https://www.udemy.com/hotel-management-food-beverage-and-general-cost-control/?couponCode=INTERNAL In Hospitality management, F&B and other general Cost are second largest cost in hospitality apart from labour cost. in this hotel management cost control course you will learn the fundamental processes by which these cost can be controlled. we will learn various - PAR Setting process for general inventory - How to Calculate kitchen food orders - Butcher Test / Yield Tests - Bar Spot Checks - Various other control aspects related to hotel cost controls This Course is designed for hotel cost controllers, finance staff, department heads to be able to understand how cost for hotels are managed.

1. COST CONTROL
OPERATIONS
Manish Gupta,
Hotel Management
School

2. Check Fundamental Terms
Sales
Concepts
Sales By Type
By Category
Sales per
Person
Cost
Concepts
Cost %
Fixed &
Variable cost
Standard Cost
Controllable /
Non-
Controllable
Recipe
Portions
Perishable Non-Perishable
Perpetual Inventory
Par
Re-order Level
Break-Even Point

3. QUALITIES OF A GOOD COST
CONTROLLER
Analytical to understand trends and make sense of data
Good understanding of Food & beverage items
Understanding of latest trends in market for recipe / promotions
Strong Leadership for enforcing standards
Auditing skills

4. Process of cost control
Establish
Standards
Implement
and Train the
Staff
Monitor
Results
Corrective
Actions

5. Establish
Standards &
Controls for
Each Part of
Business
Operation Cycle
1.
Purchasing
2.
Receiving
3. Storing
4. Issuing
5.
Producing
6. Selling
and serving

6. Standards relating to Purchasing Function
Quality of food
purchased
To ensure consistency.
Plan ahead for requirements.
Eliminate Mis-understanding
between kitchen and purchaser &
steward
Easy to check by receiver to ensure
correct delivery of items
Quantity of food
purchased
Par stock of items to be
purchased based on consumption
Daily inventory taken by steward /
kitchen to ensure adequacy (no
over nor shortages)
Prices at which
food is purchased
Approved Suppliers
3 Quotations
Fixed Prices (Usually for Non-
prishable)
Daily Market price for preshiable
Peiodic Market Suvery

7. KITCHEN ORDER

8. Should be based on past three to six month consumption
• Future trend / Guest Behavior need to be considered
• Change in standards
Lead Period should be confirmed with purchasing.
• Vary by price level, considered options
• Lead period in general not specific to vendor
Re-order quantity is based on packaging
Maximum Order should be based on storage capacity

9. Basic Receiving Controls
The prices on the invoice should be the same as those circled on the Steward ’ s
Market Quotation List
The quality of the item delivered should conform to the establishment ’ s standard
purchase specification for that item.
Quantity should be identical on Steward ’ s Market Quotation List, invoice, and PO.
Can we check all items Who is responsible to check What is it does not meet standards

10. Verify that the
quantity,
quality, and
price for each
item delivered
as per PO
Acknowled
ge by
stamping
the
invoice.
List all
invoices on
the
Receiving
Clerk ’ s
Daily
Report.
Forward
completed
paperwork to
proper
personnel.
•Daily Receiving
Record
•Stamp the
invoice and pass
one copy to
finance
Move food to
appropriate
storage areas
•Direct to Kitchen
(Directly
recorded in daily
food cost report)
•Store
Department
(Based on issue
from store)
Basic Steps in receiving Cycle

11. Store &
Issue
Control
1. Condition of
facilities and
equipment
2.
Arrangement
of foods
3. Location
of facilities
4. Security of
storage areas
5. Dating and
pricing of
stored foods

12. Condition of Storage Facility
Temperature
control
Set Standards as
per Hygiene &
Food Safety
Standards
Monitor and
check regularly
Storage
Containers
To protect
from
moisture,
insects
Cross
contaminati
on
Shelving &
Cleaningness
for airflow
Atleast 1 ft from
wall and roof
Standards
Fresh Food and
dairy: 34 – 36 ° F
(1-2 c)
Fresh fish: 30 –
34 ° F - (1 c)
Frozen foods: 10
– 0 ° F (-12 to -18
c)

