Food and Beverage Control

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Objectives of F&B control
* Analysis of income and expenditure performance can be expressed in gross profit, net margin (gross – wages) and net profit (net margin – rent, rates, insurance…) * Establishment and maintenance of standards. SOP (standard operational procedures) * Pricing

* Prevention of waste
* Prevention of fraud
* Management information

Problems of F&B control
* Perishability of food
* Business volume unpredictability/sales instability
* Menu mix unpredictability
* F&B operation short cycle -> little time for many control tasks * Departmentalization - several production and service departments -> separate trading results

Fundamentals of control
Planning phase
Policies: pre-determined guidelines
* Financial policy – level of profitability, subsidy and cost limits from each department * Marketing policy: target group
* National identity
* Customer profile
* Market share – same or more percentage of ‘our’ market * Turnover – sales volume increased by x% on previous year * Profitability – profit increased by each unit by x% on previous year * ASP (average spending power) increased by x% or to achieve a new ASP of no less than €x * Product – same high standard

* Customer satisfaction – net result must be the satisfaction of every customer * Catering policy – main objectives of F&B facilities and describe the methods of how this is achieved * Type of customer

* Type of menu
* Beverage provision necessary for operation
* Food quality standards
* Method of buying (contract, cash…)
* Type and quality of service
* Degree of comfort and décor
* Hours of operation
Operational phase
* Purchasing
* Product testing (tasting)
* Yield testing
* Purchase specifications – concise description of quality, size, weight etc. * Method of buying
* Clerical procedures (who places orders, what documentation necessary for control) * Receiving
* Quantity inspection
* Quality inspection
* Clerical procedures (acknowledgement of the receipt, delivery signature) * Storing and issuing
* Stock records
* Pricing of items
* Stocktaking (how much stock to be held, rate of stock turnover etc.) * Clerical procedures (what documentation in necessary) * Selling
* Checking system (number of items sold)
* Control of cash
* Clerical procedures
Post operation phase
* F&B cost reporting (daily or weekly)
* Assessment – compare reports with budgets and with previous performance * Correction if necessary

Reality of control: never 100% efficient

Setting the budget and break-even analysis
* Budget – plan which reflects policies and determines the business operations for a particular trading period * Budgetary control – control with particular responsibility for budget results is assigned to managers and continuous comparison between the actual results and the budgeted figures is made * Objectives of budgetary control

* To provide a plan of action, to keep business with its policies and to maximize the full use of resources * To set standards of performance
* To set out levels of cost responsibility and to encourage cost awareness * Capital budgets – assets, equipment etc.
* Operating budgets – day-to-day income and includes sales, cost of sales, labour, maintenance etc.

Stages of budgeting
1. Determination of net profit, capital invested and risks involved 2. Preparation of sales budget – volume of sales necessary to achieve desired net profit. Also influences budgeted cost for food, labour etc. 3. Preparation of administration and general budgets (office expenses, advertising etc.) 4. Preparation of capital expenditure budget (new equipment, furniture) 5. Preparation of cash budget (cash...
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