1. Food Purchasing Control Slide 1 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

2. Recap of the Previous session What is the Cost/Volume/ Profit equation? How is Variable Rate defined? What Contribution Rate? When is the business considered in the state of Break Even. How is Contribution Margin defines? Slide 2 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

3. KCM of the session Outline the purchasing process in the operations of foodservice establishments. Describe how quality standards for food purchases are established. Reasons that standard purchase specifications are important Describe the process used to determine the quantity of perishable food purchased. Slide 3 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

4. Scope of the session Developing standards and Procedures for Purchasing. Standard Purchase Specifications. Par Stock. Periodic Order Method. Perpetual Inventory Method. Centralized Purchasing. Slide 4 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

5. Sequence of Operation Purchasing. Receiving. Storing. Issuing. Producing. Selling and serving. Slide 5 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

6. Categorizing the foods Meat and fish Fresh and Frozen Frozen vegetable Fresh vegetable and fruits. Dairy/butter Oil Sauces & dressings. Pulses , pasta and bakery Cafeteria Juices and drinks. Canned fish& meat. Spices ingredients Canned fruits and vegetables Slide 6 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

7. Developing standards and Procedures for Purchasing Objectives behind developing control standards and procedures for Purchasing: Standards for Purchasing are further subdivided into: Quality of food purchased. Quantity of food purchased. Prices at which the food is purchased. Slide 7 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

8. SPS for Black Angus Strip Loin IMPS number 180(INSTITUTIONAL MEAT PURCHASE SPECIFICATION )Boneless 10 ” trimUSDA Prime, upper halfRange #2, minimum 12 lbs., maximum 14 lbs.One - half to three - quarters of an inch fat, except for seam fatChilled upon deliveryFree from objectionable odors, no evidence of freezing Slide 8 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

9. SPS for Salmon Fish Whole, dressed, fresh day of deliveryMinimum 8 lbs., maximum 12 lbs.Fish firm and elastic, meat pink and slightly translucentGills free from slime and reddish - pink in colorScales adhering tightly to the skinNo stale odors of ammonia Slide 9 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

10. SPS for Canned Cherries Dark sweet, pitted, cannedU.S. Grade A, packed in waterCount per #303 can: 30 to 35Federal inspector ’ s certificate of grade requiredPacked 24 to a case Slide 10 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

11. SPS for Crimini (Italian Brown) Mushrooms U.S. No. 1Medium, 1 to 1 in diameterLight tan to brown in colorThin - skinned, tender, delicate fleshNo visible spotting or bruising on skinsPacked in 10 - pound containers Slide 11 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

12. Standard Purchase Specifications Standard Purchase Specifications: Are described as an accurate description of the product/s characteristics. SPS features are as follows: Government Grading standard. Weight in total. Date of Production and Expiry. Size ( length) Slide 12 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

13. SPS features Nutritional data. Name of the supplier. Consistency and description of texture freshness. Yield. Area of produce. Range of temperature for storage. Slide 13 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

14. Advantages of SPS in Food service business Exact requirement can be projected. Useful in menu preparations. All misunderstandings between Purchase, Service and Kitchen eliminated. Makes competitive bidding possible within possible purchasers. Eliminate the need for verbal descriptions of a product each time its ordered. They facilitate checking food as received. Slide 14 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

15. Par Stock The term Par stock is largely applied to Perishables: The estimated quantity required or needed for operation is termed as Par stock. The quantity of any item required to meet the anticipated needs in a specific upcoming period. Slide 15 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

16. Stewards Market Quotation

17. Periodic Order Method Method of inventory valuation for financial reporting purposes where a physical count of the inventory is performed at specific intervals. This accounting method for inventory valuation only keeps track of the inventory at the beginning of a period. The method is used keeping in mind the desired ending inventory. Slide 17 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

18. Slide 18 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

19. Periodic Order Method Amount required for the Upcoming period (40 Cans) Less (-) Amount Currently on hand (12 cans) Add (+) Amount wanted on hand at the end of the period to last until the next delivery(15) = Amount to order (43) Slide 19 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

20. Periodic Order Method Alternately represented as: To Purchase (To order) 43= Consumption(40)- opening balance(12) + Stock on hand(15) Slide 20 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

21. Slide 21 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

22. Perpetual Inventory Method The perpetual inventory method has twoprimary purposes: To ensure that quantities purchased are sufficient to meet anticipated need without being excessive. To provide effective control over those items that are being stored for future use. The method is used bearing and determining the Reorder point Slide 22 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

24. To calculate the reorder point Reorder point is the number of units to which the supply on hand should decrease before additional orders are placed. Reorder Point =1.5 (Normal Usage per day x # of days to delivery) Normal Usage per day = 2 cans # of days to delivery = 5 cans Re-order Point = 1.5( 10) = 15 cans Slide 24 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

25. To calculate reorder quantity Re-order quantity is the amount that will be ordered each time the quantity of a particular item diminishes to the reorder point. Par Stock 32 cans Less (-) Reorder Point 15 cans = sub total 17 cans + Normal usage until delivery 8 cans = Reorder quantity 25 cans Slide 25 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

26. Establishing standards for Quality and Price Categories of Food Suppliers: Wholesalers. Local Producers. Manufacturers. Packers. Local Farmers. Retailers. Cooperative associations. Slide 26 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

27. Making Comparatives from comprehensive suppliers Its important to divide suppliers who make supply of Perishables and Non-Perishables. Have at least 2 suppliers for the Fresh main line. Contract with suppliers on the basis of: Past performance. Quote. Adherence to timings frequency of visits. Slide 27 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

28. Making Comparatives from comprehensive suppliers 4. Proper and environment friendly vehicles for delivery. 5. Maintaining proper temperatures of storage in transport. 6. Supplying items as per specification. 7. Providing the clients MSDS ( Materials safety data sheet) in case of chemicals supply. 8. Ensuring that food products are supplied at least 6 months prior to their date of expiry. Slide 28 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

29. Centralized Purchasing (CPS) Largely used by chain food service operators. Use of a central warehouse. Departmental segregation system. Integral part of the supply chain methodology. Use of a computerized centralized purchase system. Slide 29 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

30. Advantages of a CPS Foods and beverages can be purchased at lower prices because of the volume. Desired quantity can be obtained more readily because the buyer has a greater choice. Foods can be obtained that meet the specifications of the buyer. Larger inventories can be maintained. Reduces dishonest purchasing of individual items. Slide 30 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

31. Disadvantages of CPS Each unit must accept the standard item in stock and has little freedom to purchase for its own peculiar needs. Individual units cannot take the advantage of local specials at reduced prices. Menus are normally standardized thus limiting the individual unit managers freedom to change the menu. Slide 31 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control

32. Questions  Comments Slide 32 / 30 Wednesday, March 16, 2011 BAC-4131 Food and Beverage Management Cost Control: :Food Purchasing Control