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Chapter 3

Food and Beverage Cost Control
CHAPTER OUTLINE
 Part One
Menu Item Forecasting
Standardized Recipes
Inventory Control
Purchasing
 Part Two
Receiving
Storage
Determining Actual Food Expense

Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
CHAPTER OUTLINE
 Technology tools
 Apply what you have learned
 Key terms and concepts
 Test your skills

Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
LEARNING OUTCOMES
 Use sales histories and standardized recipes
to determine the amount of food products to
buy in anticipation of forecasted sales
 Purchase, receive, and store food products
in a cost-effective manner.
 Compute the cost of food sold and food cost
percentage.
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
MENU ITEM FORECASTING
 Projection of how many food items you will
produce.

 The percentage of total guests choosing a
given menu item from a list of menu
alternatives.


POPULARITY
INDEX
POPULARITY
INDEX =
Total Number of a
Specific Menu Item Sold
Total Number of all
Menu Item Sold
_____________________________
_
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
MENU ITEM SALES HISTORY

MENU ITEM

MON

TUE

WED

THU

FRI

TOTAL
WEEK’S
AVERAGE
Roast
Chicken
70 72 61 85 77 365 73
Roast Pork 110 108 144 109 102 573 115
Roast Beef 100 140 95 121 106 562 112
TOTAL 280 320 300 315 285 1500 300
Dogelio’s Steak House - MENU ITEM SALES HISTORY
July 1 - 5
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
FORECASTING ITEM SALES

 The quantity of a specific menu items likely
to be sold given an estimate of the total
number of guests expected.

Predicted Number To Be
Sold
Predicted Number of
That Item To Be Sold
=
Number of
Guest s
Expected
X
Item
Popularity
Index
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
FORECASTING ITEM SALES

MENU ITEM

GUEST
FORECAST

POPULARITY
INDEX
PREDICTED
NUMBER TO BE
SOLD
Roast Chicken 300 0.243 73
Roast Pork 300 0.382 115
Roast Beef 300 0.375 112
TOTAL 300
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
FACTORS INFLUENCING MENU ITEM
FORECASTING
 Competition

 Weather

 Special Events

 Holidays

 Facility Occupancy

Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
FACTORS INFLUENCING MENU ITEM
FORECASTING
 Your own advertising and
promotional offers

 Your competitor’s
advertising and
promotional offerings

 Quality of service

 Changes in operating
hours

 Operational Consistency
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
STANDARDIZED RECIPES
 It controls both the quantity and
the quality of what the kitchen will
produce.

 It details the procedures to be
used in preparing and serving
each of the menu items.

 It ensures that each time guests
order an item from your menu,
they receive exactly what you
intended them to receive.
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
CONTENTS OF STANDARDIZED RECIPES
 Menu item name
 Total yield
 Portion size
 Ingredient list
 Preparation/method section
 Cooking time and temperature
 Special instructions, if
necessary
 Recipe Cost
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
STANDARDIZED RECIPE - SAMPLES
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
STANDARDIZED RECIPE - SAMPLES
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
ARGUMENTS IN STANDARDIZED RECIPES
 They take too long to use
 My employees don’t need recipes; they know
how we do things here.
 My chef refuses to reveal his or her secrets.
 They take too long to write up.
 We tried them but lost some, so we stopped
using them.
 They are too hard to read, or many of my
employees cannot read English.
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
ADVANTAGES OF STANDARDIZED RECIPES
 Accurate purchasing is impossible without
the existence and use of standardized
recipes.
 Dietary concerns require some foodservice
operators to know the exact ingredients and
the correct amount of nutrients in each
serving of a menu item
 Accuracy in menu laws require that
foodservice operators be able to tell guests
about the type and amount of ingredients in
their recipes.
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
ADVANTAGES OF STANDARDIZED RECIPES
 Accurate recipe costing and menu pricing is
impossible to do without standardized recipe.
 Matching food used to cash sales is impossible
to do without standardized recipes.
 New employees can be better trained with
standardized recipes.
 The computerization of a foodservice operation
is impossible unless the elements of
standardized recipes are in place; thus, the
advantages of advanced technological tools
available to the operation are restricted or even
eliminated.
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
STANDARDIZED RECIPES
 The cornerstone of any serious effort to
produce consistent, high-quality food
products at an established cost.
 Without it, const control efforts become
nothing more that raising selling prices,
reducing portions sizes, or lessening quality.
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
ADJUSTING RECIPES
 It is important that measurement standards
be consistent.
 Weighing with a pound or an ounce scale is
the most accurate method of measuring
many ingredients.
 The food item to be measured must be
recipe-ready, means, it must be cleaned,
trimmed, cooked, and generally completed.
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
TWO MAJOR METHODS IN ADJUSTING RECIPES
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
FACTOR
METHOD =
Desired Yield
_________________
Current
Yield
Example
:
CONVERSION
FACTOR =
125
_________________
50
= 2.5
FACTOR METHOD

