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Costs of a Food service Operation

Costs of a Food service Operation. Expenses. Labor Total cost of labor employed in the establishment. Expenses. Overhead Controllable Expenses Food, Labor, Supplies Non Controllable Expenses Rent, Utilities, Advertising, Insurance. Expenses. Food Cost

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Costs of a Food service Operation

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  1. Costs of a Food service Operation

  2. Expenses • Labor • Total cost of labor employed in the establishment.

  3. Expenses • Overhead • Controllable Expenses • Food, Labor, Supplies • Non Controllable Expenses • Rent, Utilities, Advertising, Insurance

  4. Expenses • Food Cost • To control Food cost, standards must be implemented • Quality • Quantity • Portion size • Yield • The most important standards are the recipes

  5. Standardizing Recipes Recipe Name ID number Portion Size Yield Ingredients Waste % Edible Product As Purchased Conversion Measure Ingredient cost Subtotal cost Q Factor Total Cost Additional Cost Food cost %

  6. Portions • The number of servings that one preparation of the recipe produces. • Portions are needed to determine the portion cost • For Example • Recipe Cost = 12.90 • Portions = 10 • 12.90 / 10 = $1.29 portion cost

  7. Example • A Recipe for Chicken Pot Pie makes 10 cups. A portion in considered 1 cup. • How many portions are there? • 10 / 1 = 10

  8. Example SOUP • Recipe Yield 2 gallons • Serving size 8 oz • How many Portions are there?

  9. Yeild % • EP/AP = Yield % • Edible Portion / As Purchased = Yield %

  10. Yield % Sample • You can find yield % by performing a cut test. • A 50# Bag of carrots is purchased • After Peeling and dicing, 45# remains • What is the Yield %?

  11. Yield % • 45/50 = 90%

  12. Using Yield % • Whole carrots cost $1.00 per pound. How much do peeled carrots cost? • Take the original cost and divide by yield % to get the true cost. • 1.00 / .90 = $1.11/lb

  13. One more… • Red snapper has a yield of 30%. Red Snapper fillets cost $12.99/lb and the whole fish cost 3.50/lb. • How should you purchase your snapper?

  14. How much should I buy? • Ep/ap = yield% • Ap = ep/yield %

  15. Example • A recipe calls for 5 lbs of diced pumpkin. Pumpkin has a yield of 60%. How much should you buy? • 5 / .60 = 8.33 lbs

  16. One More • You have a banquet for 100 people. They will be eating roast beef and each guest will be an ½ lb or 8 oz portion. The only issue is, when you roast the beef, it shrinks 20% which means the yield is 80%. How much beef should you purchase?

  17. Food Cost • Expressed as a percentage • Cost of food / sales price Cost of food = $2.00 Sales Price = $6.00 Food cost = 33%

  18. Example • Chicken Parm $9.99 • 8 oz chicken breast 1.50 • 2 oz sauce .25 • 1 slice cheese .40 • 12 oz pasta .55 • Fresh basil (garnish) .05 What is the food cost???

  19. Food Cost % • BLT • 2 pieces of bread .15 • Bacon .60 • Lettuce .25 • Tomato .25 • You would like a 30% food cost, how much can you sell the BLT for?

  20. Determining Sales Price • Desired food cost % • Direct competition • Labor intensity • Demand (popularity)

  21. Formulas to know • YIELD % = EP / AP • EP = Starting weight – waste • AP = EP/Yield % • Food cost % = cost of product / sales price • Portion Cost = Total Cost of Recipe / servings

  22. Portion Cost Example • Clam Chowder costs $22.00 per gallon to make. • There are 16 servings at 8 oz per serving. • What is the cost of 1 serving?

  23. Classwork / Homework • Standardize your recipes – put them in easy to use formats • Using the price sheet, fill out recipe cost form for all 6 recipes to determine sales price • Create your menu • Turn in all 13 pages next week

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