V.

Dakshinamoorthy
e-mail – v.dakshyn@gmail.com
Ph: 99400 26295

Subject
Subject Title L T P LTP Credit
Code
UHM
FOOD AND BEVERAGE CONTROLS 3 0 0 3 3
20D05T

Objectives
 On completion of this semester the Student will get awareness of the following
 Basic Cost Control with respect to the Hospitality Industry
 To provide knowledge about basic Material Management Functions, Responsibilities &
controlling measures.
 To be familiar with Inventory Management
 To understand the importance of Production Control & Yield Management
 Provide knowledge with regards to Sales Control. & Importance of Sales Control

Unit – 1
Food Cost Control

Introduction to Cost Control – Define cost control – The objectives and Advantages of cost
control – Basic Costing – Food Costing – Various Stages in the Control Cycle and
interrelationship of the Control Cycle

Unit – 2
Purchase Control

Aim of Purchase Policy – Job Description of Purchase Manager / Personnel – Types of Food
Purchase – Quality Purchasing , Food quality factors for Different Commodities – Definition of
Yield , Test to arrive at standard yield – Definition of standard purchase specification ,
Advantage of Standard Yield and Standard Purchase Specification – Purchasing Procedure ,
Different methods of Food Purchasing – Sources of Supply – Purchasing by Contract –
Periodical Purchasing , Open Market Purchasing , Standing Order Purchasing , Centralized
Purchasing – Method of Purchasing in Hotels - Purchase Order Forms- Ordering Cost, Carrying
Cost, Economic Order Quantity – Practical Problems.
Unit – 3
Receiving Control

Aim of Receiving – Ideal Condition of Location and Facilities for Receiving – Job description of
Receiving Clerk / Personnel- Equipment required for Receiving – Documents Required by
Supplier – Delivery Note , Bills / Invoice , Credit Notes , Consolidated Statement / Statement of
Invoice – Records Maintained in the Receiving Department – GRN / Goods Received Book , Daily
Receiving Report – Meat Tags, Receiving Procedure , Blind Receiving – Assessing
theperformance & Efficiency of Receiving Department – Frauds in the Receiving Department –
Hygiene and cleanliness of Receiving Area.

Unit - 4
Storing, Issuing & Inventory Control

Storing Control & Aim of Store Control – Job description of Food Store Room Clerk / Personnel –
Location of Storage Facilities – Condition of Facilities and Equipments – Arrangement of Food –
Safety and security , Stock control – Types of Food Received ( Perishable & Non Perishable ) –
Stock Records ( viz BIN Card, Register & other Records ) – Requisitions & Issuing Control –
Transfer Notes – ABC Analysis & Perpetual Inventory System , Monthly Inventory / Stock Taking
– Pricing of Commodities – Reconciliation of Physical Stock with Book Stock – Maintaining and
Monitoring of Stock Levels – Hygiene and Cleanliness of Stores Area – Practical Problems.

Unit – 5
Production & Sales Control

Aim & Objectives – Planning & Forecasting – Fixing Standards - Definition of Standards
(Quality & Quantity) – Standard Recipe (Definition, Objectives & Various Tests) – Standard
Portion Size (Definition, Objectives &equipments used) – Standard Portion Cost (Objectives &
Cost Cards) – Production Control Methods & Techniques - Computation of Staff Meals –
Hygiene and Cleanliness in Production Area

Sales – Ways of expressing Selling , Determining Sales Price, Calculation of Selling Price , Factors
to be considered while Fixing Selling Price – The Objectives and Advantages of Sales Control –
Matching Cost with Sales ( to determine cost of sale ) – Billing Procedure ( Cash, Credit Sales &
Bill Settlement ) – Cashier Sales Summary Sheet.
Recommended Reference Books
 Food & Beverage Training Manual – Mr.Sudhir AndrewsFood & Beverage Cost Control
- Lea R.Dopson, David K. Hayes, Jack E, Miller

Unit 1 – Cost Control

Cost control
Cost Accounting
Objectives of Cost control
Advantage of cost control
Elements of cost
Classification of cost
Food Cost

Cost control: Cost control is defined as the process used by managers to regulate costs and guard
( protect or control ) against excessive costs. It is an ongoing process and involves every steps in the
chain of purchasing, receiving, storing, issuing, preparing food and beverage for sale as well as training
an scheduling the personnel involved.

Cost : Cost is defined as the expenditure incurred in various operational activities. In order to
manufacture or purchase and sell goods and services. Lesser the cost greater the profit
and greater the cost lesser the profit.
:
Control : Is the process used by managers to direct, regulate and restrain the action of the people , so
that the establishment goals of an enterprise may be achieved.

Cost Accounting : Cost accounting is one of the branch of accounting, dealing with the classification,
recording allocation, summarization and reporting of current and prospective cost

Example : SRM Hotel purchased the following items for the hotel operation

Mutton- Rs.25000, Vegetables – 5500, Cream – 3500, Chicken – 9500, Fruits –2000, Eggs – 1500,
Paneer- 1500, Milk – 1500, Fish – 3500, Oil, Maida, Sugar & Vanaspathy – 25000, Ice-cream – 2500, Dhal
& Rice – 1500

MEAT & Egg PERISHABLES GROCERIES DAIRY PRODUCTS

Mutton - 25000 Vegetables - 5500 Oil , Maida, Sugar & Cream - 3500
Vanaspathy - 25000
Chicken - 9500 Fruits - 2000 Dhal & Rice - 15000 Paneer - 1500
 Eggs - 1500 Milk - 1500
Fish -3500 Icecream - 2500

Meat Cost :39500 Perishable Cost :7500 Groceries Cost :40000 Dairy Cost - 9000

Meat Cost ---- 39500 41.15%

Perishable cost --- 7500 07.81%
Groceries Cost --- 40000 41.66%
Dairy Cost--- 9000 09.38%
Total Raw Material Cost 96000

Objectives of Cost control :

To achieve the established goals of the organization by controlling costs

To maximize profit by controlling overall cost
To meet the operation standards efficiently and effectively

Advantage of Cost control

It helps to achieving the desired profit as per standard

It helps to avoid wasteful expenses.
It is useful to find out the reason for any increase costs
It is useful to monitor the effectiveness of the operation.
It helps to provide adequate management information and timely result oriented action.
It checks pilferages and wastages at various stages from purchasing to sales.

Elements of Cost

Means Constituent part of cost ( Cost of manufacture of the product ). These elements are

Direct Material Cost

Direct Wages
Direct Expenses
Production overhead
Administrative Overhead
Selling overhead
Distribution overhead

Direct Material cost

Total cost of raw material used for food production In Hotel Industry

The cost of raw material used for production of Food is cost of Meat, Cost of Perishables, cost Dairy
products and cost of groceries

Direct Labour Cost

The cost of labor is the sum of all wages paid to employees, as well as the cost of employee benefits
and payroll taxes paid by an employer. The cost of labor is broken into direct and indirect
(overhead) costs.

Over head Expenses

(A) HLP Cost – Heat, Light & Power Cost (Manufacturing Overhead)
(B) R&M Cost – Repair and Maintenance cost

©( C ) Administrative Cost – Administrative Overheads

(D) Marketing cost –( Sales & Marketing Overhead )

Classification of Cost

Cost can be groups into under following heads

(a) Variability
(b) Controllability
(c) Functions
(d) Normality

Variability
The cost which may or may not vary depending upon the volume of production or sale is termed as
variable cost.. Some costs remains fixed in spite of change in the volume of production; another cost
may vary with the increase or decrease in production and it may vary in the same proportion in the
volume of production or not.

Under this head the cost can be classifies in the following ways .

