2

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 Main Ideas
 Forecasting Food Sales
 Forecasting Beverage Sales
 Importance of Standardized Recipes
 Purchasing Food
 Purchasing Beverages
 Purchase Orders
 Receiving Food and Beverage Products
 Technology Tools

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 Part 1
Forecasting Food Sales

 Forecasting future sales addresses the important

operational questions of:

“How many people

will I serve today?”

“What will they order?”

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 Part 1
Forecasting Food Sales

 The proper amount of menu item production

minimizes the chances of running out of an item
before a meal period is over; and it minimizes the
chances of having excessive amounts unsold when
the meal period is completed.

© 2015 John Wiley & Sons Food and Beverage Cost Control, 6th
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 Figure 3.1 Menu Item Sales History

Date: 1/1 - 1/5 Menu Items Sold

Week’s
Menu Item Mon Tues Wed Thurs Fri Total Average
Roast Chicken 70 72 61 85 77 365 73
Roast Pork 110 108 144 109 102 573 115
Roast Beef 100 140 95 121 106 562 112
Total 280 320 300 315 285 1,500 300

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 Forecasting Food Sales

 Popularity index is defined as the percentage of

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

Popularity Index =Total Number of a Specific Menu Item Sold

Total Number of All Menu Items Sold

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 Forecasting Food Sales

 Individual menu item forecasting is based on an

item’s individual sales history:

Number of Guests Expected

x Item Popularity Index
= Predicted Number of That Item to Be Sold

 The predicted number to be sold is the quantity of a

specific menu item likely to be sold given an estimate
of the total number of guests expected.
© 2015 John Wiley & Sons Food and Beverage Cost Control, 6th
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 Figure 3.2 Forecasting Item Sales

Predicted Number
Menu Item Guest Forecast Popularity Index to Be Sold
Roast Chicken 300 0.243 73
Roast Pork 300 0.382 115
Roast Beef 300 0.375 112
Total 300

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 Forecasting Food Sales

 Factors influencing the number of guests to be

served include:
 Competition
 Weather
 Special events in the area
 Holidays
 Facility occupancy
 Advertising and promotions

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 Forecasting Food Sales

 Factors influencing the number of guests to be

served include: (cont.)
 Competitor advertising
 Quality of service
 Changes in operating hours
 Operational consistency
Sales histories track past performance and thus they
are not precise estimates of future sales.

© 2015 John Wiley & Sons Food and Beverage Cost Control, 6th
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 Forecasting Beverage Sales

 Alcoholic beverages are those products that are

meant for consumption as a beverage and that
contain a significant amount of alcohol. These
products are generally classified as:
 Beer
 Wine
 Spirits

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 Forecasting Beverage Sales

 Beer: Fermented beverages made from grain

and flavored with hops
 Wine: Fermented beverages made from grapes,
other berries and fruits.
 Spirits: Fermented beverages that are distilled
to increase the alcohol content of the product;
these are also referred to as liquors.

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 Forecasting Beer Sales

 A specific beer brand might be sold in

individual cans, bottles, or in kegs.
 Keg beer is also known as draft beer, or beer
in a form of packaging in which the beer is
shipped in multi-gallon units for bulk sale.

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 Forecasting Wine Sales

In many operations the forecasting of wine sales

will be divided into two parts:

Wine-by-the-bottle
Wine-by-the-glass

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 Forecasting Spirit Sales

Like beer and wine, the number of guests who

order a mixed drink (a drink made with a spirit)
can be recorded and analyzed.
Unlike beer and wine, however, using that
information to estimate the exact drink guests will
request can be difficult.

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 Standardized Recipes

 Standardized recipes control both the quantity and

quality of what a kitchen will produce.

 A standardized recipe details the procedures to be

used in preparing and serving each menu item.

