Food Production Midterm

Goals of Non-Commercial (Institutional) Operation

Goals:

- Meet nutritional needs

- Provide service to patrons/clients of the institution

- Financial goal is to "break-even"

Goals of Commercial Operation

Goals:

- Makes money by feeding the general public

- Meet the needs of target audience to maximize profits

Institutional: Target Customers

dependent on the patrons of the institution (school? nursing home? hospital?)

Institutional: Menu Planning Considerations

- dependent on type of operation and service

- budget restrictions

- patron's food preferences

- hours of service

- kitchen layout, equipment, storage

- government regulations

Commercial: Target Customers

- dependent on the market's sector

- usually has options of where to eat

Commercial: Menu Planning Considerations

- market sector (fast food, family dining, fast casual, etc.)

- customer

- competition

- check average

- profit margin

- trends (food industry, economy, market trends)

Menu determined by customer age, disposable income, food prefs, entertaining/dining style, education, religious/ethnic background

Examples of Institutional Operation

University

Hospital

Correctional facilities

Nursing Homes

Cafeteria

Examples of Commercial Operation

Full service restaurant

Fast-food restaurant

Catering company

Service Styles

- table

- counter

- tray service

- room service

- takeout/delivery

- self-service (buffet, cafeteria, counter pick-up, vending machines, kiosk, cart/truck)

Specialty Food Service Markets

Transportation/travel related

Recreational

Educational

Health care

Corrections

Military

*Business industry* (hybrid commercial/institutional so that employees don't have to leave workplace to eat)

Make or Buy Decision

Decision concerning whether an item should be produced internally or purchased from an outside supplier

(either spend money on labor to save money OR spend money on product to save on labor)

*Make* = control over quality, taste

*Buy* = efficiency (prep time), facilities (do have space/ tools), taste

Purpose of the menu?

*Primary selling tool (marketing tool)*

1. List of the dishes available or to be served at a meal

2. List of options available (ex. on a computer screen)

3. *Primary control for a foodservice system (operation)*

- purchasing

- production

- personnel needs & schedules

- costs

- virtually EVERYTHING!

Transformation

procuring raw products (or inputs) --> determined by the menu

Adding value to a product as it goes through the market

#1 menu consideration for institutional menus

Nutrition

#1 menu consideration for commercial menus

Sales

Menu Planning Considerations: Clientele

Nutritional Needs: can use standard meal pattern guides for some clientele

Demographics (of clientele): Age, race, religion, ethnic backgrounds. Examples:

Menu Planning Considerations: Operational

►Physical Facility

- Distance between point of preparation and distribution

- Equipment selection

►Production System/Style of Service

- Buffet/waiters/tray line/ etc.

►Personnel

►Budget

- 80% food dollars spent on 20% food items

- Food is a variable expense

- Don't want high $items in every dish, but want multiple dishes with high$ items

Menu Planning Considerations: Regulatory

►Government Regulations

- Guidelines for schools, health care facilities, prisons

- Food Code

- "Truth-in-menu"

Accuracy in Menus

►Truth-in-menus laws

- Proper representation, implied meaning is accurate

- Size, quantity

- Quality

- Price

- Brand names

- Product identification

- Marketing descriptions

- Visual representations

Menu Planning Considerations: Style

►Number of choices available

►Theme of menu

►Atmosphere

►Time of day to be consumed

►Seasonality and/or food availability (ex. might try to focus on apples because in season and cheap)

►Nutrition

Non-selective (no choice) Menu

►Less costly to produce (account for 5-10% less --> don't have to guess how many of each dish to prepare for)

►Easier to control food intake

►Simplifies purchasing (only need to order one menu item, and going to re-order multiple times)

►Easier control over portions and service

Single use menus are for clientele who are unable or have no desire to choose (ex. wedding, tray line at cafeteria, prix fixe)

Selective (Choice) Menu

►More expensive --> Higher risk of waste because order more, but decreased plate waste

►Increased food acceptance (appeals to more people)

►Decreased plate waste (individual portion waste)

►No increase in portions produced

Semi-Selective (Limited Choice) Menu

►Choices for some items

Example:

►Main Item + select 2 sides (airline)

►Wedding menu - select between 2 entrees

►Dietary - select the kosher or gluten free meal

Menu Revision: When and Why?

