Food Cost Manual

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Food CostManagement

Best Practice

Manual

A recipe for success


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Index

Section 1 Management Overview

! Objectives and Outcome

! Key Performance Indicators

! Why have a manual?

! Food Cost Management Facts

! Who needs to be involved?

! Management Responsibility Table

! How to use the manual

! Food Cost Management Action Checklist

! Process Flow Chart

! Questions

! HUKI Food Cost Management Best Practice

Section 2 Planning

! Menu Costing

! Sales Mix Analysis

! Gross and Net Weights

! Achievable Food Cost Exercise

! Setting Menu Selling Prices

! Forecasting and Food Cost Planning

! Banqueting Costing and Purchase Planning

! Peaks and Troughs Planning

! Shopping Basket

! Profit Maximisation

! Budgeting


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Section 3 Ordering, Receiving, Storage, Control and Wastage

!

Par Stocks

! Must Stocks

! Ordering The Purchase Cycle

! Receiving and Goods In

! Storage

! Security and Key Control

! Out of Hours Policy

! Wastage and Out of Date Stock

Section 4 People

! People

! Colleague Feeding

Section 5 Revenue Control and Yield Management

! Revenue Control

! Reports

! Covers Definition

! Nominal Code Definitions

!

Food Tracker

! Stock Taking

! Table Management and Food Production

! Optimum Food Costing

! Sharing Information

Section 6 Appendices

! Charts and Food Cost Calculations


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Management Overview

! Objectives And Outcome

! Key Performance Indicators.

! Why Have A Manual?

! Food Cost Management Facts

! Who Needs To Be Involved?

! Management Responsibilities Table

! How To Use The Manual

! Food Cost Management Action Checklist

! HUKI Food Cost Management Best Practice

! Questions


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Objective

To provide solutions and tools to effectively manage

hotel food cost:

Making Food Cost Management A Way of Life.

Put in place monitoring and control procedures to make sure

that these solutions and tools are used.

Outcome

This manual will allow the hotel to develop a systematic

approach to food cost management that will bring consistent,

controlled and planned profitability.

Leading to: - Optimum Food Costing.

Consistent Standards Throughout The Hotel And Across The

Hilton Estate.

Management Has Clear Understanding of Best Practice.

Improved Hotel Food Costs.

Improved Efficiency.

Improved Customer Service.

Improved Staff Training And Knowledge.

GOP Impact On Balanced Scorecard.


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Key Performance Indicators for

Best Practice Food Cost Management.

(KPIs)

Planned food cost is achieved per period

All menus and buffets are costed

Monthly food purchasing plan is in place

Par stocks in place

Monthly shopping basket exercise completed

Controlled ordering procedure in place

Controlled receiving and storage procedure in place

Recorded wastage procedure active

Staff training and knowledge up to date

Table management procedures in place

Staff feeding meeting Hilton people standards

Effective revenue control in place

Stocktaking accurate and consistent


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Why Has It Been Created?

Hilton Hotels have a varying level of efficiency in food cost management.

Control Systems to manage food cost vary from hotel to hotel.

No formal document exists to teach Chefs and Managers the Hilton

Standard.

To separate the food operations process into component parts and give

clear operational procedures for each part.

There is little understanding of the formal mechanics of food cost

management.

There is little understanding of what action to take to improve costs

generally or what contingencies to make, to react to changes in business

demands.

Change in management and staffing means that it is not always possible

to work to the same standards, and due to the multi cultural and

multinational nature of our kitchen brigades systems and procedures may

be different in other countries.

A lot of our Chefs are recruited from smaller hotels or restaurants whereformal food costing is not important to the business.

Chefs control the biggest cost budget after payroll but are given little or

no training and assistance in how to do it.

Optimum unit food cost is not planned.

To inform, educate and share knowledge with management and kitchen

staff on the importance of food cost management.

Food Cost Management Is Not Just The

Responsibility Of The Chef!


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Food Cost Management

The Facts

Hilton, as a group has generated and forecasts to generate the following sales,purchases and cost percentages in the 3 year period ending 2002.

Year Sales Purchases Cost

2000 119.2m 34.4m 28.88%

2001 123.7m 35.3m 28.54%

2002 122.5m 37.2m 30.39%

After payroll, food purchase is our biggest operating cost of sales. Therefore it isimportant that tight controls and tested methods exist in order that the company

maximizes profitability.

Frightening Scenario

It is human nature that processes can lapse for various reasons such as

sickness, holidays and new staff appointments etc. It is also realistic to

assume that we do not do things right all of the time so imagine if the

following revenue was not raised at each HUKI hotel every day of the year.

1 x Exclusive breakfast due to Fidelio meal plan report or guest key card not

being checked.

1 x TDH dinner due to Fidelio meal plan report or guest key card not being

checked.

1 x Extra banqueting dinner due to an extra delegate arriving late.

If we use an average selling price of 10.50 for breakfast, 21.95 for dinner

and a banqueting menu of 29.00 across the 77 hotels in the Hilton portfolio,

we would be losing net sales of: -

1.725m

For your hotel this could mean a minimum of 22.500 p.a. lost sales

and 6.750 unattributed costs.


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Who Needs To Be Involved And Understand The

Process

General Manager,

Executive Head Chef,

Food and Beverage Manager / Food Services Manager,

Financial Controller,

Conference and Banqueting Sales and Operations Managers,

Restaurant Manager,

All team members who impact on food buying, production and service.

Each department head plays a key part in the process and it should be noted that

their contribution is important. In order to achieve a balancedapproach,everyone must contribute and be looked upon as an important contributor.

Key Responsibilities

General Manager Overall executive responsibility for food cost

management likened to responsibility for all revenue streams and controlprocesses within the hotel. Strategic food cost planning.

Executive Chef Daily management and control of all processes, buying,

menu planning and costing, receiving, preparation, cooking, stock control

and wastage control etc. Strategic food cost planning.

Food and Beverage Manager, C&B Manager - Efficient service, revenue

maximisation, sales, table management, wastage control, staff training

and customer relationship management. Strategic food cost planning.

Conference & Banqueting Sales Manager Revenue maximisation, profit

planning and customer relationship management.

Financial Controller Provision of effective control measures, revenue

capture, audit and periodic review of accuracy.


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Management Responsibilities Table

GeneralManager

FinancialController

HeadCh

ef

F&B/FSManager

C&BSalesManager

HRManager

Stores

Management Overview X x x x x X x

Menu Costing x xGross and Net Weights x x

Achievable Food Cost Exercises x x x

Setting Menu Selling Prices x x x

Forecasting and Food Cost Planning x x x x x

Banqueting Costing and Purchase Planning x x

Peaks and Troughs Planning x x

Shopping Basket x

Profit Maximisation x x x x

Budgeting x x xOrdering x x x

Receiving and Goods In x x x

Storage x x

Security and Key Control x x x x

Out of Hours Policy x x x x

Wastage and Out of Date Stock x x x

People x x

Staff Feeding x x

Revenue Control xReports x x x

Covers Definition x x

Nominal Code Definitions x

EPOS Management x x

Food Tracker x x

Par Stocks x x x

Must Stocks x x

Stocktaking x x x x

Table Management and Food Production x xOptimum Food Costing x x x x x x x


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HUKI Food Cost Management

Best Practice

It is Best Practice that Banqueting menus should not be sold under their

costed price. Therefore if a customer wishes to purchase at a given selling

price the Chef should be consulted to devise and cost a separate menu.

It is Best Practice that all menus are costed.

Best Practice is for all costings to be reviewed at least every 3 months to

take into account market price fluctuations and seasonal changes.

It is Best Practice that a product photograph accompanies all menu-

costing sheets.

Achievable food cost exercises should be undertaken at least every 6

months as Best Practice. Every 3 months if there is a food cost problem.

It is Best Practice that 3 AFC exercises are undertaken per service as a

minimum.

Best Practice is for the Financial Controller to undertake this exercise toreview hotel selling prices against cost percentages.

Best Practice is to have a 7-9 day average stock holding.

Best Practice is for the staff food to come from the public menus.

It is Best Practice that the shopping basket exercise is carried out 3

monthly and then at the input of new menus or dishes.

It is Best Practice that the hotel works with a recorded Par Food Stock. If

relevant this should be per outlet. Par Stocks should be based upon amaximum of 7-9 days trading per average.