Fixed cost

A cost remains constant with the increase or decrease in production.

Fixed cost is a cost that does not change over the short-term, even if a business experiences changes in
its sales volume or other activity levels. It is also called Capacity cost or period cost.

Example Rent, Interest, Depreciation, Insurance …etc

Variable Cost

A cost which increase or decrease in the same proportionate to the volume of production is termed as
variable cost ..

Variable cost is an expense that rises or falls in direct proportion to production volume

The Food cost in the case of Hotel Industry is the best example for variable cost

Semi – Variable Cost

A cost which increase with the increase in volume of production but it does not increase in the same
proportion is termed as semi variable cost. In the case of volume of production decrease this cost , this
cost is also decrease but again not in the same proportion.

Example: Telephone charges , EB – Power charges

Present EB – Tariff for Domestic c consumption

0 to 100 NIL
101- 200 100 Units X 3.50
201-500 300 Units x 4.60
From 501 & above 100 Units x 6.60

Controllability
Controllable cost and Un controllable cost

This costs which can be controllable by the departmental head are termed as controllable cost. It
means the cost which can be controlled by a particular responsibility centre like direct material cost,
Direct Wages and Direct expenses. ..Food cost is the best example for the controllable cost.

Un controllable cost

The cost which cannot be controlled by the departmental head or by the particular responsibility
centre are termed as uncontrollable cost

Example Rent, Interest, Depreciation and Insurance

Functions
The cost can be grouped according to the purpose for which they are incure..Functional grouping/
classification can be one in the following

Production cost: The production of food or goods is termed as production cost…This includes supply
of raw materials, labour, services, packaging and storing of the product .

Administration Cost : The cost incurred for olicy, irection and controlling are termed as
administration cost but it does not include cost related to research, development, production ,
marketing an selling.

Selling Cost: The cost related to marketing and selling is termed as selling cost.

Distribution cost: It includes packing of products available for dispatch ends with the reconditioned
returned empty packages available of re use. .

Normality
This classification is done according to whether the cost which is normally incurred at a given level of
output or not and can be divide in to two types

Normal Cost are the normal or regular costs which are incurred in the normal conditions during
the normal operations of the organization. They are the sum of actual direct materials cost, actual
labour cost and other direct expense.

Example: repairs, maintenance, salaries paid to employees.. Procuring the raw materials as per the
standard purchase specification

Abnormal Cost are the costs which are unusual or “Cost which is non – recurring in nature and incurs
due to some unexpected misshapen in the business”.

Example: destruction due to fire, shut down of machinery,

Food Cost

Food Cost & Controlling measures

Definition

Food cost is defined as the cost of raw material consumed for the food sale The cost of indents and
transfers are tabulated and the feed back to the chef in the form of cost sheet viz food cost ( Batch
costing ) to achieve the targeted cost%

Cost of Indents or Gross Food Cost

Gross food cost is the Cost of raw materials withdrawn from the stores department for food production,
viz cost of meat, cost of perishables, cost of dairy products and cost of groceries

Cost Adjusments

Cost adjustments defined as ( a ) all complementary cost , ( b ) transfer to other departments , which are
not part of cost of Food sold / cost of sale

Examples : (a) Cost of Complementary breakfast to Room guest /

Welcome drink to Room guest on arrivals

(b) Cost of Complementary fruit basket to the Room Guest,

(c) Cost of Complementary cake to guest / amenities

(d) Cost of Gratis to Bar / complementary food to Bar

(e) cost of any other complimentary foods

Food Cost

Food cost is also defined as the cost of food sold or Net Food cost

Cost of Food sold = Gross Food cost – Cost adjustments (complimentaries)

Cost of Food Sold

Food cost % = ----------------------------------------------- X 100
Net Food sale

Gross Food cost – cost adjustments

Food cost % = ----------------------------------------------- X 100
Net Food sale

Net Food Sale = Gross Food Sale - Discounts on sale of food

Question ( Problem )

SRM Hotel Banquet kitchen withdrawn the following raw materials from the stores for 500 pax dinner
party at an APC of Rs 625 + taxes.

( a ) Meat cost – 32,000 ( b ) Perishables cost – 17,000 ( c ) Cost of Dairy products- 25,000 ( d ) Cost of
groceries – 35,000

From the total Banquets food production Rs.7000 worth of food transferred to Room service and Rs.
2000 worth of food transferred to bar service.

 In view of the regular customer to the Hotel and as per the customer request, the General
manager of the Hotel extended Rs.12,500 as a special discount to the customer on the total
Banquet sale value.

You are requested to prepare ( a ) Gross Food Cost ( b ) Net Food Cost
(c) Net Banquet Revenue ( d ) Food Cost %

Solution

Calculation of Net Food Sale

Gross Food Sale = 500 Pax X 625 : 3,12,500
Less Discount Given : 0,12,500
Net Food Sale : 3,00,000

Calculation of Food Cost

Cost of Meats : 32,000
Cost of Perishables : 17,000
Cost of Dairy Products : 25,000
Cost of Groceries : 35,000

Total Gross Food Cost :1,09,000

LESS
Food Transferred to Room Service : 7,000
Food Transferred to Bar Service : 2,000

Cost of Food Sold / Net Food Cost : 1,09,000 – 9,000

 Gross Food Cost % = 1,09,000
------------ x 100
3,00,000

= 36.33%

1,00,000
________ x 100
Food Cost % =
3,00,000

= 33.33%

Controlling Measures

(a) Identify the right source of supplier who will give the Right Product at Right Price, Right
Quantity at Right Time . (To get better yield)

(b) Standardize Purchase specification for all Raw materials in conjunction with market condition
and kitchen operation.

(c) Continuous monitoring of shelf life of Raw materials to avoid wastage and spoilage by
strengthening the internal system for receiving and storing of raw materials

(d) Maintaining optimum Inventory

(e) Fixing Kitchen PAR – Stock

(f) Monitoring daily indent from stores

(g) Monitoring Production Control

(h) Develop standard Recipe for all menus to analyze the contribution margin with the competition
 Unit 2 – Purchase Control

Purchasing

Purchasing is defined as to buy materials of the right quality, in the right quantity form the right source
delivered to the right place at .right time.

Purchase Specification

The characteristics those are associated with an item or product to be purchased. It can include weight,
size and dimensions, quality, safety requirements and the products performance parameters – (Yield).

Aim of Purchase Policy

1.To Purchase quality products at a reasonable price.

2.. To Maintain standard purchase specification & encourage competitive purchasing.
3.. To Purchase the right quantity needed form reliable supplier at the right time
4. To develop and maintain an adequate inventory of supplies and equipment as required.
5.. To establish and build cordial relations with suppliers.
6.. To purchase the most acceptable quality supplies, equipment and contractual services at the lowest
price.
7. To control wastages in purchase.

Quality Purchasing

The Purchase manager must ensure that he buys quality products from the supplier. For this purpose
only Standard Purchase Specification has to be established for each hotel stores. The SPS should
indicate the minimum quality requirements clearly & simply indicate the Food & beverage operation
needs. The SPS have to set in consultation with the Executive Chef of the hotel who will also monitor
that the correct quality only is being supplied or else return the poor quality food materials.