13. ISSUE CONTROLS
Should be Documented
based on requisition
01
Direct Issues from
receiving are also
recorded and received
and issue for easy
identification and
inclusion in cost boards
02
Update bin cards if
manual and plan re-
order
03

14. Transfers
Transfer from
Food to Beverage
or vice versa Transfer from one
kitchen to other

15. RECAP of
What We
have
discussed
so FAR
1.
Purchasing
2.
Receiving
3. Storing
4. Issuing
5.
Producing
6. Selling
and serving

16. Production Controls
1. Standard
portion size
2. Standard
recipe
3. Standard
portion
cost

17. Recipe card
Recipe Test are to be
conducted by Cost Control
While Setting prices – factor
contingency of price increase
Wastage during production
Account for Yield of product
Update at least
every six
months

18. Buffet costing
should be based
on expected Pax
Account for
Wastage & Left
Overs
Account for Yield
similar to Ala-
Cart
Buffet Costing

19. SETTING UP PRICES
Not all items will have same cost %
Prices are set as per guest expectations, competitor prices
•Compare Portion size and ingredients while comparing competitors
If Standard prices as per budgeted cost is high, consider changing recipe / reduce portions
or sell at high cost %

20. Butcher Test / Yield Test

21. Done together with Chef, Cost Control,
Purchasing
Compared against agreed yield (if any)
Trimmings used in alternative ways are
not considered
Cost per KG is derived by total cost / net
usable items and used in recipe costing
Should be done periodically to ensure
consistency
Butcher / Yield Test

22. RECEIPT / PORTION CONTROL
TEST

23. BAR SPOT TEST
Spot Check Quantity on hand (Assume 100 beer
bottles)
Objective 1 – Compare with Sales
Compare with last
counted stock
report (Assume
120 Bottles)
Add the store
issues / direct
purchase from
previous stock
report (Assume 50
bottles)
Derived quantity
(120+50-100) =
70 would be
consumption
during the month
Compare with
Sales report
Objective 2 –
Compare with
Established Par to
make sure no over
/ under stock
Objective 3 –
Storage facilities
(Check open
bottles / labelling
/ Guest bottles
etc)

24. Production control through - menu
engineering report
Get Popularity Index.
Forecast the menu
Sales by day / meal
period based on
popularity index
Align orders / mis-em
place with estimated
menu item sale based
on trends & yield
Factors
Portion Control tests /
Consumption Analysis

25. Monitor The Results
Monthly Inventory Taking
Valuation of Inventory (depend on company Policy)
Monthly Food Cost Board & Reconciliations
 Transfers
 Complimentary
 Breakages & Spoilage
 Steward Sales
 Gratis
 Promotions

26. SLOW / NON MOVING
INVENTORY REPORT
Slow moving items =
not issues in last 3
months
Non-Moving not
issues over 6
months
Exclude Spares
Identify the reasons
of slow movement
•Not in Standard
•Low Business
Identify near expiry Plan how to use

27. Monitoring – Daily Vs Monthly Food Cost
Daily
• Summarized
• Only Direct issues & Stores or big
transfers
• Gives an idea of how food cost is
behaving and offer opportunity to
control
Monthly
• Detailed
• All transfer / breakages are
included
• Historic
• Include all factors into Calculation

28. Format of
Monthly Cost
Board /
Reconciliation

29. Stock Taking – All or Some?
Proper Kitchen Transfer
Documents (In & Out should be
same)
Recording of Non-Chargeable
Items & their costing
BAR to Food / Food to BAR
Challenge
Compare with Potential Cost of
each outlet to ensure
reasonability
Compare with Budget & Previous
year same month

