CHAPTER THREE: INDUSTRIAL CANTEENS

3.1.1 Need & Justification of Industrial Canteen

3.1.2 Industrial Canteens as a welfare facility

3.1.3 Composition of Industrial Canteen

3.2.1 Administrative Set up canteen committee

3.2.2 Administrative Set up canteen manager

3.2.3 Administrative Set up canteen personnel

3.3.1 Records & Registers in Industrial Canteen

3.3.2 Purchase, Cost & Sale Register

3.3.3 Financial Working in Industrial Committee

3.4.1 Accounts-Daily, Weekly, Monthly & Annual Accounts

3.4.2 Daily, Monthly Annual Budget

3.4.3 Income & Expenditure Ratios

3.5.1 Management Procedures : Supervision, Monitoring, Controlling

3.5.2 Management Procedures - Directing, Communicating, Reporting

3.5.3 Management structure of Industrial Canteens

CHAPTER THREE: INDUSTRIAL CANTEENS

3-1-1 Need and Justification of Industrial Canteens

In the industrial belt of Pune and Pimpri-Chinchwad there are many industrial

units that run round the clock -Kirloskar units, Bajaj units, Tata units, Kinetic units and

other units like Ruston Greaves, SKF, Thermax, Forbes Marshall and others run their

production units to the full capacity. The workforce has to report at least an hour before

the commencement of the shift. They start from the place of their residence at least an

hour or more before the reporting time. The same procedure is followed when they

finish their work. Their working schedule lasts for about nine and half hours. Add to

this time required before reporting and after the end of the work-shift. The total time

required for transport and work in the shift is of about eleven to twelve hours. It is but

natural that these workers need to be fed properly and sumptuously. This requires the

establishment of the catering unit on the premises of the industrial unit. It is obligatory

for industrial units having more than 250 employers to provide the canteen facility.

Though it is optional for them, many units having less than 250 employees in their

workforce, provide the canteen facility on their premises for the convenience of their

workforce. The provision of wholesome food needs to be made for the workforce that

is required to put in their hard physical labour in the industrial unit. It is essential to

maintain a balanced diet of sufficient nutritional values to be served in such industrial

canteens. The need for the provision of canteen facility for workers is thus universally

acknowledged in respect of the industrial units for more or less than 250 employees in

the workforce.

The need to establish such catering units is the main ground of its justification.

The physical necessity of the establishment of an industrial canteen justifies its

existence. It is a welfare facility to be provided to the workers in an establishment. It is

a humanitarian gesture on the part of the employers. The welfare facilities that are

given to the employees in a unit are considered to be the part and parcel of the

expenditure an employer is required compulsorily to incur. It is now a privilege of the

workforce to demand this facility. The provision of an industrial canteen is thus an

obligation for the

management of the industrial establishments. The need and justification of running an

industrial canteen in an industrial unit that is run satisfactorily need not be exaggerated

as the facility is acceptable to both the parties concerned that is the employers and the

employees working in those units.

3-1-2 Industrial Canteens as a Welfare Facility

The aim of every industrial organisation is to gain maximum at

minimum costs through a loyal and co-operative workforce. In order to achieve this aim,

it is necessary to provide a work environment that is comfortable, convenient and

pleasant to its workforce. The establishment is obliged to fulfil the needs of the

employees if they are to give their best to achieve organisational goals. The employers

ought to provide certain facilities and benefits to their employees to gain maximum at

minimum costs. These facilities and benefits are often, referred to as “Staff Welfare

provisions”. These provisions are classified under the heads of physical needs and

socio-psychological needs.

The physical needs are those which are required for comfort at work. The

welfare activities of this category are the provision of proper lighting, temperature and

humidity control, fresh air free from fumes and gases, low noise levels, a clean

environment, clean uniforms for staff, toilet and hand washing facilities, waste disposal

equipment, proper drainage and sanitation facilities, safety procedures and devices and

appropriately designed equipment and furniture. Sound proof ceilings, fitting exhaust

fans, provision of sinks and sitting and resting facilities are required in the industrial

establishments and particularly in the canteens.

The socio-psychological needs cover the needs for security through adequate

wage payments, provision for housing, infant creches for working mothers, transport,

social working hours, leisure and holidays, leave for sickness, maternity and

counselling services for stress at work-in-addition to the wages, subsidies on meals,

housing and others help to enhance wages indirectly.

The physiological needs are the needs of all the people. The provision of safe

drinking water, canteen facilities, rest periods and room, clean toilet facilities and

medical facilities are included in the physiological needs. Canteen facilities are a

statutory requirement. Irrespective of this, it is moral obligation on employers of

catering staff to provide them with fully or partly subsidised meals. Health facilities

generally include regular medical check-up, treatment for ailments or injuries,

preventive medical care, health education and health insurance. Money is an important

motivator of people’s behaviour as far as it can help to satisfy basic physiological needs.

After that it is the non-financial incentives that take care of psychological and social

needs. The employee welfare measures include (a) work environment facilities related

to the maintenance of temperature, humidity, clean air, noise level and safety, (b)

hygiene and sanitation such as toilets, change rooms, rest rooms, waste disposal,

drainage protective clothing, and footware (c) welfare amenities such as canteen

services, safe drinking water, health facilities and medical checks, (d) housing facilities

such as HRA free accommodation and loans for housing (e) recreation as sports, games,

reading room, library and films and (f) training such as job development, individual

development, language training communications, craft training and lectures etc. The

provision of canteen facilities thus satisfies the physiological needs of the worker and

thus running a canteen in an industrial unit is a labour welfare facility.