It is Best Practice that if food is specified, ordered, received and stored by

the same person, that invoices and control measures are audited for

irregularities at least by weekly.

It is Best Practice that nominated suppliers are adhered to when

purchasing food products.

It is Best Practice that individual supplier order sheets are used.


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It is Best Practice that as a minimum all Meat, Fish and Vegetables are

weighed on delivery.

It is Best Practice that the Head Chef has overall control and is fully

responsible for purchasing and stores.

It is Best Practice that invoices are not paid until Credit Notes are

received.

It is Best Practice to return inferior quality goods.

It is Best Practice that all kitchen personnel can calculate a food-selling

price given a set cost price.

It is Best Practice that all kitchen personnel are trained on this manual.

It is Best Practice that contracts are signed for minimum numbers, and

that minimum numbers are charged without fail.

It is Best Practice to use a Food Tracker System.

It is Best Practice that a stock valuation is obtained per accounting

period.

It is Best Practice that stock is counted weekly if food cost percentage is

not being achieved.

It is Best Practice to calculate Optimum Food Cost as part of month end

calculations.

It is Best Practice that as a minimum all red sections of the Food Cost

Management Action Checklist.


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How To Use The Manual

1) Before use it is assumed that all users have a degree of knowledge. Not all

sections will be relevant to you or your hotel.

2) The manual acts as a training tool and aide memoir to ensure that you

have a consistent and structured approach to food cost management.

3) If relevant each section has detailed procedures for you to follow.

4) The manual contains appendices of recommended blank masters for

reference and copying.

5) The responsibilities of each manager are identified in the appendices.

6) Each section has been given a degree of importance of effective food cost

management.

Red sections are essential tools

Yellow sections are recommended tools

Green sections are desirable tools should problems still exist.

7) Work through each section of the manual. Start with the management

responsibilities and action checklist found in the next section. Do a healthcheck of where you currently stand.

8) Formulate an action plan of what needs to be done and allocate

responsibilities.


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Food Cost Management Action Checklist

Action Area Section Yes / NoMenu Costing 2

Achievable Food Cost Exercises 2

Setting Menu Selling Prices 2

Forecasting and Food Cost Planning 2

Banqueting Costing and Purchase Planning 2

Budgeting 2

Ordering 3

Receiving and Goods In 3

Storage 3EPOS Management 5

Wastage and Out of Date Stock 3

Revenue Control 5

Nominal Code Definitions 5

Optimum Food Cost Calculation 5

Profit Maximisation 2

Security and Key Control 3

Out of Hours Policy 3

Staff Feeding 4Food Tracker 5

Par Stocks 5

Stocktaking 5

Table Management and Food Production 5

Gross and Net Weights 2

Peaks and Troughs Planning 2

Shopping Basket 2

Continuous Review of Cost, Prices, Accuracy Throughout

Covers Definition 5People 4

Reports 5

Must Stocks 5

Red areas are actions that are essential standards of operation.

Yellow areas are recommended if food cost problems exist.

Green areas are desirable action areas.


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Before You Go Any Further Ask Yourself These Few

Simple Questions

Is food cost profit important to me?

Do I know what to do if I get or know I am going to get a poor food cost

result?

Would I like to achieve a better food cost for the business?

Do I know how much any % improvement in food cost would mean to

hotel profitability?

Can I put in place an action plan to improve?

Have I been able to solve all of my problems in the past without them

reoccurring?

Do all of my team understand how to manage food cost? Can I teach them

to manage it better?

Are enough team members involved in managing the food cost? Did I

know that so many people play a part?

Do I know how to calculate food-selling prices to achieve a profit?

Do I know the cost of each dish sold and are my menus costed?

Do I know the average food cost of my buffet?

Are any or all of the tools in place to manage food cost?

The list could be endless but if you answered NO to any of these questions

then this manual could benefit you.


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Planning

! Menu Costing

! Sales Mix Analysis

! Gross and Net Weights

! Achievable Food Cost Exercise

! Setting Menu Selling Prices

! Forecasting and Food Cost Planning

! Banqueting Costing and Purchase Planning

! Peaks and Troughs Planning

! Shopping Basket

! Profit Maximization

! Budgeting

This Section Contains KPIs

! All menus and buffets are costed

! Monthly food purchasing plan is in place

! Monthly shopping basket exercise completed


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Menu Costing

Menu or recipe costing is the key component of effective food cost management.

This applies to all food that is served whether it is a single item such as asandwich, single main course, restaurant buffet or indeed a breakfast buffet. You

need to know how much an item costs before you can effectively set a selling

price. Or indeed if you have a selling price, how much a dish needs to cost in

order to make a set profit margin.

Menus need to be costed to ensure that both profit is made and that customer

expectation of quality and standard is reached or exceeded. Therefore a balance

needs to be made between what is practical to put on the menu to achieve cost

and what is luxury (You can up sell to luxury?).

With differing sales mixes within all hotels due to the type of food offerings, it isnot the case where all food products sold will automatically achieve a planned

food cost. For example the costs in a fine dining restaurant will or might be

considerably higher than at banquets or breakfast.

Due to seasonal variations some products are not available all year round or

their price might be artificially inflated due to the fact that the product is

sourced from overseas. Menu costing needs to make allowance for this.

Reasons and Procedures for Menu Costing

1) Recipe costing must be completed for all dishes on the menu, including

banqueting and table main courses.

2) Costing exercises must be undertaken on all non-menu buffets. i.e.

breakfast and carvery.

3) Costings should be made on a gross weight basis. (See gross and net

weights).

4) Best Practice is for all costings to be reviewed every 3 months to take into

account market price fluctuations and seasonal changes. (See alsostocktaking).

5) Any changes should be noted and selling prices or recipes adjusted

accordingly.

N.B. all menus should carry the proviso that prices are subject to

change etc. it is up to the hotel to enforce this as with all contracts and

agreements.

6) Update your EPOS system and the recipe card along with date of

alteration.


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7) Ensure that all staff are trained to prepare dishes to the recipes of each

dish, and that the method is followed.

8) Banqueting meals should be costed in multiples of 10 portions for single

dishes such as, melon, chicken or steak etc, 50 portions for soups and20/25 for pates and terrines.

9) Canaps should be costed in multiples of 20 portions minimum. (Note that

small canaps can be a high cost item due to preparation and content.

10) Common mistakes are over garnishing. This wastes food and will often

detract from the main part of the dish, as well as impacting on food cost.

Cost garnishes per 25/50 portions and divide down cost to single portions.

Nobody knows the cost of a single sprig of Rosemary or 2 slices of

cucumber!

11) Include in your costings an amount for wastage, (not to exceed 2%).

12) Include in your costings an amount for staff feeding, (not to exceed 3%).

13) Include in the cost of a STARTER and MAIN COURSE the cost of a

bread roll and butter.

14) Include with the cost of coffee and tea the cost of milk, sugar, mint, petit

four, biscuit or pastry (cost in multiples of 10).

15) Insist on minimum sales numbers for certain items. i.e. if you make a

terrine that contains 25 portions, 13 portions could be wasted (if not

resold) if you serve it to a dinner for 12.

16) Achievable food cost exercises need to be carried out on restaurant

breakfast, lunch and dinner buffets. (See achievable food cost exercises).

It is Best Practice that all menus are costed.

Method

Menu or dish costings should be made in multiples of 10 portions. This allows us

to gain an average, as however well people are trained and follow procedures

there will always be some variance or heavy handedness.

1) Gather ALL ingredients for 10 portions.

2) Itemise on menu costing sheet.

3) Give a weight or size to each item (kg, gram, bag, box etc). Be consistent

in your approach.

4) Cost each item on the basis of net raw weight. (See gross and net weights).


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5) Add roll and butter (for starters and main course).

6) Add wastage.

7) Total cost for 10 portions. Divide into 1 portion.

You now have your cost per portion / menu item.

8) Calculate your selling price based on your desired food cost percentage.

(See formulas).

9) Describe method of cooking.

10) Photograph for consistent presentation standard

You have now prepared a menu-costing sheet.

Remember that if using compound dishes such as sauces or Dauphinoise

potatoes, these need to be costed separately.

