Manage Food Cost Factors

Reading Guide

Before You Read

Prior Knowledge Look over the Key Concepts at the beginning of the section. Write down what you already know about each concept and what you want to find out by reading the lesson. As you read, find examples for both categories.

Read to Learn

Content Vocabulary

Key Concepts

• issuing

• perpetual

• Evaluate the factors involved

• semiperishable

inventory

in purchasing.

• inhibitor

• parstock

• Describe the procedure for

• nonedible

• periodic-

receiving goods.

• sales cycle

ordering

• Outline how foodservice

• open-market

• bar code

businesses control inventory

buying

• rotate stock

and minimize waste.

• bid

• requisition

Main Idea

• single-source

• Daily

buying

Production

Management and control of food

• physical

Report

cost factors is essential to run a

inventory

V Eng'iSh La"9ua9e

Arts

NCTE 12 Use language to accomplish individual purposes.

V Eng'iSh La"9ua9e

Arts

NCTE 12 Use language to accomplish individual purposes.

/S^ Graphic Organizer Go to this book's Online Learning Center at glencoe.com for a printable graphic organizer.

foodservice operation. These factors include purchasing, receiving, Academic Vocabulary storage and issuing. • confirm • deteriorate

Graphic Organizer

There are six steps in foodservice purchasing. Use a chain of events diagram like the one below to list those steps.

Purchasing Steps

^ Mathematics

NCTM Data Analysis and Probability Select and use appropriate statistical methods to analyze data. n*

j I Social Studies

NCSSVB Individuals, Groups, and Institutions

Analyze group and institutional influences on people, events, and elements of culture in both historical and environmental settings.

NCTE National Council of Teachers of English

NCTM National Council of Teachers of Mathematics NSES National Science Education Standards

NCSS National Council for the Social Studies

Cost Control and Purchasing Goods

How can you keep costs under control in a foodservice operation? You might be surprised by how many factors affect cost control. Menu pricing is important. But purchasing, receiving, issuing, and storing methods are just as important. Issuing is the process of delivering foods from storage to the kitchen as needed for use. Kitchen waste and customer service can also impact an operation's profits. You must know how to properly manage and control each of these factors to be successful in the foodservice industry.

Purchasing involves more than buying products for a foodservice operation. It also involves elements that can directly affect a business's cost control. To make smart purchases, you must:

• Develop written specs for all items purchased.

• Determine the quantity of products needed.

• Assess inventory levels.

• Decide how much of each item to buy based on your current inventory and your projected needs.

Once you have done this, you can begin the purchasing process. Foodservice purchasing involves six steps:

1. Develop the order.

2. Get price quotes from vendors.

3. Select the vendor and place the order.

4. Receive and store the order.

5. Evaluate and follow up on any errors, if necessary.

6. Issue products to the production team in the kitchen.

Consistent purchasing procedures can help a foodservice operation in several ways. They allow a facility to keep enough products on hand at the lowest possible cost. This can improve customer service, as menu items will be available when customers ask for them. Purchasing procedures also ensure that high-quality products are purchased at the best price. For example, a purchaser might use USDA grading systems to ensure that the food that is purchased is of the right quality.

Product Storage Foodservice operations purchase many types of food products. How should semiperishable items be stored?

ataste of History

1999

2004

The common currency of Europe, the euro, debuts

868-pound bagel is baked for the New York State Fair

Weigh the Options

Foodservice operators know that it is essential to have consistent portion sizes to maximize customer satisfaction and profits. Quite often, and especially in the baker's kitchen, this would be impossible to do without the use of a scale.

The oldest type of scale is the balance scale. Balance scales measure an object's weight and mass (how much material the object contains). Balance scales were first used in ancient Egypt around 7000 bc. A stick hung by a cord tied around its middle. Objects to be weighed were hung on cords tied to either end of the stick. If the weights were equal, the stick stayed parallel to the ground. The baker's scale that is used today is an example of a balance scale.

History Application

Research international measuring standards, such as the International System of Units. Create a chart to show the advantages of having such an organization with regard to trade and commerce.

NCSS V B Individuals, Groups, and Institutions Analyze group and institutional influences on people, events, and elements of culture in both historical and environmental settings.

Using the grading system can help the purchaser compare foods from different suppliers.

Types of Products Purchased

In the foodservice industry, there are four types of products that a foodservice business can purchase: perishable foods, semi-perishable foods, nonperishable foods, and nonedibles.

Perishable items have a relatively short shelf life. These include products such as fresh fruits, vegetables, meat, poultry, and seafood. Perishable foods spoil easily. They should be purchased in quantities that will be used quickly, and stored properly as soon as they are received. Perishable items vary in price.