3-1-3 Composition of Industrial Canteens

What is an industrial canteen composed of? An, industrial canteen exists in its

utilitarian functioning, which is plainly to feed the employees in an industrial unit. Its

functioning is a service-oriented facility. The core activity in the industrial canteen is

the cooking of the items of food in the kitchen and serving them fresh and not to the

consumers in the dining hall or its service area. The preparation of food production, the

actual food production and the food service to the consumers are the central activities to

be performed in an industrial canteen. In addition to these core activities, what goes

before the pre-production and production stages and what follows after the food is

served are also part and parcel of the schedule of the functioning of an industrial

canteen. What an industrial canteen is composed of is the continuous and complex

network of activities during the pre-production, production and post production phases

of preparing food and serving to the consumers in order to enhance their efficiency

through the provision of wholesome meals and by creating a comfortable work-

environment. The orderly sequence of these activities needs to be maintained and each

of the activities needs to be executed most efficiently and a delicate balance between

competent work culture and consumer satisfaction needs to be maintained in the

functioning of an industrial canteen. The composition of an industrial canteen lies on

the co-ordineted joint efforts of a group of workers involved in the canteen

management from the person at the top who is supposed to manage and supervise the

functioning of the industrial canteen to the person who is supposed to be a helper in the

dishwashing operations. The hierarchy of functions, roles and activities needs to be

cautiously put to the work on hand from day one to the next and from the next to the

next to that and so on and on throughout the year. It is a constantly moving cycle that

has no stops and keeping the cycle which is made of many many inner cycles, is what is

involved in the composition of the industrial canteen. It is a joint task of all the

concerned and any slip or error at any level is bound to have, its negative results on the

entire job, involved in the functioning of the industrial canteen. There are no material

components but a consistent chain of physical actions that need

physical labour, mental alertness and psychological strength to carry on the activities in

the industrial canteen. The administration, the management and the execution of these

core and related activities constitutes the composition of the industrial canteen. What an

industrial canteen composed of is the conscious combination of the head, the hand and

the heart domains to plan, to work out and to feel the various jobs involved in feeding

the people. In India, this task has been carried out in ceremonies and festivals from the

times immemorial and the one who cooks food does it as if he is worshipping God-as if

doing the pooja (worship) of Annadevta (the god that is food) and the one who eats the

food gives heart-felt compliments with satisfaction, in the words like Annadata sukhi

bhava (let the giver of food be perennially happy). Their sincere commitment to the

duty on hand in the production and service of food is at the heart of the matter in the

functioning of an industrial canteen.

3-2-1 Administrative Setup: Canteen committee

The administrative set-up of the industrial canteens is three-tier in pattern

because the higher decision-making body is generally the canteen committee, and the

middle level administration is carried out by the canteen manager and the lower level

administration which is operative management is to be executed by the canteen

personnel. The provision of the canteen committee is made in the rules and regulations

for the industrial canteens. It is suggested that the canteen committee is to be

constituted on the tripartite basis. The representatives of the management, the

representatives of the employees of the industrial unit and the members of the canteen

staff are required to form the canteen committee. The canteen manager or the contractor

is required to work on the committee. The members represent the different cadres of

employees such as clerical staff, workers and others, if it is so required. The

composition of the canteen committee is determined by the industrial unit as a whole or

its management or its policy framework. The canteen committee thus constituted either

through the representation or the nomination of members is required to carry out the

functions of managing the said industrial canteen. The representation in some cases is

given to the members elected through elections conducted for the specific purpose

whatever is the nature of the composition of the canteen committee it has to function as

the governing body for conducting the affairs of the canteen.

The administration of the canteen is to be carried out by the canteen committee

by making the major decisions. It is observed that in some units, a non-interference

policy is observed and so the task of decision-making is entrusted to those who are

personally involved in running the industrial canteen and in such cases either the

canteen manager or the canteen contractor becomes the sole administrator of the

canteen. In some cases, the canteen committee decides what and when to purchase

provisions for the canteen, the quantity of provisions, of the mode of procuring the

provisions. The decision about menu planning is made by the canteen committee

whenever it is found necessary. The maintenance of the accounts and the provision of

money matters are sometimes entrusted to the canteen committee. In some units the

entire administration from the higher level to the lower level and all the tasks involved

from buying the provisions, preparing the food, serving the food to the consumers and

the different, post-production tasks are to be shouldered by the canteen committee. The

total administrative set-up and procedure depends on the canteen committee and its

efficient functioning in many industrial canteens. The canteen committee is the top

administrative body that varies in its nature from the most non-interfering functionary

to the most interfering authority and these differences are noticed from one unit to

another depending on the policy framework, administrative set-up and the style of

functioning of each of the industrial canteens in the units in the industrial belt and the

same is observed in the case of the industrial canteens surveyed in and around the Pune

region.

3-2-2 Administrative Setup: Canteen Manager

The canteen manager is the key functionary in the administrative set-up of an

industrial canteen. He occupies a central position between the higher level

administrators and policy-makers who decide the policy framework of the functioning

of the canteen and the canteen staff that actually brings into practice what has been

planned to be executed in respect of food to be fed to the consumers in the industrial

unit concerned. The canteen manager thus holds a very crucial post in the

administrative functioning and the managerial execution of the industrial canteen to

which he belongs. In some cases, the canteen manager is the sole administrator of the

canteen in the industrial unit. The canteen manager or the canteen contractor holds this

key position in many industrial canteens.

The canteen manager is required to play different roles in carrying out his duties.

He is required to look after the purchases to be made. It is his duty to fix the quality and

quantity of the items to be purchased. It is he who decides when and where to make

these purchases. He is responsible for making decisions about the rates to be approved

while finalizing the procedure of making purchases of grains, cereals, spices,

vegetables, fruits and other items required in the production of food. The physical

features are determined by the canteen manager such as the items of furniture, different

fixtures and the seating arrangement and the space management for the store, the

kitchen and the service area. The canteen manager has to carry out the important task of

deciding the menu and planning the menu per shift, per day, per week and even per

month. The material provision, the physical arrangement and the menu planning are for

the canteen manager the basic functions of his administrative responsibility. The

purchase manager, the supervising authority for the physical infrastructure and the

decision-making administrator for menu-planning are some of the roles the canteen

manager is required to play in the pre-production phase of the preparation and

production of food in the industrial canteen. In the phase of the production of food

items, the canteen manager is required to oversee the job done by the cooks, in

particular those involved in the making of vegetables, chapatti-roti-paratha-puri, the

sweets and salad and other supplements. Then he is required to supervise the work

carried out by the waiters and helpers. He is more or less a personnel-in-charge in this

phase. His role as a supervisor begins with the post production phases and cleaning,

washing and sanitation routine. He is required to work as a cashier in most of the units

and as such he has to occupy the seat at the reception counter. From this place he has to

control, manage, direct and supervise all the tasks being carried out on the premises of

the canteen. Many times he is required to maintain the accounts and prepare the records

and registers. He has to carry out the correspondence. He is the linking bond among all

the workers involved in the functioning of the canteen and he is the person who is

involved in a responsible capacity and who has to act as a bridge between the world of

the canteen and the world of experience outside the canteen. His is a very delicate task

of maintaining balance between management and

workers, decision making and implementation and the worlds inside and outside the

industrial canteen. He is a single individual who has to work in multiple responsible

positions to make catering a comfortable and satisfying experience to those who gather

at the canteen to get refreshed physically and mentally.

