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1. Hotel Management degree 4th
year
Food & Beverage Control
Tourism Training Institute
Instructor: Girmay Redaei 2016 e.c

2. CHAPTER ONE
INTRODUCTION
Food and beverage control may be defined
 guidance and regulation of costs and revenue of food and beverage
establishments
 Successful F&B control is crucial for any type of F&B operation
regardless of its size
 public sector catering
 staff restaurants and similar operations
 controlled by budgets and level of subsidy
The amount of control is related to the size of the operation
Large group operation
 require more precise, detailed, up-to-date information,
than a small operation

3. limitations of a control system
limitations of a control system
only identify problem areas
cannot automatically correct problem areas
require constant management supervision
for functions efficiently
need management action to evaluate the
information produced and to act upon it

4. OBJECTIVES OF F&B CONTROL
The objectives are summarized as follows:
I. Analysis of income and expenditure:
The analysis is solely concerned with
 income and expenditure related operations
 The revenue analysis is usually by aspects
each selling outlet, volume of sales, sales mix,
average spending power (ASP) of customers
number of customers served
The analysis of costs includes departmental
F&BC costs, portion costs and labor costs
Every food & service operator profit-oriented formula
Revenue - Expenses= Profit

5. Expenses
B. Expenses
Four F&B expense to control.
They are:
Food costs
Beverage costs
Labor costs
Other expenses
1. Food Costs
costs associated with actually producing the menu items
Include expense of
 meats, dairy, fruits, vegetables
 food costs will make up the largest/second largest
 cost of F&B can range 25% to 50%

6. Expenses
2. Beverage Costs
• Costs related to sale of alcoholic beverages
• Alcoholic beverages cost include beer, wine, and liquor
3. Labor Costs
• Cost of all employees necessary to run the business
– Include amount of any taxes required to pay employees payroll
• In most operations, labor costs are second to food costs in total
dollars spent
• If management is included as labor cost than other expense,
– Can be even larger than food cost
4. Other Expenses (Overhead Cost)
• all expenses neither food, nor beverage, nor labor
– include franchise fees, utilities, rent, linen, equipment
– sometimes incorrectly referred as minor expenses

7. Revenue & Expenses
C. Using Percent
• numbers can be expressed in terms of percent.
• to know percent of revenue to expenses, compute as follows:
 Food Cost % = Food Cost/Total Sales
 Beverage Cost% = Beverage Cost/Total Sales
 Labor Costs % = Labor Cost/Total Sales
 Overhead Cost % = Overhead Cost/Total sales
• Imagine your restaurant revenues for a week are in the amount
of $1,600 and expenses for the same week are $1,200. calculate
your cost percentage.
Cost % = (cost/revenue)X100= ($1,600/ $1,200)X1000
= 13.3%

8. s
II. Establishment and maintenance of standards
F&B outlet operation basis is set of standards/ SOPs
 particular to operation
 should be available to all staff for reference
 know in detail the standards to be achieved
 The difficulty for management is maintain standards, can
be aided by
regularly checking on the standards achieved
observation and analysis
comments made by customers,
conducting training to re-establish

9. III. Pricing
• important to determine food menu and beverage list
prices
– accurate costs in general market considerations
• average customer spending power
• prices charged by competitors
Menu pricing
• Menu pricing needs to fulfill two needs,
– need to make adequate profits and
– need to satisfy getting value for money
 accuracy is paramount
• Customers today are nearly all have gained
– perceptions of quality and value for money

10. IV. Prevention of waste
to achieve performance standards targets are set for
 revenue, cost levels and profit margins
• prevent wastage of materials caused by
•poor preparation, over-production, failure to use
standard recipes…
• done with efficient method of control
• from the basic policies of the organization to
•the management control after the operation
Perishable foods
Nonperishable foods

11. V. Prevention of fraud
Restrict the possible areas of fraud by customers and staff
fraud by customers are deliberately
•walking out without paying;
•unjustified complain and will not pay for it
•disputing the number of drinks served
•making payments by stolen cheques or credit cards
fraud by staff are
•Overcharging/undercharging/stealing of F&B or cash

12. VI. Management information
• System of control has an important task
• Providing up-to-date information
• Provide analysis of performance for each outlet
for comparison with set standards previously laid
down

13. Special problems of food and beverage control
F&B control is more difficult than in many other
industries.
• The main reasons for this are:
• Perishability of the product
• Business volume unpredictability
• Menu mix unpredictability
• Food and beverage operation short cycle
• Departmentalization

