Main characteristics of F&B operation Technical

A vital part of everyday life Internal Factors

Major contributor of economy
Food and beverage
Highly fragmented and complex
Staff
Creates employment
Control
Encourage Entrepreneurship
Promotes diversity through many different The Management Process
food concepts and cuisine Planning
Innovative Organizing
Consumer oriented Coordinating
High competition Staffing
Fulfils basic needs Directing
Controlling
Primary/ Commercial business
Evaluating
characteristics
Also known as Market oriented business
High % in fixed cost, for example rent, Operational Challenges
Financial Management
management salaries, depreciation of
buildings and equipment Pricing
Reliance on sales rather than decreases in Staffing
costs
Marketing Communication
An unstable market demand for the product
Flexible pricing policy Increased Competition
Secondary/ Welfare business characteristics Quality Expectation
Also known as Cost oriented business Healthier Eating Trend
Lower % of fixed costs, but a higher
Intangible Nature of service
percentage of variable costs

such as F & B costs
Reliance on decreases in cost rather than
increases in sales
A relatively stable market demand for the
product
Fixed pricing policy

Factors Affecting F&B Operation

External Factors
Government/ Political
Economic
Social
 The objectives of food and beverage Controls Receiving
control Menu Selection
Regular Inventory Keeping
Analysis of income and expenditure Wisely Ordering
Establishment and maintenance of Control Wastage and Portion Size
Training
standards
Sales Recording
Pricing
Prevention of waste
Prevention of Fraud
Source of Management Information
Essentials of a control system
Menu planning
Production control
Stock management
Purchase ordering
Menu analysis
Financial management reporting
F&B Control Process
Establishing Standard
Observing Performance
Deciding
Implement Corrective Action
Follow through
Special Problems of F&B Control
Perishability of the product
Business volume unpredictability
Menu mix unpredictability
Food and beverage operation short cycle
Departmentalization
Persons involve and responsible for
control
Owners
Managers
Chef
Steward
Activities performed to control the cost of
food and beverage business
Maintain Variety of Vendors / Suppliers
Standard costing tools Importance of Yield
Menu To determine product pricing
To set purchase specification and
Standard Purchase Specifications
receiving standards.
Standard Recipes To forecast purchase quantity and
Standard Yields ordering levels.
Standard Portion Sizes Establish standard recipe and portion
size.
Standard Portion Costs
For setting control standards.
A detailed formal specification includes Comparison of vendor price and quality.
the following information Monitoring the usage of raw materials.

Intended use Yield Terminology

Product name As Purchased Weight (AP weight)
Grade Edible Portion Weight (EP weight)
Product size Production Loss
Packaging
Recipe Conversion Issues
Product characteristics
Acceptable substitutions (or equal) Cooking Equipment
General instructions to bidders Timing
Temperature
Advantages of standard recipe
Moisture Loss
Consistent food quality Recipe Error
Predictable yield
Customer satisfaction
Consistent nutrient content
Food cost control
Efficient purchasing procedures
Inventory control
Labor cost control
Increased employee confidence
Reduced record keeping
Developing Standard Recipe
Generate ideas
Develop recipe ingredients
Develop method and procedure
Develop serving presentation
Give marketable name
Standardize the recipe
o Tested
o Adjusted
o Re-tested
o Yield Adjustment
o Fix in a Standardized Recipe format
Purchasing Control points to be considered Menu engineering
Product testing Billing and sales report (daily/ weekly/
Yield testing
monthly)
Purchase specifications
Method of buying Preventing Pilferage Theft of Revenue
Clerical procedures Install security cameras
Purchase Cycle Conduct audits and review reports
Limit access to the POS system
Recognizing need
Maintain tabs on inventory
Preparing specifications
Set and enforce cash handling procedures
Selecting a supplier
Monitor employee access to vulnerable
Ordering the goods or services
Receiving the goods or services areas

