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Food Purchasing Control. HRT 276 – Chapter 4 Part II: Food Control. Thanks to…. The information in this presentation comes from Chapter 4: Principles of Food, Beverage, and Labor Cost Controls By Paul R. Dittmer 7 th Edition. 2003. New York: John Wiley & Sons. Introduction to Part II.

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Food purchasing control

Food Purchasing Control

HRT 276 – Chapter 4

Part II: Food Control

Thanks to
Thanks to…

The information in this presentation comes from Chapter 4:

Principles of Food, Beverage, and Labor Cost Controls

By Paul R. Dittmer

7th Edition. 2003. New York: John Wiley & Sons

Introduction to part ii
Introduction to Part II

  • Purchase

  • Receive

  • Store

  • Issue

  • Produce

  • Sell & Serve


  • Purchasing decisions are driven by these key components:

    • Menu

    • Product specifications

    • Purchase method

    • Product forecasting

  • Other factors

    • Budgeted food cost goal

    • Labor and type of service

    • Equipment, storage space, and layout of facilities

Purchasing the key factors
Purchasing: The key factors

  • Menu—determines needs

  • Product specifications—determines quality

  • Purchase method—determines price and supplier

  • Product forecasting—determines quantity

Responsibility for purchasing
Responsibility for Purchasing

  • Manager, Chef, Steward

  • The book uses the steward

  • The primary issue in this step is to limit purchasing to one person if possible

The control process from ch 2
The Control Process (from Ch. 2)

  • Establish standards and procedures

  • Train

  • Monitor performance

  • Take appropriate action

    • With people

    • With products


  • Perishables

    • Comparatively short shelf life or useful life

    • Think “fresh” – purchased for immediate use

    • It’s a “quality thing” in most cases

    • Can be more costly and more wasteful

  • Non-perishables

    • Comparatively longer shelf life

    • Do no deteriorate as rapidly if stored closed and at proper temperatures

Standards developing standards
Standards: Developing Standards

  • The primary purpose of establishing control over purchasing is to ensure a continuing supply of products:

    • In sufficient quantities

    • At the appropriate quality for its intended use

    • Purchased at the most favorable price

  • Standards dictate:

    • Quality

    • Quantity

    • Price

Standards establishing quality
Standards: Establishing Quality

  • Before the first purchase, one must determine:

    • Type of food (menu-based decision)

    • Quality of food (market-based decision)

      • Brand

      • Size

      • Packaging

      • Grade

      • Degree of freshness

      • Other

Standards establishing quality1
Standards: Establishing Quality

  • To produce meals of desired and consistent quality, then the raw products must be of desired and consistent quality


    • Commonly abbreviated “SPS”

    • These specifications dictate quality

Standards establishing quality2
Standards: Establishing Quality

  • SPS

    • Establishes exact requirements in advance

    • Useful in menu preparation and development

    • Help eliminate misunderstandings between steward and purveyors (vendors)

    • When distributed to more than one purveyor, competitive bidding is possible

    • Limit or eliminate verbal descriptions each order

    • Aid in proper receiving

Standards establishing quantity
Standards: Establishing Quantity

  • Principles are based primarily on useful life of the product

    • Perishable

    • Non-perishable

  • Other considerations

    • Projected business volume

    • Storage

    • Financial desires (cash-on-hand vs. on-shelf)

    • Purveyor minimums (quantity or value)

Standards terms and considerations
Standards: Terms and considerations

  • Storage locations

  • Permanent locations / Limited Locations

  • Shelf tags and labels

  • FIFO

  • Bin Cards

  • Computerized assistance

Standards establishing quantity1
Standards: Establishing Quantity

  • Perishables

    • Par or Par Stock

    • Minimum vs. maximum vs. always on-hand

    • Defined – for our use – as the quantity of any item required to meet anticipated demand in some specific upcoming period of time

    • The par level is established using historical information (remember the assumptions!)

    • Volume projections may dictate that more than normal is needed.