14. Fundamentals of control
Effective control systems and procedures consist of
three broad phases:
• planning, operational and after the operation
1. planning phase
• Policies outline; market/segment or
profitability/subsidy to be achieved
• there are three basic policies
• financial
• marketing
• catering

15. 2. The operational phase
• Having defined the policies and outline how they are to
be interpreted into the day-to-day control activities
• The operational control five main stages cycle are:
 Purchasing
 Receiving
 Storing and issuing
 Preparing
 Selling

16. 3. The post operation phase
This final phase of F&B control is in three main stages:
Food and beverage cost reporting:
• necessitate up-to-date reporting at daily/weekly
Assessment:
• analyze the reports and compare with budget for the
period against previous performance
Correction:
• When analysis identifies a problem, management to take
the necessary steps to correct the problem as quickly as
possible.

17. The reality of control
The control level is related to the size and complexity of
operation.
• The larger the number of out lets, the more sophisticated
• there are realities that do not allow for any system to be
100% efficient
Material, employees & equipment are unlikely to be
100% consistent & efficiency
 affect quality or the final yield obtainable
 in fact standards may exist

18. CHAPTER TWO
FOOD AND BEVERAGE OPERATIONS
All food service establishments have the following
sequence of operation:
 Purchasing
 Receiving
 Storing
 Issuing
 Producing
 Selling and serving

19. FOOD PURCHASING CONTROL
• There are five main points to be considered.
• Product testing –identify as result of series taste
evaluations for particular products to be used.
• Yield testing –identify as result of tests the yield
obtainable from all the major commodities used
• Purchase specifications – brief description in writing of
the quality, size, weight, etc. for a particular food or
beverage item.
• Method of buying –by contract, quotation, cash and
carry, etc.
• Clerical procedures –determine who originates
sanctions, places orders and the documents required

20. DEVELOPING STANDARDS AND STANDARD
PROCEDURES FOR PURCHASING
The primary purpose of establishing control over
purchasing
Ensure continuing supply of
sufficient quantities, appropriate quality &
purchased at the most favorable price
Standards must be developed for the :
 Quality of food purchased
 Quantity of food purchased
 Prices at which food is purchased

21. FOOD RECEIVING CONTROL
 If effective purchasing control is done, but no
attention to receiving controls,
 all earlier efforts may have been wasted
 ordering specific quantities, qualities at optimum
prices constitutes no guarantee of products ordered
will actually be delivered.
 supplier may deliver incorrect quantities of foods,
foods of higher or lower qualities, foods with prices
other than those quoted, or all three.
 the primary objective of receiving controls is to
 verify quantities, qualities, and prices of food
delivered conform to orders placed

22. Receiving:
There are three main points to be considered:
Quantity inspection
 responsible person must physically counting, weighing
goods and
 checking delivery matches the purchase order
Quality inspection
important for perishable where inspection made by chef
Clerical procedures
 all necessary documentation must follow a set
procedure.
 acknowledgement of receipt of acceptable goods
 delivery person‘s signature on request for credit note for
returned goods and short deliveries

23. STORING CONTROL
Establishing Standards and Standard Procedures for Storing
 the standards established for storing food should address
five principal concerns:
 Condition of facilities and equipment
 Arrangement of foods
 Location of facilities
 Security of storage areas
 Dating and pricing of stored foods

24. Storing and issuing
There are four main points to be considered:
Stock records
 necessary to decide what records are to be kept
Pricing of items
 method of pricing must be decided for consistency
Stocktaking
 level of stock to be held, rate of stock turnover, dealing
with discrepancies, identification of slow-moving items
Clerical procedures
 Documentation necessary; requisitions, record cards,
bin cards, stocktaking reports, etc.

25. Condition of Facilities and Equipment
The factors involved in maintaining proper
internal conditions include
 temperature, storage containers, shelving,
and cleanliness.
 Problems with any or all of these may lead
to spoilage and waste
 Inspectors regularly visit establishments
and grade them on their adherence to the
codes

26. ISSUING CONTROL
Establishing Standards and Standard Procedures for Issuing
There are two elements in the issuing process:
1st - physical movement of foods from storage facilities to
food preparation areas;
 foods should be stored in fixed locations and under secure
conditions ensure
readily available in the proper quantities when needed
Cooks requisite, steward issuing of the various items
2nd - record keeping associated with determining the cost
issued
 Receiving Clerk’s determine reports of daily costs of directs

27. CHAPTER THREE
FOOD PRODUCTION CONTROL
Establishing Standards and Standard Procedures for production
 ensure all portions of a given item conform to management’s
plans for that item
 each portion of any given item is identical to all other portions of
the same item
 Portions of a given menu item should be identical to one another
in four respects:
Ingredients
 Proportions of ingredients
 Production method
 Quantity
To reach this goal, develop standards and standard procedures for
each menu item:
 Standard portion size, recipe and portion cost