Please note the following simple example

Menu

Grilled Sirloin Steak, Tomatoes, Mushrooms, French Fries, Green Beans

Ingredients, Weights and Costs

Sirloin Steak 225g x10 @ 2.55 / 225g = 25.50

French Fries 75g x 10 @ 0.225 / 75 g = 2.25

Green Beans 75g x 10 @ 0.32 / 75 g = 3.20

Tomatoes x 10 @ 0.15 / each = 1.50

Mushrooms 25g x 10 @ 0.35 / 25g = 3.50

Red Wine Sauce @ 0.05/ portion = 0.50

(Previously Cost)

Total Cost = 36.45

Therefore the cost of 1 dish is 3.645. (36.45/10)


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To calculate the selling price of the dish assuming a food cost percentage (%) of

30 % the selling price would be:

Food Cost x 100 3.645 x 100

--------------------- = Net selling price ---------------- = 12.15 net30 30

You now have a net price. Before serving to the customer you must add VAT at

the current rate.

12.15 x 1.175 = 14.28.

Therefore in order to achieve a food cost of 30%, this example must be sold to

the customer for 14.28.

This process should be applied to all dishes whether singular or compound. If

you follow these simple steps your menu costing will be accurate.

After dish costing and dish preparation a photograph of the completed dish

should be taken and placed with the cost sheet.

It is Best Practice that a product photograph accompanies all menu-costing

sheets.


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Sales Mix Analysis

As you will see from the table below, each food outlet within the hotel probably

has a differing food cost. This is especially true in the larger hotels. Therefore inorder to achieve the overall desired food cost, a balance needs to be achieved.

Example:- Hotel A has food sales of 50.000 per month, its food sales and

department costs are broken down as follows to achieve a food cost percentage of

26%.

Sales Mix

(%)

Total Sales

Value ()

Outlet Food

Cost %

Total Food

Cost ()

Breakfast 20% 10000 15 1500Room Service 10% 5000 35 1750

Restaurant 1 25% 12500 28 3500

Restaurant 2 5% 2500 40 1000

Bar 5% 2500 35 875

Banqueting 35% 17500 25 4375

Total 50000 26 13000

The total food cost percentage is reached by dividing food cost by total sales

and multiplying by 100. (See formulas).

Example: - If hotel As sales mix was to change as outlined below. Note what thatchange in sales mix does to the change in food cost percentage based on the same

50.000 sales.

Sales Mix

(%)

Total Sales

Value ()

Outlet Food

Cost %

Total Food

Cost ()

Breakfast 30 15000 15 2250

Room Service 5 2500 35 875

Restaurant 1 25 12500 28 3500Restaurant 2 25 12500 40 5000

Bar 5 2500 35 875

Banqueting 10 5000 25 1250

Total 50000 27.5 13750

It can be seen that because of the drop in banqueting revenue and the increase in

revenues from restaurant 2, that the food cost has risen for hotel A by 1.5% to

27.5%.

These are two basic examples that are related to constant revenues. Also to be

taken into consideration is the rise or fall in covers within a sales outlet. Thecontinuing variance of covers will also affect the cost of food sold.


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For example 100 covers for breakfast at full spend of 14.50, generates net

revenue of 1234.00.

If the breakfast spend was 6.00 per cover, 100 covers would generate 510.63

net revenue.

The examples below highlight this.

Example: - Hotel B serves 6000 covers to achieve an average spend of 12.41.

Sales Mix

(cvrs)

Average

Spend ()

Total

Revenue

()

Outlet

F/Cost

%

Total

Cost

()

Breakfast 1750 7.5 13125 15 1969

Room Service 500 9.5 4750 35 1663

Restaurant 1 2000 12.5 25000 28 7000

Restaurant 2 500 18 9000 40 3600

Bar 250 2.5 625 35 219

Banqueting 1000 22 22000 25 5500

Total 6000 12.41 74500 26.78 19951

The food cost per cover is 3.325. (19951 / 6000).

If hotel Bs covers were to increase by 10% but the average spend was to

decrease by 10% the following effect would be seen if we took the same food cost

per cover per outlet. (It is true that a menu sold at whatever price, still costs thesame to produce).

Sales Mix

(cvrs)

Average

Spend ()

Total

Revenue

()

Food

Cost per

Cover ()

Total

Cost

()

Breakfast 1925 6.75 12994 1.125 2165

Room Service 550 8.55 4702 3.326 1829

Restaurant 1 2200 11.25 24750 3.500 7700

Restaurant 2 550 16.20 8910 7.200 3960

Bar 275 2.25 619 0.876 241

Banqueting 1100 20 22000 5.500 6050

Total 6600 11.17 73975 3.325 21945

The food cost for hotel B has now risen to 29.66%, because of the movement in

business. (21945 / 73975) x 100.

Because of this, in order to achieve the same 26.78% food cost as in example 3

the Chef must try to save or adjust his overall cost by 2135.

In summary, you need to understand the rise and fall of sales mix in costs,

revenues and covers in order to explain fluctuations in food cost.


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Gross and Net Weights.

After preparation and cooking most food products experience shrinkage.

Therefore, there is less product available to serve to the customer. To takeaccount of this net raw weight must be used in menu costing calculations. The

example below will highlight the difference that the gross / net variance could

show to a food cost.

Example.

Based upon a 10kg Rib of Beef costing 4.00 / kg. Total Value = 40.00

10 kg @ 4.00 kg = 40.00 divided by 40 (x 250 grm portions) = 1.00 per

portion.

After cooking the same 10 kg Rib could weigh 9 kg, (10% shrinkage). Therefore,

9kg@ 40.00 = 4.44 / kg divided by 36 (x 250grm portions) = 1.11 per portion

If this 0.11p difference in cost was multiplied at 10 covers per service (lunch and

dinner) over a whole year then undercosting would amount to 803.00 just on

this one menu item.

Therefore the rule is

Gross Raw Weight x Gross Cost----------------------------------------- = Menu Item Cost Per Portion

Net Yield (number of portions)

Another example could be as follows;

A whole fresh salmon, with head, tail and bones weighs 10 kg and costs 2.50 per

kilo. Total Cost 25.00.

If after gutting and trimming we have only 7 kg left (30% wastage) the cost per

kilo would now be 3.57. The 3.57 cost should be used in your menu cost price

calculations.


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Achievable Food Cost Exercises

A different approach needs to be applied to the costing of restaurant buffets

(breakfast, lunch and dinner), as the food served is not of a fixed portion andcustomers have the choice of eating as much or as little as they wish. Although

portion control is practiced to an extent with the Chef carving joints or serving

individual portions of chicken or salmon etc, again the customer decides more or

less how much they wish to eat.

Therefore in order to establish the AVERAGE cost of a meal served to a

customer it is necessary to calculate as accurately as possible the AVERAGE

food consumption per customer. This consumption is then applied to AVERAGE

revenue per customer or service to give an AVERAGE food cost.

The AVERAGE calculation is used, as over a period you will find that the sameamount of food is being consumed per head. The only variables to the calculation

are the net cost of food and the net selling price.

Achievable food cost exercises should be undertaken at least every 6 months as

Best Practice. Every 3 months if there is a food cost problem.

Method

1) The complete exercise will consist of quiet, moderate and busy service

periods. The hotel needs to work out what is an average amount of covers,

for a quiet, moderate and busy service. Once you have established these

averages, choose service periods where you will serve approximately this

number of covers.

2) All participating team members need to be involved and briefed on their

roles and responsibilities. Therefore good teamwork is required between

the kitchen, restaurant, F&B Management and control departments.

Decide before starting who will do what.

3) All food consumed during a service period needs to be given a value.

Therefore an opening and closing stock figure needs to be made tocalculate consumption. Values need to be given in the same manner as

individual dish costing.

4) All food items need to be counted to create an opening stock within the

department. Start with the simple things like sugar, butter, milk and

coffee. Moving on to cold buffet displays and finally hot dishes as they

leave the kitchen. Count in the same manner as you would when

stocktaking. Have previously prepared spreadsheets ready for counting.

5) As the buffet is replenished or extra items issued from stores, these items

need to be added to the stock sheets.


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6) At the end of service count back in all food items that are left un-

consumed by the customer. Give these items a value. This will be your

closing stock.

7) Calculate your opening stock, plus additions and your closing stockfigures to find your consumption. N.B. All food that is returned to the

kitchen to be used again is part of your closing stock. All wastage is part

of your consumption.

8) Establish your net food revenue for the service period. (Treat discounts

and complimentary as full price).

9) Now that you are in possession of your consumption and revenue you can

work out your food cost percentage.