Quality factors for different commodities

Quality factor is the Standard Purchase Specification set by the purchase committee ( Right Price for the
Right Product o get an optimum Yield ) . This is a guidelines to the receiving staff to check the quality of
the product at the the time of receiving the materials from the supplier.
 Bright green in colour with a waxy sheen. Should be crispy with
CAPSICUM-GREEN KGS a whole, even shape minimum 2 1/2" in dia and 2 1/2" long. No
discoloration, bruises or soft patches. Average count 9-12
nos/kg

10-12nos/kg. Length should be 7-10 cms with a dia of not more

CARROT-LARGE KGS than 3-4 cms at base. Should be of uniform conical shape and
rusty red in colour. Skin should be smooth with a fresh
appearance and should break with a crisp snap at the top.
The bloom should be tight and marble white in colour, only 1"
CAULIFLOWER KGS stem attached to the base with only four fresh green leaves at
the base. Average weight 1kg - 1.5 kg.
Golden Red / Bright brick red colour; the skin should be
APPLE TABLE Kg smooth. Washinton variey .Spotless; no bruises cracks, no holes
or black spots. Average count 5-6 nos per kg.
Orange yellow colour in summer with traces of green
acceptable in winter. Tested fir ripeness by shaking. If seeds are
PAPAYA Kg loose and rattle then papaya is ready . Pressure applied on apex
should indent. Average weight 1.5 Kg and above. Fresh, should
avoid soft and bruised fruit.
Outer skin thick scaly, orangish green in colour with Minimum
Leaves. Ripe ones should show softness around apex, when
PINEAPPLE Kg pressure is applied. Flesh of distinct whitish yellow colour, soft,
fiberous sweet and juicy. Fruit should be heavy for its size and
base should be well trimmed. No rot or mould formation.
Fresh Chilled when received. Eyes should be bulging and Shiny.
Skin should be shiny and smooth. Gills should be bright and red
Pomfret Whole (Large Size) Kg
in colour. Tail should be firm and belly should not be swollen
and sagging. Weight to be in the range of 350 Gms – 400 Gms.
Fresh chilled when received. Without skin. Should not have bad
odour. Neck to be 3 inches long from the carcass. Should be
free from deformities. Birds to be well developed and of even
size distribution. Shouls not have any broken bones.. Shouls be
Tandoori Chicken Kg free from discoloure skin an flesh. Flesh to be plump and far
and should not be dark yellow and mushy.. Should not have
excess quantities of water. Excess water twould be rained off at
the receiving. Each chiclen to be in the weight og 600 Gms –
700 Gms. .
Eggs No
Fresh Farm Eggs… Minimum 55 Gms each an above.
 Advantage of Standard Purchase specification an Standard Yield

Advantage of Standard Purchase Specification

Food costs are controlled by five standards to which all employees and managers must adhere:
Standard purchase specifications
 Standard recipes
 Standard yields
 Standard portion sizes
 Standard portion costs

To calculate the cost of each item, you need to understand the relationship between standardized
recipes, standard portions, and yield tests. All of these play a role in calculating the cost of each item on
your menu

Specifications can include brand names, grades of meat, product size, type of packaging, container size,
fat content, count per kilogram, special trimming, and so on. The specifications should be specific,
realistic, and easy to verify.

Precise specifications can:

 Reduce purchasing costs as higher quality products need not be accepted

 Ensure constant quality in menu items
 Allow for accurate competitive bidding among suppliers and so reduce cost

Advantage of Standard Yield

 To establish a standard for the quantity and number of portions obtainable from a specific item of food.
 To establish a standard for comparison with operating results and thereby measure the efficiency of the
production departments.
 To establish an objective method of further evaluating standard purchasing specifications.
 To establish a standard cost factor for the item of food.
 To assist in menu costing and pricing.
To assist in converting forecast requirements into raw material requirements

Activities, Duties and Functions of Purchasing Department:

(i) Keep records-indicating possible materials and their substitutes.

(ii) Maintain records of reliable sources of supply and prices of materials.
(iii) Review material specifications with an idea of simplifying and standardizing them.
(iv) Making contacts with right sources of supply.
(v) Procure and analyze quotations.
(vi) Place and follow up purchase orders.
(vii) Maintain records of all purchases.
(viii) To make sure through inspection that right kind (i.e., quantity, quality, etc.) of material has been
purchased.
(ix) To act as liaison between the vendors and different departments of the concern such as production,
quality control, finance, maintenance, etc.
(x) To check if the material has been purchased at right time and at economical rates,
(xi) To keep an uninterrupted supply of materials so that production continues with least capital tied in
inventories.
(xii) To prepare purchasing budget.
(xiii) To prepare and update list of materials required by different departments of the organization
within a specified span of time.
(xiv) To handle subcontracts at the time of high business activity.
(xv) To ensure that prompt payments are made to the vendors in the interest of good public relations.

Duties & Responsibilities of Purchase Manager

Proactive and Preemptive
Dependable, Loyal & Integrity
Adequate knowledge of Market& Product
Product knowledge with respect to Source, availability, seasonality, market condition, market
rate fluctuation
Consumption pattern of raw materials & other products
Continuous monitoring of Stock levels with optimum inventory for better working capital
management.
Identification of Right source, Right Product, right price , Right quantity and procure at Right
Time
Identification of alternative source wherever possible to avoid monopoly
Continuous monitoring of hygiene at receiving & Stores
Periodic market survey to check products and to identify new market
Strict adherence with PFA & FSSAI Norms
Co Ordination with the other heads of department for an effective operation
ABC – Analysis for all Fast moving & high cost items
Purchasing Procedure
1 Request to purchase / requisition
This phase deals with identifying the need – what to buy – how much of it – and when it is
needed for – there are two main forms of requisition – a manual one i.e. that created on a form
(such as a requisition form) or other document and that created automatically via an ERP type
system. The requisition will likely go through an approvals process whereby authorization is
given to purchase the item (or not!)

2 supplier selection
Buyers may already know which supplier to to buy the item from that is being requested. If not
a tender (or request for quote) process may be initiated to identify a supplier, price and lead
time.
3 purchase order
A purchase order is dispatched to the supplier (either a paper copy or electronically) to inform
the supplier of the intent to purchase. The purchase order will identify the item(s) being
procured, the quantity required and the price being paid. It will also identify delivery address
and any terms and conditions that relate to the order.
4 Fulfillment
The supplier will then dispatch the goods to the buying organization. Lead time might be
required to allow the supplier to manufacture the item or receive deliver from Mitsubishi own
suppliers.
5 Goods receipt
Once the goods arrive at the buying organisation they will typically go through some form of
goods receipting process where the goods are checked to ensure that they match what was
ordered and that they are of the correct quality.
6 Supplier invoice/payment
At time of despatch the supplier will typically issue an invoice – which either accompanies the
goods or is sent separately. This will be received by the finance department – processed and
paid (assuming the goods are received and are correct).

Different Methods of Purchasing

Purchasing by Contract
Periodical Purchasing
Open Market Purchasing
Standing Order Purchasing
Centralized Purchasing
 Purchasing by contract
This method is usually followed in all star hotels who will advertise in a daily newspaper and
calling for tender for supply of Meat, Vegetables, Fruits , and dairy products from various
qualified suppliers. Selection of the supplier is based on the terms and condition of the
contract. Normally a contract is awarded for one year period.

Periodical purchasing
In this method the foo materials is ordered periodically. . The period will be set on a regular basis ie.
Once a , week, fortnightly, monthly, quarterly, . This periodicity depends on Source, availability,
seasonality, market condition, and market rate fluctuation.

Open Market Purchasing

In this method the hotel decides to buy directly from the local market selecting the quality and cheaper
price of materials available in the market…Disadvantage in this method, we have to buy only on cash
basis, which is unacceptable by the star category hotels. However this method is followed to check the
New supplier in the market, ( New Source ) , Availability and seasonality and market condition and rate
fluctuation .

