Post on 28-Mar-2015
OH 5-1
Controlling Food Costs in Purchasing and Receiving
Controlling Foodservice Costs
5OH 5-1
OH 5-2
Chapter Learning Objectives
Explain how a specification becomes a control in the purchasing function.
Explain the parts of a purchase specification and a purchase order.
Explain various purchasing methods and their effect on the price of goods.
Calculate a yield test that identifies the difference between as purchased (AP) price and edible portion (EP) cost.
Identify factors that affect the purchase price of goods.
OH 5-3
Chapter Learning Objectives continued
Distinguish between perishable and nonperishable goods and their relationship to the purchasing cycle.
Calculate the par stock amount of an item to order.
Calculate the amount to purchase, using EP amount and yield percent.
Calculate the amount of goods to purchase for catered events.
Calculate a butcher test, or meat yield test.
Describe proper procedures for receiving goods.
OH 5-4
Who Purchases?
Purchasing agent
Manager
Chef
Head cook
Trusted staff member
The buyer maintains quality standards!
OH 5-5
Who Purchases? continued
The buyer is responsible for ensuring that quality standards are met during the purchasing and delivery process.
OH 5-6
The Food Specification
Is a control device
Lists the product’s name
Lists its intended use
Identifies the desired brand and grade
Identifies the desired size
Identifies the desired variety
Identifies packing requirements
Details delivery requirements
Explains payment terms
OH 5-7
The Food Specification continued
Specifications should describe exactly what buyers want to buy.
OH 5-8
Purchase Orders
The official written record of the items the buyer wants to purchase
OH 5-9
Purchase Order Information
A unique identification number
The name and address of the restaurant
Date of the order
Signature of the buyer
The supplier’s contact information
Date of delivery
The name, quantity, and delivery unit of each item ordered
Total (extended) cost of the order
OH 5-10
Purchase Methods
Competitive quotes
Standing order
One-stop shop
Cost-plus
Sealed bids
Commissary
OH 5-11
What to Buy
Avoid buying the “cheapest.”
Use purchase specifications.
Buy at the best cost from sellers who meet or exceed the purchase specifications.
Consider both AP price and EP cost.
OH 5-12
Two Kinds of Costs
As purchased (AP)—the cost of food as delivered to the restaurant
Edible portion (EP)—the cost of food as served to the guest
OH 5-13
AP vs. EP Form
Items, such as fresh whole fish, will weigh much less in their EP form than in their AP form.
OH 5-14
Calculating EP Cost
Two steps
Step 1 – Calculate product’s yield percentage.
Edible portion
(EP) weight÷ As purchased
(AP) weight = EP percentage
8.00 ÷ 9.5 = 0.842 or 84.2%
OH 5-15
Calculating EP Cost continued
Step 2 – Calculate EP cost.
Example—the EP cost of one pound of onions
As purchased (AP) price
÷
Edible portion (EP) percentage = Edible portion
(EP) cost
$0.39/lb AP ÷ 0.842 = $0.46/lb EP
OH 5-16
Other Factors Affecting Purchasing
Management complacency
Payment history
Gift acceptance policies
OH 5-17
When to Buy
Purchase perishable items daily or every few days.
Purchase nonperishable items weekly or monthly.
OH 5-18
Perishable Product Purchases
1. Determine the amount of product that will be used between deliveries.
2. Count what is on hand.
3. Subtract the amount on hand from the amount that will be used.
4. The result is the amount to purchase.
(Note: Some managers purchase a small “extra” or “cushion” amount in case sales levels exceed forecasts.)
OH 5-19
Nonperishable Quantity to Purchase
Most common method is par stock method.
Steps
1. Determine quantity (par stock) that must be on hand between orders for each item.
2. Before ordering, take inventory.
3. Subtract on hand quantity from par stock quantity.
4. Difference is quantity to order
OH 5-20
Calculating How Much to Buy
Need ten pounds of onions.
Yield percentage of onions is 84.2%.
How many pounds will you buy?
EP amount needed ÷ Yield
percentage = AP amount to purchase
10 ÷ 0.842 = 11.87, or 11.9
OH 5-21
Catering Purchases
Step 1 – Determine the servings per purchasing unit (SPU).
Purchasing
unit
÷ Portion size = Servings per
purchasing unit (SPU)
OH 5-22
Catering Purchases continued
Step 2 – Determine the purchase factor.
Recall the formula for EP percentage.
SPU x EP percentage = Purchase factor
(PF)
Edible portion (EP) weight
÷
As purchased (AP) weight = EP
percentage
OH 5-23
Catering Purchases continued
Step 3 – Determine the amount to purchase.
Number of guests to serve
÷
Purchase factor (PF) = Amount to
purchase
OH 5-24
Butcher Test
Also known as “yield test”
Used to determine EP meat costs
Results vary, based upon the AP quality of meat purchased
Measures losses from
Fat removal
Bone removal
Trim and packaging removal
Portioning
OH 5-25
Steps for Receiving
Step 1 – Delivery person brings products to receiving area.
Step 2 – Check products against the purchase order.
Step 3 – Check products against purchase specifications.
Step 4 – Check delivery quantity against the invoice and the purchase order.
OH 5-26
Steps for Receiving continued
Step 5 – Match invoice prices to purchase order prices.
Step 6 – If everything matches correctly, sign the invoice.
Step 7 – Put delivered products in proper storage areas.
Step 8 – Process paperwork in keeping with the operation’s standard operating
policies and procedures.
OH 5-27
How Would You Answer the Following Questions?
1. A purchase order is best prepared by the (buyer/ seller) of the items to be purchased.
2. With effective purchasing techniques in place, a restaurant's EP costs can often be lower than its AP costs. (True/False)
3. EP weight divided by AP weight results in A. AP percentageB. AP costC. EP costD. EP percentage
4. A butcher’s test is a test of (yield/quality).
OH 5-28
Key Term Review
As served (AS)
Butcher test
Buyer
Commissary
Competitive quotes
Cost plus
Invoice
OH 5-29
Key Term Review continued
Market quotation sheet
Nonperishable goods
One-stop shop
Par stock
Perishable goods
Purchase order
Quotes
OH 5-30
Key Term Review continued
Sealed bid
Specification
Standing order
Yield chart
Yield percentage
Yield test
OH 5-31
Chapter Learning Objectives— What Did You Learn?
Explain how a specification becomes a control in the purchasing function.
Explain the parts of a purchase specification and of a purchase order.
Explain various purchasing methods and their effect on the price of goods.
Calculate a yield test that identifies the difference between AP price and EP cost.
OH 5-32
Chapter Learning Objectives—What Did You Learn? continued
Identify factors that affect the purchase price of goods.
Distinguish between perishable and nonperishable goods and their relationship to the purchasing cycle.
Calculate the par stock amount of an item to order.
Calculate the amount to purchase, using EP amount and yield percent.
OH 5-33
Calculate the amount of goods to purchase for catered events.
Calculate a butcher test, or meat yield test.
Describe the proper procedures for receiving goods.
Chapter Learning Objectives—What Did You Learn? continued