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 Standardized Recipes
 A professionally developed standardized recipe will
contain the following:

1. Menu item name

2. Total yield (number of servings)
3. Portion size
4. Ingredient list

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 Standardized Recipes
 A professionally developed standardized recipe
contain the following: (cont.)

5. Preparation/method section
6. Cooking time and temperature
7. Special instructions, if necessary
8. Recipe cost (optional)

© 2015 John Wiley & Sons Food and Beverage Cost Control, 6th
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 Figure 3.6

© 2015 John Wiley & Sons Food and Beverage Cost Control, 6th
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 Standardized Recipes
 Some managers use the following arguments against
implementing standardized recipes:
1. They take too long to use.
2. My people don’t need recipes; they know how
we do things here.
3. My chef refuses to reveal his or her secrets.
4. They take too long to write up.
5. We tried them but lost some, so we stopped
using them.
6. They are too hard to read, or many of my
people cannot read English.
© 2015 John Wiley & Sons Food and Beverage Cost Control, 6th
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 Standardized Recipes
 Reasons for using standardized recipes include:
1. Accurate purchasing
2. Dietary concerns are addressed because
ingredients are identified
3. Accuracy in menu laws are addressed because
ingredients identified
4. Matching food used to cash sales
5. Accurate recipe costing and menu pricing
6. New employees can be better trained
7. Computerization of a foodservice operation
depends on them
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 Standardized Recipes

 When adjusting recipes for quantity (total yield),

two general methods may be employed.

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 Standardized Recipes

 Factor Method: uses recipe conversion factor:

Yield Desired
Current Yield = Conversion Factor

 For example, a 50 portion recipe can be converted to

a 125 portion recipe:
125/50=2.5
2.5 is multiplied by each ingredient (except spices)

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 Figure 3.7: Factor Method Usage

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 Standardized Recipes

 The percentage method deals with recipe weight,

rather than with a conversion factor.

Ingredient Weight/Total Recipe Weight=% of Total

then
% of Total x Total Amount Required
= New Recipe Amount

© 2015 John Wiley & Sons Food and Beverage Cost Control, 6th
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 Figure 3.8: Percentage Method

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 Purchasing

 Purchasing is essentially a matter of determining the

following:
1. What should be purchased?
2. What is the best price to pay?
3. How can a steady supply be assured?

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 Purchasing

What Should Be Purchased?

Product specification (spec) – a detailed description of
an ingredient or menu item.
A spec communicates, in a very precise way, with a
vendor so that an operation receives the exact item
requested every time.
Each menu item or ingredient should have its own
spec.

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 Purchasing
 A professionally developed spec includes

 Product name or specification number

 Pricing unit
 Standard or grade
 Weight range/size – count

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 Purchasing
 A professionally developed spec includes (cont.)

 Processing and/or packaging

 Container size
 Intended use
 Other information such as product yield

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 Figure 3.9 Product Specification

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 Container Sizes

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 Purchasing

 Product yield is the amount of product remaining

after cooking, trimming, portioning or cleaning.

 Product yield has a direct impact on product costs

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 Purchasing
What Is the Best Price to Pay?
The best price is more accurately stated as the lowest
price that meets the long-term goals of both the
foodservice operation and its vendor.
Make vs. Buy decisions
Bid sheet – comparison shopping
Price comparison sheet – after managers have
received bids from suppliers, they can compare those
bids

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 Bid Sheet

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 Price Comparison Sheet

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 Purchasing

 Bid sheets and price comparison sheets are a good

place to start.
 Other determining factors: vendor dependability,
quality of vendor service, and accuracy in delivery

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 Purchasing

 Minimum order requirement is the smallest order

that can be placed with a vendor who delivers.
 If the minimum order requirement cannot be
met using the lowest prices, then the manager
may have to choose the supplier with the next
highest price to fill a complete order.

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 Purchasing

 How can a steady supply be assured?