28. 1. Standard Portion Size
 fixed quantity of given menu items for the fixed selling price
identified in the menu
 It is possible and desirable for management to establish these fixed
quantities in very clear terms.
 Every item on a menu can be quantified in one of three ways:
by weight, by volume, or by count
Weight
 expressed in ounces /grams
 used to measure portion sizes for a number of menu items
Volume
 expressed as liquid ounces/milliliters
 used as the measure for portions of many menu items
Count
 purchased by number per purchase unit
 Potatoes, grapefruit are purchased by count

29. 2. Standard Recipes
recipe is list of ingredients, quantities and procedure
/method
standard recipe is the recipe designated use in a given
establishment
 ensure quality of any item same each time
 establish consistency of taste, appearance, and
customer acceptance
SEAFOOD NEWBURG (10 4 oz. portions)
1lb. lobster meat
1/2 lb. shrimp, raw, out of shell 1/2 lb. scallops
1/2 lb. fillet of sole
1 cup of heavy cream
3 cups cream sauce
1 cup butter
Salt and pepper to taste 1 T. paprika
1 cup sherry wine
6 egg yolks Extra sherry wine 10 slices of toast
Sauté all seafood well in melted butter.
Add sherry and simmer until wine is absorbed.
Add paprika and cream sauce; combine well
and simmer.
Beat egg yolks and cream and add slowly to
pan; combine well.
Check for seasoning; pour into serving dishes
and add toast points and extra sherry wine.

30. 3. Standard Portion Cost
 calculated for every item on every menu
 Provided ingredients, proportions, production
methods, and portion sizes have been standardized
 determine cost of each ingredient used to produce a
quantity of a given menu item, add the costs of the
individual ingredients to arrive at a total, and divide the
total by the number of portions produced
These indicate what portion costs should be.

31. Calculating Standard Portion Costs
There are several methods for calculating standard
portion costs:
 Formula
 Recipe detail and cost card
 Butcher test
 Cooking loss test
Owners, managers, chefs, and others with responsible
positions in foodservice should be familiar with and
able to use all of these methods

32. Formula
determine portion cost by means of the formula
• Standard portion cost = Purchase price per
unit/Number of portions per unit
 $41.40 purchase price per case /180
standard portions per case = $ 0.23
•

33. Establishing Standards and Standard Procedures
The standard for controlling production volume to
determine and produce, for any menu item,
 number of portions likely to be sold on any given day
essential to know this number with reasonable degree of accuracy
plans can be made for purchasing and production. e.g.
40 portions of items are likely to be sold
 translated into purchasing need of ingredients for producing
that number of portions
Failure to set up procedures can lead to
 excessive purchasing, with its implications for cost
control production volume standard procedures required:
 Maintaining sales history
 Forecasting portion sales
 Determining production quantities

34. Forecasting Portion Sales
Managers use data and intuition to predict what is likely
to occur in the future
predicting accurately and planning properly can be major
factors in operating with a profit
If sales volume can be predicted accurately,
plans can be made for
 purchasing & prepare for anticipated sales
 Reducing waste, spoilage, and pilferage
 producing numbers of portions for sale on
particular dates
 reducing excessive costs to develop

35. Advantages of Precise Sales Forecasts
 Accurate revenue estimates
 Improved ability to predict expenses
 Greater efficiency in scheduling needed workers
 Greater efficiency in scheduling menu item production
schedules
 Better accuracy in purchasing the correct amount of
food for immediate use
 Improved ability to maintain proper levels of
nonperishable food inventories
Improved budgeting

36. Determining Production Quantities
The Production Sheet
 Form lists names and quantities of all menu items
 to be prepared for a given date
 tool used by management to control production and
eliminate waste e.g.
 sirloin steaks stated in portions
 beef stew and chicken noodle soup stated in
total production

37. Monitoring Quantity Production and Taking
Corrective Action
There are two purposes for monitoring quantity production:
i. determine sales forecast accurately
• in predicting total number & individual preferences
ii. Judge the chef for following production standards
established on the production sheet
Monitoring Accuracy of Forecasting
To monitor accuracy have copy of the forecast & sales
history

38. CHAPTER FOUR
MONITORING FOOD SERVICE OPERATIONS
Determining Actual Food Expense
Assume you own & manage small ice cream store
You have reviewed your records for the past month and found
the following:
 January Revenue and Expense
 Ice Cream Sales = $98,000
 Food Expense = $39,000
is the month food expense right? No, Why?
There may be more, or less, food products required to make
the ice cream in inventory on the last day of January than you
had on the first day.

