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Student Objectives:
Define the term food cost
Perform simple percentage food cost calculations
Define the term formula pricing
Describe the term product specification and relate its
role in maintaining food cost
Define the term minimum standard
Define the term par stock and describe how it is
related to food cost
Define the term portion control and discuss how to
implement effective portion control
Define physical inventory and describe its importance
in controlling and defining food cost
Demonstrate the ability to calculate food cost and
percentage food cost
I. What is food cost? Food cost is the cost
of food prepared for and consumed by the
customer. In a broader sense, it is part of
The Cost of Sales which refers to the cost of
all products, both food and beverage,
consumed by the guest.
A. Food costs are traditionally expressed in
both dollar amounts and as a percentage of
sales. For example, if your operations
monthly sales were $75,000 and your food
costs were $25,000, what would your
percent food cost be for that month? (33.3).
B. Actual food cost dollars are essential to keep
track of, but food cost is a variable expense that
rises and falls with the volume of sales
B. Purchasing
1. Specifications (specs): All of the food,
beverages and supplies that your operation has
selected to meet certain minimum specifications
to ensure the quality and consistency your
customers have come to expect when they visit
your facility.
B. Purchasing
2. These specifications are in writing, and
will determine the cost of goods being
purchased from outside vendors.
B. Purchasing
3. Most operations put their product specs
out to bid or enter into a buying agreement
with a trusted, reputable vendor.
B. Purchasing
4. Prices may fluctuate with the seasonality of
items and other supply and demand situations.
a. Cost of sales
b. Cost of labor
c. The above two items subtracted from your revenue equals your
prime costs
d. The prime cost is a principle indicator of performance and
profitability by determining contribution to overhead
11. Customer ordering
a. Ensure effective communications
procedures are in place between the line
cooks and the service personnel.
b. Remove any barriers (physical or
otherwise) to efficient service and correctly-
produced customer orders.
11. Customer ordering
c. Monitor line or service personnel who
are frequently involved in menu items
being misfired, improperly prepared,
improperly served or sent back by the
customer.
11. Customer ordering
d. Line and service staff need to be a well-
trained team focused on customer
satisfaction.
III. Six tips for controlling food
cost
A. Frequent line checks: conduct a line
check prior to each meal period or day
segment. Some things to look for
A. :
line check, Some things to look for
1. Observe
employees at work
2. Note where
minimum standards
are not being met
3. Schedule retraining
on those standards
C. Schedule regular meetingsHave frequent
kitchen meetings. Daily, post shift meetings are
good forums for
1. Discussing all the shift events and offering
praise
2. Reviewing what went wrong, involving the staff
in discussing solutions
3. Updates on food cost status from previous day
D. Menu analysis
1. Management follow-through
Check inventories
Due line checks
Follow up on all employee and maintence
issues.
F. Monitor systems
2. Managing by example
Be highly visible
On floor
In back of the house
Be consistent in how you deal with customers and
employees, Are you thinking what is best for the
business when making decisions.
F. Monitor systems