Resource

Management

Advanced Technical Skills – FBA 11

In
Food & Beverage Service (Theory)

Mr J. Zahra

Roderick Zammit

15 December 2005
 ADVANCED TECHNICAL SKILLS THEORY FBA 11

CONTENTS

Page
No
6.1/6.2 Introduction 2

6.3 First Aid Procedures 12

Bibliography 14

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6.1/6.2 Resources and their control procedures & factors involved in the receipt,
storage and issues of resources:

Food & Beverages:

Stock control:
• Allow you to have items grouped together according their use.
• Where appropriate, to stop cross – contamination from one set of goods to an
other.
• Ensure that your stock is rotated. In one word, the first into stock is the first
out of stock.
• To be able to have a paper system, or a screen system if on a computer, which
will show, at any given time, the exact number of any item of stock in as a
short of time as possible. Also, a system that will allow you to count your
stock as effectively and efficiently as possible during whichever methods of
stock taking your organisation adopts.
• Very important that for any stock control system to work efficiently you must
understand the system (procedures) in your head, that is how the stock moves
from the supply through your organization and to the point of sale where the
customer pays you the money for the goods.

Stock control system:

• Record your stock;
• Give the details of the particular product line or item;
• Record when that item was received into stock and issued out of stock;
• Give information on minimum and maximum levels of stock and reorder
quantities;
• Prove that the system is secure and that your records provide a true picture.
Ex: if you have 2 crates of bottles lager in stock, and you order 10 more, you
have 12 in stock. If 6 crates should be in cellar and 6 crates are than issued to
the banqueting bar, then 6 crates should be in the cellar and 6 crates should
be in the banqueting bar prior to be sold, or there should be money from
sales of beer in the banqueting till. This is the ultimate part of stock control
system which proves its efficiency and effectiveness.

The purchasing cycle:

• Delivery (arrival on your premises)
• Inspection (Checked by store men)
• Into stock
• Invoice checking
• Payment

Goods into stock:

• If goods are found satisfactory, the goods immediately go into stock or into
.storage

• Into stock: the information from the delivery note is entered onto you . .
paperwork or via computer screen, usually onto stock card or bin card.

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The Purchasing cycle:

• Into storage: the type of store in which the goods are physically kept.
• This will depend upon the type of goods, for example:

Spirits – in which case they will go to the cellar;

Meats – to the chill or (for example with frozen chicken breast) to the frozen
store;
Fruits and vegetables – to the appropriate store in or near the kitchen;
Tins (for example kidney beans) – into the dry goods.

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Invoice checking and payment

Shortly after receiving the goods, the accounts department will receive an
invoice (bill) for the goods for which, in due course ( 4 – 8 weeks), the supplier will
expect payment.
We must , therefore, make sure that all goods received arrive at their
appropriate destination. This may be into storage in the chill room the freezer or the
cellar or it may be that goods are going strait to the kitchen or the bar for ‘processing’
and therefore immediate selling. If the goods are going immediately to the point of
sale, care has to be taken that the information is written up on the storage or bin cards,
even thought the goods bypass the storage process.
We need to know at any moment and time what the balance of the items is in
storage, so that we can reorder before we run out.
How many times have you set down in a café or bistro and chosen from the
menu only to be told that the item you have chosen is off the menu? There could be
many reasons for this, but if you are operating in efficient stock control system, it
should not be because you run out of stock (not unless you can prove exceptional
circumstances (for example an extra 300 guest arrive at a wedding and you did not
expect them!!!).
So, as soon as goods go into storage a note is made on a stock card or bin card
this will immediately show the status, that is how many there are of that particular
stock item and will be written in ink or shown on a computer screen.
Which ever way you keep your records (manual or computerised) you
physically have to write down (or enter into the pc) the details, so don’t think the pc
will cut down the work, it won’t!!!
A bill card or a stock card will be written up by a store keeper or who ever is
designated in the business to do that job.
A stock or bin card will show the movement of stock and will also show the
balance of what is in the store at any given time.

