FOOD AND BEVERAGE
COST CONTROL SYSTEM
THE CONTROL PROCESS
Control in the Food and beverage business is
defined as the process by which managers
attempt to direct, regulate and restrain the
actions of people in order to achieve desired
goals.
THE CONTROL PROCESS
Four Steps:
Establish standards and standard procedures
for operation.
2. Train all individuals to follow established
standards and standards procedures.
3. Monitor performance and compare actual
performances with established standards.
4. Take appropriate action to correct deviations
from standards.
1.
CONTROL TECHNIQUES
1. Establishing standards
2. Establishing procedures
3. Training Personnel
4. Setting examples
5. Observing and correcting employee actions
6. Requiring records and reports
7. Disciplining employees
8. Preparing and following budgets
COST CONTROL
As the process used by managers to regulate
costs and guard against excessive costs.
It is an on going process and is involved every
step in the chain of purchasing, receiving, storing,
issuing and preparing food and beverage for sale.
COST CONTROL
SELLING
FOOD
PREP
STORIN
G
ORDERING/
PURCHASING
INVENTORY
HANDLING
RECEIVIN
G
DELIVERY
COST CONTROL
SALES FORECAST
STANDARDIZED RECIPES
INVENTORY MANAGEMENT
WORKING STOCK
Amount that will be used between deliveries and
minimal safety stock
SAFETY STOCK
Extra amount of a food product we will keep on hand.
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 PESO TO THE OPERATOR
STORAGE CAPACITY
Increased inventory of items generally leads to
greater spoilage
Loss of items due to theft
Large quantities of goods on the shelf tend to
send a message to employees that there is
plenty of everything
Overstocking may result in the careless use of
valuable and expensive products
Too many stocks can result in difficulty in finding
items.
ITEM PERISHABILITY
Serving items that are too old is sure way to
remember a customer complaint
Overstocking of perishable items may lead to
moldy, soft, overripe or rotten food items a
clear indication that the managers does not
have a feel for inventory levels that is based
on the need of the operations. It is a sign that
sales forecasting methods either not in place
or have broken down.
VENDOR DELIVERY SCHEDULE
Vendors will readily let an operator know what
is their delivery schedule to a certain area and
it is up to the manager to use this information
to make educated decisions regarding the
quantity of that vendors product he or she
will require to have both in working stock and
safety stock.
POTENTIAL SAVINGS FROM
INCREASED PURCHASE SIZE
Food Service Operators find that they can
realize substantial savings by purchasing large
quantities and thus receiving a lower price
from the vendor.
Operator should determine their actual
product inventory levels and then maintain
their stocks within the need range.
OPERATING CALENDAR
Operating Calendar determines the inventory
level decision making.
Many operators actually plan menus to steer
clear of highly perishable items at weeks end.
RELATIVE IMPORTANCE OF STOCK
OUTAGES
A strong awareness of how critical an outage can
be help determine the appropriate inventory level.
Food service operator who is determined never to
run out of anything must be careful not to set
inventory levels so high, as to actually end up
costing the operation more than if realistic levels
were maintained.
PESO TO THE VALUE OF
INVENTORY OPERATOR
Operators select to remove peso from their
bank accounts and convert them to product
inventory.
The operator is making the decision to value
product more than peso.
SETTING THE PURCHASE POINT
Purchase point
The point in time when an item should be
reordered.
Typically designated by one of the two methods:
As needed
Par level
AS NEEDED
Purchasing food based on their prediction of
unit of sales and on sum of the ingredients from
standardized recipe necessary to produce sales.
Example:
In a hotel food service operation, the demand for
500 servings of raspberries and cream torte
dessert, to be served to a group in the hotel next
week would cause the responsible person to
check the standardized recipe for this item and
thus, determine the amount of raspberries that
should be ordered.
PAR LEVEL
Food Service operators may set
predetermined purchase points called par
level.
When determining par levels, both minimum
and maximum amount must be established.
Many food service manager established
minimum par level by computing working
stock then by adding 25% - 50% more for
safety stock.
SETTING THE PURCHASE POINT
Rule: highly perishable items should be
ordered on as needed basis.
PURCHASING
What should be purchased?
What is the best price to pay?
How can a steady supply be assured?
WHAT SHOULD BE
PURCHASED?
Product Specs is simply a way for the food
service director to communicate specifically
with a vendor so that the operator receives the
exact item requested, delivery after delivery.
WHAT SHOULD BE
PURCHASED?