Standards establishing quantity2
Standards: Establishing Quantity

  • Ordering Perishables

    • The par (standard for quantity) is established and used in calculating the needed purchase amount

    • Steward conducts a daily physical inventory (or at least a physical observation)

    • Par is sometimes called a “build-to” value

      • So, par is what we need

      • Inventory is what we actually have

      • Order is the difference between par and actual

    • More may be ordered as par can be considered a minimum

Standards establishing quantity3
Standards: Establishing Quantity

  • Ordering Perishables (continued)

    • Steward’s Market Quotation List (figure 4.2)

    • For all purveyors holding the SPS for perishables, daily quoting is possible (price issue)

Standards establishing quantity4
Standards: Establishing Quantity

  • Non-Perishables

    • Par methods can be used

    • The par level is established using historical information

    • Storage is a greater issue as the time period between orders may be longer

    • Issues:

      • Storage / Permanent Location

      • Theft

      • Waste & FIFO

      • Labor for maintenance

Standards establishing quantity5
Standards: Establishing Quantity

  • Ordering Non-Perishables

    • Periodic Order Method

      Amount required for upcoming period 40

      - Amount presently on hand - 12

      + Amount wanted on hand at the end of the +15

      period to cover needs until the next delivery

      = Amount to order = 43

    • Ideally, physical inventory is used to determine on-hand amounts

Standards establishing quantity6
Standards: Establishing Quantity

  • Ordering Non-Perishables

    • Perpetual Order Method

      • It is like a check book (In, Out, Balance)

    • Requires some type of tracking

      • Perpetual Inventory Cards (not bin cards)

      • Paper or Computer

    • Reorder Point - the amount at which a new order is placed

    • Reorder Quantity – the amount ordered regularly once stock reaches the reorder point

Standards establishing quantity7
Standards: Establishing Quantity

  • Ordering Non-Perishables (continued)

    • Perpetual Order Method

      Par stock 32

      - Reorder Point - 15

      = Subtotal 17

      + Normal usage until delivery +10

      = Reorder quantity (minimum needed) 27

    • Note that the standardized Reorder Quantity is 24, so a determination of number of cases is needed (case may be 6, 12, 24 of each item)

Standards establishing price
Standards: Establishing Price

  • Quality – what to buy

  • Quantity – how much to buy

  • Price – how much to spend

  • Factors:

    • Quality / Market segment

    • Quantity / Economies of Scale

    • Seasonality of product

    • Location

    • Availability of more than one purveyor

Standards establishing price1
Standards: Establishing Price

  • Price Quote

    • Daily

    • Longer (bulk buying, commitments, etc.)

  • Methods

    • Phone

    • Fax

    • Email / Web / Direct On-line Links with Purveyor

    • Salesperson

    • Mail

Standards establishing price2
Standards: Establishing Price

  • Perishable

    • Daily

    • Weekly

    • More than one purveyor is likely

  • Non-Perishable

    • More likely one primary purveyor and one back-up

    • Individual items may vary between purveyors, but keep the big picture in mind

Training for purchasing
Training for Purchasing

  • Training of the Purchaser

    • Formal education

    • On-the-job training

    • Owner / Manager

    • Purveyors / Food Shows / Specialized training

    • Use of SPS and other Standards

    • Use of general policies and procedures regarding the operation that relate to purchasing

    • Knowing the other steps in the flow of food

Monitoring purchasing
Monitoring Purchasing

  • Purchasing

    • Standard Purchase Specifications (SPS)

    • Monitor purveyor performance

    • Monitor purchaser performance

  • Who does what?

    • Owner / Manager works with purchaser (steward)

    • Both Owner or Manager and Steward monitor SPS and purveyors

    • Steward must have two-way communication with the receiver

Taking corrective action
Taking Corrective Action

  • With Purchaser

    • Further training and development

    • Re-training

    • Discipline

  • By Purchaser

    • Contact with salesperson

    • Contact with purveyor directly

  • Any variation from standards must be investigated: people or product

Purchasing centralized purchasing
Purchasing: Centralized Purchasing

  • Needs of individual operations (“units”) are consolidated to a central location

  • Total needs are purchased

  • Purchased items be distributed to individual operations by the purveyor or by the company (central location)

Purchasing centralized purchasing1
Purchasing: Centralized Purchasing

  • Advantages

    • Volume pricing

    • More choice of purveyors may lead to better quality

    • SPS more likely to be met

    • Larger inventories can lead to more reliable supply

    • The possibilities for dishonest purchasing in individual units are reduced

Purchasing centralized purchasing2
Purchasing: Centralized Purchasing

  • Disadvantages

    • Restricts individual unit operator’s freedom

      • Selection (variety)

      • Needs (timing)

    • Individual unit operators can not take advantage of local specials

    • Limits individual menu variations

Purchasing standing orders
Purchasing: Standing Orders

  • Delivery without order

    • Specific quantity on a set day

    • Building an item up to a specified level

  • Convenient

  • Possible waste or excessive cost

Purchasing computer applications
Purchasing: Computer Applications

  • Simple

    • Excel

    • Database

    • HOH only

  • More complex

    • HOH and FOH communication

    • May include

      • Recipes

      • Labor