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Minimum stock levels
This is the amount of stock that is needed for each stock item held, bearing in
mind operational need (demand) and suppliers delivery period.

Demand x Delivery Period = Minimum Stock

4 boxes/week x 3 days (3/7 week) = 1.71 (say 2 boxes

If you were only able to have deliveries, every 2 weeks the minimum stock will be 8:

Demand x Delivery Period = Minimum Stock

4 boxes/ week x 2 weeks =8 minimum stock.

Re-order level of stock

Because of the risk involved in relying on prompt deliveries, a figure for extra
stock (often 25% of minimum stock) is added to the minimum stock.
This level of stock is the trigger to go ahead and purchase a new supply of
goods, and where this information is held on computer some computer programs will
automatically re-order by printing a purchase order or will automatically warn you to
reorder by visual means (perhaps a flashing item on the screen)

The re-order formula is as follows:

Minimum stock + 25% extra stock = re-order level

Maximum stock level

When establishing the maximum level of stock that can be held, the actual
physical capacity of your storage facilities will have to be taken into consideration.
In addition, it is good practice to keep your stock levels lower rather than
higher. This keeps the mo0ney in the bank and not tied up in the store room 4for
months on end. There is no point in carrying 4 months stock of an item if you can
order the item weekly or monthly at no extra cost.

Stocktaking
The purpose of a stock take is to check the actual physical stock held, against
the various stores records (bin cards, stock cards …) and to verify that the information
from the paper work has been accurately transcribed, and tallies with the physical
goods in stock. For example, if the bin card for gin (the gin-bin!!!!) in the case that
there are 23 x litre bottles of gin in the cellar, it is important to check that there
actually 23 litres bottles of gin awaiting movement to the bars for consumption.
Stock taking also allows full the evaluation (Lm) of the currant stock holding
to be done which, intern, will provide data which will contribute to the bar or food
stock results.
A stock take is always take at the end of your financial year for the purposes of
valuing the stock that you have for your balance sheet .
How ever, stock taking should be done more often than once per year ion
order to ensure that you are not carrying to much stock, and so that if there are
discrepancies between what you think you have in stock and what you actually have
in stock, you don’t have to wait 12 months to find out.

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On-going / continuous stock taking
This involves stock being continuously physically checked so that stock item
is verified at least once a year.
The system should be devised so that a number of stock items are checked on
every working day, with valuable or fast moving items being checked more often.

Random stock taking

This type of stock taking involves selecting a number of stock items at
random. A stock take is then carried out on those items and the results recorded.
With this method staff will not be aware which items have been selected for
stock taking, which would reduce potential pilferage, and comparisons of results with
the stock record will indicate the efficiency of your operations without a need of a full
stock take.
In a large establishment external specialist stock takers are employed on a
contract to carry out regular stock takes (or inventories, as they are sometimes
known).
As one of the main reasons of stock taking is to put monitory value on the
stock held, it is important to use either evaluation of the last batch of items going into
stock (LIFO last in first out) or the first item going into stock (FIFO first in first out)
Apart from the obvious problem of food and drink item going past their ‘sell-
by’ dates, thus obviating the use of FIFO, using a combination of the two methods
will produce inconsistencies in the stock evaluations, so only one method should be
used.

Elements of cost:
• Materials, ex: the cost of goods used
• Labour, ex: the cost of employees’ wages and salaries
• Expenses, ex: other costs, mainly the overheads

Each of the cost element can be categorised between:

• Direct costs – those costs that can be identified directly with each unit of output
• Indirect costs – all other costs, ex: those that cannot be identified with each unit of
out put

The cost elements for manufacturing business now appear as:

Materials:
• Direct – materials from which the finished product is made
• Indirect – other materials used in the factory, ex: grease for machines, cleaning
materials…
Labour:
• Direct – wages paid to those who work the machinery on the production line or
who are involved in assembly of the product
• Indirect – wages and salaries paid to those who are not directly involved in
production, ex: supervisors, maintenance, staff, etc…

