Food & Beverage Cost Control

Objective: We will understand in a summary how and why a food cost control is required to maintain a cost control and optimize revenue in an organization.

P.S. Note that while studying this chapter keep in mind that the nature of controls involve a lot of human intervention and paper-work. And does not run solely on a set of computer programs.

COST CONTROL
Cost control alone, is applied to only manufacturing industries which are cost oriented and rely on bulk sales to attain profits. A 100% profit margin per product may not be the underlining rule here.

Food Cost Controls or F&B Controls

This sort of a control measure are more prevalent in catering industries and hotels where a variety and bulk of products are produced in terms of food and beverage. Here the general trend is to have a 100% profit per product. Therefore for the success of this nature of industry to flourish revenue control & cost control, both need to exist. The definition of F&B Cost Control may be defined as the guidance and regulation of the cost & revenue of operating the catering activity.

Limitations
1. This controls can only identify problems and business trends in a process, but cannot prevent problems. 2. Constant supervision to ensure effective functioning. 3. Management action is required after evaluating the process and finding the outcome of the evaluation.

Advantages
Analysis of income and expenditure. Establishment & maintenance of SOPs and SPS. Sound basis for menu pricing. Prevention of waste. Prevention of fraud. Documented information for management to supervise, analyze and act upon.

Disadvantages
Perishability of the product. Fluctuation of the volume of business. Fluctuation of the menu-mix. Short cycle of operation. High degree of departmentalization.

Food & Beverage Control Cycle

Phase I:Basic Policy Decisions by Senior Mgt Financial Policy Marketing Policy

Catering Policy Purchasing Phase II: Dayto-day Operational Control cycle by Supervisors & Associates Receiving Storing & Issuing Preparing Selling

Phase III: Control after the event by supervisors and management.

Management Control After The Event

Financial Policy: It involves setting of a profit targets and planning the

whole financial boundaries within which operations need to run.

Marketing Policy: Helps in identifying broad market, future trends and demand
1. 2. 3. 4. 5. 6. 7. 8. pattern in terms of; National Identity Customer Market Share Cover turnover or product turnover Profitability Avg. spending power Product Customer satisfaction by which it can be attained through; Type of customer Type of menu Food qlty. standards. Method of buying. Type & qlty. of service Degree of comfort & decor

Catering Policy: Evolves from the above two policies & defines main objective and method
1. 2. 3. 4. 5. 6. 7. Hours of operation. 8. Beverage provisions required.

Purchasing:
1. Product testing 2. Yield testing. 3. Purchase specifications 4. Method of buying. 5. Clerical procedures.

Receiving:
1. 2. 1. 2. 1. 2. 3. 1. 2. 3. Qty. inspection. Qlty. inspection. Stock records. Pricing of issues. Volume forecasting. Pre Costing. Chemical procedures. Checking system. Control of cost. Clerical procedures. 3. Clerical procedures

Storing & Issuing:

3. Stock taking. 4. Chemical procedures.

Preparing:

Selling:

Finally in Phase III:

1. F&B Cost Reporting. 2. Assessment. 3. Correction. Requirements or characteristics of a Control System: 1. Comprehensive & cover all outlets. 2. Cost of maintenance should be in relation to the savings to be made. 3. Easy to operate and understood by all. 4. Staff to ensure functioning of the system. 5. Information produced to be accurate and up-to-date.

***Find out the 9 points to food control procedures***