WMI Book No. 2- Culinary Economics - MM
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1 CULINARY ECONOMICS - COSTS BOTTOM LINE MANAGEMENT LEARNING COMPETENCIES : At the end of this module the trainee should be competent to understand : 1. Revenues – gross and net. 2. Effects of reduction in net revenues. 3. Type of Costs. 4. Our efforts. 5. Concept of money. 6. The S.O.S. Principle. 7. The questioning mould. 8. Absolute Terms v/s Percentages. 9. Other expenses. 10. Contribution. 11. Types of expenses. 12. Understanding Food Cost. 13. Objectives of Food Cost Control. 14. Steps of the Control Cycle. 15. Aids to Cost control. 16. Yield Tests. 17. Butcher Yield Tests. 18. Cost Factor. 19. Calculation of Capacity Utilization. 20. Break-even point. 21. Banquet Matrix. 22. Economies of Scale. 23. Profits and Profitability. 24. Maximizing Revenues. 25. Minimizing Expenditures. 26. Profitability. 27. How to improve Profitability.
Transcript of WMI Book No. 2- Culinary Economics - MM
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CULINARY ECONOMICS - COSTSBOTTOM LINE MANAGEMENT
LEARNING COMPETENCIES :
At the end of this module the trainee should be competent tounderstand :
1. Revenues – gross and net.2. Effects of reduction in net revenues.3. Type of Costs.4. Our efforts.5. Concept of money.6. The S.O.S. Principle.7. The questioning mould.8. Absolute Terms v/s Percentages.9. Other expenses.10. Contribution.11. Types of expenses.12. Understanding Food Cost.13. Objectives of Food Cost Control.14. Steps of the Control Cycle.15. Aids to Cost control.16. Yield Tests.17. Butcher Yield Tests.18. Cost Factor.19. Calculation of Capacity Utilization.20. Break-even point.21. Banquet Matrix.22. Economies of Scale.23. Profits and Profitability.24. Maximizing Revenues.25. Minimizing Expenditures.26. Profitability.27. How to improve Profitability.
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UNDERSTANDING COSTS
Definition of “Costs”Let us begin by establishing a simple definition of “Costs”.
“Costs” can be defined as resources sacrificed or foregone toachieve a specific objective.
Cost is generally measured in monetary terms.
Cost is the amount of expenditure (actual or notional) incurredon or attributable to a product or services. We shall be talkingmore about a food product sold or a food service rendered.
In terms of food costs, a cost is incurred as soon as a productis produced partially or completely. (Semi prepared food for a lacarte menu items or completely for example, a bakery orconfectionery or dessert item).
A cost is incurred even if the product is spoilt due to non-usageor poor preparation style and finish and thrown away or it isconsumed illegally i.e. pilfered. We notice that cost is incurred evenwhen the food product is no longer available for sales, i.e.profitable use. This is due to the highly perishable nature of theproduct line.
Expression of Cost : How is Cost expressed?
Cost of a product or a service can be expressed in many ways,for example, value in units of weight.(For example: A portion of a Chicken Steak of 225 grams for Rs.775), or
Value in terms of units of volume.(For example Rs. 15/- for 200 ml. of Cola
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Or, any other pre-determined unit.e.g. Rs. 750 per plate.e.g. Rs. 225 per piece.e.g. Rs. 775 per casserole, etc.e.g. Rs. 15 for a Pepsi bottle, etc.e.g. Rs. 65 for a can of non-alcoholic beer, or in case of a
beverage as per bottle, can or peg,e.g. Rs. 275/- for a large peg.
PROFITS ARE THE KEY PRE-REQUISITE OF ANY BUSINESS.
CUISINE AT WELCOMGROUP IS CLIENT ORIENTED ANDA PROFIT CENTRE. WE NEED TO BE VERY CAREFUL OFCOSTS.
