Controlling Food Service Costs

popularity index

The percentage share of a menu item in its category

Menus should be built around items that are

highly profitable

ladle

a portion-control device

the schedule

The primary control tool for labor costs

credit memo

adjusts a delivery invoice

Food, beverage, and labor costs together

prime costs

The EP method

measures only the usable amount of an ingredient

product usage report

tracks costly or theft-prone items

Dry goods must be stored

6 inches off the floor

collusion

an internal threat to revenue security

Daily food cost =

Requisitions + Transfers In – Transfers Out

employees receiving kickbacks

purchasing-related security risk

weekly sales

$ amount divided by percentage

Mandatory meetings count

as work that must be paid

Minimum hot holding temperature is

135 degrees F

Guest credit card payments go into

merchant account

plate cost

Total product cost for a single meal

variable

An expense that increases with sales

Increasing menu price lowers the item’s

food cost percentage

To convert 200 portions to 120, use a 0.6 conversion factor

new yield/old yield

what food cost methods do buffets often use?

price-per-person food cost method

A corrective action to control food cost

reducing portion sizes

daily sales report

Shift sales, cash, charges, and variances

Labor cost percentage =

Labor Cost ÷ Sales

Managers estimate food cost using

percentage of sales and simple markup

Food costs are realized when the food is

used

Labor cost percentage measures labor cost relative

business volume

utilization factor

The percentage of a food item served

Complimentary meals

are a credit to COGS

Product quality standards are determined by

intended use

Product quality standards are determined by

menu engineering

POS systems

generate product mix reports

labor costs

Fixed/variable wages, benefits, and taxes

prime cost method

The pricing method using labor + food cost

Bar productivity is measured by

sales per hour

the food cost percentage is

30.4%

plowhorse

An item high in popularity but low in contribution margin

purchase order

legally binding document listing ordered products

job description

Expectations for a specific position

Turnover

= Persons hired per year ÷ Average number of employees

COGS

Costs directly tied to product sales

slack-out seafood

Thawed fish sold as fresh

An important quality-control step

temperature checks

fraud

Intentional deception for unlawful gain

The recipe cost for 10 oz of rice is

$0.75

Profitability is shown on the

income statement

Reducing turnover saves money

here, the savings are $10,000

A ½ cup portion uses a

#8 scoop

Banks look closely at

inventory turnover

revenue variance from $75,000 to $82,500

is 10%

Work output is evaluated using

productivity standards

A price range on the menu

broadens the customer base

Large-volume school purchases use

sealed bids

The proportion of each expense to sales is the

cost structure

Budgets/forecasts are used to

plan and allocate resources

PCI standards

protect cardholder data

Baker’s percentage formulas are based on

flour

Pro forma income statements use

historical patterns

Cost of food sold =

Opening Inventory + Purchases – Closing Inventory

preportioning

Weighing food before service

walk-in cooler

A purchase recorded as a capital expenditure

HACCP

used to control risks and hazards

Prevent “building the till”

conducting surprise cash counts

Bacteria on room-temp food doubles every

6 minutes

For 305 covers at 25 covers/server/hour, schedule

5 covers

Real-time inventory updates come from a

perpetual system

FIFO rotation

reduces spoilage

Competitive pricing

common in quick-service restaurants

Requisition forms

list items and quantities needed from the storeroom

order guide

helps count and track products to reorder

suggestive selling

A tactic to increase revenue during service

directs

Items charged to food cost on the day received

A menu item is “popular” when

it meets 70% of forecasted sales

Not following standardized recipes increases

food costs

A master schedule

lists how many people are needed per position

Short-term budgets are based on

the operating budget

Sales forecast =

Average check × Customer count

accounts payable

Money owed to suppliers

prime vendor system

The “one-stop shop” purchasing method

Control vs. delegation depends on the

size and scope of the operation