3-2-3 Administrative Set-up : Canteen Personnel

The canteen personnel or the canteen staff works at the bottom of the pyramid-

like structure of the administrative set-up of an industrial canteen. These are called line

management or lower management workers. The different cadres make the canteen

personnel. Apart from the canteen manager, most of the other employees as the staff of

the canteen are included in the category of the canteen personnel. In the kitchen there

are cooks, assistant cooks, a maker of tea-coffee, dishwashing workers, the cleaning

workers, those are required to cut, slice, peel, and clean the materials of the food items

to be used for production of the items. In the service area there are the steward, the

captain, the waiters, the utility workers, the helpers and the cleaners. There are the

cashier, clerk, the accountant and the servants in the reception section. The maid

servants have to perform certain specific duties. The catering, the purchasing, the

service, the general administration, the financial management and the personnel

management are the major heads of activities that are involved in the running of an

industrial canteen. The staff that is employed to carry out these various activities forms

the category of the canteen personnel. This is the group of those individuals who

actually perform the different operations and complete the different procedures and

processes necessary in the running of an industrial canteen. This is the actual work-

force of the canteen activities to be performed in a routine schedule day in and day out

almost without interruption on all the working days of the year, which in majority of

cases, happen to be all the 365 days of the year. The management is of administrators

and the middle management of managers and supervisors and the line management is

that of the actual performers of the tasks in the running of an industrial canteen.

The canteen personnel are required to work together with a sense of

commitment and a high degree of efficiency to maintain the quality of food at the

industrial canteen establishment. It is the co-ordination of the different activities and

the simultaneous operative functions which enables the canteen establishment to bring

out a satisfactory feeding experience for the employees of the industrial unit. The

administrative set-up of canteens has to pay attention to this level of administration as it

is necessary to maintain a close watch and a supervisory attention on the working of the

employees in the canteen personnel. It is observed that a half-cooked roti or a burnt

chapatti, the supply of onions and a slice of lemon, the fresh, clean glass of cold water

or even the uncleaned plate or table cause complaints from the consumers. That is the

reason why the working of the canteen personnel becomes most significant in the

context of the running of an industrial canteen. This is the staff of the canteen that

maintains the quality and taste of the eatables prepared and served in the canteen. The

administration, the management and the actual performance thus make the three-tier

pattern of the administrative set-up of the catering units in the industrial canteens which

are in general practice represented by the all-rounder personality of the canteen

manager and the practical performance of the canteen personnel from cooks to cleaners

who are busy in the store, in the kitchen and in the service area of the canteen.

3-3-1 Records and Registers in Industrial Canteens

There are three main aspects of the functioning of the industrial canteens that

need to be appropriately recorded in specific books and registers. These are (a) the

administrative records (b) the records of financial transactions and (c) the records of the

staff working in the canteen.

The records which need to be maintained for administrative purposes are

records like the stock register, the attendance register, the record of leave of workers,

the record of menu-sheets, the record of meetings such as the minute-book, and other

such necessary records. The stock register may be a single book for all materials or

separate for consumables and non-consumables. The property register will keep a

record of the immovable assets. The store records will prepare the day to day actual

position of the material provisions to be used, being used and have been used in the

canteen. The cutlery register, the crockery register, the furniture register, the equipment

register and other registers will have to be prepared, provided the stock of these articles

is considerably large otherwise, the same single register may contain sections recording

the stock of these articles. To maintain the stock register as a single book with separate

sections or as separate books for different types of articles will depend on the size of

the catering establishment. For most of the canteens that are surveyed in this study will

need the main stock register.

The daily attendance register and the leave record register are meant for the

employees working in the canteen. The Wages and Salary Register, the PF account

register and the Overtime Allowance register are related to the canteen staff. The

presence and absence in the daily attendance register and leave record register mark the

employees on duty or otherwise as the case may be.

The record of menu sheets is essential for the preparation of the cyclic menu for

a week or a month. Menu planning, menu preparation and menu scheduling will

enhance on account of these records and registers if maintained with accuracy and

efficiency in the establishment like the industrial canteen.

Like the stock register and registers related to the employees, the registers and

minute-book concerned with the meetings of the canteen committee are essential in the

administrative set-up of the industrial canteens. The canteen committee being the

responsible decision-making body makes decisions about the working, the daily

business and the general policy and these decisions are recorded in the minute book

which is an important document to run the canteen as per the resolutions passed in the

committee meetings.

The maintenance of the records is vital in the running of the industrial canteen.

The administrative aspects are duly recorded due to the up to date keeping of these

records and registers. The management of the canteen personnel is effectively made on

account of the different registers maintained to record the service profile of the

employees in the canteen. The registers and records keep the account of what should

happen and what actually happens in the administration, financial and personnel

management and the organisational working of the industrial canteens and therefore

those are of vital importance in the industrial canteen management.

3-3-2 Purchase, Cost and Sale Register

The financial transactions of an industrial canteen are mainly the purchase of

materials for the production of food and the sale of the items of food. What is

significant is the determination of the cost of food items and the cost pricing of the

items.

The purchase register may be a single register or a set of separate registers for

the perishable and non-perishable items or for the bulk purchases and the daily

purchases. There is the possibility of category-wise or item-wise keeping of the records

of purchases in the purchase register. The item-wise registers of purchases can be

useful if the details of the items, their quality, quantity, weight or measurement and

price are recorded in the relevant sections under different headings. The food and

beverage section may be kept separate from the sections of furniture, equipment and

utensil for cooking and for serving. The purchases of perishable items such as milk,

eggs, vegetables and fruits may be recorded with specific details. Purchases of the

materials determine the volume of expenditure. The purchase register gives information

about the materials and the other essentials in running the industrial canteen and the

planning, the preparation and the production of the items of food is decided on the basis

of what the store contains. The market, the store and the kitchen are the locational

points which are necessary in making an eatable item out of the provisions purchased

from the market and stored in the store of the industrial canteen.