Expenses:
• Direct – expenses which can be attributed to units of production, ex: royalties
payable to the designer of a product, special items bought in for particular product
• Indirect – other expenses, such as rent, business rates, telephone, lighting, which
cannot be attributed directly to production

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The indirect costs of materials, labour and expenses form the overheads of the
business:

Indirect materials + indirect labour + indirect expenses = total overheads

Net profit:
It is accepted that the net profit of a commercial undertaking be considered as
one of the fixed costs since without any profit the business could not survive.
The businessman has to take a salary or living wage as a reward for his efforts.
The precise amount of net profit to be expected is related to the amount of
capital invested rather than to the turnover of a small firm.
The enterprise should yield at least the same gain as if the capital had been
invested in bonds, stocks or shares or in a deposit account, after the payment of the
entrepreneur’s salary.
It should be remembered that a catering business tends to be capital intensive
and may need premises in a prime location.
If it has been purchased by the owner its periodic revaluation will be a form of
profit.

Gross profit:
Under this method the person responsible for the production and finishing of
dishes will have received materials to a certain value into his kitchen.
He is then expected to achieve a return of monies through sales which will be
sufficient to recover the original value of these materials plus a gross profit to pay the
fixed and variable costs.
This means having to add a figure of from 50% up to 300% or, in other words,
multiplying the materials cost by from 1½ to 4 times their value to arrive at the selling
price.
These percentages are not expressed as an addition on sales but as a fraction of
sales returns which represents 100% of revenue.
In some large-scale catering establishments there is a system whereby a total
sum of money is allocated to run the operation over the year to cover the cost of food
and service for the expected number of customers and at a certain standard.
The total sum is divided into the various costs and may not be exceeded; for
example; in a hospital the allocation for food may be $1.30 per day per patient which
must provide a breakfast, a two course luncheon and a three course evening meal.
Labour costs would be under a separate segment of the total budget.

Selling price:
Selling price to the customer can be quite a complex process but, at its most simple,
there are two techniques used:
• Cost – plus: i.e. cost price, plus profit (often as a percentage of cost price) equals
selling price
• Market led: i.e. the selling price is determined largely by what other suppliers of
similar products or services are charged

It should be remembered that, if the business is to make a profit, then selling

price must, overall, be higher than total costs. However, there are circumstances when
it is possible to sell output at below the absorption cost and still increase profits – we
shall investigate the pricing of ‘special orders’ using marginal cost pricing.

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Cost-plus pricing:
The basic calculation for cost-plus pricing is: cost price + profit = selling
price Cost is usually calculated on the basis of absorption cost – which absorbs all
costs into each cost unit – or standard cost. A variation is to use marginal cost.

Profit can be calculated:

• Either as percentage mark –up on cost price (ex: the profit, being a percentage of
cost price, is added to cost price to give selling price)
• Or to give a percentage return on capital employed (ex: the money invested in the
business)

Market led pricing:

When a business has a product or service for which there is considerable
demand and over which it has sole rights, it may be able to set and maintain its own
price level (subject to government intervention on the grounds of monopoly pricing).
Most businesses, however, must set their prices in comparison with other suppliers of
the same or similar products and services. In the economy of the free market, buyers
will tend to buy from the supplier than can produce the product, or supply the service,
at least cost. Thus, in an ideal world (but not always in reality), inefficient suppliers
will be forced out of the market and, in order to re-establish themselves, will have to
look carefully at their costing and/or production techniques.

Sales mix:
Hotel sales are made up of 3 distinctive elements:
• Room sales
• Food sales
• Beverage sales

It is vitally important that you know what proportion of your total sales each
one of the above components represents, and you need to constantly monitor the mix
of sales.

