This document provides an overview of food and beverage cost control. It discusses the importance of food and beverage control for managing costs and ensuring profitability. Key topics covered include the objectives of food and beverage control like analyzing income/expenditure, establishing standards, pricing, preventing waste and fraud, and providing management information. Common problems in food and beverage control are also outlined, such as the perishability of food products, unpredictability of business volume and menu preferences, and the fast cycle of food and beverage operations. The document aims to explain the methodology of food and beverage control and its critical role in managing costs.
This document provides an overview of food and beverage cost control. It discusses the food service industry and food and beverage control. The methodology of food and beverage control includes planning, operational, and post-operational phases. Key aspects of the operational phase are purchasing, receiving, storing, preparing, and selling foods and beverages. The post-operational phase involves cost reporting, measuring performance against standards, and taking corrective actions. Personnel management is also important for effective food and beverage control.
This document discusses beverage control in the hospitality industry. It defines beverage control as directing and regulating staff actions to achieve business goals. Key aspects of beverage control include establishing standards, training staff, monitoring performance, and taking corrective actions. The document outlines standards and procedures for purchasing, receiving, storing, issuing, and producing beverages. It discusses establishing quality, quantity, and price standards at each stage. The document also addresses fraud prevention for customers, staff, and in beverage production. Overall, it provides a comprehensive overview of implementing effective beverage control systems in the hospitality industry.
MTA - Unit 1- Coordination of Housekeeping Department with Other DepartmentS Joseph
This document discusses the coordination between the housekeeping department and other hotel departments like front office and maintenance. It emphasizes that no department can work in isolation and cooperation is essential. The housekeeping department coordinates closely with front office on room status updates and guest information. It also works with maintenance to report facility issues and ensure repairs are completed. Effective communication through tools like work orders and computer systems is important for smooth coordination across departments.
The document discusses different types of catering and restaurants. It describes two main types of catering: on-premise catering where all services are done on site, and off-premise catering where food is served away from the production facility. It also discusses different styles of restaurant service including French/gueridon service, American/plate service, English/family style service, Russian service, and buffet service.
Information technology in Hospitality IndustrySarabindhGManoj
The document discusses the use of information technology in the hospitality industry. It describes how IT helps with functions like management, decision making, customer service and increasing efficiency. It then outlines different IT systems used for distribution, at the front-of-house like property management, and in guest rooms. These systems help with reservations, operations, customer satisfaction and security. The adoption of IT has grown and revolutionized the industry by solving problems and improving services.
The document provides an overview of the history and development of the food and beverage service industry. It discusses how the first inns evolved from basic shelters for travelers to include amenities like privacy and sanitation. Major hotels in the 18th-19th centuries further improved standards of service and facilities. The food and beverage industry now encompasses over 100 million meals served daily across various sectors like hotels, restaurants, hospitals, and transportation. Catering establishments specifically prepare and provide food and drinks to meet the needs of clients across different settings from offices to prisons.
The document discusses various methods for determining hotel room tariffs, including cost-based and market-based approaches. The cost-based approach includes the rule-of-thumb method, which sets the price per room at ₹1-2 per day based on costs, and Hubbart's formula, which uses an inverted profit and loss statement to calculate the required average room rate. The market-based approach considers competitor pricing, market tolerance rates, bundled/package pricing, and customizing rates based on guest needs. Hubbart's formula provides a scientific way to determine room rates based on costs, revenues, occupancy rates, and desired profit levels.
This document provides an overview of food and beverage cost control. It discusses the food service industry and food and beverage control. The methodology of food and beverage control includes planning, operational, and post-operational phases. Key aspects of the operational phase are purchasing, receiving, storing, preparing, and selling foods and beverages. The post-operational phase involves cost reporting, measuring performance against standards, and taking corrective actions. Personnel management is also important for effective food and beverage control.
This document discusses beverage control in the hospitality industry. It defines beverage control as directing and regulating staff actions to achieve business goals. Key aspects of beverage control include establishing standards, training staff, monitoring performance, and taking corrective actions. The document outlines standards and procedures for purchasing, receiving, storing, issuing, and producing beverages. It discusses establishing quality, quantity, and price standards at each stage. The document also addresses fraud prevention for customers, staff, and in beverage production. Overall, it provides a comprehensive overview of implementing effective beverage control systems in the hospitality industry.
MTA - Unit 1- Coordination of Housekeeping Department with Other DepartmentS Joseph
This document discusses the coordination between the housekeeping department and other hotel departments like front office and maintenance. It emphasizes that no department can work in isolation and cooperation is essential. The housekeeping department coordinates closely with front office on room status updates and guest information. It also works with maintenance to report facility issues and ensure repairs are completed. Effective communication through tools like work orders and computer systems is important for smooth coordination across departments.
The document discusses different types of catering and restaurants. It describes two main types of catering: on-premise catering where all services are done on site, and off-premise catering where food is served away from the production facility. It also discusses different styles of restaurant service including French/gueridon service, American/plate service, English/family style service, Russian service, and buffet service.
Information technology in Hospitality IndustrySarabindhGManoj
The document discusses the use of information technology in the hospitality industry. It describes how IT helps with functions like management, decision making, customer service and increasing efficiency. It then outlines different IT systems used for distribution, at the front-of-house like property management, and in guest rooms. These systems help with reservations, operations, customer satisfaction and security. The adoption of IT has grown and revolutionized the industry by solving problems and improving services.
The document provides an overview of the history and development of the food and beverage service industry. It discusses how the first inns evolved from basic shelters for travelers to include amenities like privacy and sanitation. Major hotels in the 18th-19th centuries further improved standards of service and facilities. The food and beverage industry now encompasses over 100 million meals served daily across various sectors like hotels, restaurants, hospitals, and transportation. Catering establishments specifically prepare and provide food and drinks to meet the needs of clients across different settings from offices to prisons.
The document discusses various methods for determining hotel room tariffs, including cost-based and market-based approaches. The cost-based approach includes the rule-of-thumb method, which sets the price per room at ₹1-2 per day based on costs, and Hubbart's formula, which uses an inverted profit and loss statement to calculate the required average room rate. The market-based approach considers competitor pricing, market tolerance rates, bundled/package pricing, and customizing rates based on guest needs. Hubbart's formula provides a scientific way to determine room rates based on costs, revenues, occupancy rates, and desired profit levels.
This document discusses catering operations, including on-premise and off-premise catering. It describes the catering industry segments, advantages and disadvantages of on-premise and off-premise catering, and considerations for home-based caterers. The key segments are commercial, non-commercial, and military. On-premise catering occurs at the caterer's location while off-premise requires transportation of food and equipment. Home-based caterers have limitations around facilities, equipment, and training.
INTRODUCTION TO FRONT OFFICE:
the basics, such as the personnel under the front office department, their duties and responsibilities. and etc. SEE FOR YOURSELF.
This document discusses the key attributes required for front office staff. It lists attributes such as pleasant personality, personal hygiene, physical fitness, honesty, salesmanship, diplomacy, good memory, good communication skills, calmness, courtesy, loyalty, punctuality, and a smiling face. For each attribute, it provides further details on what is required and why it is important. For example, it states that personal hygiene includes being clean and fresh looking, brushing teeth twice a day, showering regularly, and shaving every day. Physical fitness is needed because front office staff must stand for 8-10 hours each day.
The rooms division is the area most responsible for a hotel's main product - the sleeping rooms. It includes the front office, reservations, housekeeping, night audit, and security departments. The front office handles guest check-in/out and payments. Reservations books rooms. Housekeeping prepares rooms for new guests. Night audit reconciles finances. Security ensures guest and employee safety. The rooms division manager oversees these areas to maintain clean, available rooms for guests.
This document discusses various techniques for menu merchandising, including menu design, pricing, and engineering. It covers topics such as using floor stands, tent cards, and posters to promote the menu; designing the menu to match the facility's style; using images and descriptive text; and categorizing menu items based on popularity and profitability to determine pricing and placement on the menu. The objective of menu engineering is to analyze each item's demand, contribution to profits, and role in the overall menu mix.
The document discusses food and beverage management in the hotel and catering industry. It outlines the objectives of food and beverage departments, which include satisfying guest expectations, efficient purchasing and preparation of food, effective control systems, and gathering performance data. It also describes the functions of food and beverage management, which involve planning, organizing, motivating, and controlling operations. Finally, it notes some constraints faced by food and beverage management, such as economic factors, staffing issues, and the perishable nature of food.