Semiperishable products are perishable food items that contain an inhibitor (in-'hi-bs-tsr) An inhibitor is a substance that slows down the chemical breakdown of the food. This increases the products' shelf life. Semiperishable products include smoked fish, processed meats, and pickled vegetables.

Nonperishable foods, such as canned goods and flour, have a long shelf life. The quality of these items is unchanged when they are stored for up to one year.

A nonedible is a nonfood product. Noned-ibles include cleaning materials and paper goods.

Food Specifications

A specification, or spec, is a written, detailed description of the products and supplies that a foodservice operation needs to purchase. (See Figure 14.3.) A spec acts as a quality control tool. It helps a commercial kitchen purchase exactly what is needed. Specs also tell vendors exactly what a foodservice operation expects to receive, both in quantity and in quality.

Foodservice operations usually have a spec sheet for nonperishable products as well. The specs usually include the following information:

• Name of the supplier

• Package size, quantity, or item count

• Form of the item to purchase

• Costs and quality limitations

Determine Purchase Quantities

There are several methods that can help you determine exactly how much of a product to purchase. First, you must know how much of each product the chef expects to use to prepare menu items for a given sales cycle. The sales cycle is the period of time between supply deliveries. The sales cycle varies for different foodservice operations.

The amount of available storage space and factors such as how perishable the food ordered is, how it will be used, and the cost of y figure I4j Food Purchasing Spec Order

Receiving List A food spec tells vendors exactly what the foodservice operation expects to receive. What is this foodservice establishment expecting to receive?

Food Purchasing Specification Order

Exact Product Name:

Oranges

Packer Name:

N/A

Intended Use:

N/A

U.S. Grade:

Fancy

Product Size:

88 count

Type of Packaging:

Bulk

Package Size:

35-lbs. box

Form:

Fresh

Degree of Ripeness:

N/A

Additional Notes:

Firm and heavy in hand

Receiving Indicator:

No mold or chalk-white coating

Acceptable Substitute:

Navel for Valencia or Valencia for Navel

Point of Origin:

CA or FL

Price Per Unit: Comments:

the food influence how much of a food product to purchase. Remember that perishable and semiperishable items are relatively expensive. Be careful when you order larger quantities. They may not be used before they spoil.

Common Purchasing Practices

Purchasers may buy food and supplies from vendors directly, or from distributing companies that sell products and equipment from many different vendors. Foodservice operations may use several purchasing methods. Two of the most common are: • Open-market buying is the most common purchasing method. A foodservice operation gets price quotes for identical items from several vendors, and then chooses the vendor based on price and delivery history. A formal price quote from a vendor is often called a bid. Open-market buying is often used for purchasing perishable foods. • In single-source buying, a foodservice operation purchases most of its products from a single vendor. A discount is usually given to a foodservice purchaser when a large amount of goods or supplies are purchased at one time.

Yield Tests

In Section 14.1, you learned how to calculate yield percentage (the ratio of the edible portion of food to the amount of food that was purchased). The results of yield testing will have an impact on your purchasing

^_jTake a Count It is important that employees frequently help managers take inventory. Why is this important?

decisions. They tell how much food you should purchase to end up with the right serving of food on each customer's plate. Yield tests must be performed accurately to help you plan correctly.

Vendor Relationships

Good relationships with vendors are very important. The relationship between a foodservice operation and its vendors must be

Receiving Tools and Equipment Make sure that the proper tools and equipment are available for receiving. You will waste time if you must go looking for them. Proper tools and equipment include:

• Heavy-duty gloves with nonslip fingertips j Scales of the proper size; check that the scales are properly calibrated before use

• A calculator to check total costs or add up total weights j Cutting devices for opening containers, packages, and boxes

• Thermometer

^_jTake a Count It is important that employees frequently help managers take inventory. Why is this important?

based on mutual trust, honesty, and good business ethics. A foodservice operation must choose vendors that it trusts will not inflate prices or reduce the quality of the products delivered. Foodservice operations also must choose vendors that have a good record of delivering supplies on time, and based on the operation's specifications.

To maintain a good relationship with vendors, foodservice operators must schedule regular meetings with vendors and carefully study their supply catalogs. It is also a good idea to visit vendor showrooms, arrange for occasional on-site visits from vendors, and attend foodservice industry trade shows to view new products and equipment.

What are the four types of products a foodservice operation purchases?

Receiving Goods

After products have been purchased, the next important function in a foodservice business is receiving.

Many foodservice establishments have formal guidelines for receiving goods. These guidelines help ensure that the products received are sanitary and that they are correct as ordered.

