be
used. Menu items based on clear specifica-
tions are prepared at a consistent level of
quality within cost parameters determined
by the foodservice operation. Chefs have

Controlling Costs ultimate control, but controlling costs and

quality of products is a shared responsibility
of all kitchen personnel.
After the menu has been developed and selling prices Types of Purchased Products
Not all purchased products are food, but all
have been determined,control tools must be used to realize
are essential to a commercial kitchen.
a profit.These begin with purchasing and continue Foodservice operators purchase four types
through to the production and sales processes. of products: perishable, semiperishable,
nonperishable, and nonedibles.
Perishable Perishable products are gen-
Purchasing erally fresh foods that have a relatively
Depending on the size and type of the operation, purchasing food may be the responsibility of short shelf life. The quality of these items,
the chef, a food steward, or a designated purchasing agent. By giving responsibility and con- such as fresh fruits, vegetables, meat, poul-
trol of purchasing to one person quantity control is assured, ingredient quality is consistent, try, and seafood, tends to diminish in a rel-
and food is purchased at the appropriate cost. atively short period of time. These items
It is important to set purchasing procedures to define who has purchasing authority, identify must be ordered frequently and in quanti-
which purveyors are preferred for what items, provide standards on how often orders should be ties that can be used quickly so that the
made, and offer specific criteria on what should be ordered. Large multiunit operations will ingredients are at their peak of freshness
usually have employees dedicated to purchasing activities so that they can leverage economies and waste is minimized.
of scale, or price breaks, for purchasing in larger quantities. Semiperishable Semiperishable prod-
Product Specifications ucts are those that often have been treated
Decisions related to food quality are based on the menu and customer expectations. The most with preservatives (usually smoked or
efficient way to ensure consistency and quality is through the use of standardized recipes and care- salted) to extend shelf life. These products
fully creating a description of the ingredients the recipe requires in terms of standard product include processed meats, smoked fish, and
specifications. Product specifications describe the quality and quantity of each standardized pickled vegetables.
Nonperishable Nonperishable items
have a long shelf life—they do not decom-
pose rapidly when stored in their original
packages at room temperature. The quality
of these items remains intact when stored
for up to one year. Examples of nonperish-
able items include canned fruits and veg-
etables; bags of rice, sugar, and flour; and
condiments such as catsup, steak sauce,
and mustard.
Nonedibles Nonedibles are nonfood
products and include such items as alu-
minum foil and plastic wrap, paper goods,
and cleaning supplies.
Determining Purchase Quantities
The quantity of the item purchased
depends on several factors:
• Type of product being ordered
• Storage constraints
• Number of times a menu item will be
sold in a particular timeframe
• Discounts on volume purchases
• Available seasonal specials
Purveyor Relationships
The relationship between foodservice
operations and purveyors is based on
mutual trust and performance. Food-
service operations should show integrity
when interacting with purveyors, and they
should be able to trust purveyors to consis-
tently deliver products of the desired qual-
ity at a reasonable cost. Proper cost control
measures add integrity to the relationship of
trust between the buyer and the purveyor.
Methods of Purchasing
There are two primary methods of pur-
chasing products for a foodservice opera-
tion: open market and single-source
buying. The open market allows foodser-
vice operators to obtain bids from various
purveyors. Purveyors compete with one
another to offer the specified quality and
quantity of product at the lowest price and
best service to the foodservice operation.
Depending on the volume of sales a
restaurant produces, the effort required to
purchase items on a competitive basis is
sometimes more than the cost benefit
received. If hours must be spent seeking
and responding to bids for only a small cost
savings, it is wiser to use single-source buy-
ing. In single-source buying, operators
can purchase products from a single pur-
veyor, negotiating price for volume-based
discounts. This makes single-source buy-
ing attractive for items that are consistently
purchased in large volumes.
After the purchasing method is deter-
mined, a purchase order is prepared. A
purchase order is a form that communi-
cates to the purveyor the items to be pur-
chased. See Figure 5-4. A purchase order
lists the products that were ordered and
specifies the type and amount of the prod-
ucts. In addition, a formal purchase order
includes the unit price of the product and
the total cost of items to be purchased.

F i g u r e 5 - 4
A purchase order lists the
items to be purchased.
Receiving Goods
Receiving refers to the process by which
product is accepted from the purveyor. An
invoice is the bill that normally accompanies
the delivery. Receiving standards ensure the
correct quantity and quality of product
ordered. A good receiving system ensures
that the correct items and the proper quan-
tity of items has been received and the prod-
uct has been handled properly during
shipping. Receiving is the first opportunity
the restaurant has to control costs.
See Chapter 4: Food Safety for
more information on receiving.
Receiving Tools and Equipment
The following tools and equipment make
receiving more efficient:
• Heavy-duty gloves with nonslip fingertips
• Scales that are of the proper size to
weigh food when received
• A calculator to check total costs or weights
• Cutting devices for opening containers,
packages, and boxes
• Hand trucks to move cases from receiv-
ing to the storage area
• Thermometers to make sure that refrig-
erated and frozen goods are received at
the right temperature
• Business forms, such as purchase
orders and invoices
See Chapter 7: Equipment for
more information.
Physical Inspection of Goods
All products received should be visually
inspected to ensure that they are of good
quality; that is, fresh, undamaged, and free
from product tampering or mishandling,
improper storage,and pest or rodent infesta-
tion. Weigh the products to make sure that
their weights match those that were ordered.
Check the products against the invoice.
Report any discrepancies immediately.
Checking Purchase Order to Invoice
After the physical inspection of products is
complete and the invoice quantities are
confirmed, make sure that the items
received are the ones that were ordered by
checking the invoice against the purchase
order. The purveyor supplies an invoice,
and it should match the purchase order.
The purpose of this step is to ensure that
the items on the invoice are in fact the
items that were ordered.
Storing and Issuing Controls
When food items are received, items are
moved to the proper storage facility until
needed for production. If a product’s bar
code sticker can be scanned, do so on
receipt to help track the item through the
inventory system. See Figure 5-5.