Example.

Food Consumption 300.00

------------------------- x 100 --------------- x 100 = 30%

Net Revenue 1000.00

10) As the AFCE is an average you will need to undertake a number of

exercises.

It is Best Practice that 3 exercises are undertaken per service as a

minimum.

Recommended - 3 lunch and 3 dinner services and 4-5 breakfast services.

11) Having completed the exercises add all your costs and revenues together

to find out your average cost.

Example.

Sample AFCE for restaurant buffet lunch over 3 service periods

Service Covers Served

Food Cost () Net Revenue

()

Food Cost %

150 133 350 38

2125 303.75 843.75 36

3250 459 1530 30

Total 425 895.75 2723.75 32.88


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You can see that the average cost of the lunch buffet for this restaurant is

32.88%, based on 3 exercises.

12) Costs will vary between services; therefore the more exercises undertaken

the more accurate your AVERAGE results will be. Agree the accuracy ofthe results with the Financial Controller.

13) These exercises should be used as a guide to costing, so that the Chef is

aware of how much the buffet is costing to produce per service period. If

it is too high he needs to trim it back. However do not compromise on

standards.

14) N.B. where an a la carte menu is in operation during a buffet service. Do

not include the covers, revenue or food consumed for a la carte as this will

negate the result of purely counting the buffet.


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Setting Menu Selling Prices

There is no hard and fast rule to set menu selling prices. The most important

thing to do is to consider all factors.

Required Food Cost %

Sales Mix

Revenue Mix

Seasonality

Fair Market Price / Value For Money

Average Spend

Potential Price Fluctuations

A practical way of seeing if selling prices generate the hotel sufficient profit is to

carry out the following exercise.

Looking at historical data (Micros / EPOS System) and your anticipated menu

sales estimate how many individual menu items you will sell over a period (4

weeks).

Menu Item Estimated Sales Selling Price Total Revenue Sales Mix %

1 600 3.50 2100 11

2 1200 5.50 6600 33

3 1000 6.00 6000 30

4 600 8.75 5250 26Total 3400 19950 100

Now multiply each menu item sales mix percentage by a pre determined cost

percentage, as identified below to give a weighted cost percentage.

Menu Item Sales Mix % Menu Item Cost

%

Weighted Cost %

1 11 25 2.75

2 33 45 14.85

3 30 30 9

4 26 30 7.8100 34.4

This gives an overall weighted cost of 34.4%. Therefore, if the target is 30% cost

the selling prices will either have to be increased or the cost prices reduced.

Best Practice is for the Financial Controller to undertake this exercise to review

hotel selling prices against cost percentages.


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Forecasting and Food Cost Planning

This is a tool that is not often used to effectively control the management of food

cost. Its aim is to gear the Chef to the ordering and production of food in aregulated manner to service customer requirements based on anticipated

business needs.

If you are a Chef ask yourself these questions:

Do I know what next weeks / months food revenue forecast is or am I just

planning to order for the number of covers I expect to serve?

How much planning do I do?

If the hotel expects to have total food revenues of 100.000 next month and islooking to achieve a 28% food cost then the Chef has only 28.000 to spend!

How often is the revenue forecast discussed by the General Manager, Financial

Controller, F&B and C&B Managers or Revenue Manager and Chef together?

Prior to the start of each month the Chef, F&B Manager, Storeman, Buyer,

Financial Controller etc. should hold a planning meeting. Remember again that

after payroll, food purchasing is the biggest cost for the hotel.

A planning meeting will enable you to do the following

1) Maintain correct stock levels of food to within 4 days.

! Best Practice is to have a 7-9 day average stock holding.

2) Minimise wastage by ordering and producing correct levels of food.

3) Gives suppliers maximum time to get quality and quantity correct.

4) Negotiate prices and discounts with suppliers based on volume.

5) Plan staff feeding (see below).

6) Minimise number of deliveries and invoices.

7) Review menu and dish costings.

8) Rotate menus effectively.

9) Maintain standards by using fresh commodities, therefore satisfying guest

expectations.


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Requirements

1) Precise information about menus and contents especially banqueting.

2) Precise information about house function numbers on a particular date.

3) Past history or trend data of sales in reference to

a) Last years sales

b) Sleeper density (double occupancy)

c) Local events and promotions

4) Current statistics -

a) Sleeper/ Breakfast ratio weekday and weekend

b) Sleeper / Dinner ratio - weekday and weekend

c) Sleepers that will eat in banquetingd) Sleepers that wont eat (aircrew)

e) Sleepers that eat in Executive / Club Lounge

f) Inclusive Sleepers

g) Tours

5) Sales mix pattern do not just look at today look at the next 10 days and

adjust your plans accordingly.

6) The above statistics after forecasting revenues can be used to forecast

costs for food based on the restrictions imposed by the sales mix, then set

weekly spend targets based on revenue / cost percentage.

Example

If weekly food sales are 25000 and target food cost is 30%. Then the

Chef has 7500 to spend in the week.

7) Plan to sale particular menu items on a particular day to cut down

wastage. If a function is being served chicken with mushroom sauce, put it

on the restaurant buffet and serve it to the staff. Batch cooking is one of

the most effective cost and waste control measures. (See below).

Best Practice is for the staff menu to be the same as the restaurant or

banqueting buffets.

8) Plan to make use of cheaper cuts for buffets. Casseroles, pies and stews

are widely accepted by the customer, as it is what they will eat at home.

Remember when people are away from home they want something

familiar. Most customers are not used to gourmet cuisine.


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9) Use a weekly planner as detailed below to plan menus. It is the same as

planning a staff roster or holiday planner. Be lead by what you have to

produce. i.e banqueting menus

Restaurant

Roasts

Soup of

day

Function 1 Function 2 Staff

Monday Beef Tomato Melon

Chicken

Chasseur

Tom Soup

Lamb

Cutlets

Tom Soup

Chicken

Chasseur

Tuesday Lamb Vegetable Veg Soup

Roast

Lamb

Terrine

Chicken

Chasseur

Veg Soup

Roast

Lamb

Wednesday Gammon Mushroom Sm Salmon

Chicken

Kiev

Melon

Roast Cod

Melon

Chicken

Kiev

Thursday Rib of Beef CarrotSoup

HaddockTurkey

CarrotSoup

CarrotSoup

Turkey

Friday Pork Bisque Buffet Buffet Bisque

Pork

Saturday Turkey Lentil Lentil

Steak Pie

Buffet Lentil

Steak Pie

Sunday Beef and

Chicken

Consomm Pork

Steaks

Consomm

Pork

Steaks

Note that the planner can be broken down into daily service periods and can

accommodate a number of functions. You will see that the staff are being

served the same food as the customers.


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10) Look at ways that money can be saved by not compromising on quality.

Be imaginative!

11) Accurate recipe / dish costings

Always ensure that food forecasts are net of VAT.

Ideally the food and beverage team should be planning 2-3 months in advance.

By doing this, if you know that you will have a change in sales mix, therefore

probably meaning a change in cost mix, you will be able to re-cost or adjust

menu items and re-print outlet menus. This might be a good time to install

incentives or promotions.

Review

One of the most important areas of forecasting is review. At the end of each day

or week write down the actual number of covers served and the revenue taken. If

there is a difference to your forecast find out why?

If you have a variance to your weekly food cost estimates there should be

reasons, therefore you can investigate any overspend etc.

Reviews can help the team learn and develop. Reviews also allow us to use our

experience to plan better in the future.

Points to remember when forecasting

Ask questions of reservations about large bookings with no meal

requirements at your weekly operations meeting. This is a possible sales

opportunity and could prevent a large booking turning up without being

forecasted.

Midweek demand for room service is particularly high when there are

major sporting events such as the Champions League on. Obtain a list of

fixtures and plan accordingly.

Make food cost and particularly wastage part of your daily reviews and

meetings. Put as much emphasis on it as you would payroll!

Plan ahead. Forecast in advance, react to changes in demand and business

mix. If necessary change your menus and pricing.


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Banqueting Costing And Purchase Planning

The purchase of food for function set menus should be made consulting the

individual recipe / menu costing sheets.

As it is known how much it costs to produce each dish and therefore each

whole meal. The total cost of a menu can be established. The Chef should

regularly consult and adhere to the cosBting plans.

Example.

