cost control

Controlling

function of management which ensures that performance is in accordance with the plan.

Cost

expense; the price paid for goods or services when the goods are consumed or when services are rendered.

Cost Control

regulate cost based on the cost-standards set by the foodservice establishment.

Food Cost

cost of food items or edible materials sold in a foodservice establishment, often referred to as “cost of goods sold”.

Beverage Cost

cost related to the sale of alcoholic beverages.

Labor Cost

cost of all employees involved in running the operation, referring to salaries and wages, fringe benefits, insurance and retirement taxes.

Fixed Labor Cost

salaries of employees who are paid a fixed amount, regardless of volume of business. (manager, cashiers, supervisor and chef

Variable Labor Cost

salaries or wages of employees which vary with changing volume of business. (waiters or service personnel)

Overhead Cost

that are not classified as food and labor

Quality Standard

degree of excellence of raw materials

Quantity Standard

measures of weight, count or volume

Standard Cost

pre-determined cost of food, labor and other expenses

Standard Procedures

established methods, routines, techniques and processes used in a day to day operations to ensure that cost standards are met.

Standard Recipe

written formula detailing ingredients and respective quantities needed in order to produce desired quality and quantity of a menu item

Menu

list if food products or items offered by a restaurant or a foodservice establishment.

Sales history

a written record of the number of portions of each item sold every time it appears on the menu; also known as a daily summary of portion sales.

Popularity Index

ratio of the number of menu items sold in a given period over the total number of menu items sold in the same period.

Forecasting

predicting what is likely to occur in terms of revenue and expenses, using available data

Yield

the resulting quantity obtained after a recipe has been prepared, which may be expressed in count, volume or weight.

Pre-costing

calculating the cost of a recipe prior to actual preparation to determine whether it will meet cost objectives.

Food Cost Percentage

ratio of the cost of food as purchased over the sales multiplied by 100.

Buying

activity which involves setting policies and making decisions about what product to buy, how to buy them, who are the vendors to be patronized and at what frequency and quantity

Ordering

a clerical activity involved in the buying procedure

Purchase standards

rules or measures established for making comparisons and judgements to be used as basis for determining the extent to which results meet expectations

Par stock

the normal quantity of an item required in a given operating period

Record point

figure representing the number of units that should be on the shelves before additional quantities are ordered

Standing orders

prepared in advance, orders specify how much an item should be automatically delivered each day of a week or a month

Centralized Purchasing

there’s a purchasing department

Cooperative Purchasing

independent buyers representing different establishments group together to purchase their requirements and allows the group to negotiate for a good price.

Blank Purchase Agree

buyer vendor agreement whereby the vendor agrees to supply the buyer on a charged basis

Just-in-Time Purchasing

agreement where products are purchased in the exact quantities required for a specific use in food preparation/production and delivered

Blanket order

also called master contracts, is one of the efficient means od reducing the umber of small, repetitive orders,

Lead time

period of time from date of ordering to delivery

Contract

agreement between two or more competent persons

Breach of contract

failure to perform at the time and in the manner required by the contract

Force majcure

contracts shall contain a provision which will permit non-performance by either party of specific conditions stipulated in the contract, if it is the result of fire, war or labor problems beyond the party’s control

Consignment

goods entrusted to another for sale

Earnest Money

money given by one party to another upon entering into a contract which could be forfeited for failure

free on board

agreement whereby the seller is required to place the goods aboard the transporting carries without cost to the buyer

cost, insurance, freight

cost of marine insurance is for the account of the seller

Bill of lading

a carrier’s contract and receipt for goods by which he agrees to transport from one place to another.

Warranty

a promise given by a seller to the buyer

Yield testing

a process of determining the amount of edible portion and waste in a food product

Raw Food Test

process of determining the best count and weight for specific food items based on the needs of the establishment

Butchering Test

used to evaluate the actual portions obtained after waste, trim and by-products are removed form wholesale cut of meat, fish or poultry

Cooking Test

used to determine a food item’s final yield when cooked

Contract Price

The price of a product agreed upon between buyer and seller, which is expected to remain unchanged over a specified period of time.

blind receiving

The supplier is instructed not to furnish the receiving clerk with an invoice as the goods are delivered, and instead, to send invoice directly to the accounting office.

