Controlling food costs in purchasing and receiving
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Controlling Food Costs in Purchasing and Receiving. Controlling Foodservice Costs. 5. OH 5- 1. Chapter Learning Objectives. Explain how a specification becomes a control in the purchasing function. Explain the parts of a purchase specification and a purchase order.

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Controlling Food Costs in Purchasing and Receiving

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Controlling Food Costs in Purchasing and Receiving

  • Controlling Foodservice Costs

5

OH 5-1


Chapter Learning Objectives

  • Explain how a specification becomes a control in the purchasing function.

  • Explain the parts of a purchase specification and a purchase order.

  • Explain various purchasing methods and their effect on the price of goods.

  • Calculate a yield test that identifies the difference between as purchased (AP) price and edible portion (EP) cost.

  • Identify factors that affect the purchase price of goods.


Chapter Learning Objectives continued

  • Distinguish between perishable and nonperishable goods and their relationship to the purchasing cycle.

  • Calculate the par stock amount of an item to order.

  • Calculate the amount to purchase, using EP amount and yield percent.

  • Calculate the amount of goods to purchase for catered events.

  • Calculate a butcher test, or meat yield test.

  • Describe proper procedures for receiving goods.


Who Purchases?

  • Purchasing agent

  • Manager

  • Chef

  • Head cook

  • Trusted staff member

  • The buyer maintains quality standards!


Who Purchases? continued

The buyer is responsible for ensuring that quality standards are met during the purchasing and delivery process.


Is a control device

Lists the product’s name

Lists its intended use

Identifies the desired brand and grade

Identifies the desired size

Identifies the desired variety

Identifies packing requirements

Details delivery requirements

Explains payment terms

The Food Specification


The Food Specification continued

  • Specifications should describe exactly what buyers want to buy.


Purchase Orders

  • The official written record of the items the buyer wants to purchase


A unique identification number

The name and address of the restaurant

Date of the order

Signature of the buyer

The supplier’s contact information

Date of delivery

The name, quantity, and delivery unit of each item ordered

Total (extended) cost of the order

Purchase Order Information


Competitive quotes

Standing order

One-stop shop

Cost-plus

Sealed bids

Commissary

Purchase Methods


What to Buy

  • Avoid buying the “cheapest.”

  • Use purchase specifications.

  • Buy at the best cost from sellers who meet or exceed the purchase specifications.

  • Consider both AP price and EP cost.


Two Kinds of Costs

  • As purchased (AP)—the cost of food as delivered to the restaurant

  • Edible portion (EP)—the cost of food as served to the guest


AP vs. EP Form

Items, such as fresh whole fish, will weigh much less in their EP form than in their AP form.


Calculating EP Cost

  • Two steps

  • Step 1 –Calculate product’s yield percentage.


Calculating EP Cost continued

  • Step 2 –Calculate EP cost.

  • Example—the EP cost of one pound of onions


Management complacency

Payment history

Gift acceptance policies

Other Factors Affecting Purchasing


When to Buy

  • Purchase perishable items daily or every few days.

  • Purchase nonperishable items weekly or monthly.


Perishable Product Purchases

  • Determine the amount of product that will be used between deliveries.

  • Count what is on hand.

  • Subtract the amount on hand from the amount that will be used.

  • The result is the amount to purchase.

    (Note: Some managers purchase a small “extra” or “cushion” amount in case sales levels exceed forecasts.)


Nonperishable Quantity to Purchase

  • Most common method is par stock method.

  • Steps

    • Determine quantity (par stock) that must be on hand between orders for each item.

    • Before ordering, take inventory.

    • Subtract on hand quantity from par stock quantity.

    • Difference is quantity to order


Calculating How Much to Buy

  • Need ten pounds of onions.

  • Yield percentage of onions is 84.2%.

  • How many pounds will you buy?


Catering Purchases

  • Step 1 – Determine the servings per purchasing unit (SPU).


Catering Purchases continued

  • Step 2 – Determine the purchase factor.

  • Recall the formula for EP percentage.


Catering Purchases continued

  • Step 3 – Determine the amount to purchase.


Also known as “yield test”

Used to determine EP meat costs

Results vary, based upon the AP quality of meat purchased

Measures losses from

Fat removal

Bone removal

Trim and packaging removal

Portioning

Butcher Test


Steps for Receiving

  • Step 1 – Delivery person brings products to receiving area.

  • Step 2 – Check products against the purchase order.

  • Step 3 – Check products against purchase specifications.

  • Step 4 – Check delivery quantity against the invoice and the purchase order.


Steps for Receiving continued

  • Step 5 – Match invoice prices to purchase order prices.

  • Step 6 – If everything matches correctly, sign the invoice.

  • Step 7 – Put delivered products in proper storage areas.

  • Step 8 – Process paperwork in keeping with the operation’s standard operating policies and procedures.


How Would You Answer the Following Questions?

  • A purchase order is best prepared by the (buyer/ seller) of the items to be purchased.

  • With effective purchasing techniques in place, a restaurant's EP costs can often be lower than its AP costs. (True/False)

  • EP weight divided by AP weight results in

    • AP percentage

    • AP cost

    • EP cost

    • EP percentage

  • A butcher’s test is a test of (yield/quality).


  • As served (AS)

    Butcher test

    Buyer

    Commissary

    Competitive quotes

    Cost plus

    Invoice

    Key Term Review


    Market quotation sheet

    Nonperishable goods

    One-stop shop

    Par stock

    Perishable goods

    Purchase order

    Quotes

    Key Term Review continued


    Sealed bid

    Specification

    Standing order

    Yield chart

    Yield percentage

    Yield test

    Key Term Review continued


    Chapter Learning Objectives—What Did You Learn?

    • Explain how a specification becomes a control in the purchasing function.

    • Explain the parts of a purchase specification and of a purchase order.

    • Explain various purchasing methods and their effect on the price of goods.

    • Calculate a yield test that identifies the difference between AP price and EP cost.


    Chapter Learning Objectives—What Did You Learn? continued

    • Identify factors that affect the purchase price of goods.

    • Distinguish between perishable and nonperishable goods and their relationship to the purchasing cycle.

    • Calculate the par stock amount of an item to order.

    • Calculate the amount to purchase, using EP amount and yield percent.


    Chapter Learning Objectives—What Did You Learn? continued

    • Calculate the amount of goods to purchase for catered events.

    • Calculate a butcher test, or meat yield test.

    • Describe the proper procedures for receiving goods.


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