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Food and beverage operation management

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A foodservice director has many options for food production and service. Most food service directors inherit a foodservice system, but may make modifications to that System or select and build a new system. For example, in today’s environment it is very difficult to find adequate labour, which is forcing school foodservice directors to consider alternatives in food production. Also, there is a great concern about food safety, including Hazard Analysis Critical Control Point (HACCP) program implementation, and quality control that might be improved in centralized food production. If a change is to be made in the system, it is important to know what alternatives are available.

In this chapter, information will be presented about:

• Unique characteristics of foodservice
• Flow of food
• Form of food purchased
• Types of foodservice systems
⇒ Conventional
⇒ Centralized (Commissary)
⇒ Ready-Prepared
⇒ Assembly-Serve
• Advantages and disadvantages of each type of foodservice system

Unique Characteristics of Foodservice there are some characteristics of foodservice that make it unique compared to production of other products. This uniqueness influences decisions that are made about production and service. Some of these characteristics include: ¾ Demand for food occurs at peak times, around breakfast, lunch, and dinner Meals. Between these peak demand times, there are valleys or slow times. ¾ Demand for food may vary depending on time of year and competitive events, and production must be modified accordingly. 2 A Guide to Centralized Foodservice Systems ¾ Food production and service are labour intensive. ¾ Both skilled and unskilled labour is needed. ¾ Food is perishable, requiring it to be handled properly before, during, and after preparation. ¾ Menus change on a daily basis, thus, production changes daily. These characteristics create challenges in scheduling employees and production, in staffing, and high labour and food costs. Conventional foodservice systems exhibit these characteristics.

Foodservice directors look for ways to reduce or eliminate the impact of these characteristics—and alternative foodservice systems offer solutions. For example, commissary foodservice systems centralize the production process and allow for economies of scale, reducing the costs of food production. Ready-prepared foodservice systems separate production and service in that food is prepared and stored either frozen or chilled for later rethermalization and service. This removes the peaks and valleys of production that occur when production is planned around service. Thus, this is a more cost-effective foodservice system than the conventional system. Foodservice systems may be combined to meet the unique needs of a district school foodservice operation.

1.2 Recipes and menus
Menu and recipe development: cookery styles, types of menus, balanced menus, dietary needs, ethnic and social influences, nutritional considerations Methods: using fresh foods, using prepared foods, using a combination of prepared and fresh foods, cook-chill, cook-freeze, cook to order, batch cooking Factors affecting menu compilation: taste, colour, texture, temperature, appearance, foods which complement each other, food and drink which complement each other Alcoholic beverages: sources, selection, availability, storage, legislation

1.3 cost and staffing implication for different systems
This unit introduces the learner to the practical aspects of food and beverage production and service. Due to the nature of the job, hospitality managers need to have the basic practical skills to enable them to operate effectively within a kitchen and restaurant operation. The focus of this unit is the development and application of practical activities within a food preparation and service environment. Learners will review and evaluate different food and beverage production and service systems, together with aspects of menu design, financial and staffing implications for different outlets. They will investigate the importance of financial controls, including costs and selling prices and aspects of the purchasing programme. Learners will also develop their understanding of the processes involved in planning and developing recipes, the methods that can be used, and a range of factors that affect menu compilation. The learning for the whole unit is drawn together through the planning, implementation and evaluation of a hospitality event. This unit is common to more than one Higher National qualification. Learners must ensure that their evidence relates to the sector they are studying. Module Contents

Food and beverage systems
Production systems: eg traditional, centralised, sous vide, cook-chill, cook-freeze Service systems: eg table service, counter service, ?la carte, table d?h?te, silver service, family service, plate service, gu?ridon service, specialist food service systems Menu design: type of food and beverage operation, customer perceptions, choice of products, flavour and appearance of dishes, nutritional value Financial implications: equipment costs, wages, product costs Staffing implications: skills and de-skilling, job specifications, staff training, levels of output Food and beverage outlets: e.g. hotels, restaurants, banqueting, in-flight, outside catering, industrial, institutional (public and private) Financial controls