Receiving Control points to consider

Quantity inspection
Quality inspection
Clerical procedures
Receiving process
Inspection against the Purchase Order
Inspection against the Invoice
Acceptance or Rejection of Order
Completion of Receiving Record
Removal to Storage
Types of store rooms
Perishable stores
Dry stores
Beverage stores
Storing Control points to be considered
Stock records
Pricing of items
Stocktaking
Clerical procedures
Food preparation controlling tools
KOT/BOT
Standard recipe
Portion control
Serving controlling tools
KOT/BOT
Portion control
Food Service Control Points Objective Pricing Methods
Menu Planning
Purchasing /Ordering o Desired Food Cost Percentage
Receiving
Pricing Method
Storage
Issuing
Preparation o Profit Pricing Method (Contribution
Production Pricing Method)
Serving
Menu planning objectives o Simple Mark-up Pricing Method
To meet or Exceed guests Expectations
To meet Quality Standards o Ratio Pricing Method
To Attain Marketing Objectives
To be Cost Effective
o Simple Prime Cost Method
To be Accurate
Factors that influence menu planning/
o Specific Prime Cost Method
Principles of Menu Planning
Location of the establishment Menu Categories for menu engineering
Type of establishment
Type of customer
Stars
Seasonal availability
Plow-horses
Availability of equipments in the kitchen
Puzzles
Capability of kitchen and services staff
Dogs
Leftovers in hand
Cost of the menu
Policy of the establishment Guidelines to consider menu engineering
Service hours and design to turn it into a profit center
Nutritional factor
Occasion
Use visual cues to highlight the items that
need to sell most
Menu Pricing Methods
Dont list prices in a column down the right
side of menu
Subjective Pricing
Recognize that there is a science to listing
each menu sections items
o The Reasonable Price Method Take advantage of customers eye-
movement patterns
o The Highest Price Method Use menu item descriptions to the
advantage
o The Loss Leader Method Think outside the menu

o The Intuitive Price Method

Purpose of Budgeting
A forecast of income and expenditure (and
thereby profitability)
Means to monitor business performance
A tool for decision making
Importance of Budgeting
Examine the facts to achieve desired profit
levels.
Provides standard for comparison
Prepare for future business conditions
Means to analyze alternative course of action
Periodically carry out a self-evaluation
toward its financial objectives.
Provides a communication channel to its
various departments.
Establish departmental operating objectives
List items for expenditure with costs for each
items, both fixed and variable costs.
Set budget priorities with justifications
Write the budget for presentations (to
approve from senior management and
department heads)
Purposes/Objectives of cost volume profit
analysis
To calculate the breakeven point
To forecast the profit by the analysis of cost
and volume of sales
To show the effects of changes in price, cost
and profit
To measure the elements or factors that

and evaluation techniques and tools. affect profit

Provides management with reasonable To select the best alternate for maximizing
estimates of future expense levels and profit
serves as an instrument for setting proper
prices.
Types of Budgets
Capital budgets
Operating budgets
Basic Steps in Budget Development
Collect data (from records and reports
regarding revenue expenses and profits)
Study and evaluate data (from the previous
three to four years)
Analyze and discuss factors affecting future
operations. (The factors may be internal or
external in nature)
List all sources of income with anticipated
changes
Common definitions of quality Service quality dimensions
Conformance to specifications Timeliness/ Promptness
Fitness for use
How long a customer must wait for service; if
Value for price paid
Support services it is completed on time or not?
Psychological criteria Completeness
Product quality dimensions Is everything the customer asked for
Performance provided or not?
The basic operating characteristics of Courtesy
product How are customers being treated by
Features employees?
The extras that are included beyond the Consistency
basic characteristics Is the same level of service provided to every
Reliability customer each time?
That the product will function as expected Accessibility and convenience
without failure How easy is it to obtain the service?
Conformance Accuracy
The degree to which a product characteristic Is the service performed right every time?
meets preset standards Responsiveness
Durability How well company reacts to usual/ unusual
Expected operational life of the product/ life situations?
span before replacement Quality Management Cycle: A Systematic
Serviceability Approach to Quality Management
How readily a product can be repaired Planning
Aesthetics Doing
Checking
How product looks, feels, sounds, smells or Acting
tastes Concept of TQM can be explained as:
Safety Customer Focus
The assurance that the customer will not Continuous Improvement
Employee Empowerment
suffer from injury or harm from the product
Use of Quality Tools
Other perception Product Design
Of customer such as expectation fulfillment, Process Management
Managing Supplier Quality
goodwill etc