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IFWA 1217 Food Production and Planning Virginia Stipp Lawrence, MHM Welcome! Today’s Notes Cost Control Standardized Recipes (introduction) Cost Control - Calculate Actual Cost; Convert to Cost % Compare Actual Cost % To: Industry Average %

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Ifwa 1217 food production and planning l.jpg

IFWA 1217Food Production and Planning

Virginia Stipp Lawrence, MHM

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  • Today’s Notes

    • Cost Control

    • Standardized Recipes (introduction)

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  • Cost Control -

  • Calculate Actual Cost; Convert to Cost %

  • Compare Actual Cost % To:

  • Industry Average %

  • Previous Actual Cost % (Past Income Statements)

  • Operating Budget (Estimated Cost %)

  • Specific Standard For Your Company

  • Specific Standard For Your Property

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  • Variance From The Standard

  • First Decide If The Variance Is Significant

  • Is Standard Cost Greater Than Actual Cost?

  • Is Actual Cost Greater Than Standard Cost?

  • What Is The Percentage Variance?

  • What Is The Dollar Variance?

  • How Much Of A Variance Is Acceptable To Your Company?

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  • Why Is There A Significant Variance?

  • There Are Many Possible Explanations

  • The Problem(s) Can Usually Be Traced To:

  • Arithmetic Error (Sales Revenue Or Costs)

  • Unexpected Waste

  • Incorrect Portioning

  • Purchases Are Off-Spec.

  • Improper Storage

  • Stealing

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Correcting The Variance

  • How Much Time/Effort Do You Want To Spend?

  • How Important Is The Problem?

  • How Specialized Is The Problem?

  • Are You Sure You’ve Isolated The Right Problem?

  • Is The Corrective Action Easy To Track?

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Correcting The Variance

  • How Much Time/Effort Do You Want To Spend?

  • How Important Is The Problem?

  • How Specialized Is The Problem?

  • Are You Sure You’ve Isolated The Right Problem?

  • Is The Corrective Action Easy To Track?

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Management Objectives to Control

  • Sales Revenue

  • Profit

  • Cost Restrictions

  • Growth

  • Guest Satisfaction

  • Employee Satisfaction

  • Other Constituencies’ Satisfaction

  • Obligations to the Industry

  • Obligations to the Community

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The Control Process

  • Establish Standards: Cost, Quality

  • Determine Actual Results

  • Compare Standards To Actual Results

  • Determine If there Is A Significant Variance

  • Corrective Action

  • Revise Standards If Necessary

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The Effective Control Process

  • Measurable, Objective Standards

  • Meaningful, Realistic Standards

  • Provides Feedback

  • Accurate

  • Timely

  • Consistent

  • Tracks The Right Things

  • Tracks The Most Important Things

  • Cost Effective

  • Practical And Appropriate For The Type Of Operation

  • Flexible

  • Provides Specific Information

  • Establishes Authority And Responsibility

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Cost Control – and Menu Planning

  • Menu Planning Is The First Control Point In The Restaurant Operation

  • Other Control Points Are:

  • Purchasing

  • Receiving

  • Storing

  • Issuing

  • Preparing

  • Cooking

  • Holding

  • Serving

  • Guest Interaction, E.G., Cash Collection; Customer Satisfaction; Etc.

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Major Factors Affecting Menu Planning

  • Layout And Design Of The Facilities

  • Availability Of Food And Beverage Ingredients

  • Type Of Equipment

  • Labor

  • Budget

  • Customer Needs And Desires/Trends

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Types Of Menus

  • Day Part Menus (Meal Part)

  • Cycle Menus

  • Drink Lists

  • Dessert Menus

  • Daily Menus

  • A La Carte Menus

  • Fixed Price Menus

  • Down-Time Menus

  • Casual Menus

  • Table Top Displays

  • Catering Menus

  • Room Service Menus

  • Café Menus

  • Interactive Menus

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Truth In Menu: Misrepresentations That Should Be Avoided:

  • Quantity

  • Quality

  • Price

  • Brand Name

  • Product Identification

  • Point Of Origin

  • Merchandising Terms

  • Means Of Preservation

  • Means Of Preparation

  • Illustrations/Graphics

  • Nutrition

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Food Production and Planning

April 10,2006

Objectives for Today

1. Review Menu Pricing Methods

2. Review Controls Standards

3. Review Standardized Recipe Concepts

4. Complete Standardized Recipe handout


Homework 4 is due next week

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Menu Pricing

  • Subjective Methods

  • Reasonable Price (Usually Copying the Competition’s Prices)

  • Highest Price

  • Loss Leader

  • Lost Leader (delete)

  • Intuitive (Trial And Error)

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Objective Method Used To Price The Regular Restaurant Menus - “Multiple” Method

  • Cost Out Menu Items -- use ingredients method, prime ingredient method, or mark-up + method

    • Ingredient Method= each ingredient is costed & added together

    • Prime Ingredient Method=The formula is to add the cost of labor and cost of food, add a percentage for profit. This method is good for dishes that require a lot of preparation.

