PURCHASING

WHAT IS PURCHASING?

Purchasing is the process of getting the right product

into a facility at the right time and place, plus the amount
of goods at the right price and right source.
PURCHASING OBJECTIVES

1. Of the standardized quality and Packing.

2. Of the standardized quantity.
3. Of the negotiated and approved price.
4. At the right time.
5. From the right source.
PURCHASING
 Ultimate responsibility with the Food and
RESPONSIBILITIES
Beverage Manager.
 Smaller establishments have the Chefs or the
Steward in charge of the Purchases.
One of critical
 Slightly bigger properties need a Purchasing
control points that agent member of the staff on rotation.
needs to be
 In large hotels the Purchase department
controlled
headed by Manager Purchase and staff.
perfectly
THE PURCHASING CYCLE

4
DIFFERENT METHODS OF FOOD PURCHASING

Open Market Purchase:

This is a method of buying products that aren’t used often.
The committee consists of three people (a purchase officer,
an accounts man and one from f & B). They then go to the market
to determine the price of the product. The most advantageous product is chosen
after weighing the prices and quality. When comparing prices, quality should not be sacrificed.
This purchase has the advantage that you will only pay for the highest quality product.
PURCHASING BY CONTRACT

Contract purchases are required for food items that require frequent
purchase. Tenders can be awarded for meat, poultry, eggs, milk products, fruits,
and vegetables. Tenders are invited to submit their annual requirements. Based
on the expected consumption for the year, the tenders will be evaluated for
their total worth. To ensure that these items are supplied regularly, the supplier
must sign the contract. They must supply only the quality specified. We can
purchase the indented products at the current market rate and debit the
supplier’s account if the supplier does not supply them. This is called risk
purchase.
CENTRALIZED PURCHASING

This is based on the principle that purchasing is performed by one person or

one department. HOD is usually responsible for making sure that profit is made
in centralized purchasing operations.

All H.O.D. are involved in this type of purchasing. You can combine all the
H.O.D. items under one head to purchase them all on a large scale.
STANDING ORDER PURCHASE

This is where the purveyor will send merchandise at a pre-determined time.

You may need to replenish stock or purchase a fixed quantity each time. This
method is used to purchase milk and dairy products. This saves the receiver a
lot of time and allows him to replenish stock quickly. This type of delivery is
subject to a formal agreement and must be reviewed periodically.
This system has its disadvantages. It is dependent on one vendor and may cause
delays. It works well for items that are bought daily, weekly, or multiple times
per week or month.
PERIODICAL PURCHASING/ FORTNIGHTLY QUOTATION LIST/
PURCHASING BI WEEKLY

 This is a method to buy groceries items that are only available for delivery once per
week or twice per week.
 H.O.D. would replenish the stock and fill in the desired quantity of each item, based
on the expected volume of business and normal order quantities.
 The purchase officer would send a copy to each supplier on the master list.
 Each supplier must then quote the rates upon receipt of the quotation.
 These will be added to a master quote list, and then the order is made for each
item. The next week/ Fortnight’s requirements and available storage space would
determine this.
PURCHASING PROPER QUALITY

 It always refers to the menu

 The quality requirements are made when the menu has been established and
they should meet the type of restaurant you will run
 The relationship between quality and price is referred to as value
 The quality of each products should be documented in detail with STANDARD
PURCHASED SPECIFICATION
PURCHASING PROPER QUANTITY

 Determining the proper quantity for Startup restaurant business is

based on targeted sales requirements of each menu.
 As for running restaurant, the quantity of food item purchased are
based on sales history
 The capacity of storage room (dry and cold) is very important
PROBLEM IN PURCHASING TOO MUCH QUANTITY

 CASH FLOW
 NEED OF BIGGER STORAGE ROOM
 DETERIORATION OF PRODUCTS
 THEFT AND PILFERAGE
FACTORS THAT AFFECT PURCHASING QUANTITIES

 POPULARITY OF MENU ITEM

 PRODUCT COST CONCERNS
 STORAGE SPACE
 SAFETY LEVEL
 SUPPLIERS CONSTRAINTS
 PERISHABLE PRODUCT
STORAGE AREA
CONCEPT IN PURCHASING PERISHABLE PRODUCTS

 Normal Usage rates.

