Sunday, 9 September 2018

CHAPTER 9: LABOR COST CONTROL

Hey guys.. as i said in the previous entry, this is going to be the last entry for the subject hospitality cost control. its been quite a wonderful journey for me to share all the knowledge that i have gained during all the classes with chef naim. without further ado, lets go!

Job descriptions

The job description are:
List of 3 important questions:
- What is to be done?
- When is it done?
- Where is it done?

A job description typically has three parts:
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.

Personnel recruitment and personnel selection

Selective recruitment remains the most difficult areas, A few practical ways that can help to achieve a greater success rate,
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 description

Employee orientation and employee training

The induction of the newly employed worker to the job is a most important phase of staffing. Smith (1984) outlines ten steps to be included in an orientation program:

1. Introduction to the company
2. Review of important policies and practices
3. Review of benefits and services
4. Benefit plan enrollment

  • Completion of employment documents
1. Review of employer expectations
2. Setting of employee expectations
3. Introduction to fellow workers
4. Introduction to facilities
5. Introduction to the job

Employee orientation and employee training

  • Training - after the individual worker has been properly introduced to the job, the employee still needs to be thoroughly trained, especially the initial period of employment.

  • On the job training 
Objective:
- To reduce time spent in perfecting skills for production and service of attraction
- To avoid accidents and damage to equipment
- To promote good understanding and close working relationship among workers and supervisors

    •  Off the job training
    - New employees trained in a location away from business.
    - Management may enroll the worker in one of the culinary
    - Programs offered by community colleges.

      Employee supervision and employee appraisal

      • For maximum effectiveness from workforce, every employee should know what is expected and how he or she is performing on the job.
      • Direct monitoring
      • Indirect monitoring

      Employee supervision and employee appraisal

      • Once evaluation reveals a discrepancy between actual performance and that anticipated by standards and standards procedures, there is a generally accepted five-step approach that can be use as solution:
      1. Meet with appropriate staff to point out the problem and to determine its cause.
      2. Identify all appropriate corrective measures that may be adopted.
      3. Select the best corrective measure from among the alternatives.
      4. Institute the selected measure.
      5. Monitor performance to be sure that the corrective measure has the desired effect.

      there you go! it is sad that this entry has come to an end. but i i hope you guys can use all the entry i made to enhance your knowledge regarding cost control. this is because, it is quite an important subject to learn if you want to open up business whether its big or not. so, i hope you guys best of luck for your future endeavor and thank you for visiting my blog!

      CHAPTER 8: CALCULATING FOOD AND BEVERAGE CONTROL

      heyaa! this might be the second last entry for hospitality cost control. because there are only 9 chapters in this subject. its sad that its coming to an end. but hey, one more chapter to go. until then, lets get to chapter 8.

      Cost of sales and calculating cost of sales

      • All foods can be categorized as either directs or stores in food control, the total costs for these two are the two basic components of the daily food cost.
      - 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
      - In some establishments, primarily large hotels and motels and a very few restaurants- employees may be permitted to purchase food at cost and take it from the premises for their own personal use.
      - Similar to reimbursement

      • 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.
      - Purpose: promote sales

      • Determining cost of food sold:
              Opening inventory
      +      Purchases                          
      = Total available for sale
              Closing inventory              
      = Cost of food issued
      + Cooking liquor
      + Transfers from other units
              Food to bar
              Transfers to other units
              Steward sales
              Gratis to bars
              Promotion expense             
      = Cost of food consumed
              Cost of employees’ meals   
      = Cost of food sold                 

      Daily food costs and calculating the daily food cost percent

      - After determining daily food cost, the next step is to obtain a daily sales figure, usually from              accounting records. 
      - When both food cost and food sales figures are known, a daily food cost can be determined. 

      The food cost %=   Food cost (Cost of food sold)   
                                     Food sales
                                =   Food cost %

      • DAILY BEVERAGE COST
      - A physical inventory of the storage area is taken after the close of business on the last day of the         month.
      - The number of bottles of each item in stock is counted , and the value of each item is determined.

      *Formula*

       Opening beverage inventory                         
      +       Beverage purchases this month (all purchases) 
      =       Total available for sale this month           
      -        Closing beverage inventory              
               Cost of beverage issue                                   
      -        Transfers from Bar           
      +       Transfers to Bar                       
      =        Cost of beverage sold                                       


      remember, the formulas are the key to excel. during examination, make sure u memorize it. because as chef naim said, the formula might be or might not included . so, by memorizing all the formulas, we can excel during examination. thats all for todays entry. see you again in the final entry folks!



      CHAPTER 7: PRODUCTION AND SERVING CONTROL

      Assalamualaikum and hello again guy! i cant believe this is the 7th entry from this blog regarding cost control. its quite fun to share what ive learnt so far during the class. i hope this entry will satisfy your hunger for knowledge about hospitality cost control. lets get to it shall we?