►Seasonal or more frequent

►Trends

►Customer feedback

►Sales records

►Quality or production issues

►Changes in physical facility or production method

Static Menu

core menu doesn't change on a regular basis (every few months or specials)

Cyclical menu

rotating menu on a weekly basis (ex. Mon, Tues, Weds, then repeats) --> rarely see cyclical menus that are fully selective, usually non-selective or semi-selective

--> Higher risk for losses, moving parts, training

Single-use menu

design a menu for an event based on menu considerations

- Want to look at product that freezes well

Non-commercial menus

►Nutritionally balanced

►Cyclical menus

►Single use menu (1 day only)

►Service styles vary within operation

►Often must withstand hot-holding, transport, cook-chill, etc.

Commercial menus

►Static menus common, same items every day

►Restaurant:

- Prix Fixe - non-selective menu

- A la carte - selective menu

►Menu labeling regulations

- Food safety

- Nutrition

Physical menu preparation

►Layout and design

►Variety

►Descriptive language and alternative languages (ex. savory beef stew with root vegetable medley)

►Delivery format

►Item arrangement and location

►Readability

Items listed 1st and last sell the best (if all else is equal)

Menu Making Theories

►Longer descriptions = longer duration of meal

- Ex. if menu describes the type and sourcing of the cheese

►Most profitable items are in the beginning of category

►Most popular, but least profitable items in center of the category

►Top-right section gets seen first (entrees, specials, most expensive)

►Not including dollar signs may increase sales

- Dropping the $$ from menus resulted in spending $5.55 more per meal

Odd Cents Pricing (Psychological Pricing)

Psychological aspects of pricing affect customer perceptions, which then influence the purchase decision... *old* research says this *creates illusion of a bargain*

►Price ends in an odd number

►Price ends in a number other than 0

►Price is just below a zero ($4.99)

Round Numbers Pricing

*New* study: Consumers prefer round numbers (.00 or .50)

Pricing by the ounce

sometimes done for salad and sandwich bars. Often use a markup factor for pricing

Advantages/Disadvantages of pricing by the ounce?

Advantages: customer can select what they want and have control of food and portions

Disadvantages: must have equipment (i.e. scale by register), What happens if person finds out it is too much? (waste). Heavy items cost more and light ones cost less (put on lots of croutons)

Two-Tier pricing

Upscale amenities and menus offered to those willing to pay --> pricing strategy used in healthcare, where two levels of menus/service are provided

Menu Pricing Methods

►Factor

►Prime cost

►Actual cost

Food Cost

total cost of all ingredients needed to produce a dish or menu.

►Can apply to overall menu OR individual dishes

1st step in menu pricing

Factor Method

►Determine Desired Food Cost % (pricing factor)

►Used for menu overhauls not usually new menus

*Raw food cost x pricing factor = sales price*

To determine pricing factor:

►Divide desired food cost percentage into 100

► Ex.) 40% goal, with actual food cost of $2.00

Factor: 100/40 = 2.5

$2.00*2.5 = $5.00

Selling price is $5.00

Good profit margin ~5%

**Industry standard for food cost = 33% (usually want to be within a couple % of that)

• 40% is high (usually fast food)

•

Calculating Food Cost Percentage from Sale Price and Cost

We know we're selling item for the same price as before, but somehow not making enough money

Given current price, and cost of raw food

*Divide cost of food by menu cost to get the food cost %*

Ex. Menu cost of $5.00 with Food cost of $2.00

2.00/5.00 = .4 x 100% = 40%

Food Cost Percentage is 40%

Prime Cost

► Raw food cost and direct labor cost

► Records of food purchases

► Time studies

Actual Cost

►Actual Food cost

►Actual Labor cost

►Other Variable cost

►Fixed cost

Menu Engineering

A method of assessing menus; used to ensure that selling product that people want, keeping menu relevant, and keeping costs right

►Focuses on popularity (menu mix) and on profitability (contribution margin).