Standing Order Purchasing

In this method standing instruction is give n to the supplier to supply a fixed quantity of a food material
on a fixed ay and time.
Dairy product viz Milk, Cream Paneer is the good example for standing order purchasing

Centralized Purchasing
Under this system the requirement of individual units are relayed to the central purchase office, which
determine the total requirements of all the units and place ore.. Central purchase is responsible for
distribution of materials for various units. The major advantage of this method
1. Material quality will meet the standard purchase specification
2. Food & Beverage can be purchased at lower prices because of Volume.

Purchase Order Form

Purchase Order Form helps to identify the:

 Purchase details and requested delivery date

 Delivery details for the items purchased
 Billing and supplier information
 Quantity and unit price of each item
 Total price of the purchases
 By using this Purchase Order Form, we can:

 Monitor the delivery of goods and services from suppliers

 Put in place an approval process to control project expenditure
 Ensure that suppliers deliver exactly what was requested
 Report the status of your procurement to management
Further to monitor and control the delivery of goods and services to the organization from external
suppliers, then this Purchase Order Form will help you do it.

A purchase order, or PO, is an official document issued by a buyer committing to pay the seller for the
sale of specific products or services to be delivered in the future.

The advantage to the buyer is the ability to place an order without immediate payment. From the
seller’s perspective, a PO is a way to offer buyers credit without risk, since the buyer is obligated to pay
once the products or services have been delivered.

Ordering Cost
This is the cost incurred in placing an orer, which will include the transport costd, porterage, service
charges, and other office expenses. The ordering cost will almost be the same irrespective of quantity of
the order.

Carrying Cost
A carrying cost is the expense associated with holding inventory over a period of time. In other words,
it’s the cost of owning, storing, and keeping inventory.

Economic Ordering Quantity

Economic Order Quantity:

Economic Order Quantity Is the optimum quantity of an item to be purchase at one time in order to
minimize the combine annual cost of ordering and carrying the item in inventory. EOQ is also referred to
as the optimum lot size. .

Explain EOQ Formula – In detail with flow chart

__________
EOQ Formula = Q = √ (2PU / Ci)
Q = Economic Ordering Quantity
U = Quantity (Units) Purchased in a Year
P = Cost of Placing an Order
C = Unit Cost of an Item
I = Cost of carrying inventory (in % per annum)
 E O Q – GRAPH

Also Called Carrying Cost

Total Cost of
Inventory
Management

Ordering
Cost /
Carrying
Cost /
Total
Cost t

Order Quantity
Points to remember - EOQ Graph

(a) X- Axis EOQ Quantity

(b) Y – Axis Annual Cost
(c) Line starts from “0” is the holding cost also called carrying cost
(d) The intersecting point of Ordering cost and the carrying cost is determining EOQ

Calculate EOQ from the following data

Total Annual Consumption = 12000 Units

Unit Purchase Price = Rs.1.00
Ordering Cost = Rs. 75.00 per order
Cost of carrying inventory = 20% per annum

EOQ = Q = √ (2x75x12000 / 1.00 x 0.20PU / Ci) = 3000 Units

 UNIT 3 -- RECEIIVING CONTROL
Aim of Receiving

Identification of Right Source (Supplier), Right Product, Right Quality, Right Quantity,
Right Price mat Right Time..

The primary task of receiving department is to ensure that the hotel is receiving the correct quality and
quantity of articles and the articles supplied as per the purchase order specifications not only in quantity
but also in quality.
The job of the receiving department is very technical and he is supposed to have a complete knowledge
about each item's standard specifications.

• He must ensure that the tinned food supplied is fresh and as per PFA / FSSAI norms
• The packaging is of right standard and is not damaged during transportation.
• In case of fresh fruits, vegetables, frozen food, etc. he should ensure that the items supplied are as
per the approved standard specification s.
• If desired he can take the help of Chef in order to check the quality of the raw material.
• He should weight and count the items before receiving them.

Job Description of the Receiving Clerk

 Receive the materials as per the standard purchase specification and quantity
ordered and ensure materials are received in accordance with SOP.

 Receive the materials as against original Chelan and Invoice

 Report if any short supply and rejection to the purchase manager immediately
and on a daily basis

 Rights to reject the materials which are not as per the SOP / Standard
specification with the knowledge of purchase manager.

 Meat tags for all meat items with relevant particulars

 Transfer / move the accepted materials to stores department immediately after

inspection

 Preparing Daily Receiving Report and GRN with an appropriate Invoice / Chelan
received from the supplier. Affix Material received stamp and Quality approved
stamp on the Invoice / Chelan.
  Hand over duplicate copy of Invoice / Chelan to the supplier, after affixing the
above said stamp to follow up payment with Finance and for their records.

 Hand over original DRR /GRN o finance department with an appropriate

Invoice / Chelan

 Preparing requisition for all direct issue materials and obtained signature from
the concern head of department for the accuracy of accounting.

 Material received must satisfy PFA / FSSAI Norms

 Periodic monitoring of hygiene standard

Mandatory Requirement for Receiving Area

(A) Signage’s
 Nothing is Sold Hear
 Material Under Inspection
 Suppliers are not allowed beyond this point
 Rejection Materials

(B) Records to be maintained

 A permanent copy of SOP & SPS
 Inspection Report
 Daily Receiving Report / Material Received Report
 Ensure all Chelan / Invoice copy’s are properly attached recoded in the receiving report .
 Relevant paper forms , tags, rubber stamps and related office supplies
 Contract copy and copy of the purchase order
 Certification of weighing scale to be displayed at receiving

( C ) Equipments at Receiving
 Certified Weighing Scale
 Receiving Stamp
 Quality subject to approve stamp
 Cap / Gloves / Face Mask / Coat Etc
 Han Sanitizer
 Vegetable washer / Liquid Chlorine Dozer container / Ozonizer
 Pesto flash
 Rejection Sticker
 Pedestal Dust Bin ( Covered Dust Bin )
 Paper roll / Hard Dryer / Hot & Cold water line / Soap Disperser / Steam line

 (C) Other records for Audit purpose
 Temperature record
 Cleaning schedule
 Vehicle Inspection Report
 Material delivery record
 Weighing scale record
 Sanitization report

Documents by Supplier

Every time when materials delivered at the receiving it should accompanied by either a
Invoice or a delivery Chelan

The Invoice contains details of the item supplied, quantify and price of each item and
the total amount with the name and address of the supplier with his signature. Invoice
always prepared in two copies, original given to the receiving along with the material
supplied and the duplicate retained by the supplier for his record

Delivery note is a document accompanying with the material supplied. . This document lists the
description of the material, quantity in units / kg, Date of supply with the name and address of
the supplier. This document is also prepared in duplicate by the supplier, original handed over at
the receiving along with the material supplied and the duplicated retained by the supplier for his
record.

Meat Tags

Meat Tag –

Meat tag definition:

used to control the usage of expensive items, such as meat, fish, and poultry. It contains two duplicate
parts. One part is attached to the item when it is received and placed into storage, the other one goes to
the controller's office.

The main advantage:

• Control of expensive food.

• Receiving department weighs and records each item against the specific weigh range.
• Assists in obtaining a more accurate daily food cost percentage
• Assists in controlling the stock level on these items
• It provides a reference number to aid assuming to the kitchen and when yield testing.
• With clearly marked date on the tag it helps in efficient rotation of the stock.
In addition the meat tag also serves following purpose:
• Control expensive items
• Ensures the receiving clerk weigh the item
• to check individual weight of each item against the specification weight.
• Provide reference no. to aid issuing to the kitchen and when yield testing.
• To assist in weekly or monthly inventories as per the purchase

MEAT TAG

Sr. No___________ Date Sr. No. ……………… Date…………………..