You need to know your sales mix for two reasons:

1. You need to compare figures from one period to the other in order to react to any
trends which may be showing.
2. You need also to know your sales mix in order to calculate how efficient each
department is in its pursuit of laid down departmental gross profit targets

The formula for calculating the sales mix is:

Departmental sales divided by total sales x 100

Turnover or total sales:

Overall, it is important to keep sales increasing rather than decreasing, as the
more of any item you sell, the more profit you will attract. As some elements of the
sales mix, however, attract more profit than others (in this example rooms, food and
beverage in that order) then the more rooms you sell, the more profit you will attract.
It stands to reason that your business will be more profitable in terms of money in the
bank, even if your overall turnover remained the same, but was made up of an
increase in room sales of $10 000 and decrease in food sales of $10 000, because
rooms attract more profit.
For this very reason, we can see from the example shown that, because the
total sales for 3 departments is made up of a different amount, each of rooms, food

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and beverage between 2 years being compared even with a decrease in total sales
(down $25 000) and a corresponding decrease in gross profit (down $12 800), the
overall gross profit margin is up by 0.57%, all explained by the shift in the sales mix.
So, we can conclude that a change in the sales mix can have a signification
impact on our gross profit and on gross profit margin, therefore it is vitally important
to analyse departmental sales mix and gross profit to identify and act according to
trends.

Check pads / computerised point of sale (Pos) system

Many establishments now use Pos system where the control of stock and
therefore the control of profit, is computerised.
A small Pos system might consist of just one or two cash registers, plus
software, a kitchen printer and a (PC).
In this way, as the information is entered into the till in the restaurant or at the
bar, as well as logging this on to the customer’s bill, whatever is entered is
automatically deducted from stock.
This replace the more tedious and labour intensive world of writing down
orders for food and drinks on a duplicate or triplicate check pad, all copies of which
are’ married up’ and eventually checked in the ‘control office’. As fast as technology
moves, new, improved and cost-effective systems come onto the market, which will
almost certainly replace the need for illegible scrawls to go orbiting round an hotel.

Storage and the law/ storage for profit

As soon as any of the commodities purchased arrive at our service door, they
became the responsibility of the unit, therefore a highly responsible approach has to
be taken to the storage of the various goods that we buy in prior to and during the time
which we manufacture the goods to the end product-the food and drink consumed by
our customers.
Once again, we have many factors to consider when looking at the storage
system of our goods. Obviously different goods require different storage conditions.

As responsible managers in the hospitality industry the following will have to be

taken into consideration when dealing with storage of goods:
1. Food safety act, 1990
2. Food safety regulations, 1995
3. Health and safety at work act, (HASAWA) 1974

Where storage are inadequate food goods purchased money would be wasted.
This wastage will manifest its self in a significant drop in gross profit. Goods may
deteriorate, which means they will be unfit for human consumption. This will effect
our gross profit margin, because goods have been bought in (purchase) but have not
became sales as they have had to be thrown out, in addition inadequate storage
conditions may cause at best stomach upset, and at worst a cute food poisoning which
will obviously effect sales immediately and then far into the future.

The main food hygiene regulations of impotence in the hospitality industry

are:
1. Food safety (general food hygiene) regulations, 1995
2. Food hygiene (temperature control) regulations, 1995

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These regulations place a strong emphasis on owners and managers to identify
safety risk and to design an implement appropriate preventative measures which may
include hazard analysis critical control point (HACCP) and assured safe catering
(ASC).

Food safety (general food hygiene) regulations, 1995

These regulations place to general requirements on owners and managers in
the hospitality industry amongst others:
1. To ensure that all food handling operations are carried out hygienically and in
accordance with the rules of hygiene.
2. To identify and control all potential food safety hazards, which will involve a
systematic approach such as HACCP or ASC.

The food safety (general food hygiene) regulations, 1995 are contained in 10
chapters which cover:
• Food premises
• Food rooms
• Movable premises including marquees, market stalls, mobile vehicles
and vending machines.
• Transport
• Equipment
• Food waste
• Water supply
• Personal hygiene
• Food stuffs
• Training

Food hygiene (temperature control) regulations, 1995

These regulations came into force in December 1995 and replace earlier and
more complex regulation. There are now only 2 important temperatures: 8°C, 63°C.
Foods which may be subject to microbiological multiplication must be held at
no more than 8°C or above 63°C. There are a few exceptions, which include food on
display, for up to 4 hours and also low risk and preserved food which can be stored at
an ambient temperature. Food, which is to be served hot, should be held at over 63°C.