 Assess the amount of each item in
the current inventory.
Quantity Needed - Quantity available=
 Calculate the Qty to purchase by Quantity to Purchase for Immediate use.
subtracting from the above formula.
 Adjust routine quantities as
necessary taking into account
special functions, holidays etc
#REVIEW 1: PERISHABLE PRODUCT
How much you should order?
AMOUNT NOTES
ITEM
NEEDED ON HAND ORDER
EGG 10 kg 5 Kg
MILK 30 ltr 20 Ltr
CARROTS 30 kg 10kg
TOMATOES 8 kg 5 kg
CONCEPT IN PURCHASING NON PERISHABLE PRODUCTS

 Minimum/Maximum ordering system.

 Minimum level is also known as safety level.
 Maximum level is also known as Apex level.
 Usage rate normal usage for a period.
 Lead time quantity is the number of purchase units withdrawn
from inventory between the time the order is placed and when it is
delivered.
CONCEPT IN PURCHASING NON PERISHABLE PRODUCTS

 Order Point is the number of purchase units in stock when an order is placed.
 The order point is reached when the number of purchase units in Inventory
equals the lead time quantity plus the safety level.
 Purchase units at Order point = Purchase units in lead time + Purchase
units in safety level
NON PERISHABLE - EXAMPLE
NON PERISHABLE - EXAMPLE
NON PERISHABLE - EXAMPLE
NON PERISHABLE - EXAMPLE
STANDARD YIELD

 The term Yield is defined as the Net Weight of a Food Item

after it has been processed and made ready for sale to a
Guest.
YIELD TERMINOLOGY

 As Purchased Weight (AP – Weight): It is defined as the Weight of an item upon

Purchase.
 Edible Portion Weight (EP – Weight): It is defined as the Weight of an item
subjected to Processing and Preparation Methods making it ready for Sale to the
Guests.
 Production Loss = AP Weight – EP Weight ( loss due trimming, boning, filleting,
etc)
IS STANDARD YIELD IMPORTANT?

 It is very important for the Food & Beverage Operator to know the Standard Yield
because he should not:
 Waste his money buying Ingredients which have a Poor EP Weight
 High waste
 Note: Such Ingredients must in most cases be avoided and where possible
substituted with an alternative.
STEPS IN THE PRODUCTION PROCESS RESULTING IN WEIGHT LOSS
 Preparation Stage: Loss in the Weight are due to the following:
 Trimming
 Boning
 Filleting
 Cutting
 Cooking Stage: Losses result due to the Cooking Process (Shrinkage in case of Meats mostly – an
effect of Heat on Protein content in the meat). The method of Cooking also impacts weight loss.
 Portioning: In case the Prepared Items have not been Pre – Portioned, Losses result during the
process of Portioning – Spillages / Carvings.
YIELD TEST

 Standard Yields are determined by conducting Yield Tests. In case of Meat

Products these Tests are also called as Butcher’s Tests.
 Especially conducted for expensive food item such as Lobster, Abalone, Shark fin,
Caviar, US Prime Rib Eye, etc.
 It is also conducted for less expensive food item, but it is going to be used in a
large quantity
WHEN DO WE NEED TO PERFORM YIELD TEST?

 Yield Tests must be done at least 3 times for every product purchased.
 They must be conducted under two types of conditions:
a) Controlled Environment
b) Un – Controlled Environment / Operational Environment
 Summary of Yield Test Results
Item: Oven Roasted Beef Rib Grade: USDA A+
Pieces: 8 Total Weight: 76.71 Kg. Average Weight: 9.588 Kg.
Average Item Cost: $379.71 Cost per Kg. $ 4.95/Kg.
Supplier: Kohinoor
Cost / Servable Cost
Cooking and Portioning Details Weight % of Original Weight
Pound Factor
Loss in AP Weight due to Trimming /
Deboning 3.019 Kg. 31.04
Loss in Ap Weight due to Cooking 1.835 Kg. 19.14
Net Servable Weight 4.734 Kg. 49.82
Total Weight 9.588 Kg. 100

Other Data: Cooked at 300 Degrees F for 4 Hr. and 45 Minutes

YIELD PERCENTAGE OF AN ITEM

 On obtaining the Edible Portion Weight through a Yield Test we can calculate the
Yield % of an Item.