__________
Item Description _______________ Item Description
___________________
Grade _________________________ Grade _____________________
Weight Weight : ___________________
__________________________
Supplier Name Supliar Name :

INVOICE

ABC Company Limited Date : ……………….

88, VM Street TIN No :……………
Chennai – 600 014
Ph . No …………………….. GST No : ……………….
INVOICE No…………
Quantity Unit Description of the Material Unit Price Amount In Rs.

 Total Amount in Rupees …………………………… Signature

DELIVERY CHALAN / DELIVERY NOTE

ABC Company Limited Date ……………

88 VM Street Chelan No : -----------
Chennai – 600 014 GSTIN No : ------------
Ph. No :……………
DELIVERY Note
Quantity Unit Description of the Material
Signature
 Unit - 4
Storing, Issuing & Inventory Control

Storing & Issuing Control

 Aims of Store Control

i) To ensure that an adequate supply of food materials for the immediate need of the operation
are available at all times,
ii) To prevent losses through spoilage or pilferage,
iii) To have minimum working capital.

 Storing Procedure / Control

After Receiving

----------------------------------------------------------------------------

Directs / Perishables Dry Stores / Non- Perishables

Kitchen Stores
 Utilized under the able supervision of Quantities entered into

Executive Chef Storeroom register

Goods are stored in the

appropriate places &

bin cards are updated

Issued to various

departments

on receiving requisition

 Layout and Facilities in a Storeroom -

The layout of the store should be such that it minimizes the distance walked by the
storekeeper and the inventory list be printed in the same order in which items are placed in
the store. This will facilitate the quick and efficient stock taking. Items, which are issued
daily, must be located near door and remainder being arranged in a logical sequence.
Commodities should be grouped together and each of them arranged into sections.

Facilities in storeroom –

i) Appropriate storing space

ii) Appropriate temperature & adequate lighting
iii) Proper storing equipments, like shelves, containers, refrigerators, cold room, etc. must be
available,
iv) Proper issuing equipments, like weighing scales, measuring containers, trolleys, etc. must be
available,
v) Proper security,
 vi) Proper pest control,
vii) Proper sanitation.

 Arrangements of food –

i) Items, which are issued daily, must be located near door and remainder being arranged in a
logical sequence.
ii) Groceries and canned goods are stored on shelves by groups like –

1. Tea, Coffee, etc

2. Spices
3. Condiments
4. Cereals
5. Nuts
6. Syrups, etc.

iii) Canned goods must be checked for spoilage – one must watch out for swells, leaks, tampering
or improper count – matter must be reported to the
F&B Controller.

iv) Pricing of groceries – all groceries are priced and marked before putting on shelves. Receiving
dates must be mentioned (for FIFO) and some put a special label or a sticker to stop pilferage.
v) Expensive groceries - like caviar, saffron, truffles, etc. are placed under lock and key. The keys
are with the storekeeper and only a few can access it.

Job description of store room clerk:-

Job title:-store room clerk

Department:-store
Reports to:-storekeeper
Responsible for:-subordinates equipments
Scope (of promotion):-Asst. storekeeper/Storekeeper

Responsibilities:-
1. To upkeep and maintain the store room register.
2. Assist store-keeper in all his responsibility.
3. Upkeep bin cards to know stock in hand.
4. Assist the store-keeper in proper storing and issuing of goods.
5. Assist the store-keeper in finding the cost of commodities.
6. To ensure hygiene and cleanliness in store.
Duties and Responsibilities of Store Keeper

`Job Description for Storekeeper

Position Title: Storekeeper / Store Attendant
Reports To: Purchase Manager / Store Manager
Position Summary:
The storekeeper in the hotel has the main responsibility to receive, store and issue supplies and
equipment for the day to day hotel operations. Work closely with purchasing department,
ensure cleanliness of all work areas, keeping storage and receiving areas clean and tidy at all
times.
He/she also verifies that all supplies and goods received are listed on requisitions/orders and
the delivery challans, invoices are checked and filed in the appropriate folder. Maintains par
stock, inventory and stock records every month and compiles records of
expenditures/consumptions etc.

Job Description for Storekeeper

Position Title: Storekeeper / Store Attendant

Reports To: Purchase Manager / Store Manager

Position Summary:

The storekeeper in the hotel has the main responsibility to receive, store and issue supplies and
equipment for the day to day hotel operations. Work closely with purchasing department, ensure
cleanliness of all work areas, keeping storage and receiving areas clean and tidy at all times.

He/she also verifies that all supplies and goods received are listed on requisitions/orders and the
delivery challans, invoices are checked and filed in the appropriate folder. Maintains par stock, inventory
and stock records every month and compiles records of expenditures/consumptions etc.

Storekeeper Duties and Responsibilities:

1. Receive and forward all goods and deliveries in and out of the hotel to the correct point of
contact/storage area.

2. Able to follow standards for issuing and receiving stock within the store's area of operation.

3. Monitor and take inventory on regular basis to compile orders based on par levels or needs.

4. Maintain clear and organised records to ensure all reports and invoices are filed and stored
properly.

5. Monitor PAR levels for all food items to ensure proper levels.
6. Responsible for storage of both food & beverage and operational stock.

7. Responsible for the day-to-day check on the storage facilities for upkeep and hygiene.

8. Responsible to verify all goods arrived as per the agreed purchase, delivery note and agreed
quantity has been received.

9. Refuse acceptance of damaged, unacceptable, or incorrect items.

10. Ensure cleanliness of all areas, keeping storage areas clean & tidy and in strict compliance with
hygiene regulations.

11. Ensure all store requisitions are signed by concerned Department Heads (HOD’s) Ensure the
quantity requested and the quantity issued always matches.

12. Ensure store requisition form is signed by the person collecting the goods and enter into the
Inventory/Materials Management System.

13. Post all invoices using the MMS - Material Management System.

14. Conduct inventory audits to determine inventory levels and needs.

15. Conduct physical stock audits on a regular basis as advised by the Financial Controller (FC) and
the physical count to be tallied with the inventory count from the MMS - Material Management
System.

16. Any differences between the manual count and MMS software have to be investigated and the
information to be given to the Finance Department.

17. Assist the Accounts Payable Clerk / payable assistant in finding out any cost discrepancies.

18. Complete requisition forms for inventory and supplies.

19. Extend all requisitions on a daily basis and update the inventory management software/system.

20. Work closely with Purchasing to order and receive items and equipment.

21. Troubleshoot any vendor delivery issues and oversee/follow up on the return process.

22. Follow up on documentation of after-hours issues ensuring it is in accordance with established

internal controls and procedures.

23. Adhere to all Health and Safety procedures particularly relating to food and beverage items.

24. Keep accurate recordings of all incoming and outgoing goods.

25. Notify the store manager/supervisor of any low stock levels.

26. Identify and report any slow-moving items to avoid over purchasing.

27. Verify and track received inventory and complete inventory reports and logs.

28. Perform any other duties as assigned by the management or supervisors.

Prerequisites:

 Positive attitude and good communication skills.

 Flexibility to respond to a range of different work situations.

 Ability to work on your own or as part of a team.

 Have a good eye for detail.

 Familiar with Materials Management system (MMS).

 Familiar with Inventory Management Software.

 Must have basic computer skills for the day to day operation.

Essential duties of a store keeper

Duties of store keeper: These can be briefly set out as follows:

1. To exercise general control over all activities in Stores Department

2. To ensure safe keeping both as to quality and quantity of materials.

. To maintain proper records.

4. To initiate purchase requisitions for the replacement of stock of all regular stores items whenever the

stock level of any item of store approaches the minimum limit fixed in respect thereof.