      Production planning and forecasting production needs

      -Production is a transformation of raw or processed foods into an acceptable finished product, ready for service.
      - The standards and standard procedures for production control are designed to ensure all portions of any given item conform management’s plan for that item and that, as far as possible, each portion of any given item is identical to all other portions of the same items.

      Portions of a given menu item should be identical to one another in 4 respects:
      - Ingredients
      - Proportions of ingredients
      - Production method
      - Quantity

      Standard recipes as production tools

      The objective of the standard recipe:
      • Consistent in quality aspects, including flavour, texture and portion size.
      • Minimize the effects of employee turnover on food quality and simplify the training of new staff.
      • Key to centralized ingredient assembly, where accuracy in weights and measure is essential.

      The role of the expediter and food checker

      Receive payment
                 \/
      Issue receipts, refunds, credit or change due to customer
                 \/
      Answer customer's question & Provide information on procedures or policies
                 \/
      Great customers entering establishments


      Scans loaded tray carried by patrons to compute bills
                                              \/
      Operation machine to cash register to compute bills present check to patron for payment to cashier clerical II
                                              \/
      May operate adding machine present tape rather than check to customer payment
                                              \/
      May act as cashier clerical II

      Sales income collection and automated beverage equipment

      1. Optimizing the number of beverage sales
      2. Maximizing profit
      3. Controlling revenue

      Sales income collection and automated beverage equipment

      - Another approach to controlling revenue, is to install automated bar.
      - Automated bar
      - When a customers order a drink, the bartender places the proper glassware under the dispensing device.

      Pre-check registers and computerized pre-check system

      Guest check and control:
      1. Without guest checks (customers pay cash/ bartender usually owner)
      2. Bars using guest checks (pre-checking system)
      3. Bars using guest checks (Computer system)



      CHAPTER 6: STORING AND ISSUING CONTROL

      assalamualaikum and hello again guys! today, we are going to talk about storing and issuing control. which in chapter 6 of hospitality cost control. without further ado, lets get to the topic.

      Directs and stores

      • Direct
      - Directs are charged to food cost as they are received, on the assumption that these perishable items have been purchased for immediate use.
      -These food will be moved to appropriate facilities in or near the kitchen and will be used entirely in food preparation on the day they are received.
      • Stores
      - 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.
      - Using requisition form.

      Storage system goals

      Storing system objective:
      1. To determine the value of goods held in stock
      2. To compare the value goods actually in the stores at particular time
      3. To list slow moving items
      4. To compare the usage of food with food sales, to calculate food % and gross profit
      5. As a deterrent against loss and pilferage

      Inventory Turnover

      -  It is a measure of the number of times inventory is sold or used in a time period such as a year.
      - The rate is calculated by means of the following formulas:
      • Average Inventory = (Opening inventory + Closing inventory) divided by 2
      • Inventory turnover = Food cost divided by Average inventory

      Physical and perpetual inventory control systems

      • Physical Inventory 
      - Actual account in all storage 
      - Taken on at the end of each month (in order 2 or 3 times a year)
      - To determined food cost
      • Perpetual Inventory
      - Running record of balance on hand for each item of good in a store room
      - provides a continuing record of food and supplies purchased in storage and used

      Bin cards

      - A document that records the status of a good held in a stock room. 
      - A typical retailing business with a large stock room will use a bin card to record a running balance      of stock on hand
      - Stock received and notes about problems associated with that stock item.

      Controls for issuing products from storage

      1. Condition of facilities and equipment
      2. Arrangement of foods
      3. Location of facilities
      4. Security of storage areas
      5. Dating and pricing of stored foods
      hope you you folks can benefit the knowledge from this entry. as usual, stay tune for the next blog! thank you.

      CHAPTER 4: THE MENU: FOUNDATION FOR CONTROL

      Assalamualaikum and hi again! today, we are going to discuss a topic which is menu: the foundation of control. today's topic is going to be long so grab a seat and hold on because there a lots to discuss.

      first, we need to understand what is a menu. so basically, menu is the food available or to be served in a restaurant or at a meal. through menu, we can decide whether we make profit or not. that is why, controlling the menu is important to avoid wastage and loss.