INGREDIENT

ORIGINAL
AMOUNT

CONVERSION
FACTOR

NEW AMOUNT
A 4 lb. 2.5 10 lb.
B 1 qt. 2.5 2 ½ qt.
C 1 ½ T 2.5 3 ¾ T
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
TWO MAJOR METHODS IN ADJUSTING RECIPES

 It deals with the recipe weight rather than
with a conversion factor.
 It is more sometimes more accurate than
using a conversion factor alone.
 It involves weighing all ingredients and then
computing the percentage weight of each
recipe ingredient in relation to the total
weight of all ingredients.
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
PERCENTAGE
METHOD
TWO MAJOR METHODS IN ADJUSTING RECIPES

 First, identify the total amount required.

 Second, get the percent of total (% of
Total)

 Last, get the new recipe amount
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
PERCENTAGE
METHOD
TWO MAJOR METHODS IN ADJUSTING RECIPES

 First, identify the total amount required.
 Total Amount Required = Desired Yield x Weight per
Serving

 Total Amount Required = 75 servings x 4 oz. per
serving

 Total Amount Required = 300 oz


Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
PERCENTAGE
METHOD
TWO MAJOR METHODS IN ADJUSTING RECIPES

 Second, get the percent of total (% of
Total)


Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
PERCENTAGE
METHOD
% of Total =
Item A Ingredient
Weight
______________________________
__
Total Recipe Weight
% of Total =
108 oz.
___________
__
168 oz.
=
0.619 (61.9%)
TWO MAJOR METHODS IN ADJUSTING RECIPES

 Last, get the new recipe amount
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
PERCENTAGE
METHOD
New Recipe
Amount =
Item A % of Total x Total Amount
Required
New Recipe
Amount =
61.9 % x 300 oz. = 185.70 oz.
PERCENTAGE METHOD


Ingredient
s

Original
Amount


Ounces


% of
Total

Total
Amount
Required


% of
Total

New
Recipe
Amount
A 6 lb. 8 oz. 104 61.9 300 oz. 61.9 185.7 oz.
B 12 oz. 12 7.1 300 oz. 7.1 21.3 oz.
C 1 lb. 16 9.5 300 oz. 9.5 28.5 oz.
D 2 lb. 4 oz. 36 21.5 300 oz. 21.5 64.5 oz.
TOTAL 10 lb. 8
oz.
168 100.0 300 oz. 100.0 300 oz.
Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
INVENTORY CONTROL
 Desired inventory level is simply the4 answer to the
question, “How much of each needed ingredient
should I have on hand at any one time?”

 Inventory management seeks to provide working
stocks and safety stocks.






Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
INVENTORY MANAGEMENT
 Working Stocks
 The amount of an ingredient you anticipate using
before purchasing that item again.

 Safety Stocks (minimal)
 The extra amount of that ingredient you decide to
keep on hand to meet higher than anticipated
demand.





Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
DETERMINING INVENTORY LEVELS
 Storage capacity
 Item perishability
 Vendor delivery schedule
 Potential savings from increased purchase size
 Operating calendar
 Relative importance of stock outages
 Value of inventory dollars to the operator




Food and Beverage Cost Control
Chapter 3 - Managing the Cost of Food
INVENTORY CONTROL
 A desired inventory level is simply the
answer to the question,

 “How much of each needed ingredient should I
have on hand at any one time?”
INVENTORY CONTROL
 Can be answered if your sales forecast is of
good quality and your standardized recipes are
in place so you do not “forget” to stock a
necessary recipe ingredient.
INVENTORY CONTROL
● Working stocks
The amount of an ingredient you anticipate using
before purchasing that item again