 Suppliers have a variety of prices based on the
customer to whom they are quoting them.
 It is simply in the best interest of a supplier to
give a better price to a high volume customer.
 Cherry Pickers – how suppliers describe the
customer who gets bids from multiple vendors, then
buys only those items each vendor has “on sale” or
for the lowest price.

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 Purchasing

 Slow pay means high pay (higher prices paid).

 Vendors can be great source of information related

to new products, cooking techniques, trends and
alternative product usage.

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 Purchasing

 One vendor versus many vendors

 Staples and non-perishables are best purchased
in bulk from one vendor.
 Orders for meats, produce, and some bakery
products are best split among several vendors,
perhaps with a primary and secondary vendor in
each category so that you have a second
alternative should the need arise.

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 Purchasing Ethics
 Ethics have been defined as the choices of proper
conduct made by an individual in his or her
relationships with others.
 Is it legal?
 Does it hurt anyone?
 Am I being honest?
 Would I care if it happened to me?
 Would I publicize my action?
 Kickbacks always hurt the company
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 Purchasing Beverages

 Determining which wines to buy is a matter of

selecting both the right product and packaging form
for an operation’s needs. To do so managers must
first determine if they will sell wine by the:
 Glass
 Split or half-bottle
 Carafe
 Bottle

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 Wine Bottle Sizes

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 Spirits Purchasing

 Spirits have an extremely long shelf life; the period

of time they can be stored with no significant
reduction in quality.

 Thus, managers can make a “mistake” and purchase

the wrong spirit product or too much of one without
disastrous results, but only if that product can be
sold over a reasonable period of time.

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 Spirits Purchasing

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 Spirits Purchasing

 Well liquors are those spirits that are served when

the guest does not specify a particular brand name
when ordering. The name stems from the concept of
the “well,” or the bottle holding area in the bar.
 Call liquors are those spirits that guests request by
name, such as Jack Daniel’s, Kahlúa, and Chivas
Regal. Extremely expensive call liquors are
sometimes referred to as premium liquors.

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 Beer Purchasing

Beer is the most highly perishable of alcoholic beverage

products. The pull date, or expiration date, on these
products can be as short as a few months or even a few
weeks.
Because of this, it is important that the beverage
operator only stock those beer and craft beer items that
will sell relatively quickly.

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 Beer Purchasing

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 Purchase Orders

 A purchase order (PO) is a detailed listing of

products requested by a buyer.
 A PO may include a variety of product information
but must always include the quantity ordered and
the price quoted by the supplier.
 The purchase order (PO) should be made out in
triplicate (3 copies.)

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 Purchase Orders
The written PO form should contain space for the
following information:
Purchase Order Information
Item Name Purchase Order Number
Spec #, if appropriate Date Ordered
Quantity Ordered Delivery Date
Quoted Price Name of Person who
Placed Order
Extension Price
Total Price of Order Name of Person who
Received Order
Vendor Information Delivery Instructions
Comments
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 Purchasing
 The advantages of a written Purchase Order are many and
include the following:
1. Written verification of quoted price
2. Written verification of quantity ordered
3. Written verification of the receipt of all goods ordered
4. Written and special instructions to the receiving clerk,
as needed
5. Written verification of conformance to product
specification
6. Written authorization to prepare vendor invoice for
payment

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 Purchase Order

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 Receiving Food and Beverage Products

In proper ordering and receiving one individual places

the order, while another individual is responsible for
verifying delivery and acceptance of the product.

Auditors are individuals responsible for reviewing

and evaluating proper operational procedures. They can
determine the potential for fraud or theft.

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 Receiving Food and Beverage Products

The requirements for effective receiving are:

1. Proper location

2. Proper tools and equipment
3. Proper delivery schedules
4. Proper staff training

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 Receiving Food and Beverage Products

The receiving area must be large enough to allow for

checking products delivered against both the delivery
invoice, which is the seller’s record of what is being
delivered and the PO; the buyer’s record of what was
ordered.