      The menu as a control and marketing tool

      Menu is the primary sales tool for any restaurant operation, the menu must:
      - Satisfy guest expectations
      - Achieve quality goal
      - Cost effective
      - Must be accurate

      1. Must satisfy guest expectations
      2. Must attain marketing objectives
      3. Must help to achieve quality objection
      4. Must be cost-effective
      5. Must be accurate

      Menu planning

      • Basic rules of menu planning
      - know your guest
      - know your operation

      • Menu design
      - First impressive is important the rest is the operation.
      • Menu balance
      - Business balance
      - Aesthetic balance
      - Nutritional balance

      Rationalization and cross-utilization

      Menu planing strategic:
      - Rationalization: simplification for the sake of operation efficiency 
      - Plan menu carefully can be a streamlining of the purchasing, receiving, storing, issuing, production, receiving, storing, issuing, production and serving control points.
      - High quality convenience foods make it easier to offer new items

      Contribution margin: basis of profitability

      Profit pricing:
      factors profits requirements and non-food expenses into menu item selling prices

      Desired food cost percentage pricing
      Method:
      - manager determines a reasonable food cost percent
      - then divides a menu item's standard food cost by its reasonable food cost percent

      Using mark-up pricing to calculate menu selling prices

      • Simple Mark-up Pricing Methods
      Designed to cover all costs and to yield the desired profit.
      Three steps:
      1. Determine the ingredients' costs
      2. Determine the multiplier
      3. Establish a base selling price

      If food cost is to be 40%
      Multiplier = 1/desired food cost%
      = 1/.40
      =2.5

      Menu engineering and improving the menu

      Basic menu engineering process:
      • Stars - items that are popular profitable
      • Plow-horse - item that are not profitable but popular
      • puzzles - items that are profitable but no popular
      • Digs - items that are neither profitable nor popular.
      Contribution Margin
      A "high" contribution margin for an individual menu item would be one that is equal to or greater than the average contribution margin
      *Formula*
      Average Contribution Margin = Total Contribution Margin / Total Number of Item Sold

      one thing for sure, controlling the menu is important as i said in the beginning. one must understand how menu can affect loss, profit and a tool for marketing in the industry. i hope you can use this knowledge if you want to open up a restaurant one day. thank you!

      CHAPTER 5: PURCHASING AND RECEIVING CONTROL

      assalamualaikum and hi again! today, lets proceed to our lesson which is chapter 5 of hospitality cost control.

      first of all, what is purchasing? well, 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.

      Purchasing cycle

      (Identify needs)___  (Write specifications)  (Develop purchase order)
                                  |
      - (Formal method)     - (Informal method)
                    |                                 |
      -(issue bid request)      -( Price quotation)
      - (tabulate and              - (Select vendor and place order)
         evaluate bid)
      - (award contract)

      (Receive and inspect deliveries)  (Store in proper are)  (Evaluate & follow up)

      Purchase Specifications

      • Product name or specification number
      • Pricing unit
      • Standard or grade
      • Weight range/ size
      • Processing and/or packaging
      • Container size
      • Intended use
      • Other information such as product yield


      Maximum and minimum inventory system

      Inventory – A detailed and complete list of goods in stock

      This amount depends on the usage and time required for ordering and delivery.

      Economic Order Quantity (EOQ)-  is the order quantity that minimizes the total holding costs and ordering costs
      *Formula*
      Co  = Ordering cost per unit
      D   = Demand
      Ch = Holding cost



      Purchase order / purchase record

      Definition: A written sales contract between buyer and seller detailing the exact products to be ordered from a supplier. It will specify payment terms, delivery dates, item identification, quantities, shipping terms and all other obligations and conditions.

      The receiving process

      Receiving – point of which food service operations inspect the products and take legal ownership and physical possession of the items ordered.

      The purpose is to ensure that the food and supplies delivered match established quality and quantity specifications.

      Step:
      1. inspect the delivery and check against purchase order
      2. inspect delivery against invoice
      3. accept order only if all quantities and quality specifications are met 
      4. complete receiving records
      5. immediately transfer goods to appropriate storage

      when it come to purchasing, it is important to control it to avoid wastage. the purchasing department is responsible for this because when purchasing, money is used and that money is going to be used to generate profit. so purchase responsibly. thank you!


      CHAPTER 3: THE OPERATING BUDGET AS A CONTROL TOOL

      THE OPERATING BUDGET AS A CONTROL TOOL

      Assalamualaikum y'all. this entry, we are going to discuss the operating budget as a control tool. first, we need to know what budget is. Budget is A budget is simply a forecast or estimate of projected revenue, expenses and profit. meanwhile, An operating budget is a combination of known expenses, expected future costs, and forecasted income over the course of a year. Together with anticipated changes in sales and costs, provide basic data needed to prepare an operating budget for an upcoming period.