5. To initiate action for stoppage of further purchasing when the stock level approaches the maximum

limit.

6. To check and receive purchased materials forwarded by the receiving department and to arrange for

the storage in appropriate places.

. To reserve a particular material for a specific job when so required.

8. To issue materials only in required quantities against authorised requisition notes/material lists.

9. To check the book balances, with the actual physical stock at frequent intervals by way of internal

control over wrong issues, pilferage, etc.

Location of storage facilities

 It should be located near to both receiving and usage area.

 The store should be at same level as the receiving area.
 Generally the store room is located at the back of building which would enable the good to come
right in.

Security

i) Adequate security arrangements are of utmost importance.

ii) Unauthorized personnel are not allowed.
iii) Keys of the storeroom are issued to individuals designated by the chief accountant after
entering into a Key Log Book.
iv) Proper strong locks to be used to lock the storeroom once it is closed.

Stock Control

 Goods are stored in a manner so that FIFO can be followed.

 Each item stored is entered in the storeroom register, and subsequently the bin card is
updated.
 Each item issued is entered in the storeroom register and issued to authorized person
only, on receiving a requisition, and subsequently the bin card is updated.

g. Aims Issuing Control -

i) To ensure the proper authorization for the release of merchandise,

ii) To account properly for daily food issues.

h. Issuing Procedure / Control

i) All items are issued against requisitions prepared and signed by authorized person,
ii) The requisitions are pre-numbered and are in triplicate, the copies are distributed as follows –
original – store, duplicate – department, triplicate – book copy,
iii) The storekeeper is intimated about persons who can sign and authenticate requisitions.
iv) The storeroom register is updated after issuing of goods.

Requisition:-

1. All items are issued against requisition prepared by authorized person.

2. The requisitions are in triplicate.
3. The original and carbon copy are in different colors.
4. The top copy goes to store, 2nd copy to the department concern.
5. The third copy is the book copy.

Transfer note:-

 For inter or intra departmental transfers.

E.g.:- 1. Lemon from kitchen to bar.

2. Fish from main kitchen to coffee shop kitchen.

For this transfer note is generated.

 Transfer note is generated in duplicate copy.

 Fist copy goes to supplying department.
 Second copy remains with receiving department.

i. Stock Taking -

There are two types of stock taking-

i) Perpetual Stock Taking – it is the stock registered in the storeroom register or

the book stock.

ii) Physical Stock Taking – it is stock taking by physically counting all goods
in the storeroom and noting them on a physical inventory sheet.

Perpetual stock taking/perpetual inventory procedure-

It is also known as continuous stock taking. The essential features of this type of stock taking is that the
number of items of ingredients and materials which are used over the past period of few days or
fortnight are counted and checked at frequent intervals and physical balance of stock is compared with
the balance shown by bin cards and stock books. Thus, a perpetual inventory is an up to date record of
all purchases and store room issues along with their balance for each commodities.

Physical Stock Taking / Physical Inventory Procedure –

It is generally done on the last day of the trading period (a trading period is of 28 days – thus there are
13 trading periods in a year) or it can be done once a month. It is generally done by two persons – one
from the accounts department and the other from F&B Controls or Purchase, one of them count the
goods and other note it on the physical inventory sheet. This is done to ascertain the actual value of
goods and compare with its book value. A report is generated and sent to GM, F&B Manager, Accounts,
Purchase, Executive Chef and Storekeeper.

Stock levels:-

There are three basic Stock levels.

A) Maximum stock level:- this is the upper level beyond which items must not be stocked. this level is
decided after considering consumption frequency ,durability of items, availability.

B) Minimum stock level:- it is the level of stock to be maintained at all times so that production and
sales do not get obstructed due to want of material and ingredients.

C) Recorded level of stock:- between the maximum and minimum level a, point is set as the recorded
level, at this point the orders for fresh supplies must be placed with suppliers .to ensure that the stock
of ingredients arrive before the existing stock level fall below the minimum level.

Comparison of actual physical inventory and book value:-

Sometimes there is a difference between the actual physical inventory and book stock of a particular
item. the causes of difference are as under:

1. Change in volume due to evaporation or absorption of moisture.

2. Impossibility of breaking up or cutting bulk without loss.
3. Shortage in actual inventory due to pilferage and careless handling.
4. Careless measurement at the time of receiving.

j. Records Maintained -
i) Bin Card – kept with the goods on their shelves and updated on receiving & issuing goods.

ii) Stock Record Card – same as bin card

iii) Food Storeroom Requisition – it is for requisition of goods from store.

iv) Kitchen Transfer – it is for intra or interdepartmental transfer of goods, like from main kitchen
to coffee shop kitchen, from coffee shop kitchen to bar, etc.

v) Physical Inventory Sheet – it is for noting quantity of goods during physical stock taking.
 Bin card

ABC Hotel Ltd

Commodity: Re-order point: Supplier:

Max stock:

Min stock: Bin no. : Code no. :

Date Ref In Out Bal Date Ref In Out Bal

STOCK RECORD CARD

ABC HOTELS LTD.

BIN NO-

SUPPLIER-

COMMODITY-

REORDER QUANTITY-

REORDER LEVEL-

DATE REF UNIT RECEIVED ISSUED BALANCE

COST
NO. RS. NO. RS. NO. RS.
 PERPETUAL INVENTORY CARD

ABC HOTELS LTD.

ITEM- COST-

SIZE- PAR STOCK-

SUPPLIER- RE-ORDER POINT-

DATE ORDER NO. IN OUT BALANCE

 FOOD STORE ROOM REQUISITION

DELIVERY DATE- INDENT NO-

DEPARTMENT-

SL NO. STOCK ITEM SIZE QNTY QNTY UNIT TOTAL

NO. REQUIRE ISSUED COST COST
D

REQUESTED BY- INDENT MADE BY- (CONTROLLER)

DELIVERED BY - RECEIVED BY-

KITCHEN TRANSFER NOTE

NO-
DATE-
FROM-
SL NO. ITEM SIZE QNTY TRANSFER COST

UNIT TOTAL

REQUESTED BY- INDENT MADE BY-

DELIVERED BY- RECEIVED BY-

(COST CONTROLLER)
 INVENTORY SHEET-

ABC HOTELS LTD.

PHYSICAL
INVENTORY
AS ON-

VARIANC
STOCK UNIT E VALUE
PHYSICAL VARIANCE INVENTORY ISSUE OF MONTH
SL NO. ITEM UNITS IN PRICE
STOCK + - RS. P. + - QNTY
HAND RS. P.
RS P.
 UNIT- 4
PRODUCTION CONTROL

a. Aims & objective of production control ( Production Planning )

-Reduce waste (especially leftover)

-Reduce higher cost than necessary from over production
- Eliminate incorrect portion size
- Keep food cost as low as possible by maintaining the established standard
- Minimize cost and Maximize profits
- Maximize customer service
- Minimize inventory investments
- Minimize change in production rates
- Minimize change in work force levels
- Maximize the utilization of plant and equipment.

b. Forecasting
Forecasting is a technique of predicting the volume of sales of the establishment for a specific
future period like, for a day, a week, etc.
The following are taken into considerations for forecasting –

i) Estimating the total numbers of covers sold from the past records,
ii) Analysis of the portions of menu items sold,
iii) Popularity ratio – ratio between – meal period: no. of covers sold: menu items sold,
iv) occupancy in the hotel,
v) Special events,
vi) Weather,
vii) Season of the year,
viii) Day of the week,
ix) Holidays

Initial Forecasting

It is prepared a week in advance and indicates –

i) The estimated meals to be prepared in each selling outlet,
ii) The estimated total of each menu item for each day of the following menu week.
The basis for initial volume forecasting:
1. Past records or sales histories
2. Advance booking and reservation
3. Current events
4. Current trends

Final Forecasting –

This forecasting takes place the day before the preparation, and is based on

i) The previous days’ food production and sales figure,

ii) The weather condition.