The sale register keeps the record of what is sold, in what quantity and for what

price. In some cases, the cash transactions do not take place on the counter. In place of

the cash in return of the items sold, the coupons are used. The issue of coupons and its

utilization pattern is pre-determined as per the procedure fixed by the authorities of the

canteen. It becomes obligatory to keep a record of the coupons collected and to tally it

with the sales of the items served in the canteen. Whatever is used for the sale

transactions, the cash amount or the coupon collection, the sales determine the receipts

in the canteen. The expenditure from the purchase register and the receipt from the sale

register are the two sides that are necessary to present the financial position of the

transactions in the industrial canteen.

The purchase register and the sale register both together enable the canteen

management to determine the price of the item. The cost register and the cost pricing

procedure are to be essentially maintained in order to find out the inputs required in the

production of the food items and the determination of the level of the price of the item

concerned. The cost of materials, the labour charges, the establishment expenses and

the overhead charges need to be calculated to determine the price and on account of this

price of an item like potato-wada may vary from canteen to canteen. The range of price

may be Rs.5 to Rs.10 for such an item as the bare price of the product, but the way it is

served, where and when served and what other comforts are offered with it may

determine the actual price in the range of Rs.10 to Rs.25 depending on the cushion, the

furniture, the dishes and the environment in which the item is served. It is observed

these days that the price of the ambience today is much more that the actual price of the

item. It is for this reason that the industrial canteen management tries to maintain the

price level by keeping the ambience to the minimum and the quality and

wholesomeness of the food items as the matter of significance. It is for this reason that

the subsidy is offered on the prices of the items, or discounts given, or free meals or

free coupons or subsidized item are given by the industrial units that ultimately control

the industrial canteen finances.

3-3-3 Financial Working in the Industrial Canteens

Financial statements in the industrial canteens are of different types. It has been

observed that the purchases denote the expenditure side and the sales present the

income side and the both need to be stated in the manner which is desirable. The

expenditure and the income sides both are presented through the information sheets to

be supplied in the statements of expenditure, that is, the report of the two factors shows

the actual financial position and other factors.

The income and expenditure statements provide just one aspect and those are

dependent on the purchases and sales recorded in the registers maintained specifically

to keep track of the two. These statements prepare the ground for the profit and loss

account. The profit and loss statements are required to prepare the trial balance and the

balance-sheet. In addition to the purchases of provisions, the other items such as wages

and salaries, the establishment expenses by way of expenses on furniture, linen,

equipment, bills for water, gas, power and telephone connections, the overhead

expenses and others need to be put in the appropriate format so that the financial status

becomes clear. These total expenses present one side that is of the outgoing flow of

cash transactions and therefore the other side of the sales, the coupons, the subsidy, the

monetary receipts need to be taken into account. The running of an industrial canteen is

a labour welfare activity and therefore an entirely commercial approach need not be

adopted in the consideration of the profit and loss statements of the establishment like

the industrial canteen.

Though it is not exactly a commercial enterprise, the running of an industrial

canteen requires the necessary monetary discipline and taking this into account, the

financial working of the industrial canteen must be carried out in the manner that is

required to be followed in the other establishments. In many cases, the industrial

canteen is run by the contractor and in all the industrial canteens, that are run by the

contractor the same financial working is found to be in actual practice which is

followed in the running of an eatery in the private sector by an individual or an

establishment that is constantly seeking to increase the margin of profit-making. It

becomes necessary in such circumstance to curb the profit-making tendency and to

maintain the balance in keeping the quality of food intact and keeping the welfare of

the employees uppermost and for this purpose the check and control procedures need to

put into operation by the controlling authority. It is essential to preserve the nature of an

industrial canteen as a welfare facility to feed the workforce sumptuously with a

balanced and highly nutritious diet at the low cost. In this respect, the financial working

of an industrial canteen is much more difficult and much more complex in nature than

that of the other catering establishments run for more and more margin of profit.

3-4-1 Accounts - Daily, Weekly, Monthly and Annual Accounts.

The accounts should be maintained meticulously. Funding, investing in

assets and controlling operations are the three major aspects of financial decision

making in any enterprise-private or organizational and irrespective of the fact whether

it is profit making or the non- profit making unit. The importance of financial

information is emphasized but more statements or figures have little significance. The

information needs to be related to the technical, staff and materials controls. This is a

continuous process because there is a side range of products and services offered for

sale in the catering establishment. In the west most catering establishments follow a

uniform system of financial accounting. In a developing country like India, there is a

large disparity in the methods of maintaining accounts.

The stipulated procedure of maintaining accounts is to be followed in the

financial canteen management. The daily accounts are to be maintained through

vouchers, bills, coupons and the recording of the incoming and outgoing cashflow

should be completed at the earliest. The daily accounts should prepare the ground for

the weekly accounts. The weekly accounts should lead to the monthly accounts. It will

be a good practice if the financial discipline the preparing quarterly, half yearly and

annual accounts is followed scrupulously. The general guidelines for preparing such

accounts are uniformly applicable to both the industrial canteens and the departmental

canteens. The inputs of capital, grants and subsidies from the departmental source are

available for the departmental canteens but for the other industrial canteens, the capital

inflow is procured from the norms prevailing in the market conditions and the

proprietor of the canteen will be responsible for such procurement. That apart,

maintaining the accounts procedurally and the time frame for the same and the method

of the preparation of accounts and the schedule of the submission of accounts are other

related matters remain almost the same in both the categories of the industrial canteens

and the departmental industrial canteen.

Annual accounts comprising of Income and Expenditure, Trading and Profit and

Loss Account, Balance Sheet etc. must be prepared immediately on the close of the

year. After internal audit they should be submitted to the Integrated Financial Adviser

of the Department/ Office within three months of the close of the financial year. It will

be the responsibility of the Manager to complete and submit all accounts progressively

prepared as on the last day of every month, within seven working days of the following

month, after internal audit, to the Honorary Secretary for putting up to the Managing

Committee.