A short preparation to explain the various types of hotels, their special features, the needs that they fulfill, and the kind of customers/guests who would prefer each type.
FOOD AND BEVERAGE OPERATION: THE TOTAL MEAL EXPERIENCE OFFERED BY FOOD SERVIC...MUMTAZUL ILYANI AZHAR
The document discusses various food and beverage operations including meal experience, food production methods, and service procedures. It covers 6 main methods of food production - conventional, convenience, centralized, cook-chill, cook-freeze, and sous vide. Each method has benefits like cost savings and constraints like deterioration time. Proper service includes greeting customers, taking accurate orders, following food safety handling, and explaining payment options.
The document provides an overview of the foodservice industry, including types of foodservice operations, sectors of the industry, and variables that influence food and beverage service. It discusses key aspects of the customer experience, such as food and beverages offered, service levels, cleanliness and atmosphere. Food and beverage service methods can range from full table service to self-service, depending on factors like the establishment type and customer needs.
This document summarizes the key departments in a hotel's organizational structure. It divides departments into revenue centers, which directly generate income, and cost centers, which support revenue-generating functions. Revenue centers include front office, food and beverage, and sales and marketing. The document also distinguishes between "front of house" departments like front desk and food service that interact with guests, and "back of house" ones like housekeeping and engineering with limited guest contact. It provides examples of department heads and briefly outlines some core responsibilities of rooms division, food and beverage, and other operational areas.
Kitchen organization&duties and resposibilitis of various chefs.Rohit Mohan
The document summarizes the organization and structure of professional kitchens. It discusses the basic divisions of kitchen work and the partie system developed by Escoffier to efficiently divide labor. Under the classical brigade system, stations were overseen by chefs de partie like the saucier and rotisseur. Modern kitchens still use a modified brigade structure with roles like the executive chef, sous chef, and garde manger chef. The duties of the chef de cuisine include menu planning, staff management, ordering, and maintaining quality and efficiency. Sous chefs assist the chef de cuisine, while chefs de partie oversee defined sections.
This document summarizes front office operations in a hotel. It discusses the four stages of the guest cycle: pre-arrival, arrival, occupancy, and departure. It describes front office recordkeeping systems and documents. It also outlines the functions of the front desk and the hotel's telecommunications systems. Finally, it identifies common property management systems used in hotel front offices to support operations.
The structure of the catering industry includes both commercial and non-commercial establishments. Commercial establishments include five-star hotels with restaurants and coffee shops, medium hotels similar to five-stars but less luxurious, and free-standing high-class restaurants. Non-commercial establishments include snacks bars, fast food centers, night clubs, industrial canteens operated in factories on tight budgets, institutional catering in hospitals and colleges, outdoor catering providing services off-site, and disaster catering providing food during emergencies. The catering industry caters to customers across different price points and service levels.
Front office department of a hotel - It is the face of the hotel, the voice of a business.
It works 365 days, 24x7. The front office communicate and coordinate with all other departments of the hotel as well as external sources, running its operations day to operations smoothly to make the guest stay more comfortable through providing personalized, consistent standard services as per management policy
The document discusses different rooms in a restaurant kitchen - the still room, plate room, and pantry. The still room stores and prepares food and beverage items like coffee, teas, juices, pastries. It is overseen by a supervisor and staff work rotating shifts. Equipment includes coffee and tea machines, bread slicers, refrigerators. The plate room stores silver service plates and cutlery. The pantry is located between the kitchen and restaurant and facilitates work for both areas.
The document discusses various aspects of food and beverage service management including types of food and beverage operations, classifications of the industry, types of catering, organizational charts, duties of staff, layouts of service areas, types of services, menus, and menu planning considerations. It provides details on different sectors within the industry such as hotels, restaurants, banqueting, industrial catering, and more. The document serves as a comprehensive overview of the food and beverage service management field.
A PowerPoint presentation for the students of second semester in Hospitality Management colleges.
The presentation contains lot of images and graphics for ease of understanding; and text has been minimised so as to reduce the sleeping effect, which prolonged reading has on the current generation of learners.
Chapter 1 : Introduction of Housekeeping DepartmentSyara Ramlee
The document outlines the structure and responsibilities of the housekeeping department in hotels. It describes the typical roles and hierarchy within housekeeping, including executive housekeepers, supervisors, attendants, and more. It also details the key responsibilities of housekeeping which include cleaning guest rooms, public areas, and other hotel facilities. Maintaining cleanliness is important for guest satisfaction and maximizing room sales and revenue. The housekeeping department aims to provide a comfortable environment and fulfill guests' needs and preferences.
Unit 1. Introduction to Food and Beverage Control.pptxHannaViBPolido
This document provides an overview of food and beverage cost control. It discusses the food service industry and the objectives of food and beverage control, which include analyzing income and expenditures, establishing and maintaining standards, pricing, preventing waste and fraud, and providing management information. The document also outlines some problems in food and beverage control, such as the perishability of food products, unpredictability of business volumes and menu item preferences. It provides background information on traditional approaches to cost control.
Food cost control is a system used in hospitality businesses like hotels and restaurants to regulate costs and ensure they align with financial objectives. It focuses on controlling the largest cost element - food costs. The objectives of food cost control are to analyze income and expenses by department, set menu prices based on costs, prevent waste and inefficiencies, and provide management reports. Implementing an effective food cost control system involves three phases - setting basic financial policies, implementing operational controls around the catering cycle, and post-operational controls to analyze results. Food cost control faces obstacles like unpredictable demand, perishable goods, daily menu variations, short operational cycles, and high departmentalization in larger businesses.
This document discusses catering operations, including on-premise and off-premise catering. It describes the catering industry segments, advantages and disadvantages of on-premise and off-premise catering, and considerations for home-based caterers. The key segments are commercial, non-commercial, and military. On-premise catering occurs at the caterer's location while off-premise requires transportation of food and equipment. Home-based caterers have limitations around facilities, equipment, and training.
INTRODUCTION TO FRONT OFFICE:
the basics, such as the personnel under the front office department, their duties and responsibilities. and etc. SEE FOR YOURSELF.
This document discusses the key attributes required for front office staff. It lists attributes such as pleasant personality, personal hygiene, physical fitness, honesty, salesmanship, diplomacy, good memory, good communication skills, calmness, courtesy, loyalty, punctuality, and a smiling face. For each attribute, it provides further details on what is required and why it is important. For example, it states that personal hygiene includes being clean and fresh looking, brushing teeth twice a day, showering regularly, and shaving every day. Physical fitness is needed because front office staff must stand for 8-10 hours each day.
The rooms division is the area most responsible for a hotel's main product - the sleeping rooms. It includes the front office, reservations, housekeeping, night audit, and security departments. The front office handles guest check-in/out and payments. Reservations books rooms. Housekeeping prepares rooms for new guests. Night audit reconciles finances. Security ensures guest and employee safety. The rooms division manager oversees these areas to maintain clean, available rooms for guests.
This document discusses various techniques for menu merchandising, including menu design, pricing, and engineering. It covers topics such as using floor stands, tent cards, and posters to promote the menu; designing the menu to match the facility's style; using images and descriptive text; and categorizing menu items based on popularity and profitability to determine pricing and placement on the menu. The objective of menu engineering is to analyze each item's demand, contribution to profits, and role in the overall menu mix.
The document discusses food and beverage management in the hotel and catering industry. It outlines the objectives of food and beverage departments, which include satisfying guest expectations, efficient purchasing and preparation of food, effective control systems, and gathering performance data. It also describes the functions of food and beverage management, which involve planning, organizing, motivating, and controlling operations. Finally, it notes some constraints faced by food and beverage management, such as economic factors, staffing issues, and the perishable nature of food.
A short preparation to explain the various types of hotels, their special features, the needs that they fulfill, and the kind of customers/guests who would prefer each type.
FOOD AND BEVERAGE OPERATION: THE TOTAL MEAL EXPERIENCE OFFERED BY FOOD SERVIC...MUMTAZUL ILYANI AZHAR
The document discusses various food and beverage operations including meal experience, food production methods, and service procedures. It covers 6 main methods of food production - conventional, convenience, centralized, cook-chill, cook-freeze, and sous vide. Each method has benefits like cost savings and constraints like deterioration time. Proper service includes greeting customers, taking accurate orders, following food safety handling, and explaining payment options.