● Safety stock
The extra amount of that ingredient you decide to
keep on hand to meet higher than anticpated
demand.
RESULTS OF TOO LITTLE INVENTORY
● Running out of products resulting to guest
dissatisfaction.
RESULTS OF TOO MUCH INVENTORY
● Waste
● Theft
● Spoilages
DETERMINING INVENTORY LEVELS
● Storage capacity
● Item perishability
● Vendor delivery schedule
● Potential savings from increased purchase
size
● Operating calendar
● Relative importance of stock outages
● Value of inventory dollars to the operator
DETERMINING INVENTORY LEVELS
● Storage capacity
– Inventory items must be purchased in
quantities that can be adequately stored and
secured.
● Item Perishability
– Shelf life, the amount of time a food item
retains its maximum freshness, flavor, and
quality while in storage.
DETERMINING INVENTORY LEVELS
● Shelf Life
ITEM STORAGE SHEL LIFE
Milk Refrigerator 5 – 7 days
Butter Refrigerator 14 days
Ground Beef Refrigerator 2 – 3 days
Steaks (fresh) Refrigerator 14 days
Bacon Refrigerator 30 days
Canned Vegetables Dry Storage 12 months
Flour Dry Storage 3 months
Sugar Dry Storage 3 months
Lettuce Refrigerator 3 – 5 days
Tomatoes Refrigerator 5 – 7 days
Potatoes Dry Storage 14 – 21 days
DETERMINING INVENTORY LEVELS
● Vendor delivery schedule

● Potential savings from increased purchase
size
– You should determine your ideal product
inventory levels and then maintain your
stock within that needs range.
DETERMINING INVENTORY LEVELS
● Operating calendar
– It can be said that an operator who is closing
down either for a weekend or for a season
should attempt to greatly reduce overall
inventory levels as the closing period
approaches.
● Relative importance of stock outages
– 86 rhymed with “nix,” a Cockney term meaning
“to eliminate.
– Too much 86 items, the reputation of the
restaurant and the ability to manage will suffer.
DETERMINING INVENTORY LEVELS
● Value of inventory dollars to the operator
– Operators overbuy or “stockpile”
inventory, causeing too many dollars to be
tied up in a non-interest-bearing food
products, then managers incur opportunity
costs.
– Opportunity cost is the cost of forgoing the
next best alternative when making a
decision.
SETTING PURCHASE POINT
● Purchase point, as it relates to inventory
levels, is that point in time when an item
should be reordered.

● Two Methods
– As needed (just in time)
– Par level
SETTING PURCHASE POINT
● As Needed
– Also known as “just-in-time”
– Method of deremining inventory level,
basically purchasing food based on your
prediction of unit sales and the sum of the
ingredients necessary to produce those
sales.
SETTING PURCHASE POINT
● Par Level
– Set predetermined purchase points.
PURCHASING
● What shoud be purchased?

● What is the best price to pay?

● How can a steady supply be ensured?
WHAT SHOULD BE PURCHASED?
● It is impossible to manage costs where
purchasing is concerned without the use of
product specifications, or also known as
specs.

PRODUCT SPECIFICATIONS / SPECS
● Is simply a detailed description of an
ingredient or menu item.
– A way to communicate in a very precise way
with a vendor so that your operation
receives the exact item requested every
time.
INFORMATIONS IN A FOODSERVICE
SPECIFICATIONS
● Product name or specification number
● Pricing unit
● Standard or grade
● Weight range / size
● Processing and / or packaging
● Container size
● Intended use
● Other information such as product yield
WHAT IS THE BEST PRICE TO PAY?
● Best price
– Is more accurately stated as the lowest price
that meets the lont-term goals of both the
foodservice operational and its vendor.
WHAT IS THE BEST PRICE TO PAY?
● Bid sheet
– When you have a choice of vendors, each
supplying the same product, can be subject
to comparison.
– Includes vendor information, buyer
information, item description, unit of bid, bid
price, salesperosn's signature and date.
– “fixed”, means the dates that the supplier
agrees to keep the bid price in effect.
WHAT IS THE BEST PRICE TO PAY?
● Price Comparison
Sheet
– Typically has a
place to list the
catergory being
bid, namely:

● Produce
● Dairy products
● Meats
● Name of the
vendors available to
bid
● Bid date
● Item description
● Unit of purchase
● Best bid price
PRICE COMAPARISON
WHAT IS THE BEST PRICE TO PAY?
Bid sheets and price comparison sheets may be
used to determine the specific vendor who can
supply the lowest price, but they do not give
enough information to determine the best price.
HOW CAN A STEADY SUPPLY BE ENSURED?
● Suppliers have many prices, not just one
● Suppliers reward volume guests
● Cherry pickers are serviced last
● Slow pay means high pay
● Vendors can help reduce costs
● One vendor versus many vendors
PURCHASING ETHICS
● Is it legal?
● Does it hurt anyone?
● Am I being honest?
● Would I care if it happened to me?
● Does it compromise my freedom as a
buyer?
● Would I publicize my action?