    • Mark Up Method=each ingredient has food cost percentage added to it or cost is just multiplied by three (factor method) not including labor or other costs

  • Multiply Cost By 3 to 7

  • Check Out The Competition

  • Adjust Multiple, If Necessary

  • Do Menu Engineering Analysis

  • Adjust Multiple Again, If Necessary

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Objective Method Used To Price Catering Menus - “Thirds” Method

  • 1/3 Cost Of Food, Beverage, Other Supplies

  • 1/3 Cost Of Labor, Overhead

  • 1/3 Profit

  • Aggravation Factor?

  • Shoulder Periods/Down Time?

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Objective Method Used To Price Catering Menus - “Contribution Margin” Method

  • Calculate Average CM Needed, Per Guest (This is equal to all expenses -- except F&B -- plus net profit, per guest)

  • Calculate Cost Of Food And Beverage, Per Guest

  • Add Together To Determine Price, Per Guest

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Other Pricing Procedures “Contribution Margin” Method

  • Pricing Food And Beverage Daily Specials

  • Pricing All-You-Can-Eat (Drink) Items

  • Pricing Merchandise

  • Pricing Sales Promotions

  • Corkage Fees-bringing in your own bottle

  • Pricing Entertainment

  • Pricing Take-Out, Delivery Items

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Purchasing and Controls “Contribution Margin” Method

  • Security Problems In Purchasing

  • Kickbacks

  • Fictitious Suppliers

  • Unintentional/Intentional Errors

  • Off-Spec Products

  • Getting Proper Credit

  • Other Buyer Dishonesty

  • Receiving Wrong Products

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Receiving Controls “Contribution Margin” Method

  • Compare Shipment To Copy Of Purchase (Order) Record

  • Compare To Copy Of Invoice

  • Check Quality

  • Check Quantity

  • Check Expiration Dates

  • Spot Check AP Prices

  • If Shipment Acceptable, Sign Invoice, Keep Copy

  • If Unacceptable, Return And/Or Get Credit Slip

  • Move “Directs” To Production

  • Move “Stores” To Warehouse For Later Issue

  • Update Inventory File in Computer

  • Update AP Prices in Computer

  • Update Bar Codes in Computer

  • Complete Necessary Paperwork

  • Send Paperwork To Office

  • Keep back Up Files/Paperwork

  • Security Problems In Receiving

  • Off-Spec Products

  • Expired Products

  • Wrong Products

  • Short Counts

  • Theft/Pilferage

  • Spoilage

  • Wrong AP Prices

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Storage Controls “Contribution Margin” Method

  • Determine Which Items To Track (ABCD)

  • Separate “Directs” From “Stores”

  • Determine Which Areas/Items Require Tight Controls

  • Limited Access

  • Proper Locking System

  • Practice FIFO Inventory Rotation

  • Controlled Temperature/Humidity

  • Follow Health District Guidelines To Avoid Spoilage/Quality Deterioration

  • Arrange Inventory Conveniently

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Maintaining Cost And Quality “Contribution Margin” Method

  • Specifications

  • Recipes

  • Portion Costs

  • Yields

  • Portion Sizes

  • Glass Sizes

  • Ice Sizes

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Other Production Controls “Contribution Margin” Method

  • Track Expensive Issues And Directs

  • Keep Training Up-To-Date

  • Watch Waste (Paper Products, Linen)

  • Watch Over-Portioning

  • Make Sure To Use Correct Qualities

  • Use EDR, Not Eating-On-The-Job

  • Match Issues With Sales And Mistakes

  • Watch Crossover Problems On Prep Lines When Planning Menus

  • Have Appropriate Equipment/Tools

  • Try To Use Leftovers

  • Lock Up In-Process Inventory When Closed (Especially At the Bars)

  • Try To Hire The Correct Personalities

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Serving Controls “Contribution Margin” Method

  • Service Is Affected by:

