EDUCATION

FOOD AND BEVERAGE COST CONTROL

CHAPTER 1

INTRODUCTION TO COST CONTROL

The Costs

There have four main costs which is need the managers concern about these costs:

1.      Food Costs – Cost of food in produce product. Usually it is the largest expenses

2.      Beverages Costs – It is related all the sale of alcoholic and non- alcoholic. Is is also include the ingredient to produce that beverages like lemon, cherries and others

3.      Labor Costs – All the employees wages or cost include the taxes and benefit which is give to the employees to run the operation.

4.      Overhead Costs – All the expenses but not include the food, beverages and labor cost.

Cost Percents

To calculate are:

Cost %  =  Cost / Sale             eg: Food Cost%  =  Food Cost / Sale

Other type of cost also can calculate like at the above such as beverage cost %, labor cost %, and overhead cost %.

There are various types of costs:

1.      Fixed costs
2.      Variable costs
3.      Semi variable costs
4.      Controllable cost
5.      Non-controllable costs
6.      Unit costs
7.      Total costs
8.      Prime cost
9.      Historical costs
10.  Planned costs

Monetary Sales

§  It is usually items can calculate in money or can calculate the price

§  This monetary term are include the total F&B cost by server or by seat

§  Other monetary are include sale price, average sale per customers and others

Nonmonetary Sales

§  It is not include the money item

§  It is include the total number of sold such as number of fruit platters sold. And include the cover.

§  Other nonmonetary term include the seat turnover, and sales mix.

Profit and Loss (P&L) Statement

§  The statement that have revenue, expenses and profit. It is usually the statement to calculate the profit amount after revenue minus all the cost such as food & beverage cost, labor cost and overhead cost.

§  It is describe the efficiency and profitability of the operation at certain organization or business.

§  The format of this statement:

Revenue (100%)  – (F&B cost % + Labor cost% + Overhead cost%) = Profit %

CHAPTER 2

THE CONTROL PROCESS

The Definition of certain term in this chapter are:

·         Control – Process used by manager which is act to control certain thing in operation business

·         Cost Control – Process by manager to regulate all the cost to run the business operation

·         Standards – Rule establish for comparison and judgments

·         Standard Cost – Cost of goods and services which is approve the management

·         Standard Procedures – The correct procedure, routine and technique

·         Budget – realistic expression of management goal and objective in financial term

·         Control System – Collection of interrelated and interdependent control technique and procedures in use in a given food and beverage operation

CHAPTER 3

COST/ VOLUME/ PROFIT RELATIONSHIP

Cost / Volume/ Profit Assumptions

The cost can be fix or variable:

§  Fixed cost – stable , usually the cost is same every year or month

§  Variable cost – can change depend the usage

Cost / Volume/ Profit (CVP)  Analysis

The symbol in this chapter

§  FC – Fixed Cost

§  VC – Variable Cost

§  VR – Variable Rate

§  P - Profit

§  CR – Contribution Margin

Breakeven point is the midpoint on the scale

 

Large                           Small                         0                        Small                           Large

            LOSSES                       B-EVEN POINT                             PROFITS

To calculate the Break-even Point are:

            FC + 0

            CR                   = Break-even Point

FC      

CR                   = Break-even Point in Sale

 

FC                  

CM  per U int              = Break-even Point in Unit Sale

The CVP analysis help to predict the dollar sales, volume require to get the profit based on known cost.

Contribution margin (CM) can define as dollar amount which is to cover the fixed cost and to get the profit. The calculate CM are:

            CM      =          Total Sale – Variable Cost (VC)

The important Equations

§  Sale =  VC + FC + Profit

§  Variable Rate = VC/ Sales

§  Contribute Rate = 1 – VR

CHAPTER 4

FOOD PURCHASING AND RECEIVING CONTROL

Food Categories

§  Perishable food : usually for fresh food which is short useful life.

For example: vegetables, fruits, chickens, fish and others

§  Nonperishable food:  items which is longer shelf life

Eg: groceries product such as flour, sugar, can product, and others

Advantages of Standard Purchase Specification

1.      The manager should determine exact requirements in advance for any product.

2.      Useful in menu

3.      Eliminate the misunderstanding between stewards and the supplier or purveyors

4.      Circulation of specifications for one product to several supplier makes competitive bidding possible

5.      Eliminate the need for detail and for each product ordered

6.      The clerk must check the receiving item or product to prevent product receive not enough amount like in the invoice

There have two type of method to calculate the amount in inventory and calculate how much amount of inventory need to purchase to run the operation business clearly.

1.      Periodic order Method for Nonperishable

Amount require for upcoming period

_          Amount presently on hand

+          Amount wanted on hand of the end of the period to last until the next delivery

=          Amount to order

2.      Perpetual Inventory Method for Nonperishable

            Par Stock

_          Reorder Point                                     

=          Subtotal

+          Normal Usage until Delivery             

=          Reorder Quantity

Amount for Maximum Quantity to be Kept on Hand of Any Nonperishable

§  Space of storage have it

§  Limit on total volume of inventory

§  Frequency of ordering happen

§  Usage of the item

§  Suppliers’ minimum order requirement

Centralized Purchasing

In this purchasing have own advantage and disadvantages. There are advantage and disadvantages for the business who use this centralized purchasing

v  Advantages

o   Can purchase at lower price because purchase of volume

o   Can choose the greater of markets

o   That item will meet the exact purchasers’ specification

o   Can maintain the longer of inventory item

v  Disadvantages

o   Each item of units must accept the standard item

o   It can effect when the manager or chef change the menu item

Important Receiving Process Standards

The important thing when receiving the food or item of purchased are:

§  The quantity of items – should same with order

§  The quality of items – follow the specification

§  The price of items – match with the invoice

The Standard Receiving Procedure for Foodservice Organization

§  Verify the quantity, quality and price each type of items exactly must same with ordered

§  Acknowledge that quantity, quality and price

§  List all of invoice items for delivery should give to clerk to ensure all item match with the specification

§  All the report should forward the account department

§  Move all items to appropriate storage

The Invoice Stamp provides

§  Verify the date of items’ receive

§  Signature of the clerk receive the food items

§  Steward signature and they need know that item already receive

§  Food controllers’ verification of the arithmetic accuracy of the bill

§  Signature approval of the bill for payment

Food Storage Standard

        i.            Condition of facilities and the equipment

      ii.            The arrange of food in that storage

    iii.            The location of facilities

    iv.            Need have the security of storage area

      v.            Date and price of items of stored should be check and tag it

Factor Involved in Proper Internal Condition

• §  Temperature
• §  Storage containers
• §  Shelving for two type of food
• §  The cleanliness of storage