1. Chapter 9 Daily Food Cost
Principles of Food, Beverage, and Labour Cost Controls,
Second Canadian Edition

2. Learning Objectives
9.1 Calculate food cost and food cost percent for a single day and for all the days to date in a period.
9.1a Calculate food cost percent for any single day and for all the days to date in a period.
9.2 Prepare a daily report of food sales, food cost, and food cost percent.
9.3 Differentiate between book inventory and actual physical inventory and identify various causes for differences between the two.
9.4 Determine book inventory value.
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

3. Introduction
If foodservice operations were monitored from monthly cost figures alone, the length of time between monthly reports would present an obstacle.
This delay can be very costly. To avoid the delay, better organized foodservice operations calculate food cost daily.
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

4. Important Definitions
Opening inventory: the dollar value of all food on hand at the beginning of the accounting period
Purchases: the sum cost of all food purchased during the accounting period
Total Available: the sum of the beginning inventory and purchases
Closing Inventory: the dollar value of all food on hand at the end of the accounting period
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition
It is important to note that ending inventory for one accounting period becomes the beginning inventory figure for the next period.

5. Important Definitions
Cost of food consumed: the actual dollar value of all food used, or consumed, by the operation
Employee meal cost: a labour-related, not food-related cost. Free or reduced-cost employee meals are a benefit much in the same manner as medical insurance or paid vacation.
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

6. Determining Daily Food Cost
All foods are either directs or stores
Find total directs that day, available from the Receiving Clerk's Daily Report
Stores are charged to the food cost when issued
Determine the value of stores issued on a given day
Extends all requisitions for foods issued on that day and total
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

7. Determining Daily Food Cost
Determine the value of any alcoholic beverages transferred from the bar to the kitchen
Determine the value for daily transfers from the kitchen to bar, promotion, etc.
Many establishments credit daily food cost for the value of employees’ meals
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

8. Determining Daily Food Cost
The daily cost of food can be determined in the following way:
Cost of directs (from the Receiving Clerk’s Daily Report)
+ Cost of stores issued
+ Adjustments that increase daily cost*
– Adjustments that decrease daily cost**
= Cost of food consumed
– Cost of employee meals
= Daily cost of food sold
*Include transfers from bar to kitchen; transfers from other units
**Include transfers from the kitchen to the bar food to bar (directs), gratis to bar, steward sales, promotion expense
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

9. Food Cost Today and To Date
The daily food cost percent for any one day may not be a very accurate:
Directs may be purchased every other day
this will make daily food cost artificially higher on the days when directs are received
To help overcome the problem most operations calculate food cost percent to date.
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

10. Food Cost Today and To Date
Food cost percent to date is defined as the cumulative food cost percent for a period.
It takes into account all food costs and all food sales for all days so far in the period.
To determine food cost percent to date:
divide cost to date by sales to date
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

11. Simple Daily Cumulative Cost Report
Adjustments
Total Cost
Total Sales
Food Cost %
Date
Directs
Stores
Added to Cost
Subtract from Cost
Today
To Date
1-Feb
$254.20 $
$ 57.20
$255.30
$1,033.40
$2,778.00
$ 2,778.00
37.199%
2-Feb
$326.70 $
$ 86.20
$253.40
$1,103.60
$2,137.00
$2,919.20
$ 5,697.20
37.805%
37.510%
3-Feb
$262.50
$1,040.40
$ 88.60
$177.80
$1,213.70
$3,350.70
$3,056.95
$ 8,754.15
39.703%
38.276%
4-Feb
$256.35 $ $
$220.00
$1,121.65
$4,472.35
$3,094.20
$11,848.35
36.250%
37.747%
5-Feb
$218.75 $
$ 90.00
$170.00
$1,083.30
$5,555.65
$3,427.35
$15,275.70
31.608%
36.369%
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

12. Daily Reports Daily reports allow management to: Report should show:
accurately assess daily costs and sales
compare with similar periods
better assess operations and cost-control measures
Report should show:
food cost, food sales, and food cost percent for any one specific day and for all the days to date in the period
compare these figures to those for a similar period
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

13. Book vs. Actual Inventory
Determine what the value of the closing inventory should be, based on records indicating purchases and issues
Compare it with the actual inventory value
Maintain daily food cost figures to establish the value of the book inventory
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

14. Book vs. Actual Inventory
Book inventory value is determined as follows:
Opening inventory (closing inventory for the preceding month)
+ Purchases (total stores purchases for the period, on receiving reports)
= Total available (total value of stores available for use during the period)
– Issues (total stores issues for the period, as listed on requisitions)
= Closing book value of the stores inventory
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

15. Book Inventory vs. Physical Inventory
The value should be identical to the value at the end of the month.
Acceptable reasons are:
an occasional human error in costing out requisitions
use of the most recent purchase price rather than actual purchase price in valuing the physical inventory
mismarking of actual purchase prices when that method is used
Reasons that are never acceptable include:
issuing stores without requisitions
food spoilage that must be discarded
theft of food.
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

16. Key Terms Book inventory, p. 252 Daily cost of food, p. 244
Food cost percent to date, p. 245
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

17. Chapter Web Links Silverware POS: www.silverwarepos.com
Compeat:
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition

18. Copyright
Copyright © 2014 John Wiley & Sons Canada, Ltd. All rights reserved. Reproduction or translation of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein.
Principles of Food, Beverage, and Labour Cost Controls, Second Canadian Edition