The document provides an overview of the foodservice industry, including types of foodservice operations, sectors of the industry, and variables that influence food and beverage service. It discusses key aspects of the customer experience, such as food and beverages offered, service levels, cleanliness and atmosphere. Food and beverage service methods can range from full table service to self-service, depending on factors like the establishment type and customer needs.
This document summarizes the key departments in a hotel's organizational structure. It divides departments into revenue centers, which directly generate income, and cost centers, which support revenue-generating functions. Revenue centers include front office, food and beverage, and sales and marketing. The document also distinguishes between "front of house" departments like front desk and food service that interact with guests, and "back of house" ones like housekeeping and engineering with limited guest contact. It provides examples of department heads and briefly outlines some core responsibilities of rooms division, food and beverage, and other operational areas.
Kitchen organization&duties and resposibilitis of various chefs.Rohit Mohan
The document summarizes the organization and structure of professional kitchens. It discusses the basic divisions of kitchen work and the partie system developed by Escoffier to efficiently divide labor. Under the classical brigade system, stations were overseen by chefs de partie like the saucier and rotisseur. Modern kitchens still use a modified brigade structure with roles like the executive chef, sous chef, and garde manger chef. The duties of the chef de cuisine include menu planning, staff management, ordering, and maintaining quality and efficiency. Sous chefs assist the chef de cuisine, while chefs de partie oversee defined sections.
This document summarizes front office operations in a hotel. It discusses the four stages of the guest cycle: pre-arrival, arrival, occupancy, and departure. It describes front office recordkeeping systems and documents. It also outlines the functions of the front desk and the hotel's telecommunications systems. Finally, it identifies common property management systems used in hotel front offices to support operations.
The structure of the catering industry includes both commercial and non-commercial establishments. Commercial establishments include five-star hotels with restaurants and coffee shops, medium hotels similar to five-stars but less luxurious, and free-standing high-class restaurants. Non-commercial establishments include snacks bars, fast food centers, night clubs, industrial canteens operated in factories on tight budgets, institutional catering in hospitals and colleges, outdoor catering providing services off-site, and disaster catering providing food during emergencies. The catering industry caters to customers across different price points and service levels.
Front office department of a hotel - It is the face of the hotel, the voice of a business.
It works 365 days, 24x7. The front office communicate and coordinate with all other departments of the hotel as well as external sources, running its operations day to operations smoothly to make the guest stay more comfortable through providing personalized, consistent standard services as per management policy
The document discusses different rooms in a restaurant kitchen - the still room, plate room, and pantry. The still room stores and prepares food and beverage items like coffee, teas, juices, pastries. It is overseen by a supervisor and staff work rotating shifts. Equipment includes coffee and tea machines, bread slicers, refrigerators. The plate room stores silver service plates and cutlery. The pantry is located between the kitchen and restaurant and facilitates work for both areas.
The document discusses various aspects of food and beverage service management including types of food and beverage operations, classifications of the industry, types of catering, organizational charts, duties of staff, layouts of service areas, types of services, menus, and menu planning considerations. It provides details on different sectors within the industry such as hotels, restaurants, banqueting, industrial catering, and more. The document serves as a comprehensive overview of the food and beverage service management field.
A PowerPoint presentation for the students of second semester in Hospitality Management colleges.
The presentation contains lot of images and graphics for ease of understanding; and text has been minimised so as to reduce the sleeping effect, which prolonged reading has on the current generation of learners.
Chapter 1 : Introduction of Housekeeping DepartmentSyara Ramlee
The document outlines the structure and responsibilities of the housekeeping department in hotels. It describes the typical roles and hierarchy within housekeeping, including executive housekeepers, supervisors, attendants, and more. It also details the key responsibilities of housekeeping which include cleaning guest rooms, public areas, and other hotel facilities. Maintaining cleanliness is important for guest satisfaction and maximizing room sales and revenue. The housekeeping department aims to provide a comfortable environment and fulfill guests' needs and preferences.
Unit 1. Introduction to Food and Beverage Control.pptxHannaViBPolido
This document provides an overview of food and beverage cost control. It discusses the food service industry and the objectives of food and beverage control, which include analyzing income and expenditures, establishing and maintaining standards, pricing, preventing waste and fraud, and providing management information. The document also outlines some problems in food and beverage control, such as the perishability of food products, unpredictability of business volumes and menu item preferences. It provides background information on traditional approaches to cost control.
Food cost control is a system used in hospitality businesses like hotels and restaurants to regulate costs and ensure they align with financial objectives. It focuses on controlling the largest cost element - food costs. The objectives of food cost control are to analyze income and expenses by department, set menu prices based on costs, prevent waste and inefficiencies, and provide management reports. Implementing an effective food cost control system involves three phases - setting basic financial policies, implementing operational controls around the catering cycle, and post-operational controls to analyze results. Food cost control faces obstacles like unpredictable demand, perishable goods, daily menu variations, short operational cycles, and high departmentalization in larger businesses.
FBC Damat (1).pptxYour one-time passcode for Scribd is 597222ShimekitGenene
s Your one-time passcode for Scribd is 597222Your one-time passcode for Scribd is 597222Your one-time passcode for Scribd is 597222Your one-time passcode for Scribd is 597222Your one-time passcode for Scribd is 597222
Here is the operating budget for the Market Restaurant for the coming year based on the information provided:
Market Restaurant
Statement of Income for the Coming Year
SALES
Food $820,000
Beverage $290,000
Total Sales $1,110,000
COST OF SALES
Food $295,200 (36% of food sales)
Beverage $69,600 (24% of beverage sales)
Total Cost of Sales $364,800
GROSS PROFIT $745,200
CONTROLLABLE EXPENSES
Salaries and Wages $102,000
Employee Benefits $25,500 (25% of salaries and wages)
Principles And Practices of F&B Control by Ms. Prachi Wani Assistant Profess...AISSMS
A Food and Beverage control may be defined as the guidelines and regulations of the costs and revenue of operating the catering activity in a food and beverage establishment. A control system covering the sale of all food and beverages is vital to accomplish maximum return. Know in detail about Principles and Practices OF F&B Control by Ms. Prachi Wani, Assistant Professor at AISSMS College Of Hotel Management And Catering Technology, Pune.
Principles and practices of f&b control by ms. prachi wani assistant prof...AISSMS
A Food and Beverage control may be defined as the guidelines and regulations of the costs and revenue of operating the catering activity in a food and beverage establishment. A control system covering the sale of all food and beverages is vital to accomplish maximum return. Know more in detail about Principles and Practices OF F&B Control by Ms. Prachi Wani, Assistant Professor at AISSMS College Of Hotel Management And Catering Technology, Pune.
This document discusses the objectives and importance of food and beverage control. It defines food and beverage control as the guidance and regulation of costs and revenue in catering establishments. There are three main areas to control: assets, revenue, and food and beverage consumption costs. The purpose of control is to set standards, measure performance against standards, and take corrective actions. Key objectives of control include analyzing income and expenditures, establishing and maintaining quality standards, setting appropriate prices, preventing waste, preventing fraud, and providing management information.
This document outlines key concepts around food and beverage cost control for hospitality managers. It discusses the manager's main roles of communication, cost/expense control, revenue enhancement, and forecasting. It then covers introducing cost control, including defining costs, types of costs, and control techniques. Specific techniques covered include establishing standards, procedures, training, budgets, and ensuring proper purchasing, production, recipes and portion sizes to control food costs. The overall goal of cost control is to help ensure profitability through regulating expenses.
The five most important responsibilities of a food and beverage manager are:
1. Ensuring food safety through proper food handling, storage, and a clean environment.
2. Maintaining quality control through sourcing high-quality ingredients, proper storage and preparation, and timely serving.
3. Controlling costs by closely monitoring expenses, optimizing menus, improving operations, and negotiating supplier contracts.
Food cost control involves setting standards for costs according to business objectives and policies. It aims to control costs related to food including cost of food cooked, wastage, spoilage, and shrinkage/pilferage. Key aspects of food cost control involve planning, operations such as purchasing and storage, and control after the event through reporting and assessment. The overall goal is to analyze income and expenses to maximize profits while maintaining quality and customer satisfaction. Factors like menu planning, purchasing, skills, and waste avoidance can impact the percentage of food costs.