The following books of accounts are to be maintained by the Departmental and

other Industrial Canteens :

1. Cash Book 2. Ledger 3. Stock Register (for expendable items, coupon books,

crockery, empty containers etc.) 4. Dead Stock Register 5. Preparation

Register (to show the details of eatables produced) 6. Sales Register (Work

Sheet) 7. Coupon Sales Register 8. Salary Register 9. Attendance Register

10.Bill Register (for sale on credit) 11. Kitchen Register (if a number of

canteens is grouped together for Kitchen functions) 12. Journal (if number

of daily transactions of credit sales and purchase exceed five) 13.Annual

Accounts

The responsibility for proper maintenance of account books, submission of monthly

and annual accounts rests with the Manager of the Canteen.

The audit of accounts will be carried out by the internal Audit and after that it

will be carried out by the Statutory Audit Squad appointed for the same specific

function.The periods for retention of the records of the canteens are to be prescribed in

consultation with the competent authorities for a period form One year to Ten years

depending on the nature of the records and register. The annual rates of depreciation

will not be allowed to exceed the under mentioned limits for Furniture – 10 percent,

Equipment -20 percent and Crockery of 33 percent.

After applying reasonable rate of depreciation within prescribed limits the

unserviceable non- expendable equipment furniture, crockery etc. will be categorized as

“Beyond Economical Repairs” (BER), these articles will be disposed of through local

auction. The money received will be credited to the canteen funds. Book balances will

be adjusted accordingly. Each member of the Managing committee shall assume full

responsibility for efficient running of the canteen and to endeavour and strive for

avoidance of losses as far as possible, as per the duties allocated to him by the

committee. The net value of general working losses/ liabilities as reflected in the annual

accounts will be placed before the Managing Committee, which will go into the reasons

for losses and decide the remedial measures to arrest the losses for the future.

3- 4-2 Daily, Monthly, Annual Budgets.

Financial management is that area of business which deals with the effective

management of all the resources of an establishment in monetary terms. It involves

keeping account for all the transactions made, also recording any information to enable

the decision making on equipment, employees, purchasing sales and other areas of the

canteen management. The term accountancy is used to describe the process of

measuring in the financial terms the past, present, and future operations of a business. It

helps to assess the financial status of on organization at any particular point in time.

The term management accounting covers more than just the preparation of financial

statements or accounting reports. It is concerned with the interpretation of reports and

their presentation in a form that will enable canteen management to make profitable

decisions about utilization of resources.

Though based on knowledge of basic accounting techniques, it is chiefly a

matter of nature of attitude and approach towards the complex business problems. It

includes the preparation of cost statements and cost estimates. The direct and indirect

costs involved in the process of production need to be identified. This prepares the

ground for standard costing. Standard costing includes comparison of actual with

standards and determines variations. The importance of standard costing needs to be

properly understood in respect of the standard costing for dishes, meals, and other

eatables and beverages. The cost accountancy and standard costing are very useful to

prepare the cost estimates. These become part of the cost budgeting. Planning and

control of sales determines the extent of the use of materials. The materials estimates or

the materials budgeting help in the appropriate utilization of the materials. There is the

significant contribution of budgets in the management accounting. For this purpose the

fixed and flexible budgets need to be prepared. Similarly capital, and operating budgets

are used as standards for measuring actual performance. As the Daily, Weekly,

Monthly and Annual account are to be maintained to record the financial status, it is

necessary to plan and prepare in order to make the decision making process easier and

to prepare daily, weekly, monthly, and annual budgets in the financial organization like

the industrial canteen.

Catering is essentially a service industry. Some of its special features

make it different from other industries and complex in terms of financial viability.

There is a wide variety in the types of products and services. There is a large variety of

costs incurred. The proportion of fixed costs is very large. A variety of prices needs to

be determined for the same items depending on the nature of services offered. Catering

establishments are always affected by the mood and the goodwill of the consumer and

the seasonal demand. All these diverse features make financial management of catering

and food services rather tricky, difficult job. Therefore, decisions are required to be

made at

every stage and for the decisions to be made effectively, budgeting men, manner,

materials and processes is required.

An illustration will serve the purpose

Date 01-04-2004 Estimate

s

% Actual %

Variable costs 5000 50% 3000 30%

Fixed costs 4000 40% 6000 60%

Net Profit 1000 10% 1000 10%

Total 10,000 100% 10,000 100%

This daily budget is in the simplest format. It can be detailed out including the

different products and services. The extension and addition to the same will possibly

generate by putting together the daily budgets, the weekly and monthly, budgets. The

seasonal budgets may to some extent correspond with the quarterly budgets such as the

summer budgets of the months of April, May and June, the rainy season budget of July,

August, September, The autumn season budget of October to December and the

Winter budget from January to March. This will finally lead to the preparation of the

annual budgets. The budgets exercise check and control mechanism on the financial

transactions of the industrial canteens. They provide a blue print for the “What” and

“How” of the operations to be performed with the cost estimates maintained from a

single day to even the span of the entire year in catering services.

3-4-3 Income and Expenditure Ratios.

Cost pricing in canteen Management is a process by which managers

attempt to direct, regulate and restrain the actions of the canteen personnel in order to

achieve goals. This is essential in the area of food and other costs because loss is

possible at every stage in a catering operation. The food costs in any catering

establishment, whatever its size, vary between 40 per cent of total sales. These costs

being variable need to be controlled because on them will depend the amount of profit

that the establishment makes. In the sequence of the production cycle and service, the

losses are possible because of lack of supervision at the point of receiving supplies,

insufficient menu planning, lack of care in the Kitchen production and lack of training

in the service of prepared food.

The exact cost of a dish should preferably be known before it can be

served to the consumer at a profitable price. It is important to cost dishes and meals

accurately to ensure that they are cost-effective and cover all costs incurred in their

preparation and service. It is the usual practice in catering to determine the total cost of

materials used in producing a dish of a standard quality and then adding to it a certain

percentage to cover labour and overhead costs to calculate the selling price. The

method of standard dish costing is useful in setting the targets for price and usage of the

materials, thus helping to detect differences in the process of food production and

service- Dish costing needs to be checked and altered periodically when food prices

change.