When the going is good, i.e. to say that the business is good, itis easy to contain costs in terms of parameters of cost percentages(or in Absolute terms)
Food business is revenue-led. When revenues of food are high,all fixed and semi-fixed costs are at lower percentages. Most costsin our business due to the fact of their being based on net revenuesand net revenue percentages—tend to be of this type.
Costs therefore look big when revenues start falling.
Just to give an example: SWB – salaries, wages, and benefits –this is a fixed cost.
The SWB for the month of April 2008 for the F&B departmentwas Rs. 2147000. The net revenue for the same month wasRs. 9806000.
Therefore the SWB for the same month was = 21.90%
The Net Revenue for the month of May 2008 was Rs. 12382000.
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Let us examine the effect of this amount of Net Revenue on SWBPercentages.
SWB is a Fixed Cost, i.e. Rs. 2147000.
Therefore the SWB for the month of May 2008 would be 17.34%.The difference between the SWB percentages of April 2008 andthat of May 2008 was = 21.90%-17.34% = 4.56 %
So that, we notice, that fall in Revenues (Gross, and subsequentlyNet) make costs look more.
Cost is a generic term. When talking of costs or expressing it,we need to give additional information, e.g. by adding a prefix,e.g. Direct Costs.
What should be noted is that cost is always a relative or referentialterm. So that, it is ascertained with reference to some objects suchas product or services. Each prefix to the generic word “cost”implies certain attributes, which explains its nature and also itslimitations.
To make our understanding of the previous statement, let usexamine a few of the prefixes to the generic word Cost, speciallyrelating to our food and beverage business.
We shall understand the prefixes faster through our understandingof the types of costs of our business.
What are the different types of costs?The different types of Costs that are important to understand inour Food & Beverage business are :
• Fixed Costs• Variable Costs / Semi Variable Costs• Budgeted Costs• Standard Costs
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• Direct Costs & Indirect Costs• Actual Costs
FIXED COSTS:
Those costs which remain constant irrespective of the product orservice output, within and up to the capacity that has been builtup, are known as Fixed Costs, or Period Costs (as these relateto a time period).
Examples of Fixed Costs are : management and worker’s salaries,insurance of building, vehicles, etc.
Committed Fixed Costs are costs like depreciation, property taxes,and salaries. Discretionary Fixed Costs are costs like Researchand Development, sales promotions, donations and externalconsultancy. Fixed amounts are set aside for these activities.However, in adverse business scenario, these activities can eitherbe eliminated or reduced in scale of expenditure. These are calledDiscretionary Fixed Costs.
Why are they called discretionary ?
Because they are at the discretion of a manager. These are thereforetotally dependent on the Human Factor. These costs may or maynot have any particular relationship to the product, its volumesor level of activity. Discretionary costs may be totally or partiallycurtailed in a particular time period, a quarter, a half year or ayear.
Discretionary costs therefore reflect total discretion of themanagement, and has no relevance to quantum of profits, othercosts of the business and volume of activity. Examples ofDiscretionary costs are : research and development costs, and salespromotion activities.
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VARIABLE COSTS :
Variable costs are those costs that vary directly in proportion tothe volume of output. These costs are also called Product Costs.These costs increase or decrease in the same proportion to theoutput.
Some of the F&B Costs are Variable Costs. Costs occur only whenpreparing a F&B product or rendering a F&B service.
Cost per unit of sale (of product or service or combination of both)remains constant whereas total variable costs change with changeof output in terms of quantities.
Semi-Variable Costs do vary, but not in direct proportion to theoutput. Up to a certain level costs remain fixed and increase ordecrease with a change in the output.
BUDGETED COSTS :
It is an exercise of setting standards of financial performance.
For a fresh business enterprise, a Budgeted Cost is fixed upconsidering the viability of the food & beverage product or service.
Budgeted costs are also based on certain factors of demand, andcreativity of a product line, etc. For an existing business, budgetedcost is based on observations of the previous year or years (i.e.it is chronologically dependent) and the potential of that particularmarket.