 Yield % = EP Weight x 100

AP Weight
= (Ratio of Servable Weight to Original Weight)
CONDUCTING YIELD TEST

 A Whole Red Snapper with 3,8kg weight (100%) Price Rp 230.000

(60.526/kg)
 Loss in Preparation/Butchering process 1,2kg (31,58%)
 Net weight (Edible Portion) 2,6kg
 Yield Percentage is 68,42%
COST PER SERVABLE KG

 Cost per Servable Kilogram is computed as follows:

 Cost / Servable Kg = AP Price
Yield %
= 60.526
0.68
= Rp 89.009 (rounded)
This 89.009 will be used in standard recipe costing
ORDER QUANTITY BASED ON YIELD

#REVIEW 2:
 Assume that there is a 50 Pax Banquet Function which requires 200 gr per
portion of Red Snapper. How much would you Order?
 Order Quantity = no of pax x portion size per pax
Yield %
= 50 x 0.2 kg
68,42%
= 14,70kg (rounded)
COST FACTOR

 The Cost Factor is a Constant Value which is used to convert new AP Prices into
Cost per Servable Kg. Assuming that all other Parameters remain the same.
Cost Factor = Cost per Servable Kg
AP Price
= 89.009
60.526
= 1,47
COST FACTOR IS USED TO ADJUST COST PER SERVABLE KG
#REVIEW 3:
For example, if the price Red Snapper increased from Rp 60.526 /kg to Rp
65.000/kg. How much is the new cost for Red Snapper per servable kg?
New AP Price x Cost Factor = New Cost per servable kg

65.000 x 1,47 = Rp 95.550 / kg

STANDARD PURCHASED SPESIFICATION
STANDARD PURCHASED SPESIFICATION
STANDARD PURCHASE SPECIFICATION
RECEIVING CONTROL

After placing orders, managers must ensure that beverage products

are properly received. The receiving process entails matching the
products ordered with those delivered. It also means ensuring
that the products have arrived in good condition
THE OBJECTIVES The objectives of the receiving function
include inspecting deliveries to
All items delivered are
checked against the
evaluate the quality and determine
standard purchased the Quantity of the products,
specification, checking prices, and arriving at an
purchase order, and accept or reject decision.
delivery invoices
PROCESS

NEVER LET THE SAME

PERSON IN CHARGE
OF PURCHASING AND
RECEIVING
REJECTED ITEMS – CREDIT MEMORANDUM

 If all items delivered are matched to SPS, PO, and invoice, then
receiving staff will store them in storage room accordingly
 If there is any rejection prior to discrepancies, then the restaurant will
fill out the credit memorandum (credit memo) to reject the items
CREDIT MEMO

Restaurant Name : Café de Verona CREDIT MEMORANDUM

PURVEYOR : Delivery Date : PO Number:
Invoice Number :
Unit/Quantity Description Credit amount Notes

Tenderloin US Too much fat 5 kg

Mushroom Canned Broken can 10 cans

Reason for credit: Requested By :

SECURITY CONCERN IN RECEIVING
SECURITY CONCERN
  FRAUDS BY STAFF
FRAUD IN
RECEIVING • Overcharging or undercharging for items.
MOSTLY DONE BY STAFF IN • Stealing of food, drink or cash.
RECEIVING AREA OR THE
PURVEYORS THAT WORK IN A • Billing with used cheques.
TEAM WITH YOUR STAFF
• Bringing own liquor in and selling it.
• Under pouring of peg.