A sample of a standard costing sheet is given below.

Standard Costing Sheet

Dish – Chapati Date 12-7-2002

Portions 4(8 Chapatis)

Ingredients Quantity Price RS/Kg Cost (Rs.)

Whole Wheat

flour (atta)

75 gm 6.00 0.449

Soya flour 25 gm 8.00 0.200

Rice flour 05 gm 8.00 0.040

Salt 02 gm 2.50 0.050

Fat 10 gm 40.00 0.480

Total Food Cost

(4

Portions) 1.219

Selling price

Gross

Portion 0.304

+

profit %

66%

Sample costing Sheet for Chapati

Costing sheets for each dish on the menu may be prepared to calculate the

meal or menu costing. Since catering is a service industry, labour, staff costs form the

largest expense next to food. Labour costs include salaries of staff, the value of all

allowances, facilities and benefits to them such as meals, medical facilities, housing,

insurance, bonus, pension, and uniforms. Overheads include all other costs like rent,

depreciation, fuel, cleaning materials, linen, security, administrative and costing cost.

From costing we have to move on to the process of determining what to charge for food

items which is termed “pricing” in commercial catering. The pricing takes the profit

making goal but in the industrial canteens it has to take the cost effective goal. The

method of pricing used often is the cost plus method. The rate of return on the capital

method is also used for the determination of pricing of items. In general 150 per cent of

food cost is added to determine the pricing. It is evident that irrespective of the size and

nature of the food service establishment, price fixation must aim at covering all costs

involved in the preparation and service of food. The determination of prices varies with

the fixed cost and overhead expenses of every establishment.

A full part subsidy is provided to many factory or office canteens,

Generally, a supervisor runs a canteen who is accountable to the personnel manager or

to the works manager. Normally, the canteen provides main meals, snacks and tea.

Although employees generally like plain well cooked and attractively served food, the

canteen supervisor tries to introduce a weekly cycle for the sake of convenience and to

provide variety. It is however difficult to offer a choice of dishes everyday. The canteen

supervisor is responsible for controlling costs and therefore he collects cost in a manner

that facilities cost control.

When the principle of costing is applied to this field, the objective is to

keep the costs to the minimum consistent with quality. A monthly operating statement

is prepared to show the various expenses under appropriate heading. The total cost is

compared with the amount realized from the sale to find out the next operating profit or

loss.

Under the following main account headings, The costs are collected periodically.

(a) Provisions like - Meat, eggs, fish, vegetables, fruits, flour, rice, milk

vegetable oil, tea, coffee, sugar, soft drinks, etc.

(b) Wages and salaries of Labour Supervisor, cooks, waiter, kitchen

assistants, porters.

(c) Services as Gas, power, electricity, steam, water, light.

(d) Consumable Stores such as Table linen, cutlery, glassware, crockery,

cleaning materials, brushes, dustbins, etc.

(e) Miscellaneous Overheads like - Rent and rates, depreciation insurance

premium, etc. The sale of meals and subsidy is the source of revenue for the

canteen. Usually coupons of different colours are issued to workers, according

to the type of meal provided.

The receipts from running a canteen include company subsidy and sale

from provisions. A proper budget should be prepared starting from the volume of the

services to be rendered. Since the production of the canteen is mostly perishable, care

should be taken to avoid excess waste or supply as much as possible.

CANTEEN COST STATEMENT

NO. OF MAIN MEALS SERVED

NO. OF SNACKS SERVED

NO. OF TEA SERVED

PARTICULARS ACTUAL BUDGET

FOR THE

MONTH

CUMMULATIVE FOR THE

MONTH

CUMMULATIVE

A) Wages and

salaries

Supervision

Cooks

Canteen Manager

Kitchen Assistant

SUB TOTAL

PARTICULARS ACTUAL BUDGET

FOR THE

MONTH

CUMMULATIVE FOR THE

MONTH

CUMMULATIVE

B) Provision

Meat

Fish

Eggs

Vegetables

Rice

Butter

Vegetable oil

Bread and cakes

Fruits

Biscuits

Milk

Tea and Coffee

Sugar

Soft Drinks

Grocery

SUB TOTAL

C) Consumable

Table line

Cutlery

Glassware

Crockery

Cleaning material

Dustbins

D) Services

Gas

Power

Electricity

Water

E) Miscellaneous

O/H

Rent and rates

Depreciation

Insurance

Maintenance

SUB TOTAL

F) Total cost

G) Deduct income

from sales

Subsidy by company

H) Surplus / Deficit

Mostly the canteens are subsidized i.e all costs are not borne by the

workers. For this reason from the total cost, subsidy and sale of coupon is deducted to

arrive at the profit or loss of the canteen. It is difficult to give format of the Canteen

cost sheet which will hold good in all circumstances. The required format should be

developed based on the specimen format given above.

Some times it is required to calculate the increment in subsidy per head

to be provided by the company this month over that in the same month last year. For

this purpose, monthly statement of canteen cost may be prepared in the following forms:

MONTHLY STATEMENT OF CANTEEN COST

Particulars This Month This month

last year

Materials consumed

Labour and Supervision Overheads

Total Rs.

Less : sales by Coupon

Subsidy for the period (a)

Number of employees served (b)

Cost per employee (a+ b)

Cost accounting with the objects of fixing prices for main meal, snacks,

tea etc. is difficult to organize because it requires equating one type of food with

another so that a common denominator can be obtained to determine the average cost

per meal. However, if such a common denominator cannot be ascertained, costs may be

expressed in terms of per employee to facilitate control. Though, it is difficult to

calculate the cost per meal the canteen supervisor with his experience can estimate the

cost involved for each type of meal provided. The canteen supervisor should have the

knowledge and judgment about the number of meals that can be served with various

combinations of meat, fish and vegetables and how many cups of tea can be provided

with certain quantity

of tea leaves and certain litres of milk. Thus the entire decision making is mostly left

upto the canteen supervisor who mostly handles situation single handedly.

It is necessary for the canteen supervisor to estimate correctly the

number of meals required each day. Wastage must be avoided to control the costs. The

personnel manager and the canteen supervisor should examine the waste food bins from

time to time. This is to ensure that food is not wasted.