A forever effort of a F&B business enterprise is to reduce costsunder an average of working conditions.
Taking therefore, a previous year’s achievements, fresh standardsare set for the following financial year, against which performancesare desired.
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Budgeted cost is therefore the cost expected to be incurred in thebudgeted period, and are calculated taking into consideration theaverage working conditions which are likely to prevail during thebudget period.
STANDARD COSTS :
Standard cost is a benchmarking device. Standard Cost is abenchmark to measure future activities, and to derive inferencesthere from.
Standard Cost is therefore regulatory in nature.
Standard Cost refers to the technique which uses a standard forcosts for the purpose of control through analysis of variances.
Standard Cost is therefore a predetermined calculation of howmuch costs should be, under specified working conditions.
To build up and arrive at a Standard Cost, an assessment is madeof the totality of cost elements and co-related technical specifications,qualifications of materials, labour and other costs against the priceor wage rate expected to be applied during the period underreview.
Once a Standard Cost is fixed, actuals of future performances aremeasured against these standards. Variances observed during thisexercise are analyzed, and reasons established. Subsequent correctiveaction ensures efficient operations.
WHAT IS TO BE DONE ?
1. Set Standards.
2. Examine these standards at periodic intervals.
3. Analyze them.
4. Upgrade them.
5. Or Maintain them.
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DIRECT COSTS :
Costs that can be directly and completely attributed to a productare called Direct Costs. Direct costs are identified with a productor a cost unit.
Direct Material Cost: Those materials (or ingredients) whichbecome an integral part of the finished product and which hasspecific physical units is known as Direct Material, and the costof such material are called Direct Material Costs. All Food Costsare Direct Material Costs.
Direct Labour Cost: Labour which takes a direct and active partin the production of a particular commodity is called direct Labour.These Direct Labour Costs can be directly and conveniently tracedto specific products of F&B department or specific services. AllS.W.B. Costs are Direct Labour Costs.
Direct Expenses : These are those expenses which can be whollyand directly assigned to a specific product or service.
INDIRECT COSTS:
Those costs that cannot be identified with a particular productor service, but need to be accounted and allocated are calledIndirect Costs.
Indirect Material: Those materials which are used for the purposewhich cannot be conveniently assigned to a specific physical unitof product or service are called indirect material, e.g. cleaningsupplies, printing & stationery, etc. The costs of these IndirectMaterials are called Indirect Material Costs.
Indirect labour : Labour employed for the purpose ofcarrying out tasks incidental to goods produced or services
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provided is indirect labour. Such labour does not alter thecondition of the product or service. It cannot be particularly tracedto a product or service, e.g. salaries of Sales Manager, Salariesof Stores & Purchase personnel. Such Costs are called IndirectLabour Costs.
Indirect Expenses : Indirect expenses are those expenses whichcannot be directly, conveniently and wholly allocated to a specificcost unit. Examples of Indirect Expenses are Rent of a building,HLP allocations and insurance charges.
ACTUAL COSTS :
Actual Costs are historical in nature. Substantial time gap existsbetween the occurrence of a cost of product or service and itsreporting. Actual Cost is the cost incurred in procuring a productor service.
Examples of Actual Costs are petty conveyance, tenting, brasscleaning, petty jobs, etc.
There is no stopping of an actual cost in so far as it has alreadyhappened.
We have now understood the various types of costs relating toour business of food & beverage. What do we do with thisunderstanding?
Our efforts should be to keep variable and semi – variable costsdown. Why?
Because Fixed Costs cannot be easily minimized.
The important variable costs in Food & Beverage business areFOOD COSTS and OTHER EXPENSES.
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FOOD COSTS AND OTHER EXPENSES
FOOD COSTS:
Costs which are directly attributable to preparation of a particulardish, whether in terms of semi-prepared dishes (as earlier explained),or completely ready-to-serve dishes and costs of certain ‘necessaries’of our business, e.g. cost of decorations of a dish, cost ofaccompaniments, cost of food appointments on the service sidetable (e.g. cost of proprietary sauces), or those items whichenhance the value of the dining experience and are of the natureof food, e.g. saunf, supari, pan, etc. are called FOOD COSTS.