This chapter discusses restaurant operations. It describes the front of house, back of house, and office areas. The front of house deals directly with guests, while the back of house handles receiving, storing, food production and cost control. The chapter also covers forecasting demand, increasing sales, reducing costs, and trends like more flavorful foods and increased takeout/home meal replacement. Key aspects of operations include purchasing, receiving, storing inventory, and ensuring proper portion and cost controls.
This document discusses food cost control in the food and beverage industry. It defines food cost control and explains that the objective is to analyze income and expenditure while preventing inefficiencies. Some key ways to control costs include reducing shrinkage, spoilage, and wastage through better security, storage, kitchen design, and stock management. Cost of food cooked can be controlled through planning quantities and ensuring quality. Financial planning, marketing, catering, purchasing, and operations are phases of the control procedure.
Food cost control involves setting standards for costs according to business objectives and policies. It means adhering to predetermined standards for buying, preparing, and selling food. Food cost includes the cost of food cooked plus wastage, spoilage, and shrinkage/pilferage. It should not be reduced at the expense of quality or customer satisfaction. Controlling food cost is important because every 1 rupee saved equals 10 rupees in sales and improves the bottom line. Methods of control include reducing shrinkage/pilferage through better security and workplace culture, minimizing spoilage through storage and kitchen facilities, and decreasing wastage through planning quantities and bringing a culture of high performance rather than policing.
This document provides an overview of Chapter 7 of the Glencoe Culinary Essentials textbook, which covers foodservice management. The chapter is divided into three sections that discuss management basics, managing people and facilities, and foodservice marketing. An effective manager must balance employee schedules, control costs, and apply marketing strategies to maintain profitability. Managers are responsible for hiring, training, and supervising staff as well as ensuring food safety and loss prevention. Developing a marketing plan that includes advertising, promotion, and public relations strategies can help attract customers.
The document discusses menu planning and purchasing control points. It covers how menu planning relates to inventory and is influenced by factors like guest demands, economic conditions, and operational systems. Rationalization and cross-utilization of ingredients are important for operational efficiency. Staff, equipment, facilities, and their layout must support what is on the menu. Purchasing objectives are to obtain quality ingredients at reasonable prices from reliable suppliers. A buyer's responsibilities include maintaining adequate inventory levels while minimizing costs and ensuring quality and food safety standards. Characteristics of a successful buyer and criteria for evaluating suppliers are provided.
1) Key item management is an effective way to manage food costs without a large time investment. It involves identifying top spending items, examining their specifications, and managing prices paid through negotiation or bid pricing.
2) Operators should complete a yield analysis for key items used in recipes or prepped, and manage profit margins for menu items containing key items.
3) Comparing actual versus ideal key item usage identifies operational issues, like improper training or changed specifications, which can be addressed to reduce variances.
INDUSTRIAL MANAGEMENT.
Controlling ensures that there is effective and efficient utilization of organizational resources so as to achieve the planned goals.
Vaz Emerciano Robert provides a summary of his experience and qualifications for a food and beverage management role. He has over 15 years of experience in roles such as Food and Beverage Manager, Assistant Food and Beverage Manager, and Dining Room Waiter for various cruise lines and hotels. His responsibilities have included maintaining quality standards, efficient service, staff training, cost control, and ensuring guest satisfaction. He lists skills in areas such as teamwork, communication, leadership, planning, and a customer service orientation.
Mr. Tushar Bolar is seeking a position as a Materials Controller & Stores position. He has over 20 years of experience in food and beverage roles of increasing responsibility in India and Dubai. His experience includes positions as F&B Controller, Assistant F&B Controller, and Executive - F&B Controls. He has a Bachelor's degree in Commerce. His objective is to utilize his experience and education for a position with opportunities for growth.
Similar to Unit 1. Introduction to Food and Beverage Control.pptx (20)
Unit II - Plan, Develop and Manage Operational Appoaches 1 F.pdfHannaViBPolido
The document discusses communicating work roles in operations. It begins by outlining the topics to be covered, including defining and sharing roles, ongoing communication, and additional strategies. Key points of each topic are then described in detail, such as developing clear job descriptions, using visual representations, and conducting regular team meetings to facilitate ongoing communication. Formal and informal communication channels are also discussed. The stages of developing an operational plan are outlined as identifying objectives and resources, developing the plan, and communicating the plan to stakeholders. Objectives and operational plans for both short and long-term goals are further differentiated.
Unit 1 - The Catering Business Industry - Topic 2 3 4 5.pptxHannaViBPolido
Catering involves providing food services for large groups of people at off-site locations. The catering industry is divided into commercial, non-commercial, and military segments. There are two main types of catering services - on-premise catering which occurs at the catering establishment, and off-premise catering which involves delivering and serving food off-site. Catering requires specialized equipment to safely transport and serve food. Catering can be classified into types like corporate, wedding, social, concession, food truck, and restaurant catering. Catering establishments include restaurants, outdoor venues, industrial cafeterias, clubs, welfare services, leisure locations, retail stores, and transportation.
Unit 1 - The Catering Business Industry - Topic 1.pptxHannaViBPolido
The document provides an overview of the history and development of the catering industry. It discusses how catering originated on merchant ships and later expanded to serve noblemen in Europe and soldiers in ancient Rome. As societies developed, catering became a professional trade and further grew with industrialization and expanding economies. The document also provides specifics on the history of catering in the Philippines, from the influences of Chinese and Spanish colonizers to the modern integration of American foods and culinary technology. It outlines the learning objectives of understanding catering management, business planning, marketing, and event execution.
Unit I - Introduction to Operations Management.pptxHannaViBPolido
The document provides an introduction to operations management. It defines operations management as the business function responsible for planning, coordinating, and controlling resources to produce goods and services. It discusses the differences between production of goods versus services and explains the scope and importance of operations management. Key concepts covered include process management, decision-making, historical evolution, and current issues in operations management.
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Unit 1. Introduction to Food and Beverage Control.pptx
1. CUE 303
Food and Beverage Cost Control
Hanna Vi B. Polido
Instructor
2. Unit 1. Introduction to Food and Beverage Control
1. The Food Service Industry
2. Food and Beverage Control
1) Introduction, objectives, problems and Methodology of food and
beverage Control
2) Personnel Management in F & B Control
3. Cost and Sales Concept
1) Definition, elements and classification of Cost
2) Sales Defined
3) Sales Concepts
4) Cost/Volume/Profit Relationship (Break-Even-Analysis)
3. Learning Outcomes
• Discuss the food and beverage control.
• Identify the methodology of Food and
beverage control.
• Explain the elements of cost.
• Discuss the concepts of sales.
• Understand the Break-Even-Analysis.
5. Introduction
• Successful restaurant personnel, including chefs, restaurants
manager, food and beverage controller, dining room
managers, and stewards have the ability to keep the costs at
predetermined levels. They understand that successful
operations require that costs be carefully established and
monitored so that profit will result.
6. • Food, beverage and labor costs generally represents between
60% and 70% of the total costs of a restaurant operation. If
these costs are not carefully established and monitored, they
can gradually increase until PROFIT is eliminated, and losses
are sustained.
7. • Ever-increasing competition in all industries demands that
more and more attention is paid to the control of costs to
ensure the survival of each business unit.
• In the long run a business will not survive unless it earns an
adequate amount of profit in relation to its capital. It must be
an extension of the financial and catering policies as laid down
by the top management. In order to evolve a realistic scheme
of food & Beverage control, it is essential to determine
appropriate cost and profit target for all departments of a
business.
• A Food & Beverage control system in itself will not cure or
prevent problems occurring. An effective system is dependent
upon correct up-to-date policies and operational procedures.
But the system should identify problems and trends in the
business. A food & Beverage control system will need
management action to evaluate the information produced and
to act upon it.
9. Food and Beverage Control
• Food and beverage department in a hotel, restaurant, or any catering
establishment consists of closely linked system-the-Kitchen, restaurant, bar etc. In
a hotel there may exist number of systems, all of these are reading together with
the food and beverage facilities to form the total hotel system.
• The main aim of costing in a food and beverage establishment is to satisfy both the
“customers requirements” and the “financial requirements”.
• To achieve this objective a suitable food and beverage control system need to be
developed which must avoid excessive costs without sacrificing the quality,
quantity and competitive price of the varied product being marketed.
10. Food and Beverage Control
Food and Beverage Control
• Can be defined as the guidance and regulations of the cost and revenue for
operating catering activities in hotels, restaurants, and other catering
establishments.