F i g u r e 5 - 5
Bar codes help track items
through the inventory system.
Storeroom Controls Physical security of inventory can be
When storing goods, keep them in the proper environment to maximize the shelf life of the accomplished by locking storage areas to
product and ensure its continued quality. Moving received products through proper inventory limit access to unauthorized employees.
rotation is an important component of food storage, accomplished by using the FIFO method. Procedures should be established and fol-
lowed. Employee theft should result in
See Chapter 4: Food Safety for more information on FIFO.
immediate termination. Managers should
Inventory Control monitor sales patterns and inventory levels
Inventory control is an essential component for business success. When a customer orders a
to uncover any aberrations that might indi-
particular item from the menu, the item should be available. Running out of a popular menu
cate a pilferage problem, and video cam-
item can alienate a loyal patron. Food inventory is also a large expense for a foodservice oper-
eras can be used to monitor storage areas.
ation. Managing inventory helps the establishment manage its capital assets efficiently. It is
not cost efficient to hold excessive inventory. Production Controls
Physical Inventory
When products leave the storage areas,
A physical inventory is an actual count of items on hand. If a foodservice operation uses phys-
they move to the kitchen for production.
ical inventories as a control tool, an inventory may be performed daily (for alcoholic bever-
Production includes the preparation, pro-
ages) or weekly (for high-cost ingredients). Performing a physical inventory can assist in the
control of theft and pilferage and in the decision-making process for determining how much duction, and distribution of food products
to order. Performing periodic physical inventories at specific intervals allows the calculation of to the dining room. Managers often use
food and beverage costs (cost of sales) for that time period. daily production report forms to help
control and manage costs and show how
Parstock The amount of a product kept on hand from one delivery date to the next is called
the parstock. Product shortages, bad weather, or delivery delays can affect delivery intervals,
much product was prepared, how much 61
was sold, and how much was unused. Not
so plan for sufficient parstock to account for such unforeseen events. Having a parstock quan-
all leftover products can be reused, so min-
tity assigned to each product assists the purchaser in determining how much to purchase. It
imizing them is important to cost savings.
lessens the decision-making time for determining how much to buy. The purchaser simply
For example, by tracking daily the number
compares the inventory on hand with the parstock quantity; the difference between the two
of items left unused, the operation may
quantities determines the quantity to be ordered. This is often referred to as the periodic
adjust its preparation to better meet, rather
ordering method. The periodic ordering method of inventory control is used to establish
than exceed, sales needs.
how much product will be used in a given time period. The amount of the product on hand
will be reviewed to determine what will be needed and how much parstock of the
product should be available. A formula is used to determine how much to order:
Sales Controls
Sales is the final information-gathering area
of control that is necessary to complete the
Parstock  Production needs  Stock on hand  Order amount cost-control system. The recording of sales
information begins when the customer
Perpetual inventory Perpetual inventory is a continuously updated, documented places an order with the foodserver and the
record of food items on hand. A perpetual inventory is often stored on a computer and, at items are entered on a guest check or into
preestablished levels, products are automatically reordered. Perpetual inventory systems are the cash register system. The customer is
often difficult to use in foodservice operations because thousands of different items must be served, completes his or her meal, and pays
tracked and many of them are perishable. the guest check. The daily sales information
The use of computers in inventory control can help in the purchasing process. Through the is tallied within the cash register system
use of computers, foodservice operators can establish desired minimum and maximum and is printed out for analysis. With this
inventory levels. When the inventory reaches the preestablished minimum level, an order is information, managers can determine how
generated to increase the inventory to the maximum level. Computers can even be pro- well the foodservice operation performed;
grammed with ordering parameters and tied in to point-of-sale cash registers so that inven- adjustments, if any, can be made; and the
tory can be adjusted downward whenever a specific menu item is sold. When inventory levels cycle of cost control can continue.
reach parstock levels, the computer automatically generates a purchase order for the item
needed. When the item is received, it is added to inventory by scanning the product bar code
in the receiving area.
Issuing Controls
Unfortunately,food pilferage occurs in the foodservice industry.Operators can take precautions
to prevent pilferage whenever possible by building controls into the operation to make sure that
pilferage does not occur. Two ways to achieve this is through requisitions and security.
Using requisitions, an internal invoice that allows management to track the release
of inventory from storage, helps control the internal flow of items. This ensures that only
authorized staff sign the requisition. By limiting access, pilferage is decreased.