Used as:

►Management information tool

►Monitor effectiveness of efforts to maximize profits

Menu Engineering: Concepts

►Menu mix percent - one dish as it relates to the menu as a whole (how much of the menu went to that item)

►Item contribution margin (CM) - raw # not %; how much money we get when we sell the item

►Menu cost - how much we sell for

►Menu CM - how much we sold in that period of time

►Average CM - add up all CM and average them

►CM category

►MM Category - visual chart that allows us to make decisions around where items fall in popularity and cost

Menu Mix Percent (MM)

one dish as it relates to the menu as a whole (how much of the menu went to that item)

(also called Sales Mix %)

*MM = (# single item sold / Total # of all items sold) x 100*

Contribution Margin (CM)

raw # not %; how much money we get when we sell the item

*CM = Menu Price - Food Costs*

Menu Engineering Matrix

Star = Items that sell well and bring a lot of $</p><p>(high contribution margin)</p><p>Horse = Low margin that we sell a lot of</p><p>Dog = Don't sell well and lose$

Puzzle = High contribution, low sales item

Usually look at dogs and puzzles to remove or change on menu

How to fill out a Menu Engineering Chart

**WILL BE ON THE EXAM**

1.Fill in contribution margins first (ex. 30-21 = $9)

2.Cost % = portion cost / menu price

3.Total food sold = food portions sold x price of portion

4.Total food cost = # sold x portion cost

5.Menu CM = total sales - total cost

6.Menu mix (%) = # dish sold / # total items sold

Procurement

A systematic exchange between a seller and buyer to obtain goods and services, which includes determining:

1.Types of *products* needed

2.Making purchases (*purchasing*)

3.*Receiving & storing* shipments

4.Administering purchasing *contracts*

5. *Inventory control*

▪If inventory isn't controlled, will lose money because food is perishable

Purchasing

procedure of acquiring goods

centralized purchasing

1 department or person has purchasing responsibilities

▪More common in institutional settings or large-scale operations

Examples:

▪Multi-unit school district

▪Nursing home chains

▪Restaurant chains

centralized purchasing advantages

▪Cost-saving through economies of scale (get discount on individual products because ordering so much)

▪One person might manage all purchasing and be very familiar with products (vs. chef who has other responsibilities)

▪Consistency of products

▪Can easily move/reallocate products from one location to another

centralized purchasing disadvantages

▪Decreased efficiencies when trying to make changes or move quickly

▪Less diversity of menus

Decentralized purchasing

Each unit responsible for its own purchasing.

Examples:

▪Franchised restaurants

▪NYU Eats facilities

Decentralized purchasing advantages

▪More flexibility (can change an order right away without needing to contact someone)

▪Menu diversity

Individual purchasing

Operations does not gain purchasing power from multiple outlet scale.

Purchasing cooperative

An organization comprising *2+ foodservice programs that procure goods as a unit*

Prime Vendor

A vendor providing a foodservice operation with 80% or more of all food purchased (SNA, 2006) --> government agencies usually use this model

▪Ex.) Sysco, US Foods, Baldor, etc.

Multiple vendors

Purchasing products from a mix of vendors based on the items they specialize in.

▪Advantages: might be able to do more price shopping

▪Disadvantages: might cost more on labor for someone to manage (labor cost > than cost of product), hard to juggle with so many vendors

Advantages of Group (or cooperative) Purchasing

▪Added purchasing power encourages vendors to offer more variety and higher quality product

▪Better selection of food and nonfood items

▪Also gives foodservices an extra edge through sharing the experiences of others

Disadvantages of Group (or cooperative) Purchasing

▪Requires additional energy

▪Difficulty coming to consensus

▪Additional paperwork

▪Additional computer equipment and/or software may be needed.

Individual (Independent) Purchasing

Purchasing by one unit of an operation or by one organization

▪Ex: Purchasing Agent—Director of Dietetics at Community Hospital

Prime Vendor Advantages/Disadvantages

Advantages:

- reduced prices

- strong, professional partnership

- potential for value-added services (discounts, free delivery)

- simplification (working with only one company)

Disadvantages:

- might sell mediocre products

- stuck if they're out of a product

- might lose money because they have a monopoly on products

warehouse club purchasing

Appropriate for smaller organizations

▪Child Care Center

▪Group Home (ICF/IID)

Procurement as a control

80% of dollars are spent on 20% of items

*Purchasing method* changes can result in substantial *savings* (ex. cooperatives, prime vendors)

*Documentation and monitoring* can help identify unexpected *losses* (ex. theft, incorrect products)

Purchasing procedures include (4 criteria)....