Financial statements: dish costing sheets, cost statements, operating statements, variance analysis Cost and selling price: dishes, menus, wine lists, net and gross profit, fixed, variable, direct, indirect cost, cost elements, VAT Purchasing process: requisition of equipment and supplies, purchase specifications, receipt, invoicing, storage of equipment and supplies Recipes and menus

Menu and recipe development: cookery styles, types of menus, balanced menus, dietary needs, ethnic and social influences, nutritional considerations Methods: using fresh foods, using prepared foods, using a combination of
prepared and fresh foods, cook-chill, cook-freeze, cook to order, batch cooking Factors affecting menu compilation: taste, colour, texture, temperature, appearance, foods which complement each other, food and drink which complement each other Alcoholic beverages: sources, selection, availability, storage, legislation Hospitality event

Customer requirements: type of menu, style of service, timescale, type of customer Cost control: labour materials, overhead costs, achieving target profits, budget restrictions Quality standards: setting and maintaining standards, food and beverage preparation, cooking and presentation, food and beverage service skills Health, safety and security of the working environment: procedures, setting and maintaining hygiene practices Evaluation: planning, management objectives, customer satisfaction, cost effectiveness

1.4 Cost and different Suitability implication for systems
Different types of catering of restaurant establishments. Relationship of catering industry with other industries. Staff organization in diffestauerent types of rants, duties & responsibilities staff.Classification of restaurants. Types of restaurants, status of a waiter, attributes of a waiter. Unit – II Classification of operating equipment’s used in restaurants & their uses. Ancillary departments, still room, pantry, hot plates. Restaurant service Muse en scene, Muse en place. Table lying- Points to remember when laying a table. Uses of a dummy waiter Unit – III Menu- Meaning, types, food & their usual accompaniments, French classical menu. Types of service- Different styles, factors influencing styles of service- advantages & disadvantages. Unit – IV Breakfast- Types, cover lying, terms used. Classification of beverages- Preparation of non-alcoholic beverages, examples of non alcoholic beverages. Unit – V Order taking procedures in restaurants. Room service- types, order taking procedures for room service-telephone, door hangers. Cover laying for foods- Hors d’oeuvre, fish, main course, sweet, cheese, and savoury. Examples types. Ice cream… 2.1FINANCIAL STATEMENTS IN FOOD AND BEVERAGE OPERATION

Financial statements: dish costing sheets; cost statements; operating
statements; variance analysis; sales records
Costs and pricing: dishes; menus; beverage lists; sales mix; net and gross profit; fixed, variable, direct, indirect cost; cost elements; VAT; discounting Purchasing process: requisition of equipment and supplies; purchasing options; purchase specifications; receipt; invoicing; storage of equipment and supplies

The food cost percentage is simply the cost of food sold divided by the sales. It is important to differentiate between the cost of food which was actually sold and costs of food which was not actually sold. Food not sold could be things such as staff meals, wastage, food such as cherries and lemons sent to the bar for use in making drinks, etc. There should be vouchers or requisitions from other departments to account for such food items. Staff meals should be carefully recorded. Any waste should be noted and a separate cost line for it should be created in the expense part of the financial statement. Once this is done we can then account for any items which were not directly sold to the guests. When we know the true amount for the cost of the food sold (the actual cost) we can then compare this against what the cost should have been (the standard cost).

At this point it is possible to determine the effectiveness and efficiency of the kitchen operation.

Calculating The Actual Food Cost

Opening Inventory (the closing inventory from the previous period) PLUS
Purchases (the invoice amounts from each of the Daily Purchases Register files) MINUS
Closing inventory (the goods counted after the close of business of the last day of the period) MINUS
– any adjustments
– cost of staff meals
– waste report costs
– food transferred to the bar (or other departments goods leaving them is
accounted for on a requisition and that requisition becomes an invoice for the kitchen or department receiving them. This is common in a hotel with central stores which sends out goods to various units within the hotel. In such an operation each department would have to account for their food costs independently and the requisitions would be their purchases. Sometimes, however, goods go directly to the kitchen rather than to the central stores. Examples of this might be bread and milk where the bakery and dairy place the fresh goods directly in the kitchen instead of the central storeroom. Any such goods need to be carefully accounted for and included in the food cost total. As we will see in the controls section later, it is important to be especially careful when accounting for these goods as it is possible for theft to) – any goods returned to suppliers for credit

– any other goods transferred out (to other units for example) PLUS
goods transferred in from other departments (wine for cooking from the bar) any other goods transferred in


Some operations have controlled storerooms where any occur here.