  • Type Of Menu

  • Type Of Production

  • Style Of Service Required

  • Layout And Design

  • Communication Flow

  • Degree Of Cooperation

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Service Control Factors “Contribution Margin” Method

  • Timing Of Service

  • Accuracy

  • Up$elling, Suggestive Selling, Consultative Selling

  • Keep It As Simple As possible

  • Stock Side Stands Adequately

  • Maintain High Seat T/O

  • Track Expensive Foods/Beverages Served

  • You Must Have An Expediter

  • (A Food Checker Is Uncommon These Days)

  • Allocate Stations Appropriately

  • Determine Optimal Station Size

  • Determine Optimal Tip/Tip-Out/Auto-Grad. Systems

  • Get The Right Computer System

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Computerized Service Systems “Contribution Margin” Method

  • At Very Least, You Need An ECR

  • Preferably You Will Have A POS System, With Touch Screen Capability And As Much Flexibility As You Need And Can Afford

  • Make Sure The System Is Correct, That It Meets Your Needs

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Food Production and Planning “Contribution Margin” Method

Standardized Recipes

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Goals and the Standard Cost “Contribution Margin” Method

Standard costs are one of the most important control tools within F & B operations.

The standard cost

  • ·        that you establish, defines the expected cost.  

  • ·        acts as a goal. 

    You can establish standards for:

  • ·        the operation as a whole  

  • ·        each individual profit(cost) center

  • ·        foods alone  

  • ·        beverages alone  

  • ·        each meal period  

  • ·        each particular menu  

  • ·        each food group on the menu  

  • ·        each specific menu item

    The more specific your information (your standard) is:

  • ·        the more useful for control purposes.  

  • ·        the more timely and costly to develop, maintain and use.

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Control Tools “Contribution Margin” Method

First create the menu.

  • **Based on the menu

  • there are 5 (five) control tools to use in determining standard food and beverage costs:

    The Five Control Tools:

  • 1. Standard Purchase Specifications

  • 2. Standard Recipes

  • 3. Standard Yields

  • 4. Standard Portion Size

  • 5. Standard Portion Costs

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Review-What is a Standardized Recipe? “Contribution Margin” Method

  • is a detailed formula for producing each menu item, food and beverage.

    you need precise records of:

  • a) ingredients

  • b) amounts

  • c) procedures.

    A standardized recipe is a customized recipe developed by a particular establishment describing exactly how they want a dish to be prepared, including specifications of the necessary tools and equipment, the time and personnel involved, and ideally a picture of the item as desired for service.

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The standardized recipe “Contribution Margin” Method

  • should include all relevant information right down to the garnish (if any), plate size and plate presentation.

    A recipe out of a cook book is NOT a standardized recipe, because

  • . . . equipment varies from place to place.

  • identical equipment performs differently from place to place.

  • utensil availability may vary.

  • interpretations required: "golden brown", "moderate heat", "cook until done”

  • raw food products (ingredients) may vary in terms of "types",

  • flavor, size, and availability.

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Developing a standardized recipe: “Contribution Margin” Method

12 steps:

  • 1 A) Talk through the process with the preparers (cooks, bartenders) as you observe and take detailed notes.

  • 1 B) Find a recipe that you would like to use (existing files, food magazine, mothers files . . .)

  • 2)Check if you have the necessary tools and equipment, i.e., is it at all feasible for you to prepare, or do new purchases have to be made?

  • 3) Cost it out:

  • -is it feasible for your market?

  • -is it worthwhile to produce, i.e., is it profitable.

  • -loss leader?

  • 4)Try it out in its original format.

  • Is it OK?

  • Evaluate: Appearance, tenderness, texture, flavor, overall quality . . .

  • 5)Convert the recipe to your standard size, specifying portion size,yield and number of portions.

  • 6)"You" make the converted recipe.

  • Evaluate again: does it still have the desired quality characteristics? Some recipes do not work well in large

  • quantity,

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  • 7) Make any desired or necessary changes. “Contribution Margin” Method

  • 8) Make the batch/converted recipe at minimum 3 times:

  • is it consistent?

  • are the flavors and other characteristics the same?

  • is it functional to produce in this size?

  • 9)Put into your standardized recipe format.

  • 10) Have your preparation employees prepare (recreate) it according to the standard format.

  • Evaluate, adjust, change/clarify directions.

  • 11) Train your preparation staff.

  • 12) File and/or start using.

  • Keep records of

  • ·        popularity

  • ·        reproducibility

  • ·        acceptability.

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