We shall discuss food costs in detail a little later.
WHAT ARE “OTHER EXPENSES” ?
Those expenses which can be directly and conveniently traced toa final product or service are called Other Expenses.
These expenses alter the quality of the product or servicesrendered in term of its sale ability (read acceptability to a client).These expenses alter the quality of the product or the service andin totality the experience of the Food & Beverage event.
The following are currently listed as Other Expenses for foodbusiness at Welcomgroup:
1. Uniform.
2. Guest Supplies.
3. House Stationery.
4. Photocopying.
5. Menus.
6. Laundry Cost.
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7. Cleaning Supplies.
8. Contract Services.
9. Pest Control.
10. Garden supplies.
11. Banquet Service.
12. Replacement Charges Chinaware.
13. Replacement Glassware.
14. Replacement Linen.
15. Replacement Silverware.
16. Replacement Cutlery.
17. Replacement Utensils.
18. Silver Plating.
19. Decorations.
20. Music Entertainment Charges.
21. Travelling Local.
22. Local Conveyance.
23. Spoilage.
24. Freight charges.
25. Cooking Gas.
26. Solid Fuel.
27. Charcoal.
28. Hire Charges.
29. Basic Excise Duty / License Fee.
30. Deepavali / Christmas / New Year Expenses.
31. Turn over tax. (at certain geographical locations)
32. Beverage Department Cost.
33. Others.
What to do with this understanding ? How to use it ? We mayhave to look at service delivery / service designs during hard timesand change strategies from tactical to strategic and plan.
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CONCEPT OF MONEYTo understand and act on keeping variable and semi- variable costsdown the concept of money has to be understood.
There are four kinds of monies :1. Your money to be spent on yourself.2. Your money to be spent on others.3. Other’s money to be spent on yourself, and4. Other’s money to be spent on others.
To achieve the situation of keeping the variable and semi-variablecosts down money has to be used efficiently. (From the definitionof “costs”, we have already related money to costs)
What is the type of money that has to be controlled ?
Other’s money to be spent on yourself and more importantlyother’s money to be spent on others. So that, especially duringhard times one should work Harder, Faster, and Smarter.
What to do ? - adopt the famous S.O.S. principle.
This is not enumerating the requirements of “save our soul” butthe essence is the same. Most importantly Switch ‘On’ your mind.
The principle is :
Save On Something.Switch On Something.Switch Over (to) Something.Switch Off Something.
To control costs it is very important for everybody to get into aninquisitive and questioning mould. Ask yourself and others :What ?How ?When ?Where ?Who ?
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It is a known fact that one gets what one demands.
An inquisitive and questioning management style:
PRESENT FACTS
WHAT ? WHAT IS DONE NOW ?
HOW ? HOW IS IT DONE ?
WHEN ? WHEN IS IT DONE ?
WHERE ? WHERE IS IT DONE ?
WHO ? WHO DOES IT ?
WHY ?
WHAT ? WHY IS IT DONE ?
HOW ? WHY IN THAT WAY ?
WHEN ? WHY AT THAT TIME ?
WHERE ? WHY IN THAT PLACE ?
WHO ? WHY THAT PERSON ?
CONSIDER ALTERNATIVES
WHAT ? WHAT ELSE COULD BE DONE ?
HOW ? HOW ELSE CAN IT BE DONE ?
WHEN ? WHEN ELSE COULD IT BE DONE ?
WHERE ? WHERE ELSE CAN IT BE DONE ?
WHO ? WHO ELSE CAN DO IT ?
BEST SOLUTION
WHAT ? WHAT SHOULD BE DONE ?
HOW ? HOW SHOULD IT BE DONE ?
WHEN ? WHEN SHOULD IT BE DONE ?