• The main purpose of any business is to make profit.
• Profit not only is earned by sales, but also can be achieved by cost control, and
whenever money is saved, money is earned.
• According to James Keiser, “Control works best when it is used with other
management process, such as planning, organizing, directing, and evaluating”.
According to him, there are two basic approaches:
1. Behavioristic Approach
2. Traditional Approach
11. Food and Beverage Control
Food and Beverage Control
• Can be defined as the guidance and regulations of the cost and revenue for
operating catering activities in hotels, restaurants, and other catering
establishments.
• The main purpose of any business is to make profit.
• Profit not only is earned by sales, but also can be achieved by cost control, and
whenever money is saved, money is earned.
• According to James Keiser, “Control works best when it is used with other
management process, such as planning, organizing, directing, and evaluating”.
According to him, there are two basic approaches:
1. Behavioristic Approach
2. Traditional Approach
12. Traditional Approach
• The traditional approach has two main aspects.
– Directing personnel, or keeping an eye on things or by walking around to see whether he
or she can correct what is not right or what is cost control break-downs.
– measurement of performance with that desired or deemed attainable.
13. Measurement of Performance Four Parts
1. Establishing Standards or Goals: It can be expressed in different ways, for instance,
a budget figure, a percentage figure, and a performance figure, such as meals served
per server per hour.
2. Measurement of Performance: It means measuring performance, and it is usually a
quantitative figure, such as amount and percentage figure.
3. Comparison and Analysis: Once the standard or goal has been established and
actual performance is determined, it is possible to compare the two and a manager can
find out the variance.
4. Corrective Action: Once a significant variance is determined, the manager must take
corrective action. Such action must involve more observation, personnel changes, and
different methods of operation among many others, or perhaps the standard is
unrealistic and needs to be changed.
14. Objectives of F&B Control
1. Analysis of income and expenditure:
– The analysis is solely concerned with the income and expenditure related to
food & beverage operations.
– The revenue analysis is usually by each selling outlet, of such aspects as the
volume of food and beverage sales, the sales mix, the average spending power
of customers at various times of the day, and the number of customers served.
– The analysis of cost includes departmental food and beverage costs, portion
costs and labor costs.
– The performance of each outlet can then be expressed in terms of the gross
profit and net margin and the net profit.
15. Objectives of F&B Control
2. Establishment and maintenance of standards:
– The basis for the operation of any food and beverage outlet is the
establishment of a set of standards which would be particular to an operation.
Unless standards are set no employee would know in detail the standards to
be achieved nor could the employee‟s performance be effectively measured
by management. The management would have set SOPs (Standard
Operational Procedures) which should be readily available to all staff for
reference. This can be aided by regularly checking on the standards achieved
by observation and analysis and by comments made by customers and when
necessary, conducting training courses to re-establish the standards.
16. Objectives of F&B Control
3. Pricing:
– Pricing is important to determine food menu and beverage list prices in the
light of accurate food and beverage costs and other main establishment costs;
as the average customer spending power, the prices charged by competitors
and the prices that the market will accept.
17. Objectives of F&B Control
4. Prevention of waste:
– In order to achieve performance standards for an establishment, targets and
set for revenue, cost levels and profit margins. To achieve these levels of
performance it is necessary to prevent wastage of materials caused by such
things as poor preparation, over-production, failure to use standard recipes,
etc. This can only be done with an efficient method of control, which covers
the complete cycle of food and beverage control, from the basic policies of the
organization to the management control after the event.
18. Objectives of F&B Control
5. Prevention of Fraud:
– It is necessary for a control system to prevent or at least restrict the possible
areas of fraud by customers and staff. Typical areas of fraud by Customers are
such things as deliberately walking out without paying; unjustifiably claiming
that the food or drink that they had partly or totally consumed was
unpalatable and indicating that they will not pay for it; disputing the number
of drinks served; making payments by stolen cheques or credit cards. Typical
areas of fraud by staff are overcharging or undercharging for item served and
stealing of food, drink or cash.
19. Objectives of F&B Control
6. Management Information:
– A system of control has an important task to fulfill in providing accurate up-to-
date information for the preparation of periodical reports for management.
This information should be sufficient so as to provide a complete analysis of
performance for each outlet of an establishment for comparison with set
standards previously laid down.
20. A. Perishability of the product:
Food, whether raw or cooked, is a perishable
commodity and has a limited life. The caterer,
therefore, has to ensure that she buys produce in the
correct quality and quantity in relation to estimated
demand, and that it is correctly stored and processed.
Problems in F & B Control
21. B. Business Volume Unpredictability:
Sales instability is typical of most catering
establishments. There is often a change in the volume
of business from day to day, and in many
establishments from hour to hour. This causes basic
problems with regard to the quantities of commodities
to be purchased and prepared as well as to the staffing
required.
Problems in F & B Control
22. C. Menu mix unpredictability:
In order to be competitive and satisfy a particular
market, caterers must often offer a wide choice of
menu items to the customers. Predicting menu items
preference on top of customer volume can be
challenge. Effective forecasting as part of the total
food and beverage control system is therefore
necessary.
Problems in F & B Control
23. D. Food and beverage operation short cycle:
The speed at which catering operations take place,
relative to many other industries, allows little time for
many control tasks. It is not uncommon that items
ordered one day are received, processed and sold the
same or next day. It is for this reason that in larger
catering establishments cost reporting is done daily or at
least weekly basis. Perishable items cannot be brought
very much in advance of their need; and the problem of
availability at times of produce relative to the price that
can be afforded in relation to the selling price.
Problems in F & B Control
24. E. Departmentalization:
Many food and beverage operations have several
production and service departments, offering different
products and operating under different policies. It is,
therefore, necessary to be able to produce separate
trading results for each of the production and selling
activities.
Problems in F & B Control
25. The Methodology of food and beverage control may broadly be
envisaged under there phases:
– Phase 1 : Planning Phase
– Phase 2 : Operational Phase
– Phase 3 : Post – Operational Phase (Management
Control after the events)
The catering cycle is a model, which represents all the food
and beverage activities performed by an organization and
provides necessary directives to the owner of the catering
establishments to follow the basics of food and beverage
operations. The cost control cycle is a sequential flow diagram
of the various issues of the food and beverage operations and
management and is illustrated in the next page.
F & B Methodology
27. F & B Methodology
Planning Phase
• Planning phase of the cost control cycle deals with
financial, marketing and catering policies of the
establishment.
o Policies are predetermined guidelines set by senior
management according to the goals of the catering
establishment to achieve the service excellence, quality
control, highest level of profitability, and delighting the
guests for repeated business.
o Financial policies deals with all the decisions to
be taken related with the finance such as the
budget. The budget has been linked to a road
map which gives an accurate route to be
followed and serves as a guide to the travelers.
28. F & B Methodology
1. Planning Phase
– Marketing Policies policy defines the market to be
catered for and develops marketing mix to satisfy the
needs and wants of the target customers. It outlines
the following:
• Identify the target market
• Identity the market segment's
• Developing the marketing mix (4 Ps- Product,
Price, Place, and Promotion) to satisfy the needs
and wants of the target customers.
• Designing the promotion mix (advertising,
merchandising, sales promotion, public
relations, and direct marketing) to facilitate
marketing communication.
• Building the corporate image by meeting
customer's expectations.
29. F & B Methodology
Planning Phase
– The Catering policy defines the main objective of
operating food and beverage faculties and the
methods by which such objectives are to be
achieved. It outlines the following:
– Outlet profile: - Types of outlet, operating
status, hours, décor, ambience, layout plan,
covers, service, staffing etc.
– Clientele Profile: - Age group, sex, food habits,
average spending, frequency of visit, etc.
– Menu Profile: - Types of menu, meals, cuisine
etc.
30. F & B Methodology
2. Operational Phase
– Can be defined as a function concerned with the search,
selection, purchase, receipt, storage and final use of a
commodity in accordance with the catering policy of the
establishment. The person employed to purchase foods and
beverages for an establishment will be responsible for not only
purchasing, but also for the receiving, storage and issuing of all
commodities as well as being involved with the purpose for
which items are purchased and the final use of them.
Coordinating with production departments to standardize
commodities and therefore reduce stock levels. Purchasing is
not a separate activity. What how and when you buy must
always reflect the overall goals of your establishment. Purchase
the right product, right quality, right price, right time and from
the right source.
