1. Monitoring Food Service Operations II Daily Food Cost BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 1 / 26 Monday, April 11, 2011

2. Recap of the Previous session Describe the formula to find out the consumption of food per month. Explain the four methods of evaluating closing stock. Describe the nature of various adjustments. List the features of inventory segregation and count. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 2 / 26 Monday, April 11, 2011

3. KCM of this session Calculate food cost for any one day and for all the days to date in a period. Calculate food cost percentage for any one day and for all the days to date in a period. Prepare a daily report of food sales, food cost, and food cost percentage. Determine book inventory value. Explain the difference between book inventory and actual inventory BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 3 / 26 Monday, April 11, 2011

4. Scope Introduction. Types of adjustments to Food Cost. Calculating Daily Food Cost Cumulative Basis. Book versus actual inventory comparison. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 4 / 26 Monday, April 11, 2011

5. Introduction Daily food cost figures are encouraged because: Length of time. Constant vigil over cost. Cumulative data available for comparative. Variance of any form can be investigated instantly. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 5 / 26 Monday, April 11, 2011

6. Types of adjustments to Food Cost Positive adjustments: Which add up to the cost of food issued. Negative adjustments: Which are subtracted from the food issued. Positive adjustments: Transfers from Bar to kitchen. Liquor transfer from Bars. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 6 / 26 Monday, April 11, 2011

7. Negative Adjustments Gratis to bars. Promotion Expense. Food to Bar(Directs) Transfers to other units. Grease sales. Steward sales. Cost of employee meals. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 7 / 26 Monday, April 11, 2011

8. Determining Daily Food Cost Cost of directs (from the Receiving Clerk ’ s Daily Report)+ Cost of stores+ Adjustments that increase daily cost (transfers from bar to kitchen; transfers from other units)— Adjustments that decrease daily cost (transfers from the kitchen to the bar: food to bar (directs), gratis to bar, steward sales, promotion expense)= Cost of food consumed— Cost of employee meals= Daily cost of food sold BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 8 / 26 Monday, April 11, 2011

9. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 9 / 26 Monday, April 11, 2011

10. Cost of food sold Cost of directs $ 218.75+ Cost of stores 944.55+ Adjustments that increase daily cost 90.00— Adjustments that decrease daily cost 70.35= Cost of food consumed 1,182.95— Cost of employee meals 99.65= Daily cost of food sold $1,083.30 BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 10 / 26 Monday, April 11, 2011

11. Calculating Food Cost Percent Food cost ————— x 100 = Food cost % Food sales $1,083.30 ———— = .31608 x 100 = 31.608 % $3,427.35 BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 11 / 26 Monday, April 11, 2011

12. Calculating Daily Food Cost Cumulative Basis BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 12 / 26 Monday, April 11, 2011

13. Week to date comparative of Food Cost BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 13 / 26 Monday, April 11, 2011

14. Daily Cumulative Cost Record BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 14 / 26 Monday, April 11, 2011

15. Daily Cumulative Cost Record BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 15 / 26 Monday, April 11, 2011

16. Book versus actual inventory comparison Opening inventory (closing inventory for the preceding month) + Purchases (total stores purchases for the period, as listed on receiving reports) = Total available (total value of the stores available for use during the period) — Issues (total stores issues for the period, as listed on requisitions) = Closing book value of the stores inventory BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 16 / 26 Monday, April 11, 2011

17. Book versus actual inventory comparison Theoretically the book value should be equal to the actual physical value ascertained. The difference is known as discrepancy. Caused due to incorrect calculations. Food Spoilage. Theft. Over issuing or under issuing. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 17 / 26 Monday, April 11, 2011

18. Book Value Versus actual Value Opening Inventory $ 9,010.00+ Purchases $ 8,240.00— Issues $ 7,630.00= Book Value $ 9,620.00— Actual Value $ 9,120.00= Difference $ 500.00 BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 18 / 26 Monday, April 11, 2011

19. Book Value and Actual Value The books value is also known as the book inventory is a complete set of closing set of balances purchases, issues based on records. The actual Value or Actual inventory where the value of consumption of food is based on physical counts of both balances. BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 19 / 26 Monday, April 11, 2011

20. Formula to calculate % difference Difference between book value and actual value = % Total issues 500 ———— = .0655 x 100 = 6.55% 7,630 BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 20 / 26 Monday, April 11, 2011

22. Inventory Turnover Inventory turnover is defined as a way to measure how often a food inventory has been consumed and replenished during an accounting period. Inventory Turnover. Rate of inventory turnover BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 22 / 26 Monday, April 11, 2011

23. Inventory Turnover Example Opening Inventory: $ 2000.00 Closing Inventory: $ 3000.00 Food Cost: $ 4600.00 Total Inventory = Opening Inventory + Closing inventory Average Inventory = Total Inventory 2 BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 23 / 26 Monday, April 11, 2011

24. Inventory Turnover Inventory Turnover = Food Cost Average Inventory Hence Total inventory= $ 5000 ($2000+$3000) Average Inventory = $ 2500 ( $ 5000/2) Inventory Turnover= 1.84 ($ 4600/$2500) BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 24 / 26 Monday, April 11, 2011

25. Inventory Turnover If the rate of inventory turnover is 1.84 in a month then in a year it would be: 1.84 x 12 = 22.08 BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 25 / 26 Monday, April 11, 2011

26. Questions & Comments BAC-4131 Food and Beverage Management Cost Control: Monitoring Food Service Operations -II Slide 26 / 26 Monday, April 11, 2011