WHERE ? WHERE SHOULD IT BE DONE ?
WHO ? WHO SHOULD DO IT ?
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Typicality of Food Costs :
The food production areas pose the greatest problem in so far asthe control of food cost is concerned. It is a physical impossibilityto trace each item of food through the receiving, storage, andproduction areas, and verifying its sale in relation to its purchase.What is being said is that it is an impossible task to relate everycommodity to a saleable value in food business.
Computers can help us come nearer to the above requirements.However, the mental and physical efforts that would be requiredto analyze the same and benefit from the analysis would bedisproportionate to the benefits received through intelligentinterpretation of the same.
Do we interpret the above and say that we should not get intodetailed examinations? No. That is not the essence of the above.We must as a rule, analyze and interpret our ‘A’ value products.
What are our ‘A’ value products?
These are those food items which are either very expensive e.g.sea food or imported foods, or highly perishable, e.g. butcher items,or those that are easily pilfered (subjective accountability), or ofthe nature of very high consumption. (e.g. tomatoes, onions, andpotatoes)
Calculation of Food Cost Percentages :Let us assume some figures and examine them :
April 2008 May 2008
Food Cost Rs.24,36000 Rs.31,52870
Net Revenue Rs. 1,12,60000 Rs.1,40,30000
The figures above are representative of Absolute terms. Just fromthese absolute figures, it is difficult to say whether cost is in order,
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it is on the lower side, or on the higher side in comparison, andin relation and proportion to Net Revenues.
However, if instead of Absolute terms, we convert these figuresto percentages, we can quickly see that in relation to Net Revenues,Food Cost is much higher in May 2008, then in April 2008.
The basic equation for expressing Food Cost X 100food cost as a percentage is Food Sales
From the above, Food Cost Percentage is 21.63 % for April 2008,and 22.47% for May 2008.
We now understand the reason for emphasis on a percentagefigure. Why? Because it is easier to compare a percentage,than to compare absolute figures. This is further as we are verymuch used to understanding percentages right from our schooldays.
What are the objectives of Food Cost Control ?
The main objective of Food Cost Control is to compare the actualFood Cost percentage, for a period, with a potential Food Costpercentage.
What are the steps in the Control Cycle ?
The control cycle consists of :
• Setting up of a potential food cost percentage, which is bothdesirable and attainable.
• Establishing Standard Recipes and portion sizes.
• Establishing Yields of various ‘A’ value commodities, andrelating these to the Standard Recipes.
• Calculate Menu item costs.
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This is for the Food Production control.
On the Menu sales front the following are the steps in the ControlCycle :
1. Determine the Selling prices of the menu items.
2. Periodically Evaluate the Actual results obtained.
An effective Control Cycle :
An effective Control Cycle consists of :
a. Setting Standards. (Benchmarking)
b. Examining the results achieved against Standards set.
c. Evaluating the achievements against the Standards(Benchmark) and
• Setting higher Standards (Benchmarks) if the currentones are achieved, or
• Examining why the set Standards (Benchmarks) couldnot be achieved, and establish measures to counter theshortfalls.
The following are some Aids to Cost Control :
1. Through personal observations and interview.
2. Through the value of statistics.
3. Through Cost and Operating Reports.
What are Yields and Yield Tests?
It is essential in all businesses to understand the saleable valuesof a product line or product. In other words a raw commodityhas to be related to a saleable product. In different businesses yieldtests are done to identify different requirements.
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In food production business, yield tests are mostly done tocalculate Butcher raw weight yield tests.
These can be intelligently analyzed to find Cost per portion, andCost factors.
What is Capacity Utilization and how is it calculated ?
Capacity Utilization and calculations thereof are the understandingof yields in the outlet service business.
Outlet wise capacity is calculated for a fixed period, for example:A day, A week, A month, or a year.Capacity Utilization is calculated as per the outlet in question.
Let us understand capacity utilization for a Lunch and DinnerF & B outlet.
