LESSON 6

FOOD AND BEVERAGE CONTROL

CONTENTS

6.0 Aims and Objectives

6.1 Introduction

6.2 Objectives of Food Cost Control

6.3 Essentials of a Control System

6.4 Calculation of Food Cost

6.5 Food Control Procedures

6.6 Checklist for the Smaller Operation

6.7 Beverage Controlling

6.8 Calculation of Beverage Cost

6.9 Methods of Beverage Control

6.10 Bar Cost System

6.11 Par Stock or Bottle Control System

6.12 Let Us Sum Up

6.13 Lesson End Activity

6.14 Key Words

6.15 Suggested Questions

6.16 References

6.0 AIMS AND OBJECTIVES

At the end of this lesson, students should be able to

demonstrate appropriate skills, and show an understanding of the
following:
Food and Beverage  Food Control Procedures
Management
 Essentials of a Control System

 Calculation of Food Cost

 Food Control Procedures

 Beverage Controlling

 Methods of Beverage Control

 Bar Control System

6.1 INTRODUCTION

Food and beverage control may be defined as the guidance

and regulation of the costs and revenue of operating the catering
activity in hotels, restaurants, hospitals, schools, employee
restaurants and other establishments. The importance of food and
beverage control needs considerable emphasis. In hotels, food and
beverage sales are the main or the only source of revenue. The cost
of food and beverages in the commercial sector is usually in the
region of 25-45 per cent of the total operating costs. In hospitals,
schools, employee restaurants and similar operations, food and
beverages are the main day-to-day expenditure, which is controlled
by budgets and / or a level of subsidy, either on a total company or
on a per unit basis. The amount of control is related to the size of the
operation. A large group operation obviously requires much precise,
detailed, up-to-date information, and its provision is often aided by
the use of computers. A small operation, such as an owner-operated
restaurant, often cannot afford, nor does it need, the same level of
sophistication of control. In both instances the type and volume of
data required needs to be selectively determined if control is to be
meaningful and effective.

6.2 OBJECTIVES OF FOOD COST CONTROL

The objectives of a food and beverage control system may

be summarized as follows:

1. Analysis of income and expenditure: The analysis is solely

concerned with the income and expenditure related to food and
beverage operations. The revenue analysis is usually by each
selling outlet, of such aspects as the volume of food and
beverage sales, the sales mix, the average spending power of
customers at various times of the day, and the number of
customers served. The analysis of costs includes departmental
food and beverage costs, portion costs and labour costs. The
performance of each outlet can then be expressed in terms of the
gross profit and the net margin (i.e., gross profit minus wages)
and the net profit (i.e., gross profit minus wages and all overhead
expenses such as rent, rates, insurance, etc.,)
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2. Establishment and maintenance of standards: The basis for Food and Beverage
the operation of any food and beverage outlet is the Control
establishment of a set of standards which would be particular to
an operation, for example a chain of steak house restaurants.
Unless standards are set, no employee would know in detail the
standards to be achieved nor could the employee’s performance
be effectively measured by management. An efficient unit would
have the set standards laid down in manuals often known as
SOPs (standard operational procedures) which should be readily
available to all staff for reference. Having set the standards, a
difficult problem always for the management of an operation is to
maintain these standards. This can be aided by regularly
checking on the standards achieved by observation and analysis
and by comments made by customers, and when necessary,
conducting training courses to re-establish the standards.

3. Pricing: An important objective of food and beverage control is

to provide a sound basis for menu pricing including quotations for
special functions. It is, therefore, important to determine food
menu and beverage list prices in the light of accurate food and
beverage costs and other main establishment costs; as well as
general market considerations, such as the average customer
spending power, the prices charged by competitors and the
prices that the market will accept.

4. Prevention of waste: In order to achieve performance standards

for an establishment, targets are set for revenue, cost levels and
profit margins. To achieve these levels of performance it is
necessary to prevent wastage of materials caused by such things
as poor preparation, over-production, failure to use standard
recipes, etc. This can only be done with an efficient method of
control, which covers the complete cycle of food and beverage
control, from the basic policies of the organization to the
management control after the event.

5. Prevention of fraud: It is necessary for a control system to

prevent or at least restrict the possible areas of fraud by
customers and staff. Typical areas of fraud by customers are
such things as deliberately walking out without paying;
unjustifiably claiming that the food or drink that they had partly or
totally consumed was unpalatable and indicating that they will not
pay for it; disputing the number of drinks served; making
payments by stolen cheques or credit cards. Typical areas of
fraud items served and stealing of food, drink or cash.