Moving average charts for the main heading of expenses and income

received from various type of meals helps to keep a watch on trends. A moving average

charts can be prepared as below.

THREE – MONTHLY MOVING AVERAGE CHARTS FOR

CONSUMPTION OF VEGETABLE OIL

Month Date 3 Months Moving Total 3 Months Moving average

January 150 - -

February 135 425 141.67

March 140 413 137.67

April 138 420 140.00

May 142 420 140.00

June 140 423 141.00

July 141 418 139.33

August 137 416 138.67

September 138 420 140.00

October 145 426 142.00

November 143 427 142.33

December 139 - -

Note : The first figure against February in the 3rd

column is the total of data for January,

February and March. The three months moving total for March is obtained by

discarding data for January and adding data for April. Each time while calculating a

moving total, the data is discarded for the 1st of the previous 3 months and data for the

month which is next to the last of the previous 3 months.

The moving total and the moving average are placed at the center of the time span

from which they are computed. The total data of January, February and March is placed

against February.

EXAMPLE

The industrial canteen in an industrial unit is run for the benefits of its workmen and

provides necessary subsidy to the canteen.

During the month of August 2000 the following purchases were made.

Commodity Quantity Rs. Rate (Rs.) Per. Kg.

1. Tea 4 160

2. Sugar 50 30

3.Milk 60 25

4.Atta 210 20

5.Flour 20 30

6.Vegetable Ghee 3 110

7. Besan 12 40

8. Dal 30 38

9. Potato 90 20

10. Green vegetable 20 15

11.Spices 2 150

The other expenses for the month were : Rickshaw fare Rs. 200, Salary to cook

(1) Rs. 2500 per month, Wages to waiters,

(2) Rs. 1500 per month each, Supervisors Salary Rs. 3000 per month.

Fuel, Gas, Coal etc. Rs. 4000, Miscellaneous expenses-crockery and glassware

Rs. 1000. Depreciation of Utensils and Furniture Rs. 500, Sale of coupons @

Re. 0.15 per coupon.

Prepare Trading and Profit and Loss Account of the Canteen for the month of

August 2000 and find out the amount of subsidy paid by the company.

Tea Sugar Atta

Opening Balance 2 kg 10kg 30kg

Closing Balance 1kg 5kg 20kg

Solution :

Canteen subsidy during the month of August 00.

Rs. Rs.

Net Loss 5290 Subsidiary given by

company

15290

Establishment Expenses 5500

(Salary, wages )

Overheads 1500

Staff Overheads 3000

Total 15290 15290

TRADING AND PROFIT AND LOSS A/C FOR THE MONTH OF AUGUST

2000

Rs. Rs.

To Opening Stock By Sales 7,800 @ Rs.2.15 16770

Tea 2 kg x 160per kg 320 Closing Stock

Sugar 10 kg x 30 per kg 300 Tea 1x 160 = 160

Atta 30 kg x 20 per kg 600 Sugar 5x30 = 150

To Purchases : Atta 20 x 24 = 480 790

Tea 4 x 160 640

Sugar 50 x 30 1500

Milk 60 x 20 1200

Atta 210 x 20 4200

Flour 20 x 30 600

Vegetable 3 x 20 60

Besan 21 x 40 840

Dal 30 x 38 1140

Potato 90 x 16 1440

Green Veg. 17 x 20 340

Spices 2 x240 480

Fuel, Gas, Coal etc. 4000 By Net Profit / Loss -

Rickshaw fare 200

17560 17560

3-5-1 Management Procedures : Supervision, Monitoring, Controlling

Major policies are conceived and planned at the higher management and

then each policy decision passes through different channels and processes to the person

that is at the level of executing the decisions. In a catering establishment, decisions as

well as guidelines for performance of process activities and operations need to be

passed from level to level downwards to carry out the scheduled operations and the

programme of production. It is therefore essential to see that the management

procedures in the establishment have a suitable network for efficient supervision,

effective-monitoring and competent controlling mechanism well established for these

purposes.

The traditional concept of supervision has undergone many charges. The

method of supervision was mainly the spot visit. It was generally a fault – finding

mission in majority of the cases. At present supervision through the spot visit is not just

an occasion for fault finding but an opportunity to take stock of the situation on the

whole and to advise and guide those concerned with the operation.

In the industrial canteens the supervisory authorities have to carry on the

tasks of supervision. At the higher level of management the decision making procedure

is carried out by the management. On account of this, the top level management is the

supervisory authority. There is no direct supervision but the powers of supervision are

delegated to the canteen committee. The canteen committee on its part delegates this

supervisory authority to the canteen manager or the canteen contractor or the proprietor

as the case may be. The canteen manager visits the spot concerned either in the store or

in the kitchen or the service area as often as it is convenient for him, considering the

nature and the size of the catering establishment under his charge. The supervision of

service is entrusted by the managers to the steward or the captain and then to the

waiters. The supervision over the maid servants, cleaners and waiters is carried out by

the steward or the canteen manager depending on the size of the industrial canteen. The

store – keeper is under the charge of the canteen manager and the store – keeper

concerned will supervise the functioning of the helpers, the cleaners and the maid

servants, if such a need arises. The canteen manager has to supervise the operations

carried out by the cooks.

The supervision task is closely related with the monitoring of the

operations in the functioning of the industrial canteens. A periodic monthly or quarterly

stock taking is necessary to monitor the store of the industrial canteens. To ensure

proper execution of the processes in food production and catering operations it is

essential to monitor the operations in the field. This monitoring process initiates the

necessary corrective measures at appropriate time and at appropriate level. Monitoring

helps to keep a watch on achievement of targets and appraise the execution of the plans

set in the light of actual experience. Field visits, meetings, and mutual discussions are

the methods used for monitoring and those who have the supervisory authority will

carry out the task of monitoring in the managerial procedures of the canteen

management.

Controlling is the process that measures current performance and guides

them towards some predetermined objectives. The controlling is essential for the

effective implementation of plan. Controlling is linked with planning. It is the process

of comparison of actual with the standard set. Controlling has to maintain a balance

between activities and operations and the set of goals set for the various operations of

the canteen management. Controlling is a means to plan policies, programmes, and

schedules of planning. Planning should precede controlling. Planning without control

is meaningless and controlling without planning is blind. Thus good planning can bring

concrete results through controlling.

