Food cost controlFood cost control

• It can be defined as guidance and regulation of cost of operations.

• Under taking to guide and regulate cost needs to ensure that they are in accordance of the predetermined objectives of the business.

• Guidance and regulations of cost are set as per expressed in the policy statements and budget of undertakings:

Cont..Cont..• Food cost control means :

• You have a stick to your predetermined standards.

• Set standards appropriate to your market before you buy, prepare and sell food.

• Cost control procedures.

What is Food Cost?What is Food Cost?

Cost of Food Cooked+

Wastage+

Spoilage+

Shrinkage/ Pilferage

What is What is NotNot Food Cost Control? Food Cost Control?

Bringing down the cost at the expense of• Quality & Guest Satisfaction

Attitude:• Penny Wise, Pound Foolish• Golden Goose

Why should you Control Food Cost ?Why should you Control Food Cost ?

• Rs.1 Saved = Rs.10 Sales• Adds Straight to the Bottom Line• Competitive World

How do you Control Cost?How do you Control Cost?

1. Shrinkage/ PilferageShort Term: Better Security SystemLong Term: Create a working atmosphere,

where people belong and are proud to be contributing to the growth of the company

How do you Control Cost?How do you Control Cost?

2. Spoilage

• Better Storage Facilities

• Better Kitchen Design

• Stock Management

How do you Control Cost?How do you Control Cost?

3. Wastage• Temporary / Stressful / Negative / Life

reducing way: Policing

• Permanent / Enjoyable / Positive / Life enhancing way: Bring in a culture of High Performance

How do you Control Cost?How do you Control Cost?

4. Cost of Food Cooked

• Planning the Quantity• Ensuring the Quality

ObjectiveObjective• To analyze income and expenditure:-

– Gross profit = sales – food cost– Net profit = sales – (food cost + labour cost + overheads)

• Pricing of food:-Selling Price = food cost + labour cost + overheads + profit

(20-30%) (7-10%) (6-10%) (50%)

• Prevention of inefficiencies:-• Data for the management:-

Factors affecting the percentage of Factors affecting the percentage of food cost- food cost- HurdlesHurdles

• Food Purchasing • Menu Planning• Method of pricing• Culinary Skills• Service Skills• Avoiding Wastage

Phase of control proceduresPhase of control procedures

• Planning

• Operational

• Control after the event

Phases of Control

Planning Operation Control after the Event

Finanacial Marketing Catering Purchasing Receiving Storing Issuing Production Sales Reporting Assesment Correction

Financial PlanningFinancial Planning

• Budget- Whole organization & single unit• Total Revenue• Expenditure• Borrowing• Profit• Shares• Debentures

MarketingMarketing• Segment• Clientele• Turn over• Market Share• Average Spending Power• Choice• Trends• Advertisement• Promotions

CateringCatering• The type of customer• The type of menu• Beverage provision necessary for operation• Food quality standard• Method of pricing• Type and quality of service• Degree and décor and comfort• Type and style of table and chairs

OperationsOperations

• Purchasing• Receiving• Storing• Issuing• Production control• Sales control

Management control after the Management control after the eventevent

• F & B cost reporting• Assessment• Correction

Cont..Cont..

Operation

Control After the Event

Planning

METHOD OF FOOD CONTROLMETHOD OF FOOD CONTROL

• a) Weekly/monthly food cost report- This system is used by small organization where manager controls each activity as daily routine. It is a reconciliation report of daily activities. The calculation procedure is

• Opening stock + total purchase for the period – closing stock = total food sale

• b) Daily food cost report- This method is used in medium sized operation.

Problems of F&B IndustryProblems of F&B Industry

• PERISHABILITY OF THE PRODUCT

• UNPREDICTABILITY OF VOLUME OF BUSINESS

• UNPREDICTABILITY OF THE MENU MIX:

• SHORT CYCLE OF CATERING OPERATION

• DEPARTMENTALIZATION