LISTS OF INFORMATION:
Product Name or Specs Number
Packaging or unit on which a price is quoted
Standard or grade, if established
Weight range
Type of processing or packaging
Size of the basic container
Other information such as product yield
PREPARING THE PURCHASE
PURCHASE ORDER INFORMATION:
Item name
Spec Number, if appropriate
Quantity Ordered
Quoted Price
Extension Price
Vendor Name
Date Ordered
Delivery Date
Ordered By
Received By
Delivery Instructions
THE RECEIVING AREA
Receiving area is where we are ensure that
the products we ordered are in the best
quality.
Proper receiving includes all of the following
features:
Proper location
Proper Tools and Equipment
Proper Delivery Schedules
Proper Training
PROPER LOCATION
The back door which is usually reserved for
receiving.
Receiving area must be:
Large enough to receive and check the goods
delivered against both the invoice with the PO.
It should be kept clean to avoid contamination
of incoming food.
It should be well lit and properly ventilated.
PROPER TOOLS AND EQUIPMENT
Standard items needed in receiving operation:
Scales
Wheeled Equipment
Box Cutter
Calculator
Records Area
PROPER DELIVERY SCHEDULE
Acceptance hours
Food service manager would accept delivery of
products during only designated hours.
Times scheduled during slow periods when
there would be plenty of time for thorough
checking of products delivered.
Refusal hours
Time wherein the operation may refuse to
accept deliveries.
PROPER TRAINING
Weight
Quantity
Quality
Price
Matching PO unit price to invoice unit price.
Verifying Price extensions.
Contract Price
A price agreed by the suppliers and the operator.
Verifying Price Extension
Unit Price x No. of Units/Quantity = Extended
Price
Example:
Items
Unit Price
(PhP)
Quantity/
No. of
Units
Extended
Price
(PhP)
Tomatoes
18.50
55.50
Potatoes
12.90
Carrots
18.29
Celery
17.35
10
Cabbage
20.75
Broccoli
25.89
RECEIVING RECORD
Daily Receiving Sheet
A receiving record contains the following:
Name of Supplier
Invoice Number
Item description
Unit Price
Number of Units delivered
Total Cost
Storage Area
Date of Activity
Quiz
Determine the Working Stock, Safety Stocks, and the
Total Stocks that has to be ordered by the manager
of Grand Hotel given its 1 week usage as a basis of
ordering.
Note: 75% Buffer is assigned to all frozen and wet
items while 85% Buffer is assigned to all dry items.
ITEMS
7/2
0
7/2
1
7/2
2
7/2
3
7/2
4
7/2
5
7/2
6
DRY ITEMS
Tissue rolls
125
167
153
134
145
176
157
Bath Soap
102
123
134
123
111
125
113
Shower
Caps
87
82
78
75
86
87
83
Shower Gel
78
75
83
84
79
80
76
FROZEN/ WET ITEMS
Sausages
(kg)
15
18
16
12
14
20
16
Egg (pcs)
112
125
118
154
163
145
156
Bacon
(packs)
21
26
21
27
28
20
19
Ham
(packs)
12
14
11
15
13
17
15
Cheese
(pcs)
112
114
113
116
124
135
110
Straw. Jam
87
82
75
65
78
82
75
Workin
g Stock
Buffe
r
Safet
y
Stock
s
Total
Stocks for
Ordering/
Purchasin
g
Quiz
The following data is available in MACT
Restaurant. If you will be assigned to
determine the actual amount of purchase so
that the check can be prepared for release,
how will you compute this using the other
conditions given below:
Delivery Schedule is every 3 days
Buffer for Non Food is 50% and 30% for Food
items.
ITEMS
Par
Level or
Stock
Build up
Milk
48 tins
8 tins
P46/tin
Trash Bag
30 pcs.
3 pcs
P7/ pc
Dishwashing Liquid
15 bottles
4 bottles
P203/bot
Carrots
25 kgs.
5 kgs
P90/kg
Beans
3 kgs
0.75 kg
P130/kg
Spinach
10 Bundle
s
P20/bun
Bag, Plastic
100 pcs
22 pcs
P3/pc
Tapioca
1 kg
0.25 kg
P120/kg
Cheese
1 kg
P385/kg
Mop, Head
5 pcs
P190/pc
Gelatin
15
sachets
P68/sach
TOTAL
Buffer or
Safety
Stock
Total
Items
Needed
Ending
Inventor
y
Actual
Order
Unit
Price
Extensio
n Price