39. Formula for Cost of Food Sold
The correct formula is shown in below
Beginning Inventory
PLUS
Purchases
=Goods Available for Sale
LESS
Ending Inventory
=Cost of Food Consumed
LESS
Employee Meals
= Cost of Food Sold
Cost of food sold - dollar amount all food actually sold/wasted/stolen
Beginning inventory - dollar value of all F&B on hand at the beginning of
the accounting period. It is determined by completing
 actual count and valuation of the products on hand

40. Purchases - sum cost of all food purchased during the
accounting period. It is determined by adding all properly
tabulated invoices for the accounting period
Goods available for sale – sum beginning inventory and
purchases. It represents the value of all food that was
available for sale during the accounting period.
Ending inventory - dollar value of all food on hand at the
end of the accounting period. determined by completing a
physical inventory
Cost of Food Consumed - actual dollar value of all food
used, or consumed, by the operation. Includes staffs meals
Employee Meals- labor-related, not food-related cost.
 reduced- cost employee meals are benefit much in the
same manner as medical insurance or paid vacation

41. The dollar value of food eaten by employees is subtracted
from the cost of food consumed to yield the cost of food
sold
There are four techniques for determining the cost of
employees’ meals:
1. Cost of separate issues: This technique requires that
employees be given food other than that which is
prepared for customers. used in a number of larger
hotels but in comparatively few restaurants
2. Prescribed amount per meal per employee: somewhat
more common approach is to direct the chef to give
employees meals that will cost no more than a specific
fixed amount per meal. For example,
 the fixed amounts established for meals may be $1.50
for breakfast, $2.50 for luncheon, and $3.50 for dinner

42. 3. Prescribed amount per period: Because some find it
difficult to keep records of the numbers of employees
consuming meals each day
Management informs the chef of a fixed amount that
will be credited to food cost for employee meals for
each period, regardless of the number of employees
who actually have meals on the premises.
4. Sales value multiplied by cost percent: Another
technique requires that each employee who eats
record the selections on a check. The menu price is
recorded next to each selection. The check is totaled,
but the employee is not asked to pay it. The checks are
totaled at the end of the period.

43. Cost of Food Sold
 actual dollar value of all food expense incurred by the
operation except employee meals
 determine by
 beginning inventory at the start of the month followed
 inventory taken at the end of the month
 Without both inventory, it is impossible to
accurately determine the cost of food sold
cost of food sold sheet
Every manager should, on a regular basis, compute the actual
cost of food sold because it is not possible to improve your
cost picture unless you first know what your costs are

44. Variations on the Basic Cost of Food
Consumed Formula
• the format most commonly used to determine cost of
food sold
Accounting Period: ___ to ___
Unit Name: _______________
Beginning Inventory ________$
PLUS
Purchases _______________$
Goods Available for Sale ____$
LESS
Ending Inventory __________ $
Cost of Food Consumed _____$
LESS
Employee Meal ____________ $
Cost of Food Sold ___________$
In the following example following, both beginning inventory and ending inventory figures are
known, thus enabling you to determine your actual cost of food sold.
Beginning Inventory $22,500
Purchases $39,000
Ending Inventory $27,500
Employee Meals $ 725
Accounting Period: ____ to _____
Unit Name: _______________
Beginning Inventory $_______
PLUS
Purchases $_______________
Goods Available for Sale $___
LESS
Ending Inventory $________
LESS
Value of Transfers Out $____
PLUS
Value of Transfers In $____
Cost of Food Sold $__________

45. Cost of food sold
Accounting Period: 1/1 to 1/31
Unit Name: Your Ice Cream Store
Sales 98000
Beginning Inventory $22,500
PLUS
Purchases $39,000
Goods Available for Sale $61,500
LESS
Ending Inventory $27,500
Cost of Food Consumed $34,000
LESS
Employee Meals $ 725
Cost of Food Sold $33,275
Monthly Food cost Report
From ––––––––– To ––––––––
Gross sales of Food –––––––––
Credit to Sales
Office allowance ––––––––
Promotion –––––––––––
Others –––––––––––––
Total credit –––––––––––
Net Sales ––––––––––––
You are now able to complete your recap sheet as illustrated in Figure below.
Cost of Beverage Sold
Kitchen opening inventory ––––––––––––––
Store issue –––––––––––––––
Direct purchase ______________
Beverage transferred to kitchen _______
Total available –––––––––––––––
Less –
Kitchen closing inventory ––––––––––––
= Consumption ––––––––––––––––
Credit to Cost of food
Office allowance ––––––––––––––––
Promotion ––––––––––––––––
Staff meal –––––––––––––––
Food to bar –––––––––––––––
Others –––––––––––––––
Total Credit = –––––––––––––––
Net cost of Food –––––––––––––––––––
Food cost % –––––––––––––––––––
G.P –––––––––––––––––––