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 Receiving

 Accessibility to equipment required to move

products to their proper storage area and to dispose
of excess packaging is important.

 Receiving areas must stay free of trash and clutter,

as these make it too easy to hide delivered food
items for later attempts of theft.

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 Receiving

 Remember that the delivery person is also a

potential thief.

 The receiving area should be kept extremely clean,

since you do not want to contaminate incoming
food, or provide a carrying vehicle for pests. The
area should be well lit and properly ventilated.

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 Receiving Food and Beverage Products

 Although the tools and equipment needed for

effective receiving vary by type and size of
operation, some items are standard in any receiving
operation. These include:
1. Scales
2. Wheeled equipment
3. Box cutters
4. Thermometers
5. Calculators
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 Receiving Food and Beverage Products

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 Delivery Schedules

 Some operators are able to demand that deliveries

be made only at certain times. These are called
acceptance hours. The operation may refuse to
accept delivery of products at any other time.

 Some large operations prefer to establish times in

which they will not accept deliveries. These are
called refusal hours.

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 Staff Training

 Receiving clerks should be trained to verify the

following product characteristics: weight, quantity,
quality, and price.
 Receiving clerks should be required to weigh all
meat, fish and poultry delivered, with the exception
of unopened Cryovac (sealed) packages.
 When an item is ordered by weight, it should be
verified by weight.

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 Credit Memos

 Shorting is the term used to indicate that an ordered

item has not been delivered as requested.
 When a vendor shorts the delivery of an item you
ordered, that item may or may not appear on the
delivery invoice.
 If the item is listed on the delivery invoice, the
delivery driver should sign a credit memo. A credit
memo indicates an adjustment to a delivery invoice
must be made.

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 Credit Memo

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 Receiving Beverages

When receiving beverage products, the following items

are of special concern and should be verified:

Correct brand
Correct bottle size
No broken bottles or bottle seals
Pull dates (beer)

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 Receiving Beverages

When receiving beverage products, the following items

are of special concern and should be verified: (cont.)

Correct vintage or year produced (wine)

Correct unit price
Correct price extension
Correct invoice total

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 Verifying Price

In the area of training staff to verify proper pricing, two

major concerns should be addressed:

1. Matching PO unit price to delivery invoice unit

price

2. Verifying price extensions and totals

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 Receiving

 A contract price is an agreement between buyer

and seller to hold the price of a product constant
over a defined period of time.

 Extended price is the unit price of an item

multiplied by the number of units delivered.

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 Receiving

 Never assume extensions are correct because a

computer did them!
 If a supplier consistently shorts an operation, that
supplier is suspect both in terms of honesty and lack
of concern for the operation’s long-term success.
 Training your receiving clerk to assess and evaluate
quality products is a continuous process.

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 Receiving Records
 Some large operations use a receiving record when
receiving food.
 A receiving record generally contains the following
information: name of supplier, invoice number,
item description, unit price, number of units
delivered, total cost, storage area, and date of
activity.
 Receiving reports can be helpful if it is important to
record where items are to be delivered, or have been
delivered.
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 Receiving Records

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 Technology Tools

This chapter focused on managing food-related costs by

controlling the areas of forecasting future sales,
using standardized recipes, effective purchasing, and
proper receiving.

© 2015 John Wiley & Sons Food and Beverage Cost Control, 6th
Hoboken, NJ 07030 RONALD AARON M. GALLARDO Edition
Dopson, Hayes, & Miller 72
 Technology Tools
 There are a variety of software programs that are
available that can assist managers in purchasing and
receiving. These include:
 Recipe Software: To forecast production, cost
and adjust recipes
 Purchasing Software: To create bid sheets and
prepare purchase orders
 Receiving Software: To record deliveries

© 2015 John Wiley & Sons Food and Beverage Cost Control, 6th
Hoboken, NJ 07030 RONALD AARON M. GALLARDO Edition
Dopson, Hayes, & Miller 73