Menu A Starter Soup Main Dessert Coffee Total

Cost () 0.95 0.77 2.85 1.43 0.35 6.35

If 125 covers were to be served at the function the Chef would have 793.75

to spend in buying produce. (125 x 6.35).

Selling Below Published Prices

If a menu is sold below its published selling price, the food cost margin will

not be achieved, therefore increasing cost and effecting profit. If a customer

wishes to pay a lower price than the stipulated menu price, the Head Chef

must be consulted and separately cost and suggest a menu that fits with his

cost structure.

Example.

If a menu containing a chicken supreme main course is costed at 5.75 and

sold at 25.00 it will have a 26% cost. The chicken cannot be replaced with

beef fillet costing 8.50, because with the same selling price the cost will be

39%.

! It is Best Practice that banqueting menus should not be sold under their

costed price. Therefore if a customer wishes to purchase at a given selling

price the Chef should be consulted to devise and cost a separate menu.


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Peaks and Troughs Planning

To totally understand how your business should be managed, and to ensure best

presentation, best use of manpower, equipment and to reduce wastage to aminimum, you must forecast both covers and at what time peaks and troughs

will occur.

Example.1.

Breakfast midweek Monday to Friday

Peak is 7.00 am until 8.30 am. Outside these times are troughs. Presentation

dishes for troughs should be reduced to half the size.

Chart.1.

Using this forecast you will ensure:

1) Presentation is at its best

2) Products do not deteriorate as they are not held under heat lamps

3) Wastage is reduced as you are cooking for consumption hour ahead

Do not allow the breakfast Chef to cook everything off prior to service opening.


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Chart.2.

Peaks and troughs should be forecast on a weekly basis and actioned

accordingly. Remember 100 people might be attending a conference breakfast

and will not dine in the restaurant, or 50 people might be leaving early on a tour

bus.


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Shopping Basket

In order to track the movement and fluctuation of price over a given period each

Head Chef, Financial Controller or F&B Controller should undertake ashopping basket exercise.

The exercise will track the rise and fall in commodity prices and can be a tool in

setting menu selling prices, planning menu cost prices and assisting in explaining

food cost fluctuation.

It is Best Practice that the shopping basket exercise is carried out 3 monthly and

then at the input of new menus or new dishes.

Method

1) Choose a selection of ingredients (shopping basket).

2) Give a current market value. (This market value will be identified as the

starting point or 100%. On the second week or month the market values

of the same commodities will be established).

3) Calculate total cost of shopping basket.

4) On the second week do the same again. You now have 2 shopping basket

values.

5) These 2 values are then compared to each other in the form of a

percentage.

A rise in market prices will be expressed as 100%+ and have a negative effect on

cost price and a fall will be expressed as 100%- and have a positive effect on cost

price.

A minimum of 40 items should be used for the exercise and they should be

selected from commodities that have regular cost price movement (perishables).

Dry goods and goods that have a fixed annual price should not be used. Goods

with high volume and high price movement are particularly relevant. Consider

fish and vegetables out of season.


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Example

Product Unit Value

Wk 1()

Value

Wk2()

Diff

(+/-)()

Diff

(+/-)(%)

Value

Wk3()

Diff

(+/-)()

Diff

(+/-)(%)

Beef Fillet Kg 9.00 9.25 0.25 2.70 9.15 0.15 1.6

Lamb

Fillet

Kg 8.50 8.50 0.00 0.00 8.34 -0.16 -1.9

Tomatoes Box 13.00 14.50 1.50 11.53 14.75 1.75 13.46

Melons Each 0.90 1.15 0.25 27.00 0.90 0.00 0.00

Bread Loaf 0.45 0.45 0.00 0.00 0.45 0.00 0.00

Cheese Kg 10.45 11.99 1.54 14.73 11.00 0.55 5.2

Potatoes Kg 0.25 0.35 0.10 40.00 0.30 0.05 20

Total 42.55 46.19 3.64 8.55 44.89 2.34 5.5

We can see from the above example that food prices between week 1 and week 2

have risen by 8.55%. This is expressed as 108.55% to the starting point (week 1).

This means that our selected purchases are 8 % more expensive.

In week 3 prices have risen over week 1 by 5.5%. This is expressed as 105.5%.(Please note that prices may also fall. If they fell by 5.5%, they would be

expressed as 94.5% of week 1).

Menus should be costed on week 1, therefore price rise and fall if significant

should be applied to menu price costing, in order that food cost profit can be

maintained or menu items changed. It is therefore correct to say that if prices

fall we will theoretically make a higher food cost profit. It is also correct to say

that if prices rise you should adjust your menu selling prices to reach the same

desired level of food cost %. On a weekly basis you should not expect significant

price fluctuation, however, over an extended period and due to seasonal

variations prices will go up and down.


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Profit Maximization

Often popularity and profitability are confused. Menu items can be arranged on

a grid the so called Boston Matrix representing their performance with

regard to volume (popularity) and cash contribution (profit).

The Cash Cow: high sales and high profit contribution make this the ideal

product. It can be milked for cash, if cared for and fed regularly.

The Plough Horse: high sales and low profit contribution. It works hard but

the profits are not always immediately apparent; it will take time to reap the full

reward from this crop.

The Cuddly Panda: low sales but high profit. Lovable but elusive, it will

require careful study and special attention.

The Dodo: low sales and low profit. Probably extinct. Therefore, get it off your

menu.

Plough Horse Cash Cow

Dodo Cuddly Panda

Contribution (margin of profit)

Popula

rity(sales)

Low High

High


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Profit Improvement Strategy

Profit maybe enhanced by manoeuvring cash cow menu items towards the top

right of the grid. As shown in the example below. However, when considering

strategies / tactics be aware of the potential effects and possible consequences.

Low Price:

Good Value

Sought After Item and Price

Does Not Matter

Low Price But Uninteresting Tempting But Overpriced

Evaluation

The Plough Horse

Tempting, but overpriced.

Maintain value, review costs

and portion size.

Careful price increases through

enhanced benefits and added

value.

Try repackaging and / or

linking

The Cash Cow

Sought after item, price does not

matter.

Warrants further promotion

and merchandising with prime

menu position.

Price increases but with caution

The Dodo

Low price, but uninteresting.

Is this an old product in

decline? Can it be revamped?

Is it a new product that needs

attention?

If both cash contribution and

volume remain low, it may be

wise to eliminate this product.

The Cuddly Panda

Low Price, Good Value.

Re-appraise, research (market,

raw material etc.) and try a

variety of options.

Increase promotions, re-style

and / or add value.


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Promotions

Promotions should only be undertaken when there is an opportunity to make

incremental sales over and above normal business volumes or when you want to

drive cash cows and cuddly pandas to make incremental profits.

If you have a food cost management problem do not run a promotion if it means

buying in extra menu items over and above your norm. Promotions should be

staged from within the normal operation of the business.

The only proviso to this is when a new menu or menu items are being introduced

and a sales drive is required to initiate customer awareness.

Specials

Specials are items that the Chef is able to purchase at a more competitive one-

off price, that will facilitate the cash cow syndrome or menu items that need to

be sold before expiry dates which are cuddly pandas or dodos.

Do not put high sales and low profit plough horses on promotion.

Table dHote and Inclusive Menus

When writing Table dHote or inclusive menus always use Cuddly Pandas. The

thinking behind this is that the customer must consume the menu items that you

specify at a cost you can control.


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Budgeting

As an outcome of the use of this Best Practice manual, food cost budgeting

should become easier and more accurate for the hotel. However, unless themanual is used correctly it will not be an aid to budgeting.

When budgeting it is an unrealistic assumption that the food cost should remain

the same for every accounting period. Therefore, if for example the hotel is

looking to attain an annual food cost of 30% it is unrealistic to have 12

accounting periods saying that they will all be at 30% cost.

Food costs could vary dependant upon the hotel and time of year, from 18 35%

per period. Your budgets should reflect the monthly movement in sales mix. If it

does not your year end budgeted food cost will be impossible to achieve.

Your 30% total should be made up of 12 food costs of differing amounts!

When budgeting for the next financial year you should use all available data

from the EPOS, sales mix analysis, menu costing and profit maximization

exercises to set a realistically achievable budget that fits with your business

needs.

Take into account possible movements in rooms business mix. Hilton is rapidly

expanding its leisure market. Therefore, more and more sleepers will be on low

priced inclusive breakfast and dinner packages. If you do not react your food

cost will automatically move upwards.