46. Food Cost Percentage
 Food expense is percentage of total revenue/sales
Determining actual cost of food sold and evaluate operation’s food
cost percentage are both
 traditional way of looking at food expense used by most
operators when preparing the profit and loss statement
 actual food cost percentage is computed as follows:
 Cost of Food Sold/ Food Sales = Food cost%
o an ice cream store cost of food sold equals $33,275. If the store
experienced $98,000 in food sales for the period of January 1 to
January 31, the food cost percentage for the period would be
 33275/ 98000 =34%
 34% of the dollars in sales revenue taken in was needed
 to buy the food used to generate that revenue. Or
 34 cents of each dollar in sales were used
to buy the products needed to make the ice cream

47. METHODS OF FOOD CONTROL
Weekly/monthly food cost report
•The following is example for calculation of monthly food
costs for operation where
 detailed information is not thought to be necessary, or
 for a small or owner-managed unit where
 control is everyday part of the manager’s activity
weekly/monthly food cost report is reconciliation report
tightly controlled daily by management.
The advantages of this
method are:
 It is simple and quick
to produce
 It can give indication
of the general
performance of the unit
The disadvantages though are:
This information is produced after seven
/twenty-eight days of operation
 provides no intermediate information
any undesirable trends may be
corrected earlier
not provide daily/to-date information on
purchases, requisitions and sales for a unit.

48. A daily food cost report
This method is suitable for small to medium-sized operation
not too sophisticated method is required, or
where the costs involved in relation to the savings to be made
do not justify more involved method
The advantages of producing this basic food report are:
 It is simple and easy to follow
Gives reasonably detailed account of the general
performance of the business on day-to-day basis
 It records the daily stock level, daily purchases, daily
food requisitioned and daily food sales and enables the
daily food cost percentage to be calculated.

49. CHAPTER FIVE
THE GOALS OF SALES CONTROL
There are three principal goals of sales
control:
1. Optimizing number of customers
2. Maximizing profit
3. Controlling revenue

50. Optimizing Number of Customers
Assuming there are sufficient numbers of potential customers
available within a reasonable distance
from particular restaurant
 steps to be taken maximize
 advertise
discounts /non-peak hours…
The following are the most important for most people:
1. Location
2. Menu item differentiation
3. Price acceptability
4. Decor
5. Portion sizes
6. Product quality
7. Service standards
8. Menu diversity

51. Maximizing Profit
There are two principal means for maximizing profit:
pricing products properly and selling those products
effectively
Pricing Products Properly
Factors Influencing Menu Price
1. Local competition
2. Service levels
3. Guest type
4. Product quality
5. Portion size
6. Ambiance
7. Meal period
8. Location
9. Sales mix

52. Sales Mix
refers to the specific menu items selected by guests
 influence menu pricing decision
 guest purchase decisions influenced total product costs
Managers can employ concept called price blending
 process of pricing products, with very different individual
cost percentages, in groups with the intent of achieving a
favorable overall cost situation
The ability to knowledgeably blend prices is a useful skill and
well worth mastering

53. Menu prices
Three basic approaches for establishing menu prices:
1. Matching competitors’ prices
2. Calculating prices from costs and cost percents
3. Adding desired contribution margins to portion costs

54. Selling Products Effectively
Essentially, a restaurant has two principal means
available for selling products effectively:
1. The menu
2. The sales techniques used by the staff
Foodservice manager should understand how the revenue
security system works and how to maintain
 four-step process of revenue security
 develop revenue security system, concentrating on the
following formula:
Product Issues = Guest Charges=Sales Receipts = Sales
Deposits

55. Step 1. Verification of Product Issues
No product shall be issued from the kitchen or bar unless a
permanent record of issue is made.
Step 2. Verification of Guest Charges
keep track of the checks issued to service personnel, you use
a guest check control form
Product issues must equal guest charges
Check Numbers issued Check Numbers returned
Step 3. Verification of Sales Receipts
Sales receipts refer to actual revenue received by designated
personnel, in payment for products served.
Guest Charges=Sales Receipts
Verifying sales receipts is more than a simple matter of

56. Thank You