31. F & B Methodology
Operational Phase
1. Purchasing: Can be defined as a function concerned with
the search, selection, purchase, receipt, storage and final use
of a commodity in accordance with the catering policy of the
establishment. The person employed to purchase foods and
beverages for an establishment will be responsible for not only
purchasing, but also for the receiving, storage and issuing of
all commodities as well as being involved with the purpose for
which items are purchased and the final use of them.
Coordinating with production departments to standardize
commodities and therefore reduce stock levels. Purchasing is
not a separate activity. What how and when you buy must
always reflect the overall goals of your establishment.
Purchase the right product, right quality, right price, right time
and from the right source.
32. F & B Methodology
Operational Phase
2. Receiving: In large hotels, receiving is a specialized job.
While receiving the food or beverage items check delivery
note to see if the products delivered agree with it. Inspect
products/ raw materials to determine if they are in
agreement with the purchase order and specification. List
all items received on the daily receiving report. Accept the
products by signing the delivery note and returning the
copy to the delivery driver. Deliver goods to the correct
place.
33. F & B Methodology
Operational Phase
3. Storing and Issuing: The main function of this
department is to store and issue food and beverages items
that pertain to food and beverages operations of the hotel.
Raw material should be stored correctly under the right
conditions and temperature.
34. F & B Methodology
Operational Phase
4. Preparing: A production system needs to be organized
to produce the right quantity of food at correct standards,
for the required number of people, on time, making best
possible use of staff, equipment and material available. A
method of predicting the number of Customers using the
catering facilities on a specific day, and also of predicting as
accurately as possible what items they will eat and drink. A
method of controlling food and beverage costs in advance
of the preparation and service stages. It is done by
preparing and using standard recipes for all food and
beverage items and also by using portion control
equipment.
35. F & B Methodology
Operational Phase
5. Selling: It is necessary to ensure that all items sold have
been paid for and that the money is received or credit has
been authorized. This is necessary to keep control of the
number of covers sold and of the items sold. This may be
done through a standard type of waiter‟s check system.
36. F & B Methodology
3. Post Operational Phase
Post operation management control phase base on
comparing and correcting the activities held in
operations. Need to observe the measurement of
performances, preparation and comparison of various
reports and statement, and need to provide
information to HODS for further improvement. This
phase give chance to take corrective actions on the
basis of feedback, further forecasting and future
planning.
37. F & B Methodology
Post Operational Phase
Post operational phase is concerned with the three main
points:
1. Food and beverage cost reporting: Providing accurate
and up-to-date data for the preparation of periodical
reports on current operations.
2. Measurement of Performance: Monitoring
performance and comparing actual performances with
established standards.
3. Corrective Action: Taking the appropriate action to
correct deviations from standards, where necessary.
Proper feedback of information to management,
future forecasting and future planning whenever
required.
38. Personnel Management in F&B Control
• F & B Control is a process by which managers try to direct,
regulate, and restrain the action of employees.
• A manager of an organization cannot be in all places at all
times to observe how all the staff members are performing.
• The observation is usually made by the records and reports,
which are scrutinized on a daily, weekly or monthly basis to
understand the goals, set by the organization and the
fulfillment of the same.
• The success or failure of F & B control really depends on the
staff.
• If they know the standards, understand the system and what is
to be accomplished, and have a real desire to carry it out, their
intelligent cooperation with adequate instruction and
supervision should ensure a satisfactory outcome.
39.
40. Discuss the problems in
Food & Beverage Control.
Give illustrative example
and site the reference.
43. TOPIC 3: Cost and Sales Concept
3.1
Definition of Cost
3.2
Elements of Cost
3.3
Classification of Cost
3.4
Sales Defined
3.5
Sales Concept
3.6
Cost/Volume / Profit
Relationship (Break
Even Analysis)
44. 3. 1 - Definition of Cost
Cost
• is generally defined as a reduction in the value of an asset
for the purpose of securing benefit or gain, however, in
the food and beverage business, it means the price to the
hotel or restaurant of goods and services when the goods
are consumed, or the services rendered.
Costing
• is a specialized area which is gaining ground in many of
the industries related with the processing and
manufacturing of a product or rendering a service. It may
be defined as ascertainment of costs relating to a suitable
unit of output.
45. 3.2 - Elements of Cost
There are broadly three elements of costs by nature of
expenses-material, labor, and expense.
46. 1. MATERIAL
Material is a substance from which the product or dish or
drink is made. Food and beverages are the most common
raw materials or ingredients. Raw ingredient used for
preparing any food item is known as material for food.
Material may also comprise semi-processed ingredients
such as sauces or pickles which are used in the food
industry. The material could be direct and indirect.
3.2 - Elements of Cost
47. 1. MATERIAL
• Direct Material: The direct material cost is the cost
incurred for commodities which are used in
preparation of food, for example, meat, fish, oils,
herbs and spices. It is the cost which is an integral
part of the finished product which is served to the
guest.
3.2 - Elements of Cost
48. 1. MATERIAL
• Indirect Material: The indirect material cost is the
cost which is ancillary to the business and is not an
integral part of the product but is necessary for
preparation. For, example, fuel cost such as gas or
electricity used for preparing food and cleaning
supplies.
3.2 - Elements of Cost
49. 2. LABOUR
It is the compensation given to employees for completion of
a particular job for which they have been assigned and to
convert the raw materials to the finished products to be
served to the guests. It includes salaries, commission, bonus
and wages which are paid to employees. The employees
include workers, managers and supervisors. The labour cost
can also be both direct or indirect.
3.2 - Elements of Cost
50. 2. LABOUR
• Direct Labour: Direct labour includes chefs and
cooks, and bar and beverage service staff who are
directly responsible for preparation and service of
food and beverage to guests. The salary or wages
earned by direct labour can be identified with the
particular product prepared, job, or the process.
3.2 - Elements of Cost
51. 2. LABOUR
• Indirect Labour: Indirect Labour cost or wages is the
labour employed for carrying out tasks which are
secondary to the goods or services. For example, the
storekeeper of F & B outlet and kitchen stewarding.
3.2 - Elements of Cost
52. 3. EXPENSE
All other costs excluding labour and material cost used in
preparing a product or providing service are said to be
expenses. An expense can be direct or indirect.
3.2 - Elements of Cost
53. 3. EXPENSE
• Direct Expenses: Expenses which are directly related
or allocated to various cost units are called direct
expenses. They are allocated to particular job or
service rendered which are also known as productive
responses. The hiring of a particular machinery or
equipment for preparing certain dishes would come
under this category.
3.2 - Elements of Cost
54. 3. EXPENSE
• Indirect Expense: Expenses which cannot be directly
charged and are neither indirect wages nor indirect
materials are said to be indirect expenses. Rent and
taxes, insurance, depreciation, and repairs and
maintenance are examples of indirect expenses.
3.2 - Elements of Cost
55. 3.3 - Classification of Cost
The classification of cost is done on various bases such as
behavioral in respect to the change in volume such as fixed
costs and variable costs. For decision-making purpose of the
management, costs are classified into opportunity cost,
replacement cost, and sunk cost. The cost based on time period
of assessment can be historical and budgeted cost. Other costs
such as joint cost, outlay cost, and prime cost are based on the
industry production process. The classification of cost is as
follows:
56. • Actual Cost: Actual cost is the cost or expense which is
actually spent. For example, the amount spent on buying the
raw ingredients or materials for preparing a menu.
• Budgeted Cost: Budgeted cost is the cost which is
expected for a particular period of time. For example, you
might be expected total food sales and many forecast the
cost incurred for purchasing ingredients for a month based
on the sales. Later, comparing the actual cost incurred with
the forecasted or budgeted cost will help in determining the
cause of the difference.
3.3 - Classification of Cost
57. • Controllable Cost: The cost that can be changed in a
short period of time is known as controllable cost. The cost
of food and beverage can be changed in several ways, in
particular by changing the portion size or reducing some
ingredients used for preparation or the quantity of each or
some the ingredients or the quality of the ingredients.
• Non-Controllable Cost: Non-Controllable costs are
costs which cannot be changed in a short period of time.
These costs are usually fixed costs which include rent, taxes,
depreciation and license fees.
3.3 - Classification of Cost
58. • Fixed Cost: Fixed costs are costs which are not affected by
changes in sales volumes. They do not have a direct
relationship with the change in volume and so do not they do
not change considerably with increase or decrease in sales.