What are the Steps for the calculations ?
The steps are :
• Calculate the number of services in the day.
• Calculate the number of covers available.
• Calculate the number of days of the period.
• Calculate the number of covers actually sold.
A typical situation in the outlet business is that for many reasons,we block sections of the business, called “zoning”.
How to calculate the capacity utilization of Banquets ?
The parameters here are different.
They are :
3 Services per day, and
10 Square feet of space (area) per person.
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Therefore :
a. calculate the total area of the Banquet hall.
b. divide by 10.
c. multiply by 3 (For the 3 possible services; breakfast, lunchor dinner, or lunch, snacks and dinner)
d. Divide by 2 (Considering that all three services cannot be soldeveryday, and only 1.5 services can be sold. Why ? Becauseturn-around time is required, and a fatigue factor should notcome into our business)
e. Multiply by number of days for the Month.
A typicality of a banquet operation of a five star deluxe propertyis that there are a number of banquet outlets available to us,in house, and the capacities available in the outdoor banquetingservices is enormous. We do not, repeat do not, even begin toutilize these capacities.
How to calculate the Capacity Utilization of In-Room DiningServices?
The number of room nights sold for the month multiplied by 4gives the number of available covers for the month.
So that, we find linkages with the Front of the House, whencalculating the capacity utilization of Room Service.
Break Even Point
Breakeven point is a financial situation, wherein the net revenuesout of a particular number of covers, matches the cost ofproduction of the entire food, of the same period.
Breakeven point can also be defined as a minimum sales volumerequired by a food service unit in order to avoid an operatingloss and meet operational expenses.
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Breakeven Point is an immediate indication of fixing a target, andbeyond. It is a benchmarking exercise.
Any achievement less than the breakeven point in terms ofnumber of covers would give us losses.
For buffets the menu product line is different from one day toanother. The break-even point would be different each day.Obviously, we can control the break-even point by relating tothe understanding and implementation of our questioningmould.
Banquet Matrix
If we take an example of same banquet menu offered to say 100pax, and to 500 pax, we notice that even with a reduced A.P.C.the food cost has reduced.
So that, we see that Yields get better and better on the volumeroute and costs reduce progressively. This is the cascading effectof volumes of business vis a vis cost reduction.
Benefits of Economies of Scale are normally passed on to thecustomer.
We, therefore see a distinct link between costs, economies ofscale, i.e. volume route, capacity utilization and food costpercentages.
Profits and Profitability
Taking the three factors of business i.e. Profit, Revenue, andExpenditure; Profits can be increased by
1. Maximizing revenues.
2. Minimizing expenditure.
3. or a combination of the above two.
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Maximizing Revenues
Everyone is invited to sell – everybody has to chip in and makeefforts to sell. The efforts to sell are never a full-stop.
Maximizing revenue is normally achieved through the followingconventional means :
a. Suggestive Selling.
b. Holding of food promotions – creation of a “happening place”
c. Hoardings and Ad Campaigns.
Maximizing revenue is also achieved through a couple ofunconventional means :
a. Repositioning of Food Outlets, and cuisine. This removes thefactor of fatigue, and introduction of creativity.
b. Handling of “wants” of the client – “why does he come toa five star hotel for food ?”
The success of selling lies with the guest leaving with a feelingof having received a full value for his money spent, or better still,more than his expectations.
Minimization of Costs
The concept of cost minimization essentially revolves around thefollowing two basic factors :
a. Elimination of Wasteful costs.
b. Obtaining the maximum value of all unavoidable costs at theleast expenditure.
To achieve the goal of cost minimization, it is essential to know
a. What are Costs ?
b. What are unproductive Costs ?
c. The process of identification of excessive costs.
d. How to take corrective action.
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A creative effort would be to list out all items of expenditure andwork on them. Just 10% reduction of costs under each headingwould help.
What is profitability ?Profitability is yield in profits or returns on investments.
