Purchase Specifications
4
Controlling Foodservice Costs
OH 5-1
Chapter Learning Objectives
Explain how a specification becomes a control in the
purchasing function.
Explain the parts of a purchase specification and a
purchase order.
Explain various purchasing methods and their effect on
the price of goods.
Calculate a yield test that identifies the difference
between as purchased (AP) price and
edible portion (EP) cost.
Identify factors that affect the purchase price of goods.
Chapter Learning Objectives continued
Distinguish between perishable and nonperishable goods
and their relationship to the purchasing cycle.
Calculate the par stock amount of an item to order.
Calculate the amount to purchase, using EP amount and
yield percent.
Calculate the amount of goods to purchase for
catered events.
Calculate a butcher test, or meat yield test.
Describe proper procedures for receiving goods.
OH 5-3
Who Purchases?
Purchasing agent
Manager
Chef
Head cook
Trusted staff member
The buyer maintains quality standards!
OH 5-4
Who Purchases? continued
The buyer is responsible for ensuring that quality standards
are met during the purchasing and delivery process.
OH 5-5
The Food Specification – a control device
Product name Packing requirements
Intended use Product characteristics
Desired brand and grade Product substitutions
Product size Delivery requirements
and payment terms
Count
OH 5-6
The Food Specification continued
Specifications should
describe exactly what
buyers want to buy.
OH 5-7
Purchase Order Information
Identification number Supplier’s contact
information
Name and address of
the restaurant Date of delivery
Date of the order The name, quantity,
and delivery unit of
Signature of the each item ordered
buyer
Total (extended) cost
of the order
OH 5-8
OH 5-9
Purchase Methods
Competitive quotes
Standing order
One-stop shop
Sealed bids
OH 5-10
What to Buy
Avoid buying the “cheapest.”
Use purchase specifications.
Buy at the best cost from sellers who meet or
exceed the purchase specifications.
Consider both AP price and EP cost.
OH 5-11
Two Kinds of Costs
As purchased (AP)—the cost of food as
delivered to the restaurant
Edible portion (EP)—the cost of food as
served to the guest
OH 5-12
AP vs. EP Form
Items, such as fresh whole fish, will
weigh much less in their EP form than in
their AP form.
OH 5-13
Calculating EP Cost
Two steps
Step 1 – Calculate product’s yield percentage.
Edible portion As purchased
÷ = EP percentage
(EP) weight (AP) weight
8.00 ÷ 9.5 = 0.842 or 84.2%
OH 5-14
Calculating EP Cost continued
Step 2 – Calculate EP cost.
Example—the EP cost of one pound of onions
As purchased ÷ Edible portion Edible portion
=
(AP) price (EP) percentage (EP) cost
$0.39/lb AP ÷ 0.842 = $0.46/lb EP
OH 5-15
Calculating EP Cost example
A case of iceberg lettuce weighs 30 lbs and costs
$25.50. After washing and trimming, the lettuce is
weighed again. The weight is now 24 lbs.
The EP cost for 30 lbs of usable lettuce is:
(EP) weight ÷ (AP) weight = EP percentage
24 ÷ 30 = 0.80 or 80%
(AP) price ÷ (EP) % = (EP) cost
$25.50 ÷ 0.80 = $31.88
OH 5-16
Other Factors Affecting Purchasing
Management
satisfaction
Payment history
Gift acceptance
policies
OH 5-17
Gift acceptance policies
OH 5-18
When to Purchase
Purchase perishable items daily or every few
days.
Purchase nonperishable items weekly or
monthly.
OH 5-19
When to Purchase continued
Most common method is par stock method.
1. Determine quantity (par stock) that must be on
hand between orders for each item.
2. Before ordering, take inventory.
3. Subtract on hand quantity from par stock quantity.
4. Difference is quantity to order
(Note: Some managers purchase a small “extra” or “cushion”
amount in case sales levels exceed forecasts.)
OH 5-20
Par Stock
Par stock is a widely used term which is the
standard way to determine the minimum level of
supplies to meet daily demands of daily hotel
operation. Proper application of par stock can
ensure smooth functional activity.
OH 5-21
Calculating How Much to Buy
Need ten pounds of onions.
Yield percentage of onions is 84.2%.
How many pounds will you buy?
EP amount Yield
÷ = AP amount to purchase
needed percentage
10 ÷ 0.842 = 11.87, or 11.9
OH 5-22
Catering Purchases
Step 1 – Determine the servings per purchasing
unit (SPU).
Purchasing
÷ Servings per
Portion size =
purchasing unit (SPU)
unit
OH 5-23
Catering Purchases continued
Step 2 – Determine the purchase factor.
EP Purchase factor
SPU x =
percentage (PF)
Recall the formula for EP percentage.
Edible portion ÷ As purchased EP
=
(EP) weight (AP) weight percentage
OH 5-24
Catering Purchases continued
Step 3 – Determine the amount to purchase.
Number of guests ÷ Purchase factor Amount to
=
to serve (PF) purchase
OH 5-25
Butcher Test
Also known as “yield Measures losses from
test”
Fat removal
Used to determine
EP meat costs Bone removal
Results vary, based Trim and packaging
upon the AP quality removal
of meat purchased
Portioning
OH 5-26
Steps for Receiving
Step 1 – Delivery person brings products to
receiving area.
Step 2 – Check products against the purchase
order.
Step 3 – Check products against purchase
specifications.
Step 4 – Check delivery quantity against the
invoice and the purchase order.
OH 5-27
Steps for Receiving continued
Step 5 – Match invoice prices to purchase order
prices.
Step 6 – If everything matches correctly, sign
the invoice.
Step 7 – Put delivered products in proper
storage areas.
Step 8 – Process paperwork in keeping with the
operation’s standard operating
policies
and procedures.
How Would You Answer
the Following Questions?
1. A purchase order is best prepared by the (buyer/
seller) of the items to be purchased.
2. With effective purchasing techniques in place, a
restaurant's EP costs can often be lower than its AP
costs. (True/False)
3. EP weight divided by AP weight results in
A. AP percentage
B. AP cost
C. EP cost
D. EP percentage
4. A butcher’s test is a test of (yield/quality).
OH 5-29
Key Term Review
As served (AS) Competitive quotes
Butcher test Cost plus
Buyer Invoice
Commissary
OH 5-30
Key Term Review continued
Market quotation Perishable goods
sheet
Purchase order
Nonperishable goods
Quotes
One-stop shop
Par stock
OH 5-31
Key Term Review continued
Sealed bid Yield chart
Specification Yield percentage
Standing order Yield test
OH 5-32
Chapter Learning Objectives—
What Did You Learn?
Explain how a specification becomes a control in
the purchasing function.
Explain the parts of a purchase specification and
of a purchase order.
Explain various purchasing methods and their
effect on the price of goods.
Calculate a yield test that identifies the
difference between AP price and EP cost.
OH 5-33
Chapter Learning Objectives—
What Did You Learn? continued
Identify factors that affect the purchase price of
goods.
Distinguish between perishable and
nonperishable goods and their relationship to
the purchasing cycle.
Calculate the par stock amount of an item to
order.
Calculate the amount to purchase, using EP
amount and yield percent.
OH 5-34
Chapter Learning Objectives—
What Did You Learn? continued
Calculate the amount of goods to purchase for
catered events.
Calculate a butcher test, or meat yield test.
Describe the proper procedures for receiving
goods.
OH 5-35