6. Management information: A system of control has an important

task to fulfil in providing accurate up-to-date information task for
the preparation of periodical reports for management. This
information should be sufficient so as to provide a complete
analysis of performance for each outlet of an establishment for
comparison with set standards previously laid down (for example,
budget standards).
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Food and Beverage 6.3 ESSENTIALS OF A CONTROL SYSTEM
Management
It is important when examining an existing control system or
preparing to install a system into a new operation that the following
points should be borne in mind.

1. Any control system should be comprehensive and cover all

the outlets of an establishment and all stages of the food
control cycle.

2. The cost of maintaining the system should be in relation to

the saving to be made, the level of sophistication of the
control system usually increasing with the increase in the
volume of sales and the complexity of the menu.

3. The control system should be easy to operate and to be

understood by all levels of staff.

4. The control system should be seen by staff to be working.

That is that management act in a positive way to adverse
trading results and follows up on future results to check if the
corrective action taken is effective.

5. To be effective the information produced must be accurate

and up-to-date.

6.4 CALCULATION OF FOOD COST

There are several basic terms which need to be emphasized

with regard to the calculation of food costs, such as:

1. Food Cost This refers to the cost of food incurred in

preparing the meals served.

2. Food Cost Refers to the percentage of the revenue from

Percentage sales incurred in preparing the meals, that is,
the cost of food as a percentage of sales of
food.

3. Gross Profit The excess of sales over the cost of food

or Kitchen expressed as a percentage, or in financial
Gross Profit terms.

4. Potential The food cost (or sales) uner perfect conditions.

Food Cost This may be expressed as a percentage or in
(or sales) financial terms.

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6.5 FOOD CONTROL PROCEDURES Food and Beverage
Control
1. Check and marry up all delivery notes, credit notes, invoices and
goods received report.

2. Check arithmetic to all paper work.

3. Check correct discounts are being allowed.

4. Check delivery notes to bin cards / Ledgers.

5. Maintain certain charges and credits for period inventory.

6. At set periods complete a full inventory of all chargeable

containers.

7. At set periods complete a full stock take of all food stores and
food held in the kitchens and compare to ledgers.

8. Prepare a stocktaking report and stocks take variance report.

9. Maintain up to date food control reports.

The Major reason for food cost (and gross profit) variances
from the established standard for a unit includes the following:

1. Inaccurate arithmetic paper work. This also includes the paper

work of suppliers.

2. Inefficient stocktaking.

3. Poor revenue control. Lack of systematic procedures and

practices.

4. Poor menu. Unrelated to market conditions and requirements,

lack of sales analysis and up dating of menu.

5. Poor purchasing, resulting in higher food costs, overstocking and

wastage.

6. Poor receiving, inferior goods being accepted, short weight of

goods being signed for.

7. Poor storing, poor rotation of stock, resulting in wastage, poor

security.

8. Failure to establish or maintain standards for volume forecasting,

standard portion sizes.

9. Failure to account accurately for all staff and management

meals.

10. Food controls not being seen by staff to work, resulting in staff
failing to maintain desired standards. 67
Food and Beverage 6.6 CHECKLIST FOR THE SMALLER OPERATION
Management
A quick checklist for the smaller operation for food cost (and
gross profit) variances from the established standard would include
the following:

1. Check the arithmetic of all major figures (that is, food report,
stock report, etc)

2. Recheck stock figures and total, and in particular look for unusual
figures in relation to the norm. The percentage of the total
consumption of each category of commodities (meat, poultry,
fish, dairy, fresh vegetables, etc.,) should be constant for any
given menu over a period. Once a standard has been
established, variations from it will indicate a problem, for
example, if the meat consumption percentage was up, it could
well indicate pilferage, fraud, wastage or an increase in price and
management attention should be focused towards this.

3. Recheck sales figures and check against meals served.

4. Check for unusual variances in sales. This could be caused by a

major change in the weather, a national holiday, etc.

5. Check for unusual changes in the sales mix.

6. Check for unusual changes in price of major and costly food

items.

7. Check stores, refrigerators and waste bins for evidence of over

purchasing, over preparation and unnecessary wastage.

8. Check on meals taken by staff.

6.7 BEVERAGE CONTROLLING

The objectives of beverage control are to determine and

report on the actual and the potential sales and costs for each
beverage outlet and to take corrective action where necessary.

The beverage control is simpler than food control because:

 There are fewer number of beverage item to handle

than food.

 Beverages are purchased in standard unit sizes of

known standard qualities.

 Beverages are not as highly perishable as foods.