Hazard analysis critical control point (HACCP)

HACCAP is a preventative quality control system. The approach to food
safety is based on a systematic analysis of all hazards or risks involved in buying,
receiving, storing, producing and serving food. All possible hazards are identified and
the likelihood of then happening and assed. Certain foods posed certain risks at
particular stages in the process. These risks are identified and measures are made to
control and eliminate the risk of hazard.

Recommended shelf lives

Cooked foods, frozen foods, ice cream, cheese, dairy food, fish, meat
products, cooked and raw, meat and poultry require adequate storage conditions which
will be different in each case. Further mare, canned foods, dried foods and bottled

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goods will also require adequate storage conditions. Where manufacturers recommend
use by date, these should also be adhered to.
In more simple terms, as good arrive at the back door for delivery they pass
along from main channels:
• Dried goods go to dried goods store
• Vegetables and grocery products go to the fridge or the vegetable store
• Frozen foods go to the freezer
• Fresh perishable products go to the cold room or chill room

The type of operation will dictate the storage conditions and the proportion of
those conditions in the preparation rooms, that is fast food operations will use more
frozen products, and will rely more on freezers than on refrigerators. An up market
restaurant on the other hand may need much more space for fresh vegetables and
perishable goods which will require refrigeration rather than freezing.
It is now worth nothing that the storage of waste products from the hospitality
industry, prior to disposal, needs to be considered. The environmental protection act
1990 imposes a duty of care on any one who produces or disposes of controlled waste.
So far at the hospitality industry is concerned the effect of the Act is to ensure that all
waste is stored correctly a disposed of correctly. All waste holder ‘ which includes the
hospitality industry’ must act to keep waste safe against:
• Corrosion of ware of the waste containers;
• Accidental spilling or leaking, whether cause by accident, the weather or
scavenging by animal or people.

Health and safety at work act, 1974

The legislation covers storage in as much as lifting procedures from storage
areas need to be considered. This will prevent serous injuries or worst. Typical task
which need to be addressed in the hospitality industry include:
• Lifting kegs from delivery positions to cellars or bar areas;
• Lifting gas cylinders and crates of bottles on delivery and restocking shelves;

• Also the storage of boxes of post mix syrups and the handling of bottle skips
or bins.

In the kitchen the movement of waste food bins and other waste receptacles, the
lifting positions of dishware, chemicals and containers and the loading and unloading
of storage trays in the dishware need to be considered, as do sacks of fruit and
vegetable and boxes of frozen food.
The law also requires that we control hazardous substances in the storage and use
of chemicals. This under the Control of substances hazardous to health regulations,
1994 (COSHH). Where chemicals and substances are stored a risk assessment must be
made.

Storage for profit

Wherever goods are stored, and in whatever condition, it is vitally important
that wastage (for whatever reason) is kept to a minimum. Wastage will occur for the
following reasons:
• Goods go past their sell – by date;
• Goods are damaged to careless storage
• Theft and pilferage

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Old stock should always brought to the front of the shelf in any storage
facility. This minimises the risk of goods going past sell-by dates and thus minimise
the risk of the purchase goods not attracting profit. It is also important that goods are
stored securely against the risk of theft or pilferage. By removing the opportunity for
people to steel, the risk is greatly minimised. This means that all storage areas,
including fridges, chill rooms and freezers should have a lock which should be used
and keys to those lock should be held by responsible member of staff. Duplicate keys
should be few and all should be accounted for. Access should be restricted to key
holders only and the appropriate actioned at every opportunity, ex: transfer of stock,
return to store, wastages… (see appendices)

6.3 Factors involved in the loss of resources.

Food wastage:
A certain amount of waste seems inevitable in any catering operation. Food waste
produced during the various stages of preparation meals can provide an indication of
the efficient to staff, of control over usage as well as highlighting any other inefficient
sequence in the cycle of operation.
The basic stages at which wastage can be studied are storage, preparation,
cooking, and plate waste. A figure of 20 % has been quoted as being the maximum
acceptable amount but in fact few operations that run on traditional lines manage as
low as this, yet it is essential to try to keep the amount down.