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Ordering, Receiving, Storage, Control and Wastage

! Par Stocks

! Must Stocks

! Ordering The Purchase Cycle

! Receiving and Goods In

! Storage

! Security and Key Control

! Out of Hours Policy

! Wastage and Out of Date Stock

This Section Contains KPIs

Controlled Ordering Procedure in Place

Controlled Receiving and Storage Procedure in Place

Recorded Wastage Procedure In Place


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Par Stocks

Par Stocks are one of the most effective tools in food cost management. A par

stock is the minimum number of any product that should be kept at any one timefor normal trading patterns.

It is Best Practice that the hotel works with a recorded par food stock. If relevant

this should be per outlet. Par stocks should be based upon a maximum of 4 days

trading per average.

All Hilton nominated food suppliers deliver at least twice a week.

Food product orders should be based on the forecast of customer consumption.

For standard products work out by monitoring consumption over a monthly

period and dividing by the number of days.

Example 1.

If you use 600 loaves of bread over 30 days you consume an average of 30 per

day. Build in a 10% error factor for unexpected rises in business and you should

hold 33 loaves. If you receive 3 deliveries a week then 231 loaves are required

weekly or 77 per delivery.

Food products requiring a par stock are, but are not limited to

a) Tinned / Dryb) Frozen

c) Breakfast Goods such as Preserves and Bacon etc

d) Juices

e) Breads

f) Staple menu items such as Sirloin Steaks

Consider when setting par stocks what size or weight of product needs to be

purchased. Can a smaller size be bought or can it be purchased less frequently?

Review par stocks as business demand changes. i.e. Christmas or quieter periods

such as January. The Par Stock must be flexible depending on volumes and

menu sales mix forecast and time of year.

Micros sales information on mix and volume must be used regularly to check

actual consumptions.

Too much stock will lead to wastage. Too little will lead to panic buying or

customers not having the correct product available.


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Must Stocks

For food the must stocks are items that appear daily on your menus. These

should adhere to specification for quality, consistency and contractualrequirements.

However you should question the amount that you order. If you only average

sales of 5 Fillet Steaks per night, do not order 20 per day.

Do not order separately for banqueting, restaurants and staff. Combine your

orders and try to negotiate a better price with the supplier.

Do not use it up after. Use it at the time! This saves cost!

Items that do not appear on your menu should not be purchased. Regularlyreview invoices to see what is being bought.

It is Best Practice that if food is specified, ordered, received and stored by the

same person, that invoices and control measures are audited for irregularities at

least by-weekly.

Carefully consider the purchase and use of luxury items such as Caviar, Fois

Gras and Saffron etc. Can an alternative be used without compromising on

standards?

Remember that food cost profit should be the first consideration in menuplanning.


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Ordering The Purchase Cycle

Aim

The process of ordering sufficient food stocks to meet immediate business

requirements, ensuring the freshness and quality of all produce and

commodities.

Nominated Suppliers

Use the list of nominated food suppliers as agreed with HUKI

Purchasing Department. It is Best Practice that these suppliers must

be adhered to when purchasing food products. In many cases two

suppliers have been set up for each hotel for a particular food type

grouping. It is essential to use price lists from each of these suppliersto obtain the most competitive price for a particular order. Any

queries regarding nominated suppliers should be directed to The Food

Supply Chain Executive, at Maple Court.

Order Sheets

Supplier order sheets should be prepared before ordering with a

supplier and kept on file to ensure that deliveries are as requested.

Ensure that the agreed price, specification and product code when

possible are entered on to the order sheets, as this will help whoever

receives goods to check for accuracy of delivery. Use of order sheets

will ensure that contents of stores and fridges will be checked, which

will lessen the possibility of wastage through over ordering.

It is Best Practice that individual supplier order sheets are used.

Supplier Schedule

A supplier delivery schedule should be on display in the kitchen at all

times to ensure that all kitchen personnel are aware of cut off dates

for orders. This will alleviate the need to use local suppliers and pettycash if a cut off point is missed due to holidays or sickness. Try to

order as early as possible or give plenty of notice for large orders, as

this will lessen the chance of supplier shortage and having to source

alternative orders at a premium cost. Do not rely on answer phones

for suppliers, as there is no guarantee that your order has been

accepted or that product availability has been checked.

Success Criteria

a) All orders will fulfill the business requirements.

b) All commodities will be the best value for money.


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c) Purchasing specifications are being adhered to.

d) Optimum use of deliveries from each supplier.

e) HUKI Group discounts are maximized.

f) Continuity of produce standard is maintained.


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Receiving and Goods In

Aim

All commodities to be delivered at a time, which will facilitate correct

checking and monitoring of produce for weight, quality, temperature and

quantity against the order and delivery note, to the specifications required.

Credit Notes

If there is a discrepancy between the goods delivered and the order

sheet produced by the Chef then a credit note or goods returned note

must be obtained from the delivery company driver. Both parties

must sign these.

Delivery notes

Must be obtained for every food delivery and entered onto a

purchases received sheet in the main kitchen which can be cross

matched with all food invoices processed on Oracle by the hotel

Accounts Office.

Temperature Checks

Temperature checks must be carried out on all chilled products. (See

food safety hazard analysis document by Safety Risk Management for

minimum standards).

Weights & Measures

All deliveries must be checked against delivery notes and order sheets

to ensure that quantities and specification delivered match those that

are charged for. An appropriate set of scales should be available to

ensure all weights match delivery notes. Any deviations from the

delivery note should be recorded on a credit note / goods returned

note.

It is Best Practice that as a minimum all meat, fish and vegetables are

weighed on delivery.

Grade & Quality

All deliveries should be checked to ensure that no products are

damaged, past their sell by date or of a lower grade than ordered. Any

deviations from the delivery note should be recorded on a credit note /

goods returned note.


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Please refer to the food safety hazard analysis manual to ensure that all

health and safety regulations are being adhered to as outlined by Safety Risk

Management at Cadogan Square.

Success Criteria

a) Guests receive a continuous high standard of fresh produce.

b) Food health and safety regulations are adhered to.

c) Suppliers are meeting hotel business demands.

d) No leakage of monies due to non-conformity of prices, quantity and

quality by suppliers.

It is Best Practice that the Head Chef has overall control and is fully responsible

for purchasing and stores.


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Storage

Aim

To ensure that there is an adequate supply of all food items maintained for

immediate use, with the minimum loss arising from either wastage or

spoilage.

Date Coding

All meat, poultry and fish items must be date stamped before storage

to ensure that items do not pass their sell by date. Be aware that it is

an offence under the Food Safety Act 1990 to not date code / stamp.

Date coding guns and labels can be purchased through a nominated

supplier recommended by Safety Risk Management at CadoganSquare

Temperature Checks

Must be adhered to as set out by the Safety Risk Management

department at Cadogan Square, again it is an offence not to

temperature check under the Food Safety Act 1990.

Stock Rotation

To ensure that food items do not have to be thrown away, storage of

all food products should be clear and simple with all new stock put to

the back of any storage facility. Older food should be brought to the

front to alleviate any unnecessary wastage.

Storage

All foods should be stored as recommended by suppliers and in

adherence to the guidelines set down by Safety Risk Management

department.

All foods should be decanted into suitable containers that provide

hygienic storage conditions. All open packets should be decanted and

sealed in pest proof containers.

Please refer to Food Safety Hazard Analysis Manual to ensure that all health

and safety regulations are being adhered to as outlined by Safety Risk

Management dept.


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Success Criteria

a) Food health & safety regulations are adhered to.

b) Minimal wastage and spoilage of food produce.


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Security and Key Control

As we have already said, Hilton Food Cost is an expensive commodity. As a

reminder Hilton UK & Ireland spend 50m per annum buying food. It thereforeneeds to be looked after and be secure.

Each hotel needs to put in place security and control measures that best fit its

own operational needs. The following is a guideline to best practise;

1) Once goods have been received ensure that they are put away in suitable

storage containers.

2) All stores, fridges and freezers are locked when not in use.

3) Keys to stores and cold rooms must be kept in the kitchen during shiftsand locked away on kitchen close down. Keys should have restricted

access. A list of authorised people should be kept with the keys.

4) A formalised method of control of keys should be in place.

5) Keys must be signed in and out.

6) If locks and/or clasps are ill fitting these should be changed or repaired to

ensure effective operation.