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6.8 CALCULATION OF BEVERAGE COST
 There are several basic terms which need to be explained Food and Beverage
with reference to the calculation of beverage costs: Control

1. Beverage cost: This refers to the cost of the beverage incurred in

preparing the drinks served.

2. Beverage cost percentage: This refers to the cost of beverages

sold as a percentage of sales of the beverages.

3. Gross profit or beverage gross profit: The excess of sales over

the cost of the beverage expressed as a percentage or in
financial terms.

4. Potential beverage cost (or sales): The beverage cost or sales

under perfect conditions; this may be expressed as a percentage
or in financial terms.

6.9 METHODS OF BEVERAGE CONTROL

There are many different methods in use today to control

costs, the various methods depending on the size of the operation,
the volume of business, owner or managed operation, etc., and the
level of sophistication of control required. Each of the different
methods in use could be classified under one of the following six
basic types of beverage control systems. Whatever method is
adopted, it would be of little value unless the previous steps of
control had been efficiently implemented and enforced, that is, the
control of purchasing, receiving, storing and issuing; production
planning; the establishment of standard yields, standard recipes,
standard portion sizes and inventory.

6.10 BAR COST SYSTEM

This system may be produced for each bar separately or for

all of the beverage operations. This report does not include the
opening and closing stock take of the individual bars, it assumes that
any beverage issued is for sale on that day. This report is time
consuming but may be deemed necessary when the desired gross
profit is not being achieved and when wanting to check in some
detail on the performance of individual bars in a unit.

6.11 PAR STOCK OR BOTTLE CONTROL SYSTEM

This is a simple yet effective method of beverage control and

is particularly useful for the smaller type operation where there are a
few full time control staff. The following points should be noticed.

1. The level of par stock is established for each bar, that is, to
establish for each beverage the number of bottles required for a
busy day plus a small safety factor. This number is determined to
be the stock level to be held in the bar at the beginning of the
service each day. To simplify the system only full bottles are
counted, partial bottles are not counted. 69
Food and Beverage 2. The number and type of empty bottles are noted each day, this
Management being the amount and type to be requisitioned for the day.

3. The potential sales are based on the quantities issued at selling

price and are compared to actual revenue received.

4. Adjustments to be made to the initial selling price if many mixed

drinks are sold. This may only be necessary if the difference
between the potential and actual sales figures gives cause for
investigation.

CHECK YOUR PROGRESS

1. What do you mean by beverage cost?

2. What is the main objective of food and beverage control?

3. Check for unusual variances in sales. This could be caused by a

major change in the ----------------------------- and --------------------.

4. Food controls not being seen by staff to work, resulting in staff

failing to maintain ---------------------------------.

6.12 LET US SUM UP

The objectives of beverage control are to determine and

report on the actual and the potential sales and costs for each
beverage outlet and to take corrective action where necessary.

There are many different methods in use today to control

costs, the various methods depending on the size of the operation,
the volume of business, owner or managed operation, etc., and the
level of sophistication of control required. Each of the different
methods in use could be classified under one of the following six
basic types of beverage control systems. Whatever method is
adopted, it would be of little value unless the previous steps of
control had been efficiently implemented and enforced, that is, the
control of purchasing, receiving, storing and issuing; production
planning; the establishment of standard yields, standard recipes,
standard portion sizes and inventory.

6.13 LESSON END ACTIVITY

1. Discuss about methods of beverage control.

2. Give your own view for food control Procedure.

6.14 KEY WORDS

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 Food and Beverage
Inferior goods These are goods or services for which an Control
increase in income results in a fall in the
amount bought. Eg. Bread, Canned
Vegetables, etc.

Overstoking To stock more of something than necessary or

desirable.

Par stock It refers to the standard delivery point and

quality of a commodity that is deliverable on a
features contract at contract price.

6.15 SUGGESTED QUESTIONS

1. Elaborate on food control procedure.

2. Give the checklist for a smaller operation.

3. Describe about beverage control.

4. Write short notes on bottle control system.

CHECK YOUR PROGRESS - ANSWER

1. Beverage Cost: This refers to the cost of the beverage incurred

in preparing the drinks served.

2. The objectives of beverage control are to determine and report on

the actual and the potential sales and costs of each beverage
outlet and to take corrective action where necessary.

3. Weather, and national holiday,

4. Desired standards

6.16 REFERENCES

1. Coltman, M. (1987), Hospitality Management Accounting, 3rd

edn, New York: Van Nostrand Reinhold.

2. Kasavana, M. L. (1984), Computer Systems for Food Service

Operations. CBI. New York. Van Nostrand Reinhold.

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