If you can meet these 4 criteria, then you have effective purchasing:

• *Right product* - if you order jumbo eggs by the case, you're getting exactly that (rather than medium)

• *Right amount* - want to make sure not over/under-ordering because perishable

• *Right time* - perishable so don't want to get too soon

• *Right price* - did we get the best value for the product that we're purchasing? (maybe not lowest price, but best quality for price)

Marketing Channel

Producers

Processors/MFG

Distributors

Suppliers

Customers

Food producers

These individuals or organizations produce raw food to sell to processors or manufacturers

They include:

▪Farmers

▪Ranchers

▪Small specialized food growers

Processors/ Manufacturers

These companies take raw foods and process (or transform) them into marketable products for distribution.

▪Ex.) processor turns a cow into a hamburger patty, turning apples into applesauce or waxing an apple, etc.

▪Might skip this step if going from whole product to the customer (ex. a whole banana)

Distributors and Wholesalers

Responsible from transporting products from the processor manufacturer to the supplier

▪Cost increases at each step in the marketing channel because labor has gone into adding value to the product

Suppliers

Sell products to the customer

▪Some companies skip distributor and some combine distributor and supplier

▪Can skip steps in the process BUT commodity products usually go through all 4 steps before they get to the customer

▪Selection of suppliers and ethics

▪Prime Vendor/Single Source Supplier

Customer

the food buyer

▪Food service manager plans the menus and buyer/purchasing agent selects products for the meal service.

▪Purchasing involves many complex decisions and requires careful planning

Local Food Procurement

▪Farm to Fork Movement

▪Bypasses several steps of the market channel

Marketing Regulations in the US

There are differences in grading and that you need to access that information when you are doing procurement and requisitions

• *Safety* - is it safe for human consumption

• *Quality* - how desirable is the food

• *Grading* - used for quality NOT safety

FDA - ensures that food products are safe for consumption; package and labeling regulations

USDA - grading, inspection, certification of quality, meat/poultry, fruit/veg grading

Food Safety and Inspection Service (FSIS) - branch of USDA

US Dept Commerce - seafood

What is a specification?

Indicates a quality of products and allowable limits of tolerance.

(receiving is one of the biggest loss centers in procurement process if not specific enough)

purchasing specification

includes product specification *plus* supplier services required (e.g. delivery services, financial terms, storage

Uses for specifications

▪Quality control

▪Cost control - may not always want "prime" beef

▪Communication tool between parties - make sure we know that we're getting what we want to get

▪Request for bids - getting prices for products buying

▪Help buyer clarify what they want

Specifications should include...

1.Quality (grade)

2.Type

3.Size (pack size/ product size)

4.Quantity

5.Delivery requirements (temp, condition, etc.)

Formal bid process

▪A group of bidders is selected and given the specifications and forms

▪A date is selected for return of the bid

▪Other conditions of the bid are included

▪Call For Bids

Line Item Bids

Contact a variety of vendors and ask them to each provide "bids" on product costs --> compare prices --> make decisions based on that

Each product is bid on by the vendor:

Vendors A B C

Applesauce $ 15.96 $ 14.99 $16.82

Peaches $ 20.95 $ 22.85 $19.95

Green Beans $ 17.67 $ 18.25 $17.28

All or Nothing Bids

vendors bid on all products as a unit

For 6 gallons of milk, ask vendors for prices on each variety they have --> useful in the world of prime vending because want vendor who will give us the overall lowest price

Recipe Standardization

A written formula used to produce prepared food and beverage items in *scalable quantity and of consistent quality.*

►Easier to scale up 1 lb. to 150 lbs. than 1 Tbsp to 5 cups

►Weight is more accurate for measuring than volume (even with liquids)

►Process used to make sure the recipe follows the foodservice operators needs in a specific operation.