Check Purchase Orders and Invoices

One of the most important steps during the receiving process is to make sure that the items that have been received are the ones that appear on the purchase order. The purchase order lists the products the purchasing agent ordered. A purchase order should include:

• The type of product ordered

• The amount of product ordered and/or its weight

• Sometimes the unit price and total costs In addition, you should confirm, or make sure, that the items that are listed on the invoice are the same ones that have actually been delivered. Immediately report any differences to a supervisor or manager.

Physical Inspection of Goods

Just because products show up on the receiving dock, it does not mean that they should be automatically accepted by the foodservice establishment.

First, you must visually inspect products. Check each package for quality, freshness, and signs of damage:

• Packages should be intact and clean, and have no evidence of stains or water damage.

• Packages should not have a strange odor.

• Foods such as raw meat should be checked for cross-contamination.

• Temperatures of foods should be checked by placing a thermometer between or underneath packages. Perishables must be received at 41°F (5°C) or below. Frozen foods must be received at 0°F (18°C) or below. If these temperatures are not met, bacteria may have a chance to grow. Depending on the product, you might also need to check for:

^Formal Guidelines Restaurants usually have formal guidelines set in place for how they want inventory figures kept. Why is this important?

• Product tampering or mishandling.

• Improper storage practices. For example, look for evidence that packages have thawed and been refrozen, such as ice crystals or stains.

• Pest or rodent infestation.

• Dented, leaking, or misshapen cans. Next, weigh the products that have been received to make sure their weights match what was ordered. Notify a manager immediately if you find errors.

Redding Check

I Explain What is included on the purchase order?

Inventory Control

A foodservice establishment must control inventory to control costs. If an establishment fails to control costs, it will find itself out of business very soon. Inventory should include everything that is needed to operate the business. For example, items such as food products, tableware, and equipment should all be monitored in inventory. A physical inventory is a list of everything that an operation has on hand at one time.

As soon as items are received, you must update the inventory control system. Many facilities use a perpetual inventory to track inventory. A perpetual inventory is a continuously updated record of what a business has on hand for each item. Many facilities have their perpetual inventories stored on a computer. Some use perpetual inventory cards, although computerized systems are more common. (See Figure 14.4.)

Computerized point-of-sale systems help update food inventories as food items are sold. At a glance you can see what products you have plenty of and what products need to be reordered. Remember to always keep a backup copy of all computerized records off site, for safe keeping.

There is a delicate balance between having too much of a product in stock and too little. The amount of stock that will cover a facility's needs from one supply delivery to the next is called parstock. Product shortages, delivery delays, and even the weather can affect when food and supplies will arrive, and how much they will cost. Staple products for foodservice establishments, such as coffee, sugar, and rice, must be kept on hand at all times.

^PjGURETjjT Perpetual Inventory Card

Name Rice (whitelong-grain)_

Supplier Lee Import co._

Brand China Rose

Size 5 lb. sacks

Name Rice (whitelong-grain)_

Supplier Lee Import co._

Brand China Rose

Size 5 lb. sacks

Date Rec'd

Quantity Rec'd

Date Issued

Quantity Issued

On-Hand

New Balance

9/26

10 5-lb. sacks

7 5-lb. sacks

17 5-lb. sacks

9/28

1 5-lb. sack

16 5-lb. sacks

10/2

3 5-lb. sacks

13 5-lb. sacks

10/9

2 5-lb. sacks

II 5-lb.sacks

10/13

3 5-lb. sacks

8 5-lb. sacks

Inventory Control A perpetual inventory card can help keep track of inventory amounts on hand. Do you think this foodservice establishment will need to order more rice soon?

Inventory Control A perpetual inventory card can help keep track of inventory amounts on hand. Do you think this foodservice establishment will need to order more rice soon?

Taking Inventory Counting of food and supplies on hand should be done regularly and often. This is called taking inventory. Most establishments determine their own standards, but there are some general guidelines to use when you take inventory:

j Accurately count or weigh all of the products. j Record the information according to standards of the establishment.

j Report the numbers to the supervisor.

One way to decide how much to purchase is to use the periodic-ordering method. With the periodic-ordering method, a purchaser decides how much product will be used in a given time period. The purchaser then reviews the amount of product that is on hand, what will be needed, and how much parstock of the product is needed. This helps the purchaser decide how much to purchase that specific time.

To use the periodic-ordering method, add the parstock to the production needs, and subtract the amount on hand. This will give you the order amount:

parstock + production needs - stock on hand = order amount

Storing and Issuing Goods

As soon as goods are received and the inventory control system is updated, perishable and semiperishable goods need to be properly and immediately stored. Label, date, and store perishable and semiperishable products.