On comparison with the initial forecasting, it might require substantial alterations, the purchase order
sent to the suppliers are amended as soon as possible. The copies of the final volume forecast are sent
to –

i) F&B Manager,
ii) F&B Controller,
iii) Executive Chef,
iv) Purchase Manager,
v) Store Manager,
vi) Others – to whom the information would be of use.

The objectives of Final Volume Forecasting

i) To predict the total number of meals to be sold in each selling outlet of the hotel,
ii) To predict the choice of menu items by customers/guests,
iii) To facilitate F&B purchasing,
iv) To ensure availability of all necessary ingredients required,
v) To control food costs in relation to sales,
vi) To enable the F&B Controller to compare the actual volume of sales with the one predicted.

c. Fixing Standards –
The word “standard” is synonymous with the phrase – “what it should be”. It actually is the base for any
control that is to be implemented. The different standards in respect to production control are –
i) Standard purchase specification
ii) Standard yield,
iii) Standard recipe,
iv) Standard portion size,
v) Standard portion cost.

Standard Yield

Yield is defined as the edible usable part of a food item / raw material, which is available after
preparation / pre preparation and cooking.

A standard yield is obtained when an item is processed as per the particular standard methods of
preparation, cooking and portioning of an establishment.

General Formula

Usable part of the Food Item

_______________________ X 100
Actual Weight of the food item

Example

If the Chef wants to know the Yield of 1 Kg Mutton curry cut from Leg Mutton
(Weight of I Mutton Leg = 1.2 Kg)

Purchase price of Leg Mutton 1 Kg = Rs 450.00

Size of the one leg Mutton = 1.200 Kg = Cost Rs. 540.00

Yield Formula

Usable part of a Meat Item

Formula _______________________ X 100
Actual weight of the Meat item

Usable weight of Mutton Curry Cut = 1.050 Kg

Bones , Trimming & wastages = 0.150 Kg

Formula = 1.050
______ X 100
1.200
 Yield % = 87 50 %

Purchase Price of Leg Mutton per Kg

Usable portion of 1kg Leg Mutton _____________________________
Yield %

Cost of 1 kg Mutton Curry Cut (Yield) = Rs. 514.29

Controlling Measures

Ap – Stage ( Purchase Stage )

Fix the Standard Purchase specification for all the raw materials Food (Right Price for the Right Product
to obtain an optimum yield.

At - RTC – Stage ( Ready to Cook Stage )

Maximum portion to be obtained while cutting the meat in Butchery as per the Hotel specified standard

At – RTE Stage ( Ready to eat Stage )

Cooking Method (Boiling, frying, Taste, texture, aroma & colour …… etc ) and service standard to be set
as per the of the Standard recipe card .

All the above three stages are equally important to get an optimum Yield

Objectives of Yield Management

 To establish a standard for the quantity and number of portions obtainable from a specific item of food.
 To establish a standard for comparison with operating results and thereby measure the efficiency of the
production departments.
 To establish an objective method of further evaluating standard purchasing specifications.
 • To establish a standard cost factor for the item of food.
 To assist in menu costing and pricing.
 To assist in converting forecast requirements into raw material requirements.

The importance of Yield Management

Yield testing and yield factors are important for and establishment for the following functions:
 To determine product pricing.
 To set purchase specifications and receiving standards.
 To forecast purchase quantity and ordering levels.
 Establishing standard recipes and portion size.
 For setting control standards.
 Comparison of vendor prices and quality.
 Monitoring the usage of raw materials.

Yield Cooking Loss –

It is the loss in weight or portion size after a food item has been made ready to eat. It helps in
determining final portion cost after cooking.

A standardized recipe is a set of written instructions used to consistently prepare a known quantity and
quality of food for a specific location. A standardized recipe will produce a product that is close to
identical in taste and yield every time it is made, no matter who follows the directions.

A good standardized recipe will include:

 Menu item name – the name of the given recipe that should be consistent with the name on the menu
 Total Yield – number of servings, or portions that a recipe produces, and often the total weight or volume
of the recipe
 Portion size – amount or size of the individual portion
 Ingredient list/quantity – exact quantities of each ingredient (with the exception of spices that may be
added to taste)
 Preparation procedures – Specific directions for the order of operations and types of operations (e.g.,
blend, fold, mix, sauté)
 Cooking temperatures and times, including HACCP critical control points and limits to ensure the dish is
cooked properly and safely
 Special instructions, according to the standard format used in an operation
 Mise en place – a list of small equipment and individual ingredient preparation
 Service instructions, including hot/cold storage
 Plating/garnishing
Standard Recipe Card

In addition to the list above, standardized recipes may also include recipe cost, nutritional analysis,
variations, garnishing and presentation tips, work simplification tips, suggested accompaniments or
companion recipes, and photos.

Standardize recipes can help with work simplification and incorporate HACCP into procedures. Many
facilities preparing food in large quantities also batch cook, so the standardized recipes will incorporate
those procedures into the instructions. The skill level of employees should also be taken into account
when writing recipe procedures or directions. Terminology within the standardized recipes should be at
the skill level of employees, for example, instruct an employee to melt butter and whisk with flour instead
of saying “make a roux”, if more appropriate for a specific operation. Finally, cooking equipment,
temperatures, time, etc. are adjusted for the facility.

A short side note on mise en place – a key component to efficiently producing menu items from recipes
is to have “everything in its place.” Many kitchens will have work stations with a standard mise en place
set up, which might include a cutting board, salt and pepper, tasting spoons, composting containers, etc.
Standardized recipes can help employees produce menu items most efficiently if they also list mise en
 place for small equipment needed for the recipe, such as measuring tools, preparation tools (knives,
peeler), holding pans, cooking utensils, etc. Employees can gather everything they need before starting
recipe preparation thus reducing traveling around the kitchen during preparation, kitchen congestion, loss
of focus from frequent starting and stopping, and errors from interruptions to their work. Detailing the
mise en place for individual ingredients, such as peeling and cutting, with each ingredient can also
improve the clarity and efficiency of recipe preparation. Example: Raw white potato, peeled, ½ in. dice

Recipes as a Control Tool

Standardized recipes are an important control tool for food service managers and operations. A
standardized recipe assures not only that consistent quality and quantity, but also a reliable cost range. In
order for an operation to set a menu selling price that allows the operation to make a profit, it’s vital that
the cost of each recipe and portion is calculated and relatively consistent.

Benefits of using a standardized recipe include:

 a consistent quality and quantity

 standard portion size/cost
 assuring nutritional content and addressing dietary concerns, such as special diets or food allergies
 helping ensure compliance with “Truth in Menu” requirements
 aiding in forecasting and purchasing
 fewer errors in food orders
 incorporating work simplification principles and aids in cross-training
 assisting in training new employees
 incorporating HACCP principles
 reducing waste
 more easily meeting customer expectations

S.A.M.E.