30. Monitoring – Actual vs Potential Cost
Higher Actual cost
then potential cost
represent
• Higher portions
• Higher wastage
• Low yield
• Unreported loss of sales
• Non-adherence to
standard recipe
Lower Actual
Represent
• Smaller portions
• Not adhering to quality
standards

31. MENU ENGINEERING
Helps to Identify
Best Selling menus
items
Most profitable items
Popular items but less
profitable
Profitable items but not
popular
Not popular and not
profitable
Periodicity – Monthly,
Quarterly
Affected by Seasonality,
Geographical
breakdown of guests

32. COPYRIGHT - EXCEL FINANCE ACADEMY FOLLOW OUR YOUTUBE CHANNEL AND FACEBOOK PAGE LINKED IN
DESCRIPTION TO SUPPORT

33. Suggested
Strategies for
Revenue and
Cost
Maximisation
What should you do with Most profitable and Most Popular items?
Keep the quality and use them as signature
dish for promotions.
Include them in combos to sell other non
popular items
Not Popular but most profitable
Upsell Incentives Promotions to boost sales
Popular but low margin items
Portion control
Recipe engineering to
control cost
Combine other low
cost item as package
Adjust Price upwards
COPYRIGHT - EXCEL FINANCE ACADEMY FOLLOW OUR YOUTUBE CHANNEL AND
FACEBOOK PAGE LINKED IN DESCRIPTION TO SUPPORT
Less Popular &
Less Profitable
Items

34. BREAKEVEN POINT
Minimum number of customers to recover Fixed Costs
Contribution per guest = Price – direct / indirect variable cost
Breakeven point = Fixed Cost / Contribution
Note
•Fixed Costs need to have same period
•All indirect cost are not able to be identified hence use a reliable measure
•Some cost are semi-fixed / semi variable (need to split for major costs)
•Use standard costs

35. Cost Controller Check List
1 . Market Surveys have been regularly conducted and documented. Information gathered during these surveys has
been shared with the Purchasing Manager, Executive Chef and Financial Controller.
2 . Receiving reports, packing slips or invoices show evidence that merchandise received has been inspected,
counted and weighed.
3. Food and beverage invoices are properly listed and routed to Accounts Payable.
4. Storeroom issues are controlled by means of storeroom requisitions signed by authorized personnel.
5 . Food and beverage storerooms are locked when not attended and store-room keys and locked
6 . A physical inventory of all food and beverage items is taken monthly by designated individuals and monitored by
Accounting personnel.
7. After Office hours deliveries are checked by Security, logged and followed-up the next day by the F&B Cost controller.
The list is circulated to the Executive Chef, Director of F&B and Financial Controller monthly.

36. Cost Controller Check List
8 . Buffet Costing, Yield Test and Portion Control test have been conducted in the last 3 months.
9. Open-Key Sales are analyses and submitted to the Executive Chef and Director of F&B for their review.
10 . The F&B Cost Board has been updated on the basis of daily store issue and inter- kitchen
transfers records.
11. Receiving Records and Stores Requisitions have been posted on a daily basis into the Inventory
Management System (IMS).
12. Receiving Records without Purchase Orders are highlighted to the F&B Cost Controller and
functionally report to FC.
13. The Order Deviations Report and the correction record have been reviewed on a daily basis.
14. All type of fuel deliveries are witnessed by the receiving department and Receiving Records
acknowledged.

37. Cost Controller Check List
15. Inter Kitchen and Inter Bar Transfers are prepared and posted on a daily basis.
16. The Open key Sales Analysis is reviewed on a monthly basis and corrective action taken in
consultation with the F&B Operation.
17. Bar Spot Checks are conducted on a regular basis per F&B Cost Control procedure and variances
analyzed.
18. High Value Consumption Analysis is prepared and reviewed each month.
19. Slow and non – moving inventory list have been analyzed and actions to deplete such stock have
been suggested to various user department, as fast as possible.
20. Variances between book balances and physical inventory, if any, in respect of all categories of stores
have been duly analyzed and specific approvals obtained from the FC for write-off/adjustment.