Some facilities use a bar code and computer system to keep track of inventory. A bar code is a series of bars, spaces, and sometimes numbers that contain coded information and are designed to be scanned into a computer.

With this method, all items are given a bar code sticker when they are received. This helps track the item through the inventory system.

Storeroom Controls

Food and supplies should always be kept in the proper storage areas to help prevent spoilage, waste, and contamination. In general, the longer a food product is stored, the more its quality may deteriorate, or become worse. To effectively manage the inventory and storage of food products, they must be rotated so that older items are used before newer ones.

The system of rotating stock is called first in, first out (FIFO). To rotate stock means to place stored items in an orderly way so that older items are used first. Items that are stored first should be used first. Foodservice facilities each have their own procedures for how to rotate food on storage shelves to ensure that the FIFO system is followed.

Issuing Controls

Some facilities follow an issuing system that uses a requisition. A requisition is an internal invoice that allows management to track the physical movement of inventory through a business. A foodservice employee fills out a requisition each time food or supplies need to be taken from storage. A requisition also helps calculate the cost of the food that is used each day.

^ Nutrition Notes ^ Nutrient Storage

Advances in food processing and storage, such as irradiation techniques and improved raw food storage containers, can help keep food fresh longer. They also can help maintain the nutritional value of food.

CRITICAL THINKING How can keeping food fresh for longer help maintain nutritional value?

You should fill out requisition forms carefully. Record each item that you remove from storage before you remove it. Accurate records are critical to maintaining profits and keeping enough food and supplies on hand.

For the most effective issuing control, limit the access to storage areas to as few people as possible. Theft is a problem for many foodservice operations. Keep the storage doors locked and issue keys only to authorized employees.

Minimize Waste

The more food that is thrown out unused, the more profit that is lost. A well-designed menu will allow chefs to use leftovers for a variety of food products. This reduces food waste.

Another way to reduce waste is to track the history of food products as they are prepared each day. Many commercial kitchens use a Daily Production Report form to show how much food product was used, how much was sold, and how much was unused, or left over. Knowing exactly what was unused or left over at the end of the day will allow you

SECTION 14.2 ^zmttmi Review Key Concepts

1. Describe the different methods of purchasing used by foodservice operations.

2. List the proper tools and equipment for receiving goods.

3. Explain how limiting storage access can help control costs.

Practice Culinary Academics ^^ English Language Arts

4. Examine your school's restaurant or cafeteria menu. Choose one dish from the menu, and list three ingredients used in that dish. Practice writing food purchasing specification sheets for those three ingredients. For this exercise, you will need to purchase enough of each ingredient for 100 servings total.

i i NCTE 12 Use language to accomplish individual purposes.

Something for Nothing Some foodservice facilities offer incentives for customers to return, such as free beverage refills, discounted or free birthday dinners, and huge desserts. The benefits of satisfied, repeat customers often outweigh the costs of offering these free items.

to prepare menus the following day that will use those foods.

Following the first in, first out (FIFO) inventory program will also help you to minimize waste. By clearly labeling and dating food, and properly storing it, you are able to use the food before its shelf life expires. Properly storing cooked foods and raw ingredients will eliminate the chances of cross-contamination. This will allow all of your food products to be used.

two ways to minimize waste while foods are being stored?

^^ Mathematics

5. Your purchasing agent has gotten price quotes for a case of 40 frozen hamburger patties. One vendor quoted $35, a second vendor quoted $42, a third vendor quoted $46, and a fourth vendor quoted $39. What is the average price? jMEESSm Finding the Mean When you have a series of values, calculate the statistical measure mean, or average, by finding the sum of all of the values, and dividing that sum by the total number of values.

Starting Hint There are four different price quotes. Calculate the average by adding the four prices together, and dividing by the number of price quotes (4). If necessary, round to the nearest cent.

NCTM Data Analysis and Probability Select and use appropriate statistical methods to analyze data.

fiSi Check your answers at this book's Online Learning Center at glencoe.com.

Chapter Summary f

One way for a foodservice operation to cover costs and improve customer satisfaction is through portion control. You can control portions by smart purchasing procedures. Follow specifications, follow standardized recipes, and use portioning tools and equipment. Proper receiving procedures and storeroom controls can control losses caused by damaged or spoiled products. Businesses should take inventory regularly. Controlled kitchen waste and excellent customer service also can help a foodservice operation control costs.