Remember – Standardization Always Meets Expectations. Foodservice operations need to meet the
expectations of their customers, every time they visit. Foodservice operations need to meet expectations
for employees, their skill level and training. Foodservice businesses need to meet expectations for costs
and profit for all menu items. Standardized recipes are critical to the foodservice industry. They are
simply good business!

d. Standard Portion Size

A Standard Portion Size represents the amount (weight, count, size or value) of each food item which is
sold to the guest for a stated price and should be established for all items, including appetizers, main
courses, vegetables, salads, desserts, beverages, etc.
It is used as a tool for controlling staff activity regarding main objective of standard portion size is to
serve the guest with a measured quantity of food for which he is paying, thereby earning guest
satisfaction. Production & sales and determining a standard cost per portion.
Some examples of standard portion control tools are – scoop, spoon, ladle, peg measure, soup bowl,
pony tumbler, etc.

f. Standard Portion Cost

The standard portion cost is determined on the basis of the size of the portion served to a guest and the
ingredients that are used in preparing of a particular dish.

The following points are considered for determining standard food cost

i) Establishment of standards and standard procedures,

ii) Calculation of standard portion costs

COMPUTATION OF STAFF MEAL

The following are the considerations which are as applicable:

· Separate requisition for indenting the supplies for staff meal.
· Allocation of a fixed amount on a per day basis is done which is the difference between the
total expenditure and the amount collected by selling coupons.
· Coupon system may be adopted or OTH may be issued.
· Estimated cost per day may be calculated and allocated accordingly.
 UNIT – 5
SALES CONTROL

Flow Chart - Sales Control

 .KEY MIS REPORT

Void KOT – Details

Void Check Statement

Discount amount & Discount Check statement

Detail Complimentary check statement

Cash Sales

Credit card Sale

Food Cover Analysis (Meal wise and for the day) & APC

Food Revenue Analysis ( Meal

Menu Popularity Analysis

Menu sales Analysis

Tax Break up & Statement of Taxes to file return with respective Authorities

Cashier summary sheet.

The sales summary sheet is an analysis of all the transactions/cash taken during the particular
period of service. It is prepared to know the revenue generated through the sales of food,
beverages, the modes of bill settlement- cash, cheque, credit card, amount charged to room
accounts, tax amount, discounts given etc. the basic information required in a sales summary
sheet includes the following:

 Date

 Bill number

 Table number

 Number of cover per table

 Bill amount

 Modes of payment- cash, credit card, cheque, posted to room

 Analysis of food, beverages, and other sales items.

1. REATAURANT SALESA SUMMARY SHEET

SALE - Amount in Rs. Sales Break Up in Rs.
Check Tab. No.o
No. No. f cov Taxe Total
Food Beverage Liquor Tobacco Discount s Sale cash sale Credit Sale Room
 Functions of Control System……..

 The control system monitors the area where food and beverage sales take place.
 It reduces the pilferage, fraud, and wastage to minimum.
 It provides required information to the management for costing purposes, so that they forecast
the statistics accurately for the next financial period.
 It ensures that cashiers make bills correctly so that the customer is neither overcharged nor
under charged.

. Factors to be considered while fixing Menu Price

Cost of Menu including accompaniment and garnish

Budgeted Food Cost %
Menu Popularity Analysis & Menu Engineering Statistics
Meal wise Revenue Analysis
Customer / Competition Pricing
Food Cover Analysis with APC
Seat Turnover Ration
Restaurant Capacity Utilization

1. Costs

First and foremost you need to be financially informed. Before you set you’re pricing, work out the costs
involved with running your business. These include your fixed costs (the expenses that will come in
every month regardless of sales) and your direct costs (the expenses you incur by producing and
delivering your products and services).

2. Customers

Know what your customers want from your products and services. Are they driven by the cheapest price
or by the value they receive? What part does price play in their purchase decision?
 Also look at what you are selling, are your current customers buying high-end or low-end products and
services? This information will help you determine if your price is right, what level of service or
inclusions you should be offering and lastly if you are targeting the right market. It may be that you need
to change your market to make your business more profitable.

3. Positioning

Once you understand your customer, you need to look at your positioning. Where do you want to be in
the marketplace? Do you want to be the most expensive, luxurious, high-end brand in your industry, the
cheapest, beat it by 10% brand or somewhere in the middle? Once you have decided, you will start to
get an idea of your ideal pricing.

4. Competitors

This is one of the key times you can give yourself permission to do a little competitor snooping. What are
they charging for different products and services? What inclusions and level of service are they offering
for those prices? What customers are they attracting with their pricing? And how are they positioned in
the marketplace? The answers to these questions will give you an industry benchmark for your pricing.

5. Profit

One of the most important questions business owners neglect to ask themselves is, “How much profit
do I want to make?” They tend to look at what others charge and then pull a figure out of the air to be
competitive without giving consideration to how much profit the want and need.

5. Common Pricing Methods

> Reasonable price : The manager or owner uses his own perspective in fixing the price of the
menu / dish. The guests thinking are not considered even how this pricing will reflect on profit.

> Highest Price Guest can pay : The management anticipates what maximum a guest can pay. A slight
reduction in ht management’s decision of the price is the final price.. The reduction is done to give
allowance for the mistakes made by the management in judging the guest’s ability to pay for a dish.

 Aggressive Selling: A few dishes are priced aggressively low to attract the guests. The price of a
few dishes may be as low as cost price or lower than the cost price. Those few dishes prices are
crowd / guest pullover. Management tries to recover this loss from the sale of ther dishes and
beverages. In other way the hotel tries to improve the sale.

 Trial and Error Method : For fixing the menu price, the management follows the trial and error
policy . A price is fixed and if the management is not satisfied with ht eprice then ht eprice is
suitably changed till ht emost acceptable price is derived.
  No Pricing : In case a dish is ordered which is not on the menu then a price is quoted to the
guest and if ace[ted the dish is served.

 Food Cost ; In India it is the most common method of fixing price. Hotel decides to maintain a
certain food cost. Before fixing the price, the portion size and food cost of the dish is calculated.
After knowing the food cost then the selling price is decided. For example if management wants
to maintain a 30% food cost and the food cost of the dish is 15 then it will be sold at Rs.50

 Competitive Price : The price fixed by the management is sililar to the price by other similar
hotels / restaurants. The management tries to control all costs (food cost / variable cost , semi
variable cost and fixed cost ).

 Mark Up Price : This is applicable in case of products which are not prepared by ht hotel /
restaurant but are traded by the restaurant like cold aerated drinks, alcoholic drinks, cigarette
etc. Management decides to charge 300% more than the purchase price of the items .

 The ratio price method: The previous year’s food cost and selling price ratio is analyzed and
management keeping that a bench mark to decide the selling price for future.

The importance of costs in Pricing

Costs are central elements in the pricing decision. The costs are allocated to all outlets to know the total
cost of each unit (Restaurant). In case the cost can be directly and easily allocated to different units
then there is no dispute among the unit heads. On the contrary there are some costs which cannot be
easily allocated to different units. These costs are apportioned by various methods.

After evaluating all other costs, (except for food cost) and anticipating the total sale, the management
decides the food cost for a particular restaurant. Once a decision is taken about the standard food cost
and standard menu / dish; chef is expected to maintain the food cost and standard portion size of the
dish. He may ensure a standard recipe, portion size, method of preparation, service standard, etx so
that the uniformity of dish in taste, look , presentation , portion size, etc. remains the same in spite of
change in duty of chefs.

It is usually difficult to maintain the food cost for all individual dishes. In a same restaurant different
dishes may have the different food cost but the kitchen / restaurant must maintain the standard food
cost fixed the kitchen / restaurant.

Major Types of Fraud in Restaurant - Sales Control

 Failure to make KOT / Check

 Failure to record sale in the sales summary
 Under recording the sale
 Picking up food without raising KOT / CHECK
 Charging incorrect menu price ( Over charging / under charging )
 Rotating and re presenting the settled bill ( cash ) to the other customer - Buffet
 Collecting money from the customer without presenting the bill
 Discounting the bill without approval / authorization