►Follows a consistent set of parameters, but is unique to the needs of the operation.

►Many factors to consider when developing a standardization model.

When would you use volume if weight is more accurate?

- *Easier to measure liquids* --> density might vary in something like fats, so still not exactly consistent

- *Speed & efficiency* --> if speed is more important than precision, might choose to use volume

- Using *very small quantities*, volume might be easier (ex. 1 tsp might not show higher than 0 on the scale)

Components of recipe standardization

►Production equipment and tools

►Preparation time

►Type and quality of ingredients

►Detailed recipe and preparation information

►Storage information

►Pick-up station in kitchen

►HACCP Instructions

►Cutlery required by customer

►Financial Information

►Yield and serving size

Revision of standardized recipes must occur when...

►Changes in available equipment

►Revisions are made based on customer feedback

►Major ingredient changes occur

►Production methods are revised

Standard yield

the quantity of food generated from a standard recipe/formula

Standard portion

the consistent quantity or size of product that is served to every person each time it is served. Equipment used for portioning should be stated on recipe card

- Weight - using a scale to maintain portion control; usually takes place prior to cooking

- Count - such as 4 shrimp or 12 chicken wings; orders should be portioned and separated prior to cooking when possible

- Volume- ladle, scoop, spoon, or size of the container in which product is served; takes place at end of production

# portions =

yield/portion size

Recipe Standardization Procedures

1.Select a recipe (new or existing)

2.Write recipe in facility's format (write, observe cook, rewrite)

3.Construct Recipe Header

4.Construct Recipe Body (convert to weight, standardize abbreviations, similar wording, pithy verbiage, specific ingredients)

5.Plan how recipe will be evaluated

6.Select yield for testing

7.Test recipe

8.Determine portion size and record total yield

9.Evaluate recipe (formal like survey, sample item, cost item, yield info, consider future plans for recipe)

10.Re-test with suggested changes

Recipe Writing

Formatting --> Block recipe format

►Ingredients listed in order used on left hand side

►Procedures for each ingredient listed on right side.

►Lines divide ingredients and instructions for various steps

►Identifies what to do with each ingredient and instruction order

►Ingredients may be listed multiple times, if used in various steps

Weight vs. Volume?

►Weighing is more efficient and accurate in quantity food production (faster & less food loss)

►Very small quantities generally use measuring spoons

Units of Measurement

►1 gallon = 16 cups

►1 quart = 4 cups

►1 cup = 8 fl oz (volume)

►1 fl oz (volume) = 2 Tbsp

►1 cup = 16 Tbsp

►1 Tbsp = 3 tsp

Fluid oz = volume

Oz = weight

Only equal at water

Recipe Scaling

►Standardized recipes designed to manipulate total yield

►Round off extremely large quantities (might round to nearest pound)

►Small quantities be as accurate as reasonable

►Ex. If 287 cups, scale up to larger unit

►Judgement is required!

►Units must be changed when scaling is complete

Factor Method

1.Convert pounds and decimal points (or kilos or quantity made)

2.Determine the Factor (= Desired yield / Current yield)

3.Multiply all ingredients by your yield factor

4.Whole pans - round up to keep pan full

5.Change back to pounds and ounces (or units) if normal policy

Conversion Factor

CF = desired yield / current yield

Table Method

Recipes scaled to standard increments and printed in columns on recipe card

Percentage Method

1.Add weights of all ingredients for total weight, prior to cooking

2.Calculate percent of total recipe each ingredient is

3.Calculate ingredient weights based on each percentage and Yield required

Baker's Percentage

Use the most predominant ingredient as the main ingredient

►Ex.) Flour (or other main ingredient) = 100%

►All other ingredient weights are given as a percent of that weight

►Ex.) If 10 lbs. of flour = 100% then 7 lbs. of water = 70%

As Purchased (AP)

►Flour, sugar, butter, ground beef

►Sometimes expressed at APQ (as purchased quantity)

Edible Portion (EP)

►Broccoli florets, diced potatoes, apples

►Sometimes expressed at EPQ (edible portion quantity)

Production Schedule

►Assigns preparation responsibilities to employees

►Ensures efficient use of employees' time

►Minimize production issues