2 Questions What are the steps in the food flow process? How is food cost determined?How is food cost percentage determined?How are standard portion costs established?What is the difference between AP and EP cost?What is a recipe yield?What tools can be used in controlling portion?How can an operation monitor food production and cost?What methods can be used to price a menu?
3 Flow of food Establish control during all 7 stages Purchasing: Establishing good quality standards is essential in acquiring and producing consistent top-quality product.Receiving: Trained management and staff ensuring quality standardsStorage: Monitor units and what’s in themIssuing: Inventory control, record keeping (selling/theft)Preparation: product used to fullest, exact specsCooking: Cooked and portioned correctlyService: Good service, orders taken correctly
4 Determine Food Cost(Opening inventory + purchases = total food available) – Closing inventory = Total food costSome refine by subtracting employee meals, comps, food transfer to other locationFood Cost: the actual dollar value of the food used by an operation during a certain period of timeIt includes the cost incurred when a food is consumed for any reason: sold, given away, wasted spoiled, incorrectly prepped, overportioned, overproduced, pilfered
5 Determine Food Cost Percentage Total food cost / Sales =Food cost percentageFood Cost Percentage is the relationship between sales and the cost of foodUsually determined by managementOften compared to company/industry standards, or historical costsThe relationship becomes unbalanced when cost controls are not followed
6 Standard Portion Costs For each standardized recipe, establish a standard portion cost (exact amount each serving should cost)A recipe cost card should exist for every multiple- ingredient item on the menu27# profit26# profit25# profit.10x50x6x50=1500x20=$30,000 yr.
7 AP/EP AP EP “As purchased” “Edible portion” Price/product before accounting for trim and waste? “10 pounds of onion, diced”EP“Edible portion”Price/product after accounting for trim and waste? “10 pounds of diced onion”Ultimately easiest and most exact wayAdjust price: /yp
8 Recipe Yields Determine recipe yield: Calculate total yield of recipe (weight or volume)Weigh or measure major ingredientsTake cooking loss into accountDivide total volume by portion sizeConvert recipe yield: CF = D/O Conversion factor = desired yield / original yield
10 Monitoring Production Volume and Cost How much to make? GoldilocksFood Production Chart- shows how much product should be produced by the kitchen during a given meal periodProduction Sheet- lists all menu items being prepared for a given dateSales History- record of number of portions of every item sold on a menuRecords serve as a basis for a sales history used to forecast future sales and production
12 Menu Pricing Menu is the primary sales tool Should reflect overall cost of running operationPurchasePrepareServeLaborRentUtilities
13 Contribution Margin Method Contribution Margin is the portion of dollars a menu item contributes to overall profitsThis method represents a menu items profits in relation to its portion sizeGross food sales – cost of food = Gross profit or Total Contribution Margin / number of customers100,000 – = 60,000 / 30,000 = $2.00 contributed to overhead and profit
14 Straight Mark-up Method Multiply raw food cost by a pre-determined fraction$0.63 x 2/3 = $0.42$ $0.63 =$ 1.05
15 Average Check MethodTotal revenue is divided by the number of seats, average seat turnover, and days open in one yearGives an idea of the price range of itemsUse this range, along with approximate food cost percentage to determine selling price