      Forecasting sales income

      Sales is defined as revenue resulting from the  exchange of products and services for value.
      *TOTAL SALES = refers to total volume of sales expressed in dollar (ringgit) terms*

      Monetary term:
      - Sales price = amount charged each customer purchasing one unit of item
      - Average sale = Total sale / Total number of covers (customer)
      - Average sale per server = Total sale for Celina / Number of customers for Celina

      Non-monetary term:
      - Total number sold – total number of steaks , shrimp cocktails or any item sold.
      - Cover – to describe one diner (quantity of food he or she consume)
      - Total covers – total number of customers served in a given period
      - Seat turnover – number of seats occupied during a given period

      Treating profit as an expense, estimating expenses, variable and fixed expenses

      Relationships between sales, cost of sales, cost of labour, cost of overhead and profit.

      *Sales= Cost of sales + Cost of Labour  + Cost of Overhead + Profit
      *Sales = Variable cost + Fixed cost + Profit

      Allocating costs and profit requirements


      - That which must be used to cover variable costs associated with the item sold
      - That which remains to cover fixed costs and to provide profit


      Saturday, 8 September 2018

      CHAPTER 1: INTRODUCTION TO COST CONTROL

      introduction to cost control

      assalamualaikum. this semester, we get to learn a subject which is quite important to us called cost control. the main importance of this subject is to teach us how to control the costing of everything in the industry to prevent loss and wastage. for chapter 1, we get to learn a topic which is the introduction of cost control.

      what is cost control?

      cost control is a process or activity on controlling cost associated with an activity, process, or company. it includes  investigative procedure to detect actual cost from budgeted cost.


      1. Food and beverage managers in control

      Food & Beverage Manager forecasts, plans and controls the ordering of food and beverages for a hospitality property.
      - Manages the finances related to the whole process of purchasing food and drink for the hotel premises.
      - The F&B Manager may or may not have staff under his authority. 
      - Managing business, people, skill and operation

      2. Management resource and objectives

      - Planing: Setting objectives, Decision making and formulating policies
      - Organizing: Analyzing tasks and assigning them to individuals
      - Motivating: Helping and encourage staff
      - Controlling: observing, analyzing accounting records & reports

      3. Profit and cost centers

      - A profit center is a sub unit of a company that is responsible for revenues and costs. 
      - A cost center is a sub unit of a company that is responsible only for its costs.

      4. Definition and importance of control

      - It's a process used by manager to direct, regulate and restrain the action of people so that the established goals of the business can be achieved.
      - Process used by managers to regulate cost and guard against excessive costs.
      - The main objective is to eliminate the cost for food beverage and labor to gain more profit.

      5. Steps in the control

      1. Establishing standards
      2. Establishing procedures
      3. Training
      4. Setting examples
      5. Observing and correcting employee acions
      6. Requiring records and reports
      7. disciplining employee
      8. Preparing and following budgets

      6. Establishing standards

      Standard can be set on the basis of:
      - Profitability standards
      - Market position standards
      - Productivity standards
      - Employee attitude standards
      - Social responsibility standards
      - Short change goal

      those are what we have learnt so far. stay tune for more knowledge in cost control!

      CHAPTER 2: DETERMINING FOOD AND BEVERAGE STANDARDS

      Hello guys and assalamualaikum to everyone! in this entry, we will going to learn the chapter 2 in cost control which is determining food and beverage standards.

      Standards cost & cost tools

      Cost- Expense to a food to a food service establishments for goods or service when the goods are consumed or service are rendered
      - cost of labour
      - cost of any item
      - cost of drink

      • material cost - ingredient
      • labour cost - wages
      • overhead cost - all cost other that the above
      *(formula) total cost: fixed costs + semi-fixed + variable cost*
      Fixed cost - rent, rates, insurance, maintenance etc
      Semi-fixed - telephone service, fuel etc
      Variable Cost - ingredient food & beverage, labor cost

      Element of cost:
      Controllable  and non-controllable

      Relationship between cost & sales:
      - Cost divide sales = cost%
      - cost divide cost%= sales
      - sales x cost%= cost

      Standard purchase specification

      standard purchase specification are concise description of:
      -Quality
      -Size
      -Weight
      -Count factor desired for a particular item,

      Standard recipe, yields, portion size and portion costs

      • Standard recipe - recipe that had been tasted and adapted to requirement
      • Yield Percentage - the percentage of a whole purchase after any required in-house processing been completed
      • Portion size - quantity of any item that is to be served each that item is ordered
      • Portion cost :
      *(Formula)*

      - Quantity =
      Number of portions x portion size (as a decimal)

      Yield percentage

      - Number of portion =
      Quantity  x yield percentage

      Portion size

      - Portion size =
      Quantity  x yield percentage

      Number of percentage

      - Yield percentage =
      Number of portion x portion size

      Quantity (original weight)

      The Standard Food Cost Percent

      Difference between actual food cost and standard food cost reflects inefficiencies that should have been controlled by management.

      there you have it! i hope this entry really help you to understand more regarding the f&b standards. stay tune for the next entry for more!