7) Any items leaving the stores and kitchen to be transferred to otherdepartments must be requisitioned using the appropriate documentation.

8) The issuing and receiving departments must sign this, and the requisition

kept for stock taking departments.

9) The department and duty managers should make regular checks out of

shift, to ensure that security is maintained to doors, keys and stock.

As well as the above points the following should be agreed within the hotel and

individuals trained on their own responsibilities;

1) Who can purchase food?

2) Who can receive food goods in?

3) Who stores food?

4) Who reconciles invoices to goods in?

5) Who checks wastage?

6) Who authorises returns?

7) Who authorises allowances?

8) Who is authorised to dispose of OLD stock.


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Out of Hours Policy

As hotels are a 24-hour operation it is impossible for our kitchens to be always

fully stocked and because of the needs and requests of customers from time totime we will need to requisition from the stores, outside normal opening hours.

A policy needs to be agreed and implemented so as there is control out of hours.

It is not good enough to say that the stores are closed. Our customers do not

want to hear this.

It should be trained into staff that each and everyone within the Food and

Beverage Department should take responsibility for the control of stores.

At least 2 people should be present when making out of hours requisitions

1) To check stock issues for quantity.

2) To check stock issues for conformity.

3) To prevent pilferage.

People responsible can and should include the following

Head Chef and Deputies, Food and Beverage Manager and Deputies,

Management Trainees, Duty Managers, Heads of Department, Security, Duty

Food and Beverage Manager.

Kitchen Closedown

At the end of each working day a formal kitchen closedown procedure should be

in place to ensure that not only food hygiene regulations are being adhered to but

also that food is correctly stored so it can be used the next day.

Ensure all food items are cling filmed, date stamped (with 2-day shelf

life) and refrigerated.

If any food is still left in the restaurant, i.e. soup, salad bar etc, make sure

that they are brought in and samples of appropriate foods have beentaken and recorded in the food sampling folder.

Record wastage.


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Wastage and Out of Date Stock

Wastage is the discarded element arising from the inefficient use of resources. It

will never be eliminated but can be reduced.

Keep wastage to a minimum and order effectively. Only authorise stock for

disposal as a last resort.

Check what you and your Sous Chefs do, ask questions

How often am I placing second orders?

What food is being thrown away and why?

Do my Chefs know how to carve?

Are the restaurant trained in the efficient use of the toaster and

coffee machine?

Are we cooking properly? (A roast joint sealed properly will not

only taste better but the wastage and shrinkage is significantly

reduced).

Do I regularly review the stores for stock that is either slow

moving or will soon be out of date?

Do I check expiry dates of goods on receipt?

When you return goods to suppliers, do you always check that you

receive credit notes?

It is Best Practice that invoices are not paid until Credit Notes are

received.

On delivery do you check weights? Is a 7oz Chicken Supreme

always 7oz or is it 6oz? Therefore forcing you to use more!

On delivery do you inspect quality for potential shelf life?

Remember if it is not fresh when it comes in, it will not last so long

in your stores.

It is Best Practice to return inferior quality goods.


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Consider the following table as an aide-memoir to wastage control.

Cause Effect Cure

Over Buying Slow Moving Stock

Difficulty in Control

New Rotations of Stock

Better Planning

Par Stocks for Items

Decrease Wastage

Under or Panic Buying Higher Prices Better Planning

Poor Storage Quick Deterioration Containers with Lids

Dont Over Order

Correct Storage Temp

Over Portions Increased Usage

Poor Presentation

Stock Products

Work to Specs

Staff to Understand

Weights and Measures

Use Measured

Dispensers

A key task when looking to control wastage is to look at your most wasted or

biggest wasted items.

Can they be controlled in any way?

Can the staff be trained to waste less?

How often during a breakfast service do you check how much coffee

and bread is wasted?

Undertake a waste control exercise. Empty the refuse bins at the end

of service and analyse what has been wasted!


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People

Recruitment and Training

Balanced Scorecard

Job Sharing and De Skilling

Colleague Feeding

This section contains KPIs

Colleague feeding meeting Hilton People standard

Staff training and knowledge


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Recruitment and Training

One of the most important aspects of todays Chef is his ability to control and

manage costs. The misconception when new employees are recruited is that theyonly need to be able to cook and / or prepare food.

In todays changing environment the Chef is one of the key drivers to business

success and profitability, therefore, when recruiting for new employees the

following needs to be considered;

1) Has the candidate a good command of the language?

2) Has the candidate a good level of mathematical understanding?

3) Has the candidate potential for management development?

4) Will he / she be able to understand and solve reasonably complex business

problems given training?

5) Has the candidate the ability to learn and develop under training?

6) Is the candidate responsible enough to take on responsibility?

This simple approach will enable the Executive Chef to delegate responsibilities

and give accountability to other members of his team. Therefore enabling him to

concentrate on the more strategic aspects of the job.

If in doubt set your new recruits tests that relate to their job function. Quite

simply check that they can use a weighing scale, check that they can check an

invoice, check that they have an understanding of portion control.

It is Best Practice that all kitchen personnel can calculate a food-selling price

given a set cost price.

Once recruited training is the element that binds everything together. It is an

essential business need. The more time you expend on the training and

development of your team the greater the business success you will achieve.

Not enough time is not an excuse. All elements in this document are designed to

help achieve Optimum Food Cost. A Head of Department will not achieve this

alone, it will only be achieved through teamwork and the understanding of all

the various areas.


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TBS Training

Effective Food Cost Control should be included as part of the training and

review process within your department. As we have said being a Chef is not just

about cooking and hygiene. It should form a basis for more in depth training in

the future.

It is Best Practice that all kitchen personnel are trained on this manual.

Balanced Scorecard

It could be argued that effective food cost management is related to a balanced

scorecard approach as championed by the company. Success will be achieved by

placing equal importance on the four core values of

People, Customer, Quality, Profit

Each is a key-determining factor within your operation and each must take equal

importance within your operation.

People recruit, train and develop

Customer give quality, value and respect

Quality maintain consistency

Profit develop, control and reinvest

Job Sharing and De-Skilling

Before any recruitment takes place, analyse the requirements of a job. In the

current climate we all know that it is difficult to recruit skilled Chefs. However,

is it always necessary to recruit skilled Chefs on a full-time basis.

A lot of functions within the food operation can be given to less skilled staff. With

a little training they can undertake a lot of the basic mis-en-place that takes upso much time. Think about how this could impact on your business.

Examples of jobs that can be de-skilled are

Salad Prep and Sandwich Prep

Vegetable Prep and Vegetable Cooking

And many functions that require basic chopping, cutting and slicing

Use the skills of the Chefs to cook and finish.


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Colleague Feeding

Aim

To ensure that quality and choice expectations of all our colleagues are met

and the cost of production can be greatly reduced through menu forward

planning. Staff feeding will be the same standard as that of our customers. A

fixed rotational menu will be applied having reflected time of year and ethnic

backgrounds. If your hotel is small and serves a limited amount of staff food

the matrix in the food forecasting and planning section should be applied.

Please contact Group Human Resources Department at Maple Court for

standards of staff food required and entitlements for all contract types

including live-in staff.

Food & beverage machines There are currently various machines available

from Coca Cola Enterprises Ltd. Call Group Purchasing Department at

Maple Court for the latest specifications and prices available.

Success Criteria

a) Colleagues are contented with choice and quality.

b) Viewpoint result constantly moving forward.

c) Minimum cost and wastage achieved.

It is Best Practice and the Hilton people standard that colleagues receive as a

minimum.

Breakfast Cereals, Toast, Tea and Coffee

Lunch and Dinner a selection of hot and cold dishes are offered to

suit cultural tastes as appropriate and includes a vegetarian option.

All dishes are nutritious and wholesome. (Typical dishes include: meat

or fish with potato, vegetables, vegetarian options, salad items, cold

meats, cheeses, fresh bread and butter).


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Revenue Control and Yield Management

Revenue Control

Revenue Capture

Reports Schedule

Reports Index

Covers Definition

Nominal Code Definition

Food Tracker

Stocktaking

Table Management and Food Presentation

Sharing Information

Optimum Food Costing

This section contains KPIs

Effective revenue control in place

Table Management procedures in place

Stocktaking regular and accurate


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Revenue Control

Aim

To ensure we are maximising all food revenue segments and any gross profits

associated with them and capturing all relevant data to enable analysis of our

business so that we can make strategic and informed decisions.