Storage Waste:
No waste at all should occur in the stores except for a small amount of weight loss
through evaporation of perishable foods and a minimal loss of nutritional value in
certain goods, but even these can add up to a considerable sum over the year and must
be countered. A record should be kept of goods that are lost or have deteriorated
during storage and a periodic check made to a certain possible cause such as excessive
stock being carried, poor ordering procedures, and adherence to old-fashioned
practices.

Preparation Waste:
The control of food wastage is most important at the preparation stage as here it can
be monitored to provide information regarding methods of practice, craft skills and
quality of materials purchased. This waste should be kept separate from plate waste
and inedible matter. It is even possible to find the exact source, volume and nature of
the waste by putting out a number of buckets of different colours in the various
preparation areas. The preparation loss of meat and vegetables should not exceed 15%
of total purchased weight otherwise the original quality could not have been good;
10% total waste is a realistic figure.

Cooking Waste:
Wastage in the cooking process comes from loss through shrinkage; this is usually
brought about by overcooking or cooking at too high temperature, which reduce
portion size and weight unnecessarily. When food is served hard and dry it is likely to
end as plate waste because it is impossible to eat it. Frying oil is frequently wasted
trough being maintained at too high temperature, which tends to shorten its useful life.

Plate waste:
Plate waste should be monitored whenever there is a separate of complaints or when
the amount including any bones and skin appears to exceed 10%of what was served. A
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larger proportion might indicate that (a) the portion served are too large, if kept at an
average size the dish could be sold cheaper; (b) the food was not properly trimmed;
(c) poor quality food was purchased: (d) the food was unappetisingly served; (e) there
were poor meal combinations, and (f) the food was served cold when it should have
been hot.
A recent survey on wastage showed the following points: (i) too much
sauce is often served; (ii) plated meals produced more waste than served once,
especially of vegetables; (iii) a large amount of toast is made for breakfast and any
unused is thrown away; (iv) once dishes on the sweet trolley are started they are
discarded as being unfit for meal: and (v) when catering staff are working under
pressure, presentation suffers and plate waste increase.

Pilfering:
If goods are bought, but not sold, they will not attract profit. At whichever point
throughout the cycle from purchase to sale that goods are pilfered, there will be a loss
of profit.
If a portion of apple pie is pilfered after it has been cooked there will be just
the same loss as there would be if the cooking apples where pilfered before the baking
took place. This applies to every single item that is purchased for your business.

Free food
If a member of the waiting staff omits to write an order own onto a check pad, or
omits to enter an order into the computer terminal somebody will not be charged fro
something they have consumed.
But, as it something that has been purchased, and therefore has to be paid for,
the profit is lost.

Standard recipe use

If you do not use standard recipes with accurate ingredients, than the cost of
producing the dish will be far greater than the costing of which the selling price was
circulated. In addition, if the recipe produced is a dish that is fundamentally different
from the one before or the one after, than there is no consistency and no ‘standard’.
That’s when you will hear the customer saying ‘it’s not as good as it was last time’ or
‘there’s more/less space meat than there was last time’ and so on.

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Bibliography

Authors Book Edition

Year Publisher Name

Tom Powers Introduction to Management in the Seventh Edition

Clayton W. Barrows Hospitality Industry
2003 .

Ricky W. Griffin Management

2002 Houghton Mifflin Company Seventh Edition

Richard L. Daft Management

2000 Harcourt Collage Publishers Fifth Edition

H.L Cracknell, Practical Professional Catering Management

2000 Macmillan Press Fifth Edition

Richard Kotas Food and Beverage Management

1999 Hodder & Stoughton Publishers Sixth Edition

Kinton, Ceserani Theory Of Catering

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