Content and Academic Vocabulary Review

1. Label each of these vocabulary terms as a noun, verb, or adjective.

Content Vocabulary

Review Key Concepts

2. Explain how foodservice establishments manage portion control.

3. Describe how to calculate unit cost.

4. Examine the factors that affect yield percentages.

5. Summarize how to cost a recipe.

6. Evaluate the factors involved in purchasing.

7. Describe the procedure for receiving goods.

8. Outline how foodservice businesses control inventory and minimize waste.

AP weight (p. 351) trim loss (p. 351) yield weight (p. 351) total weight as served (p. 352) Q factor (p. 353) cost per portion (p. 353) issuing (p. 357) semiperishable (p. 358) inhibitor (p. 358) nonedible (p. 358) sales cycle (p. 358) open-market buying (p. 359) bid (p. 359)

single-source buying (p. 359) physical inventory (p. 362)

• perpetual inventory (p. 362)

• Daily Production Report (p. 364)

Academic Vocabulary

Critical Thinking

9. Decide how ignoring portions could impact a foodservice operation. What might happen if a cook decided to ignore portion control guidelines? 10. Describe the elements of a good vendor relationship. What are some ways that a new vendor could gain the trust of a foodservice operation?

Academic Skills

^^ English Language Arts

11. Create a Procedure Create a procedure to keep track of inventory in a small restaurant. The procedure should attempt to minimize waste and loss of profits. Once you have created your procedure, create a training manual that outlines your procedure for other employees. Write your procedure as if you were explaining it to first-time foodservice employees. Make sure it is easy to follow and organized logically.

NCTE 4 Use written language to communicate effectively.

ijj Science

12. Determine Cooking Yield Cooking yield can affect how much you will need to purchase of certain foods.

Procedure Shape 4 ounces of ground beef into a %-inch thick patty. Cook the patty to a minimum internal temperature of 165°F (74°C). Weigh the cooked patty. Repeat, but replace 1 ounce of the meat with cooked wild rice.

Analysis Compare the weight of the two cooked patties, the weight of the drippings from the patties, the yield percentage, and the tenderness. Write a summary of your findings.

Mathematics

Calculate Food Costs On a typical night, your

NSES B Develop an understanding of the structure and properties of matter.

restaurant serves 27 9-ounce (AS) portions of roast beef. Assume that the roast beef loses 25% of its weight while cooking, and that before it is cooked you trim and discard fat equal to 10% of its AP weight. If you are able to purchase the beef at $4.50 per pound, what is your daily roast beef food cost? If the restaurant serves dinner an average of 24 nights each month, what is your monthly food cost? tfBH^fflSE Undoing Percent Calculations If you know that a value was decreased by a certain percentage, and you know the ending value but not the original value, you can determine the original value by dividing the ending value by 1 minus the percentage. Starting Hint Work backwards to determine the total weight of beef that you need to purchase each day. Since the AS weight of 9 ounces represents the precooking weight decreased by 25%, find the precooking weight by dividing 9 ounces by (1 -25%), or 9 * 0.75. Perform a similar calculation to get from the precooking weight to the AP weight. Divide the total ounces by 16 to convert to pounds.

NCTM Number and Operations Understand numbers, ways of representing numbers, relationships among numbers, and number systems.

Certification Prep

Directions Read the questions. Then, read the answer choices and choose the best possible answer for each.

14. What is the ratio of edible food to the amount purchased called?

a. product yield b. edible portion c. unit cost d. trim loss

15. What is the amount of stock needed to cover between deliveries called?

a. requisition c. parstock b. perpetual inventory d. physical inventory

Sharpen your test-taking skills to improve your kitchen certification program score.

Test-Taking Tip

Try taking a few breaks during the exam by stopping for a moment, shutting your eyes, and taking some deep breaths. This can help you relax and focus.

Real-World Skills and Applications

Interpersonal and Collaborative Skills

16. Develop Systems Follow your teacher's instructions to divide into groups and work together to develop systems for purchasing, receiving, storing, and inventory. Once you have finalized each system as a group, create a checklist for foodservice employees.

Communication Skills

17. Customer Service Divide into pairs at the direction of your teacher and take turns playing the role of a vendor and a foodservice purchaser. The vendor should try to convince the purchaser to become a customer by explaining the benefits of the company's products and services.

Technology Applications

18. Use Recipe Software Visit this book's Online Learning Center glencoe.com for links to recipe software. Use the software to create a recipe and then use it to increase the yield to double the amount produced. Then, determine the cost per portion of the original recipe, and analyze the nutritional value of the recipe if possible.

Financial Literacy

19. Calculate Costs Calculate the following:

1) A facility pays $25.50 for a 30-dozen case of eggs. Find the unit cost of each egg.

2) The total recipe cost for pecan pie, which yields 8 servings, is $4.67. Find the cost per portion for pecan pie.

Continue reading here: Culinary Lab

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