Epos Analysis

It is essential that management review all available reports so that

business decisions can be based on factual information. Menu

choices and planning can be based on actual sales achieved to

avoid wastage and spoilage.

Promotions / Vouchers

Any food dishes that are discounted or are free of charge to the

customer should be tracked so the Accounts Office can charge the

cost to marketing expenses and credit the food stock account.

Management Account

All items that are used by management or staff should be

authorised and tracked so that the Accounts Office can charge to

hotel expenses and credit the food stock account.

Allocations

These should be in line as per HUKI instructions. Please contact

your Regional Director of Finance for up to date standard

allocations.

Retrospective Discounts

These are credited by HUKI for quantities purchased from

nominated food suppliers. These can be checked by the Accounts

Office through supplier invoice listings reports produced through

Oracle financials.

Allowances

All revenue that is allowed off the daily revenue should be

documented and authorized by Financial Controller. A running

total should be tracked by the Accounts Office so that these can be

reviewed in conjunction with the monthly food cost result and help

identify any training needs or issues within departments.


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Reports

Various Fidelio reports can be printed to help ensure that guest

packages are reviewed and can be charged accordingly at different

meal periods. There are many Micros reports available to analyzerevenue and dish favorites. Please see reports section for a list

available.

Guest Key Cards

Staff should examine these for every meal period to ensure that the

correct charge is raised to the correct guest.

Lost / Leaked Business

A cross matching of revenues and covers should be carried out by

the kitchen to ensure that numbers charged are the same as

numbers that actually dined. This will help identify if all exclusive

guests and additional guests are being charged for. A review of

actual sales reports against forecasted sales will pinpoint any

discrepancies.

Success Criteria

a) All HUKI Group discounts are being maximized through nominated food

suppliers.

b) All revenue is captured and gross profits are maximized.

c) Informed decisions can be made from accurate data capture.

d) Mystery customer result standards are achieved through correct billing.

Wastage and spoilage can be reduced from dishes that are proven sellers

All the above revenue control measures are Best Practice


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Revenue Capture

To ensure that all food services provided to our guests are charged for it is

essential to put in place basic revenue capture measures. Many control

mechanisms are already set up within Fidelio and the various EPOS systems

within the company such as Micros and Remanco.

It is vital that EPOS systems are used to their full potential by ensuring every

employee has their own system key. This will enable management to track

training needs and sales performances by employee. It will also ensure that there

is a segregation of duties for departmental cashing up. Keys should be assigned

with the relevant system responsibilities per employee depending on job title and

position.

It is imperative to have an EPOS champion per hotel so that the system databaseis current and correct for items and prices, otherwise use of open food &

beverage sales keys will occur, rendering any data analysis useless for

stocktaking, tracking sales trends, menu costing, menu engineering and staff

performance incentive schemes.

It is Best Practice that all dishes set up on the EPOS system match the hotel

menus and menu prices to eliminate the use of the open food key button.

Revenue is charged correctly and that all historical data is accurate and will

assist in making strategic business decisions based on fact.

The Management Team should monitor use of voids, open checks and cancelledchecks to eliminate any possible foul play and to ensure that staff can be

identified if they are having legitimate problems with using the system.


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Key Responsibilities

Below is a table listing employee responsibilities for the EPOS system.

Job Title User Level Definition

Waiter / Barman Server

Able to post and cash off

items on the system.

At end of shift can only

produce a report to

enable the balancing of

room charges and credit

cards. NOT CASH.

Supervisor Supervisory


items. Able to voidtransactions. At end of

shift can only produce a

report to enable

balancing of room

charges and credit cards.

NOT CASH.

Outlet Manager Management


items. Able to void

transactions. At end of

shift can produce areport summary to

balance all payment

types.

Duty Manager Management


items. Able to void


shift can produce a

report summary to

balance all payment

types.

Night Auditor Management


items. Able to void


shift can produce a

report summary to

balance all payment

types.


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Remember that it is essential that there is segregation of duties in place so that

no member of staff can reconcile their own cash takings. In many hotels a Duty

Manager will sign for a pay-in once it has already been completed. This is not

acceptable as they are only signing to say that the member of staff has reconciled

their own takings.

Meal Plan Reports

The Fidelio system produces meal plan reports for the breakfast and dinner

service periods. This will highlight which guests are on an inclusive package and

those who are not. The restaurant should use this report to tick off each guest

who dines in the restaurant to ensure they are charging all non-inclusive guests

for their meals. This report should be attached to the restaurant pay-in for

breakfast and dinner so that reconciliation can be carried out by the Reception

Staff, Night Auditor and Income Auditor so that any possible missed revenue canbe posted to the guests room account.

Function / Meeting Charges

Function and meeting charging should be treated no differently to charges

posted to guest bedrooms. You must ensure that a delegate or organiser is

presented with a charge docket if they require an extra pot of tea or coffee. Many

hotels do not have their meeting or banqueting department set up as outlets on

their EPOS systems so a manual number cheque pad should be used then posted

by Reception.

To assist in capturing possible lost revenue it is imperative that there is a line of

communication between meeting organisers and hotel staff to ensure that any

delegates above the contracted numbers are charged for.

Restaurant staff should liase with the C&B Sales Department to ensure numbers

for lunch and dinner match the final numbers discussed at the Meet and Greet

with the organiser in the morning. This will ensure extra diners are charged and

not just processed as inclusive.


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Financial Responsibilities Checklist

Use the following checklist to assess how you are helping the Management Team

to successfully control Food Cost Management.

Epos System1. Are all menu items on EPOS system and correctly priced?

2. Are the Open Food & Beverage keys disabled?

3. Are reports generated and monitored for Voids, Open Checks etc?

4. Are all employees on system current and have relevant responsibilities?

5. Are there enough members of the Management Team with good system

knowledge in case of sickness or staff turnover?

6. Are departmental pay-ins authorized and checked by the Management Team

with no member of staff being able to reconcile their own cash takings?

7. Has the No Sale button been removed from the tills?

8. Are all items on system set up for the correct sales categories?

E.g. Is a cup of coffee coded to food sales?

9. Are daily saves completed by Night Audit?

10. Are touch screen pads in outlets user friendly for staff to use correctly?

Revenue Control1. Are guests asked to produce proof of a signed room key card when ordering

items in the F&B outlets?

2. Are reconciliations carried out to ensure that revenue matches food orders

taken in the kitchen?

3. Are Meal Plan reports used to ensure correct charging of inclusive andexclusive diners? Are these reports attached to departmental pay-ins so Night

Audit and Income Auditor can check them?

4. Are delegate numbers checked and recorded in the restaurant or meeting

rooms to ensure additional attendees are charged?

5. Are all complimentary items authorized with a Management signature?

6. Are all discounts recorded on a Revenue Deduction sheet and credited to Cost

of Sale account and debited to Expense accounts?

Reports1. Is a Daily Food Cost Tracker sheet completed and issued daily to the

Management Team?2. Is a Daily Actual Revenue & Covers report issued to the individual outlets

daily?

3. Is a Weekly and Monthly sales forecast issued to the individual outlets?

4. Is a Food Supplier Usage sheet completed and issued daily to the chef?

5. Is a monthly Food Cost result completed and issued to the chef with a full

breakdown of revenues, stock values and credits?

6. Is chef issued with a General Ledger Account (180 characters) report so he

can check all invoices coded, and credits given for the Food Cost of Sale account?

Miscellaneous1. Does the closing stock value generated from the stock sheets match the figure

on the Balance Sheet?2. Are all Food Invoice Batch headers signed and authorized in accordance with


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Segregation of Duties?

3. Are prices updated regularly on the stock sheets to give a true valuation of the

closing stock value?

4. Is the chef assisted at month end by a member of the Management Team when

counting physical stock?5. Have you checked that there are full menu costing sheets for every dish served

in the hotel and that these have been reviewed quarterly to ensure that they are

relevant?

6. Are all delivery notes, un-batched invoices & credit notes accrued at month

end into the Food Cost of Sale account?

7. Are all suppliers used by chef nominated?

8. Is there a good mix of use between the two nominated suppliers for a main

food grouping to ensure that the hotel is buying at the most competitive price?

E.g. Are the two nominated meat suppliers bidding for busi

Documents

Food Cost Manual