Examples are rent, taxes and insurance premium. Though fixed
cost might change in due course of time, it is not related to the
volume of sales.
• Variable Cost: Variable cost is directly proportionate with
the sales and revenue generated. An example of a variable cost
is the F & B cost. As sales increases, the cost of goods
purchased increases. The F & B cost is variable cost which is
linked with the volume of business made. The payroll costs
include salaries, wages, and employee benefits which come
under labour costs and are also variable costs.
3.3 - Classification of Cost
59. • Direct Cost: Direct Cost is the cost of a particular
department or a section and the manager concerned is
responsible for the cost. The direct cost may increase or
decrease proportionately to the sales made during a
particular period of time. Examples of these costs are food
cost, beverage cost and wages.
• Indirect Cost: Indirect Costs are the cost which are not
directly related to a particular department and cannot be
charged to any particular department, for example, energy
cost such as electricity charges. They cannot be directly
charged only to the kitchen, or the service department and
no departmental manager would be responsible for the same.
3.3 - Classification of Cost
60. • Joint Cost: It is the cost shared between two joints
or two departments; for example, F & B Production
and service is the labour cost shared between beverage
and kitchen departments. Mostly indirect costs are
joint costs.
• Outlay Cost: Outlay cost is the financial expenditure
incurred by an organization for improving the infrastructure,
product, sales, etc. This is similar to modernization of a
kitchen or renovation of restaurants. This cost can be
recorded in the books.
3.3 - Classification of Cost
61. • Opportunity Cost: Opportunity cost is the profit that
is lost by an organization for choosing another option as an
alternative venture using its available resources. It refers to
the cost incurred by taking an alternative decision by
choosing an alternative and thereby giving up something
else. It is the value of the best alternative forgone, in a
situation in which a choice needs to be made between
several mutually exclusive alternatives given limited
resource. An organization with additional cash can invest in
various marketable securities.
3.3 - Classification of Cost
62. • Sunk Cost: It is a cost that has already been met with and
cannot be reversed or altered and is also referred to as
started cost. Equipment which has been worn out after
several years of usage and the buying of that equipment
which could not be reversed is known as sunk cost.
• Standard Cost: Standard cost should be constant for a
level or volume of revenue. It is the realistic estimate based
on historical data. The standard cost of a recipe for a dish or
cocktail or beverage can be prepared, finalized, and then
standardized. After the dishes are standardized, the same is
used as benchmarks to be compared with those prepared
later.
3.3 - Classification of Cost
63. • Prime Cost: Prime cost is the sum of food, beverage, and
labour cost. It is the largest portion of all costs for a food
service organization and is of concern for both managers and
owners.
3.3 - Classification of Cost
64. Sales
• Defined as the revenue resulting from the exchange of products
and services for a value.
• In the F & B industry, the dishes and drinks served are products
and services of both bar and restaurant which are served for
value.
• The value may be cash or a promise to pay in cash. These sales
are expressed in monetary terms for the value of goods or
services.
• The success of any business is totally dependent on the sales of
product or services. If sales are not recorded properly, than a
manager cannot achieve the expected target of profit.
• It is crucial to match the cost of production with sales to avoid
or reduce pilferage and wastage. The selling price of a product
or service is generally set by management.
3.4 – Sales Defined
65. Sales
• As regards to food and beverage item, the sales prices
are printed on a menu or placed on signs appearing
thought the food and beverage outlet.
• The sale price is mainly determined on the basis of
cost. However, there are other considerations such as
maximization of sales differentiated products, price
sensitivity, excluding certain customers or to cater to a
specific clientele.
• The main objective of a unit is to have profitability in
business. The total must be greater than total costs. The
manager is constantly aware of the costs of operating
the restaurant and to keep them below sales.
3.4 – Sales Defined
66. There are two basic group of terms normally used in food and
beverage operations to express sales concept:
1. Monetary
2. Non-monetary
3.5 – Sales Concept
67. 1. Monetary
• Total Sales: The total sales refers to the total volume of
sales which is expressed in peso or dollar.
• Total Sales by Category: It refers to the total sales of a
category compared to the total sale volume; for example,
total dessert sale as compared to all dishes sold.
• Average Sale: An average sale in business is determined
by adding the individual sales and then dividing it with
number of individual sales.
3.5 – Sales Concept
68. 1. Monetary
• Average Sale per Customer: The average sale per
customer is the total sale divided by the number of sales
made, customers, or covers. It is also given as follows:
Average Sale =
3.5 – Sales Concept
69. 1. Monetary
• Average Sale per Server: The total sale per server is the total
sale amount for which sales are expressed in monetary terms
for the value of goods or services. The express value does not
include taxes imposed by the state or local bodies. Tip is not
included in the selling price. Sales expressed in terms of the
quantity of units sold are very useful for purposes of control.
For example, in a bar one would be interested to ascertain the
number of drinks one expect to get out of a quart of liquor in
order to determine on the basis of actual sales if any drinks
were given away. The average check price is calculated for
food per meal and for liquor each day. It is calculated by
dividing the total value of all the sales for that meal or day by
the number of customers. This will indicate how the menu is
working, the effectiveness of all over all selling efforts, and
determination of price.
3.5 – Sales Concept
70. All the food and beverage outlets are constantly attempting to
increase sales in order that the profit may be maintained or
increased. For a restaurant to succeed it must meet a sufficient
number of the characteristics to appeal to a large market and
hence to cover constant higher costs. Most of the customer to
patronize one particular outlet due to the following reasons:
Location- Convenient
Service and Style
Products differentiated
Variety of Menu items
Acceptable Prices
Décor-Pleasant
Portion Sizes
Product Quality
3.5 – Sales Concept
71. 2. Non - monetary
• Total Number Sold: The total number sold is the total
number of dishes, for example, menu items, sold in a
given time period. The figures help us in many ways as
it helps managers identify the popular and not so popular
items. It also helps to identify the total number of
specific items sold from historical data which helps to
forecast and make decisions regarding purchase of raw
materials and production thereafter.
3.5 – Sales Concept
72. 2. Non - monetary
• Cover: A cover is term used to describe a single dinner
regardless of the quantity of food he/she consumes. A
guest can choose an elaborate menu in the breakfast or
may opt for cereals and eggs to order with tea/coffee but
it would be considered as a single cover.
• Total Covers: It refers to the total number of
covers/customers served in a given time period which
could either be an hour, a meal period say lunch or
dinner, a day, a week, or any such time period.
3.5 – Sales Concept
73. 2. Non - monetary
• Average Covers: Average
covers are determined by
dividing the total number of
covers for a certain time period
by the desired numbers as
follows:
3.5 – Sales Concept
74. Sales Mix
Sales mix is used to describe the relative quantity sold of
the relative quantity sold of any item as compared to other
items in the same category. The idea is to achieve the
combination, or mix, that would yield the greatest amount
of profits. The profits would be greater if higher margin
items are sold more than the lower margin items as these
would lead to a relatively large proportion of total sale. A
shift in sales mix from higher margin items to lower margin
item to a dip in total profits even through sales may
increase. Similarly, if it is reversed, a shift in sales mix from
high margin item to low margin items can cause total profits
to increase even through sales may decrease.
3.5 – Sales Concept
75. Cost Volume profit analysis (CVP)
• Is a technique which is used to examine the relationship
between the three elements of financial performance,
mainly the sales and the cost associated with the volume
and the profit.
• This helps us to analysis and understands how costs
respond to various change in activity and the planning and
decision making process.
• CVP helps to predict the sales in rupees and the volume
required to achieve the desired profit based profit based on
the known costs.
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
76. Cost Volume profit analysis (CVP)
• Its focus is on interaction among the following elements:
Price of Products
Total Fixed Costs
Volume or level of activity
Mix of product sold
Per unit variable costs
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
77. Cost Volume profit analysis (CVP)
• For planning and decision-making, it is important to
look at the relationship among profit, sales, and costs
and how it changes in different situations. A manager of
an outlet may question which may directly have an
impact on the profit. Consider the following examples:
o What will happen if the sales volume reduces/increases by
15%?
o What will happen if the vendor/supplier increases by 10%?
o How would the target market be affected if the selling prices
are reduced/increased by 5%
o How much sales is needed to obtain a said profit?
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
78. • For answering all these questions, it is best that we identify the
type of costs and how they respond to changes in the levels of
activity.
