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OH 5-1 Controlling Food Costs in Purchasing and Receiving Controlling Foodservice Costs 5 OH 5-1.

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Presentation on theme: "OH 5-1 Controlling Food Costs in Purchasing and Receiving Controlling Foodservice Costs 5 OH 5-1."— Presentation transcript:

1 OH 5-1 Controlling Food Costs in Purchasing and Receiving Controlling Foodservice Costs 5 OH 5-1

2 OH 5-2 Chapter Learning Objectives Explain how a specification becomes a control in the purchasing function. Explain the parts of a purchase specification and a purchase order. Explain various purchasing methods and their effect on the price of goods. Calculate a yield test that identifies the difference between as purchased (AP) price and edible portion (EP) cost. Identify factors that affect the purchase price of goods.

3 OH 5-3 Chapter Learning Objectives continued Distinguish between perishable and nonperishable goods and their relationship to the purchasing cycle. Calculate the par stock amount of an item to order. Calculate the amount to purchase, using EP amount and yield percent. Calculate the amount of goods to purchase for catered events. Calculate a butcher test, or meat yield test. Describe proper procedures for receiving goods.

4 OH 5-4 Who Purchases? Purchasing agent Manager Chef Head cook Trusted staff member The buyer maintains quality standards!

5 OH 5-5 Who Purchases? continued The buyer is responsible for ensuring that quality standards are met during the purchasing and delivery process.

6 OH 5-6 The Food Specification Is a control device Lists the products name Lists its intended use Identifies the desired brand and grade Identifies the desired size Identifies the desired variety Identifies packing requirements Details delivery requirements Explains payment terms

7 OH 5-7 The Food Specification continued Specifications should describe exactly what buyers want to buy.

8 OH 5-8 Purchase Orders The official written record of the items the buyer wants to purchase

9 OH 5-9 Purchase Order Information A unique identification number The name and address of the restaurant Date of the order Signature of the buyer The suppliers contact information Date of delivery The name, quantity, and delivery unit of each item ordered Total (extended) cost of the order

10 OH 5-10 Purchase Methods Competitive quotes Standing order One-stop shop Cost-plus Sealed bids Commissary

11 OH 5-11 What to Buy Avoid buying the cheapest. Use purchase specifications. Buy at the best cost from sellers who meet or exceed the purchase specifications. Consider both AP price and EP cost.

12 OH 5-12 Two Kinds of Costs As purchased (AP)the cost of food as delivered to the restaurant Edible portion (EP)the cost of food as served to the guest

13 OH 5-13 AP vs. EP Form Items, such as fresh whole fish, will weigh much less in their EP form than in their AP form.

14 OH 5-14 Calculating EP Cost Two steps Step 1 – Calculate products yield percentage. Edible portion (EP) weight ÷ As purchased (AP) weight =EP percentage 8.00 ÷ 9.5 =0.842 or 84.2%

15 OH 5-15 Calculating EP Cost continued Step 2 – Calculate EP cost. Examplethe EP cost of one pound of onions As purchased (AP) price ÷ Edible portion (EP) percentage = Edible portion (EP) cost $0.39/lb AP ÷ 0.842= $0.46/lb EP

16 OH 5-16 Other Factors Affecting Purchasing Management complacency Payment history Gift acceptance policies

17 OH 5-17 When to Buy Purchase perishable items daily or every few days. Purchase nonperishable items weekly or monthly.

18 OH 5-18 Perishable Product Purchases 1. Determine the amount of product that will be used between deliveries. 2. Count what is on hand. 3. Subtract the amount on hand from the amount that will be used. 4. The result is the amount to purchase. (Note: Some managers purchase a small extra or cushion amount in case sales levels exceed forecasts.)

19 OH 5-19 Nonperishable Quantity to Purchase Most common method is par stock method. Steps 1. Determine quantity (par stock) that must be on hand between orders for each item. 2. Before ordering, take inventory. 3. Subtract on hand quantity from par stock quantity. 4. Difference is quantity to order

20 OH 5-20 Calculating How Much to Buy Need ten pounds of onions. Yield percentage of onions is 84.2%. How many pounds will you buy? EP amount needed ÷ Yield percentage =AP amount to purchase 10 ÷ 0.842= 11.87, or 11.9

21 OH 5-21 Catering Purchases Step 1 – Determine the servings per purchasing unit (SPU). Purchasing unit ÷Portion size= Servings per purchasing unit (SPU)

22 OH 5-22 Catering Purchases continued Step 2 – Determine the purchase factor. Recall the formula for EP percentage. SPUx EP percentage =Purchase factor (PF) Edible portion (EP) weight ÷ As purchased (AP) weight = EP percentage

23 OH 5-23 Catering Purchases continued Step 3 – Determine the amount to purchase. Number of guests to serve ÷ Purchase factor (PF) = Amount to purchase

24 OH 5-24 Butcher Test Also known as yield test Used to determine EP meat costs Results vary, based upon the AP quality of meat purchased Measures losses from Fat removal Bone removal Trim and packaging removal Portioning

25 OH 5-25 Steps for Receiving Step 1 – Delivery person brings products to receiving area. Step 2 – Check products against the purchase order. Step 3 – Check products against purchase specifications. Step 4 – Check delivery quantity against the invoice and the purchase order.

26 OH 5-26 Steps for Receiving continued Step 5 – Match invoice prices to purchase order prices. Step 6 – If everything matches correctly, sign the invoice. Step 7 – Put delivered products in proper storage areas. Step 8 – Process paperwork in keeping with the operations standard operating policies and procedures.

27 OH 5-27 How Would You Answer the Following Questions? 1. A purchase order is best prepared by the ( buyer/ seller ) of the items to be purchased. 2. With effective purchasing techniques in place, a restaurant's EP costs can often be lower than its AP costs. ( True/False ) 3. EP weight divided by AP weight results in A. AP percentage B. AP cost C. EP cost D. EP percentage 4. A butchers test is a test of ( yield/quality ).

28 OH 5-28 Key Term Review As served (AS) Butcher test Buyer Commissary Competitive quotes Cost plus Invoice

29 OH 5-29 Key Term Review continued Market quotation sheet Nonperishable goods One-stop shop Par stock Perishable goods Purchase order Quotes

30 OH 5-30 Key Term Review continued Sealed bid Specification Standing order Yield chart Yield percentage Yield test

31 OH 5-31 Chapter Learning Objectives What Did You Learn? Explain how a specification becomes a control in the purchasing function. Explain the parts of a purchase specification and of a purchase order. Explain various purchasing methods and their effect on the price of goods. Calculate a yield test that identifies the difference between AP price and EP cost.

32 OH 5-32 Chapter Learning Objectives What Did You Learn? continued Identify factors that affect the purchase price of goods. Distinguish between perishable and nonperishable goods and their relationship to the purchasing cycle. Calculate the par stock amount of an item to order. Calculate the amount to purchase, using EP amount and yield percent.

33 OH 5-33 Calculate the amount of goods to purchase for catered events. Calculate a butcher test, or meat yield test. Describe the proper procedures for receiving goods. Chapter Learning Objectives What Did You Learn? continued


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