The significance of supervision, monitoring, and controlling in the catering

operations needs to be emphasized as these management procedures help executing the

catering operations.

3-5-2 Management procedures – Directing, Communicating, Reporting

The management procedures include directing which is that function

that initiates actual performance of tasks and requires greater interactions between

people through communicating and reporting. Directing includes instructing, guiding,

teaching, and reviewing. Instruction must ensure that each member understands how

his work fits into the total scheme of work to be achieved. Direction is the guidance, the

inspiration, the leadership of these men and women that constitute the real core of the

responsibilities of management. The task of directing people involves guiding them in

their jobs. Clearly, standing too close to be an employee or interfering with jobs is to be

avoided. Instead of watching people, by viewing their work positively, the performance

can be supervised to see how the work is being done. Teaching people to organize work

will make the work less stressful and better in performance and using quicker methods

will create a more relaxed atmosphere. Co-ordinating and evaluating the operations is a

part of directing the organization. To get the work done by the subordinates to achieve

desired results in a stipulated span of time is an important task. Getting the work done

by a person depends on whether he is motivated to do that work or not. Motive makes

a person active in a particular way. Motive is an inner impulse causing a person to act

Motivation refers to the way in which urges, drives, desires, aspirations, striving, or

needs direct control or explain the behaviour of human beings. The fine balance of both

the types of positive motivation and negative motivation is the core of management.

Directing involves leadership traits in the supervisory authority. The process of leading

depends on the elements such as possessing separate identity, being rooted in feeling

and attitudes in everevolving dynamic process and involving influence, direction and

guidance. Co- ordination is the combination of all efforts used in an enterprise for

obtaining objectives that are common in nature. Constant co- ordination helps to tackle

problems when they arise, gather ideas from various experiences, anticipate problems

and take timely action to prevent them from recurring, Co-ordination, leadership and

motivation enhance the efficiency of directing the effective implementation of the

sequence of operations to be carried out in the canteen.

All plans chalked out for the establishment to run smoothly will come to

nothing, if they cannot be interpreted and understood by the people who have to carry

them out.The ability to carry information or messages to others is known as

communication. It is an important tool of management when dealing with people. Yet it

is the most difficult to achieve effectively. In the catering establishment,

communicating is central to unifying all the different activities which interplay in the

achievement of goals. Communication is a two way process and is completed when

there is the same response from the receiver of the information which the sender desires

to communicate. The types of communication on the basis of expression are verbal,

non- verbal, written, formal and informal communication. Oral directions, instructions

and commands, written letters, memos, notices, body gestures, facial expressions and

even silence are used to communicate messages from one end to another. The types of

communication on the basis of direction are upward communication, downword

communication and horizontal communication. The barriers of communication are

uncertainty, fear complex, cultural background, education and certain other causes and

these need to be removed and break – down in communication needs to be avoided.

The establishment of an effective communication system is essential for every

organization.

The Reporting system is aimed at providing necessary feed – back about

the status of activities and operations to the supervisory authorities. Such feed back

enables the authorities to keep a watch over the execution of plans and ensures

necessary

remedial measures to be taken to achieve the targets allotted. The lower level staff will

report orally to the middle level management. The waiters will report to the steward or

the head waiter. The utility staff will report to the head amongst them. The manager

will seek reports from the store, the kitchen and the service area. The upward reporting

will enable the manager to instruct as required. The manager in his turn will have to

report to the upper level management. The submission of written reports to the canteen

committee or management will have to be carried out in the periodic sequence. The

submission of accounts is reporting on the financial front and is to be carried out as

stipulated in the policy framework of the catering establishment. Reporting is the task

crucial in management but equally crucial is the fact of ‘who’ reports to ‘whom’.

The managerial procedures involve Supervision, Monitoring,

Controlling, Directing, Communicating and Reporting. These procedures need binding

together which is provided by the co- ordination of these management procedures. The

same can be presented through a figure as shown below

SUPERVISION

Management

MONITORING Middle Level Management DIRECTING

CO- ORDINATION

COMMUNICATING Lower Level Management CONTROLLING

REPORTING

MANGEMENT PROCEDURES IN AN INDUSTRIAL

CANTEEN

3-5-3 Management Structure of Industrial Canteens

The management structure is the out come of putting people and jobs

together and therefore represents the entire team involved in the running of the

establishment both at the operational and management levels. Any organization needs a

well set detailed structure, having functions logically arranged to achieve maximum

efficiency. The two types of authority relationships that most often exist in food

services are line and line staff relationships. In the line structure each individual is

responsible to the person ranking above him on the structural pattern. Thus authority

and responsibility are passed downward. In the line and staff pattern, specialists are

positioned at various levels to advise those along the line structure as the activities of

the establishment get diversified. The expertise of staff is utilized to maximize the

efficiency of line personnel to the utmost.

Organizational management structures can grow in two directions

vertically and horizontally. In vertical structural pattern the person above assigns the

work to his immediate subordinates down the line. In small catering establishments and

industrial canteens run for a limited number of employees, the vertical management

structural pattern is noticed. As the length of the vertical structural pattern increases,

the functional units begin to operate separately. The activities of the establishment

grow in size and volume. The structural pattern then spreads out to become a

horizontally spread structure. The structural patterns also indicate the functional units

and the interlinked relationships amongst them. The structural patterns indicate whether

authority is centralized or decentralized. The structural patterns can also be termed as

tall or flat patterns of management structure.

The management structural patterns are line or vertical or tall structures

and line and staff or horizontal or flat structures. These structural patterns of the

management organizations can also be termed as ladder and pyramid structural patterns

in which the ladder vertical, – tall, and line patterns present one group and the pyramid

– horizontal, flat, and line and staff structural patterns of management organization

present the other group. The small industrial canteens which serve up to 150 employees

are ladder type while those canteens that serve more than 150 employees are of the

pyramid structural pattern of management organization. The same cam be graphically

presented.

Management

Manager Manager

PYRAMID

Personnel ORGANISATION

Accounts SERVICE

Service PRODUCTION

Kitchen

MATERIALS

Store

LADDER AND PYRAMID PATTERN