• Since variable costs is directly proportional to the volume of
business increases, the cost also increases though the fixed cost
remains constant (change by time).
• Considering the knowledge and importance of fixed cost and
variable cost, if separated they can help to understand the
relationship between costs, volume of activity, and the profits
made.
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
79. • The costs cannot be kept as semi-fixed and semi-variable
costs as they have to be changed to either fixed or variable
costs.
• The CVP stress on the contribution margin is made towards
fixed cost and profit. It is expressed by the following
formula:
Contribution Margin = Sales Revenue – Variable Costs
• Contribution margin can also be said as the amount left from
the sales once the variable cost is deducted that is available
to contribute towards the fixed cost and the contribution is
towards the profit.
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
80. • The costs cannot be kept as semi-fixed and semi-variable
costs as they have to be changed to either fixed or variable
costs.
• The CVP stress on the contribution margin is made towards
fixed cost and profit. It is expressed by the following
formula:
Contribution Margin = Sales Revenue – Variable Costs
• Contribution margin can also be said as the amount left from
the sales once the variable cost is deducted that is available
to contribute towards the fixed cost and the contribution is
towards the profit.
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
81. Example:
A Restaurant name Horizon Garden Restaurant, which has a set menu at
a fixed price of Php 1000 per customer/cover. In a particular month, the
meal sales are between 60,000 and 90,000 Units. The Variable costs is
20,000 and fixed cost is 15,000.
• What will be the contribution margin and net profit of the Horizon
Grand Restaurant in a particular month with meal sales of 60,000?
• What will be the contribution margin and net profit of the Horizon
Grand Restaurant in a particular month with meal sales of 90,000?
82. Formula for Profit / Loss
Profit/Loss = Total Contribution − Fixed costs
• Contribution Margin: Contribution margin is the amount
remaining from the sales revenue after the variable expense has
been deducted. It is the amount available to cover the fixed
expenses and to provide profit for the period. If the contribution is
not sufficient to cover the fixed costs for a period, loss would occur
for the same period.
• Contribution Margin Ratio: Contribution Margin Ratio is the
contribution margin as a percentage of total sales. It could also be
used in cost/volume/profit calculation. The ratio is given as
follows:
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
83. • Contribution Margin Ratio: Contribution Margin Ratio is the
contribution margin as a percentage of total sales. It could also be
used in cost/volume/profit calculation. The ratio is given as
follows:
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
84. • Cost/Volume/Profit Equation: In an establishment or an F & B
outlet, there is a relationship between sales, cost of sales, cost of
labour, cost of overhead, and profit. The relationship can be
expressed as follows:
Sales = Cost of Sales + Cost of Labour + Cost of overhead + Profit
Since the cost of sales is variable cost, cost of labour includes
both fixed and variable, and the cost of overhead is fixed, then
the equation can be restructured into
Sales = Variable cost + Fixed Cost + Profit
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
85. • Target Profit Analysis: The CVP Formulas can also used to
determine the sales volume needed to achieve a target profit.
Sales = Variable expense + Fixed expense + Profits
• Variable Rate: The Variable rate is the ratio of variable cost to the
sales in rupees. It is calculated by dividing the variable cost by the
sale in rupee and is usually expressed in decimal form.
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
86. • Contribution Rate: When the variable cost is known, the balance
would be fixed costs and the profit. As there is an increase in sales,
more amounts would be available to meet fixed costs and the
profit. Therefore, it can be concluded that if the cost remains
constant, there is an increase in sales because of the contribution
rate, resulting in increase of profit. The increase is known as
contributed rate/percentage/ratio. Contribution rate is given by the
following formulas:
Contribution Rate (C R) = 1 – Variable Rate (VR)
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
87. • Break – Even Analysis: Break–even analysis represents the
relationship between cost, volume, and profit and is an important
exercise in the business it depicts the following:
1. The Financial state of the business.
2. The profitability of the business at different levels of output.
3. The break-even point (i.e., the point at which neither profit is
made, nor loss is incurred)
4. The relationship between fixed, semi-fixed and variable costs and the
contribution.
5. The margin of safety and the profit-volume ratio.
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
88. Advantages of Break-even Analysis: The advantages of break-even
analysis are as follows:
• It helps the management decide on the exact volume of goods
to be manufactured.
• It helps the management decide on preparing or making or
buying policies.
• It helps the management decide on the exact selling price of
dishes or drinks prepared.
• It helps the management to take decisions regarding current
and new production system.
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
89. • Break-even analysis is a procedure widely used by production
management and management accountants.
• It is based on categorizing production costs between those which
are variable (costs which change when the production output
changes) and those that are fixed (costs which are not directly
related to the volume of production).
• Breakeven analysis enables the relationship between fixed, semi-
fixed and variable costs at specific volumes of business to be
conveniently represented on a graph.
• This enables the breakeven point to be identified and the level of
sales necessary to produce a predetermined level of net profit.
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
90. • The term break-even point may be defined as that volume of
business at which the total costs are equal to the sales and where
neither profit nor loss is made.
• The technique is based on the assumption that: the selling price
remains constant irrespective of the volume of business; that
certain unit costs remain the same over the sales range of the
charted period that only one product (for example, a meal) is being
made or sold; that the product mix remains constant in cost price
and volume and that labour and machine productivity is constant.
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
91. • The break-even point can be calculated either by the equation
method or contribution margin method and both methods provide
the same result. The contribution margin method for calculating
break-even point discusses that each unit sold provides a certain
amount of contribution margin that goes towards recovering the
fixed cost. The Number of units required to break even is
calculated by dividing the total fixed expense with the contribution
margin.
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
92. • Instead of the unit contribution margin, the C M Ratio can also be
used. The result obtained is the break-even point in total sales
rather than in total units sold.
3.6 – Cost/Volume / Profit Relationship
(Break Even Analysis)
93. SUMMARY
Control may be defined as a process by means of which managers attempt to direct,
regulate and restrain the actions of people in order to achieve desired goals of
establishment: financial success, preservation of the sound environment, promotion of
better health etc. Controlling involves checking actual performance with the budgeted
and forecasted levels so that any deviation from the path is rectified on time and steps
are taken to prevent the problem from occurring again. It is also a process by which the
operation in the establishment functions smoothly and profitably.
94.
95. • Dittmer, R.P. (2003) Principles of Food, Beverage, and Labour
Cost Controls, 7th edn. John Wiley & Sons, New York.
• Miller, E.J., Hayes, K.D. and Dopson, R.L. (2002) Food and
Beverage Cost Control, 2nd edn. John Wiley & Sons, New York.
• Bansal, K.T. (2016) Food and Beverage Operations to
Management. I.K. International Publishing House Pvt. Ltd, New
Delhi.
• Seal, P.P. (2017) Food and Beverage Management. Oxford
University Press, New Delhi.
• Cousins, J., Foskett, D. and Gillespie, C. (1995) Food and
Beverage Management, 2nd edn. Pearson Education, New Delhi.
REFERENCE
96. A store sells t-shirts. The average selling price is 105 and the average
cost per shirt is 55. Thus, every time the store sells a shirt it has 20
remaining after it pays the manufacturer. This Rs. 30 is referred to as
the unit contribution.
(a) Suppose the fixed costs of operating the store (its operating
expenses) are 100,000 per year. Find Break-even in units?
(b) If the owner desired a profit of 25,000, what will be break-even
point in peso?
(c) If fixed costs rose to 110,000, break-even in units volume would
be?
Cost Volume Profit Problems
97. (a) Suppose the fixed costs of operating the store (its operating
expenses) are 100,000 per year. Find Break-even in units?
Breakeven in units = 100,0000 / (105 – 55)
Breakeven in units = 100,0000 / 50
Breakeven in units = 2,000
Solution
98. (b) If the owner desired a profit of 25,000, what will be break-even
point in peso?
Formula: Break-Even Point in Sales = Fixed Costs ÷
Contribution Margin ((Sales price per unit – Variable costs
per unit), with resulting figure then divided by sales price
per unit)
Breakeven in peso = 100,0000 / ((105 – 55)/105))
Breakeven in peso = 100,0000 / (50/105)
Breakeven in peso = 100,000 / 0.095
Breakeven in peso = 1,052,631.58
Solution
99. (c) If fixed costs rose to 110,000, break-even in units volume would
be?
Breakeven in units = 110,0000 / (105 – 55))
Breakeven in units = 110,0000 / 50
Breakeven in units = 2,200
Solution