Receiving Report

Listing of all goods received for the day, classified according to group.

Shorting

Term used when items ordered are not delivered

Credit memo

A form filled up by a receiver and signed by the delivery man listing the goods rejected and returned to supplier

Shelf life

Length of storage time in which a food item can retain its qualities, such as freshness, flavor, texture, color, etc.

Extended price

The unit price of a stored item multiplied by the quantity

Buffer Stock

Safety level of goods stored which will always exist if purchasing goes according to plan

working stock

Actual amount of goods in use which rises and falls as each batch is received and issued

reorder level

Stock needs replenishing to cover normal future demand

Stock level

Any stored item is to be held in order to avoid danger of overstocking or running out of supply

Inventory

Taking an actual count of goods in store.

Inventory turnover

Number of times in a given accounting period when the total value of inventory has been purchased and replaced.

As purchased or AP

weight before trimming or removal of undesirable or unusable parts

Edible portion or EP

Weight after trimming, preparation and cooking

Forecasting

Predicting what is likely to occur in terms of revenue and expenses, using available data

Standard Recipe

Written formula detailing ingredients and respective quantities needed for each, in order to produce the desired quality and quantity of a menu item.

Production Sheet

A list of menu items and the number of portion of each to be prepared based on a projected sales or forecast

Portion size

Quantity of a menu item to be served per person, as stipulated in the standard recipe

Portion control

Involves determining a definite size per serving of a menu item and making certain that this designated portion is always served

Quality control

Consistent production of menu items that meet specified requirement s in quality and yield and with minimum waste.

Food checker

Person assigned to very every item leaving the kitchen on its way to the dining area, and to check these items against the guest checker

guest checker

record of each item ordered by the guest and its corresponding selling price

Void sheet

Record of portions or dishes returned from the customer to the kitchen

Sales mix

Variation of menu items and quantities of each which customers buy or sold at a given time

Sales reconciliation

Procedure whereby a comparison is made of the portions sold after every meal as tabulated by the cashier

Operating Budget

forecast sales activity and expense categorized food and labor

Cash Budget

shows the inflow and outgo of funds and the amount on hand.

Equipment Budget

indicates when it is financially feasible to purchase equipment, and helps in deciding priority purchases.

Renovating, Remodeling and Repair Budget

provides for renovations, remodeling and repair of facilities

Long Range Budget

Covers a period of 3 to 5 years, providing a long-term view of the operation

Annual Budget

Covers one-year period, either based on the calendar year,

Achievement Budget

Short-term budget, and may cover a period of a month of a week

Profit and Loss Statement

Also called income statement, it is a financial report which contains details on income revenue, expenses and profit covering a specified period of operation.

Revenue

sales or income in a food service operation,

Cost of food sold

expenditure for food actually sold to the clientele; does not include food expenses incurred for employees’ meal

Gross Profit

resulting figure shown after deduction of cost of food sold from sales and before deducting other expenses.

Payroll

salaries and wages paid to service, preparation and administrative personnel.

Employee Benefits

include such items social security, employees’ meals, and other expenses furthering employees goodwill

Depreciation

expenses that covers the cost of wear and tear of equipment of physical objectives in the establishment

Net Profit

amount of money left after all expenses have been deducted. Figure representing the difference between total income or revenue and total expenses

Net Loss

deficit incurred when the total expenditure exceeds sale

Balance Sheet

Financial statement which portrays the financial condition of an estab.

Assets

items actually owned by the establishments,

Current Assets

those can be converted into cash in a short time;

Fixed Assets

permanent nature which will not be sold as long as they serve the needs of the business.

Liabilities

accounts owned by the business

Current Liabilities

obligations that will become due within one year.

Long Term Liabilities

obligations that require one year or longer to reach maturity.

Net Worth

refers to the owner’s equity

Capital Account

shows the value or worth of the business

Auditing

a review of the original accounting to confirm its validity . This is often done by an outside accountant

Current Ratio

the ratio of current assets compared to current liabilities

Journal

daily record of itemized business transaction. From the journal, transactions are posted in ledger