TDC 203 HOSPITALITY COST CONTROL

Job descriptions  1. A heading that states the job title and the department in which the job is located.  2. A summary of the duties of the job, typically written in paragraph  3. A list of specific duties assigned to the job.  - Step by step instruction for doing the specific work     Personnel recruitment and personnel selection  1. Review recruitment practice  2. Ensure candidates go through both their current skills and future potential.  3. Give candidates chance to tell you what they know about your organization.  4. Have a well thought out job descriptions  Employee orientation and employee training 1. Introduction to the company  2. Review of important policies and practices  3. Review of benefits and services  4. Benefit plan enrollment  5. Completion of employment documents  6. Review of employer expectations  7. Setting of employee expectations  8. Introduction to fellow workers  9. Introduction to facilities  10. Intr

Cost of sales and calculating cost of sales   -Cost of directs (directs are charged to food cost as received)  -Cost of stores (added to inventory and charged to the food cost when issued) Transfers  Transfer between  kitchen and the bar (Intra unit transfers)  • Transfers of alcoholic beverages from bar to kitchen, used in food preparation. • The term “cooking liquor” is commonly used. Charged to food cost. • Transfer of directs from kitchen to bar, where they will be used in drink preparation.  • The term “ food to bar” (directs) is often used for these items. Steward Sales .May be permitted to purchase food at cost and take it from the premises for their own personal use. Gratis to bars . The kitchen staff is expected to produce various hot and cold hors d’oeuvres that are given free to customers at the bar. Promotion expenses  .Sales personnel invite potential customers to have luncheon/ include entertainment cost. Daily food costs and calculating the da

Production planning and forecasting production needs  . Production is the transformation of raw or processed foods into an acceptable finished product, ready for service.  Portions of a given menu item should be identical to one another in 4 respects:  1. Ingredients  2. Proportions of ingredients  3. Production method  4. Quantity    Ingredient assembly  .  In this system, the ingredients needed for recipes for the day’s production and for advance preparation are weighed, measured and assembled in a central ingredient room or area. Portion control  . Standardized portion are important not only for cost control, but also in creating and maintaining customer satisfaction and goodwill.  Personnel Equipment  • Worktable      • trash receptacles  • counter scales     • counter pans  (for cans food)  • mobile storage bins (sugar/flour)  • trays (for assembling)  • refrigeration       •  measuring utensils 

Directs and stores  Directs are charged to food cost as they are received, on the assumption that these perishable items have been purchased for immediate use. Stores are described as consisting of staples. When purchased, these foods are considered part of inventory until issued for use and are not included in cost figures until they are used.  Inventory turnover  Inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year.  Inventory turnover rate is calculated by means of the following formulas:  Average Inventory = Opening inventory + Closing inventory                                                                                      2     Inventory turnover =      Food cost                                            Average inventory  Physical and perpetual inventory control systems   .Perpetual Inventory •Running record of balance on hand for each item of goods in a storeroom. •Pro

The purchasing cycle  .Purchasing is the process of getting the right product into a facility at the right time and in a form that meets pre-established standards for quality, quantity and price. Purchase specifications A food service specification generally consists of following information:  1) Product name or specification number  2) Pricing unit  3) Standard or grade  4) Weight range/ size  5) Processing and/or packaging  6) Container size  7) Intended use  8) Other information such as product yield  Maximum and minimum inventory system  .Inventory is a detailed and complete list of goods in stock. This amount depends on the usage and time required for ordering and delivery. If canned fruits and vegetables, for example, are purchased every three months through formal bidding procedure, the time lapse would be longer than for fresh produce that is ordered daily or weekly through informal buying. The receiving process  .RECEIVING – poin

 The menu as a control and marketing tool  Menu is the primary sales tool for any restaurant operation. Menu must: 1. Satisfy guest expectations 2. Achieve quality goal 3. Cost effective 4. Must be accurate Menus in foodservice establishments generally fall into one of the following three major categories: 1) Standard Menu 2) Daily Menu 3) Cycle Menu Menu planning  Knowing Your Guest .Guest preferences are learned by interviewing guests, reading surveys, comment cards and trade journals and studying production sales record  Knowing Your Operation - Theme of Cuisine - Equipment - Personnel - Quality Standards - Budget Menu planners create a pool of possible menu items using;  • Old menus  • Trade magazines  • Books  • Cookbooks for home market Once the pool has been narrowed down, some of it might be eliminated because of;  • Cost  • Incompatibility with the operation’s theme or cuisine, number of employees skills, with the operation’s qua

The operating budget, budget standards  .Operating budgets are completed in advance of the accounting period, which is why they require estimated expenses and revenues. Normally prepared using historical information from previous budgets and other financial records. Together with anticipated changes in sales and costs, provide basic data needed to prepare an operating budget for an upcoming period. Can be prepared for any time of period-a day, a week, a month, six months or full year. Example: Number of meals daily, 3 Length of campers’ stay, 7 days 180 campers x 3 meals x 7days = 3780 meals The foodservice director given amount to the meal served cost = RM1.85 So for 3780 meals, 3780 x RM1.85 = RM6993.00 Forecasting sales income  Sales forecasting is a process in which managers use data and intuition to predict what is likely to occur in the future. If sales volume can be predicted accurately then plans can be made for purchasing appropriate quantities of food to pr

Standards cost and cost tools  .In performing an excellent cost control, it is crucial for us to understand all the elements of costs used in hospitality organization • COST – expense to a foodservice establishments for goods or services when the goods are consumed or service are rendered. • The cost of labor (people on duty)- value per hour or value per week • The cost of any item (meat) – value per piece, per gm or per individual portion. • The cost of drinks (liquor) – value per bottle, per drink, or per ounce.  Material cost is the cost of purchase/plus all costs incurred in getting the raw materials to the restaurant example, rice, vegetables and other food costs Formula: Opening stock + Cost of purchases      - Closing stock  -Cost of staff meals  = Material cost A labour cost is the cost of labour that can be traced directly to the manufactured goods. Fixed costs  • Unaffected by changes in sales volume  • Rent, rates, insurance, repair maintenance

Food and beverage managers in control 3 main objective managers - Delight guest feels welcome  - Facilities work for guest  - Operation continue to provide service while also gain a profit  Management resources and objectives  .Planning: Set objectives, Decision and formulating policies   .Organizing: Analysing tasks and assigning them to individuals   .Motivating:  Helping individuals to form and develop to group “team spirit”.  Encourage staff management committee meetings   .Controlling: By observing, analys accounting records & reports  Profit and cost centers  . A cost center is a subunit of a company that is responsible only for its costs.  A profit center is a subunit of a company that is responsible for revenues and costs.   Definition and importance of control  Controlling is the process of monitoring and adjusting organizational activities to ensure they are being accomplished as planned.  Steps in the c