2.1 Financial statement in food and beverage operation
Product oriented companies create a production budget which estimates the number of units that must be manufactured to meet the sales goals. The production budget also estimates the various costs involved with manufacturing those units, including labour and material. Cash Flow/Cash budget:

The cash flow budget is a prediction of future cash receipts and expenditures for a particular time period. It usually covers a period in the short term future. The cash flow budget helps the business determine when income will be sufficient to cover expenses and when the company will need to seek outside financing. Marketing budget:

The marketing budget is an estimate of the funds needed for promotion,
advertising, and public relations in order to market the product or service. Project budget:
The project budget is a prediction of the costs associated with a particular company project. These costs include labour, materials, and other related expenses. The project budget is often broken down into specific tasks, with task budgets assigned to each. Revenue budget:

The Revenue Budget consists of revenue receipts of government and the expenditure met from these revenues. Tax revenues are made up of taxes and other duties that the government levies. Expenditure budget:

A budget type which include of spending data items.
(Arthur &Sheffrin, 2003)
2.2 cost and pricing process

A cost sheet is a statement of cost incurred, or to be incurred, for producing a given volume of output or for rendering services, as the case may be. Preparation of a cost sheet helps cost control and pricing decisions. (Banerjee, 2006) Cost sheet for Hospitality

The standardised recipe cost sheet is a record of the ingredient cost required to produce an item sold by your operation. This standardised cost sheet can be created using any basic spreadsheet software. (Dopson, 2010) Advantages of cost sheet in hospitality

New employees can be better trained.
Helpful to maintain food laws.
Helpful to explain about any food item to the guest.
Helpful for accurate purchasing in order to gain profits out of business.

2.3 Analyse purchasing process
Purchasing can be defined as a function concerned with the search, selection, purchase, receipt, storage and final use of a commodity in accordance with the catering policy of the establishment.

3.1food and beverage menus for hospitality event
Planning: type of menu; style of service; timescale; customer requirements Cost control: staffing; materials; overheads; achieving target profits; budget restrictions Quality standards: production and service planning; food and beverage preparation; cooking and presentation; food and beverage service levels; setting and maintaining standards Health, safety and security of the working environment: procedures; monitoring; setting and maintaining hygiene practices Evaluation factors: planning; organisation; management objectives; implementation; quality; customer satisfaction; cost effectiveness.


Chicken with garlic,basil,and parsley
Main dish : chicken seasoned with garlic, parsley, basil ,tomato and red pepper

4.1food and beverage service for hospitality event
Catering managers plan, organise and develop the food and beverage services of organisations and businesses, while meeting customer expectations, food and hygiene standards and financial targets. The role varies according to the size and nature of the business. In a small establishment, the catering manager usually has a hands-on role and is involved in the day-to-day running of the operation including staff supervision and events management. In larger organisations, however, the catering manager might have other managers and supervisors to handle the different catering functions and catering outlets. Catering managers can work in-house for a variety of organisations, including hospitals, schools, factories, prisons, cruise lines, hotel chains, universities and visitor attractions, or can work for a contract catering company providing services to a range of clients.

Banerjee, B. (2006). Cost Accounting Theory And Practice (12th ed.). New Delhi: Prentice Hall of India. Dopson, L. R. (2010). Food and Beverage Cost
Control (5th ed.). Canada: John Wiley and sons, Inc. Jinnet, L. P. (2006). Small Buisness Start-Up (6th ed.). Chicago: Kalpan Publications. Ojugo, C. (1999). Food & Beverage Cost Control (2nd ed.). New York: Delmar. S.P.Gupta, Ajay Sharma, SatishAhuja. (2007). Cost Accounting (1st ed.). New Delhi: V.K. Enterprises. Sullivan, Arthur; Steven M. Sheffrin (2003), Economics: Principles in action. Upper Saddle River, New Jersey: Pearson Prentice Hall

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