Profitability is therefore a measure of operating efficiency.
How to improve profitability ?Examine your area of the business, under the parameters discussedabove, understand your business, control variable costs, controlyour A value products, understand your client, get into thequestioning mould and above all adopt the famous S.O.S. principlein times of distress.
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CULINARY ECONOMICSMENU ENGINEERING
Learning competencies
At the end of the module the trainee should be competent to :
a) Understand the process of menu engineering.
b) Explain how menu engineering defines the profitability andpopularity of menu items.
c) Explain the menu engineering method for pricing food andbeverage items.
d) Understanding the process to make
• Standards into Stars
• Puzzles into Stars
• Problems into Stars
e) Understand the methods of controlling stars to maintain themas stars.
f) Understand the processes of computerised menu engineering,and the benefits of
• Menu item analysis.
• Menu mix analysis.
• Menu engineering summary.
• Four box analysis.
• Menu engineering graph.
Menu Engineering
We can calculate the food cost percentage of a menu item andof a selection of the menu or an entire menu. Percentages arefigures which we understand at a quick pace. However, inbusiness we cannot bank percentages. It is figures in absoluteterms, that we are concerned with more to understand ourfinancial standings.
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Food cost percentage of a menu item is calculated by dividingfood cost by the sale price, multiplied by 100.
A worksheet can give us very vital facts to understand ourbusiness. If we have the figure of cost (available to us from thestandard recipes) for the menu item, and we have the sale figureof the same menu item, we can arrive at the profits made in sellinga portion of that menu item. The same is true for weighted figures.
What is contribution ?
This profit (which is the difference between the sale price andthe cost price) is our contribution for that particular menu item.It is called contribution because it gives positive contribution toour bottom line. It serves our purpose to be in the business, onlyif we are profitable and cost-effective. Remember profits arethe key requisites of any business.
Note: at this point, it should be clear that we are not, as of now,talking of departmental contributions, which are the figuresarrived by duly working out the net revenues of a particular timeperiod, and reducing these in relationship to the costs of SWB,the food costs, and other expenses.
The understanding of these terms has already been taken up inthe topic on costs. As of now, for the current purposes, we aretalking of either the menu item contribution, or the section of themenu’s contribution, or contribution of the menu in entirety itself.
The understanding of contribution is clear. Figures of contributionsin absolute terms can be calculated easily from a worksheet.
The success or failure of a food and beverage operation is directlylinked to the menu. Therefore a menu is the most important toolof the business. How should menus be appraised to determinewhether the most profitable menu items are being sold?
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We do this through the process of menu engineering.
What is a good menu item? There are two measures of how gooda menu item is : its popularity and its profitability. A popularmenu item is ordered frequently by guests. A profitable menuitem generates a higher contribution margin.
Menu items can be evaluated in terms of both their popularityand profitability.
A worksheet was created as an example. This worksheet relatesto a Coorgi Food Promotion – The Spice of Life held at the Dakshinrestaurant at Kakatiya, Hyderabad. 16 menu items of the Lunchand Dinner menu were taken up for a two-week study. This formspage 42 of this module.
Upon examination we understood the number of portions of anyproduct sold for the entire study period was entered in the columnA. These figures received from this column gave us an idea ofthe acceptability of various dishes vis a vis clients. We understoodthat there were certain items which were frequently ordered byclients. What did this indicate ?
This indicated that these were popular items. We thereforeunderstand that one measure of understanding or appraisal ofa menu is the popularity.
Once we work out the contributions of the menu items, being thedifference of the sale price and the cost price, we can understandwhich menu items are giving us more contributions and whichare giving us less contributions to our bottom lines. What do weunderstand? We understand that the second measure ofunderstanding or evaluation of a menu is the profitability.
Therefore, we understand that menu items can be appraised interms of both their popularity and profitability.
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To further understand the above, the worksheet was examinedfurther. The following interesting data emerged :
1. Some menu items are popular (high sales) and profitable (highcontribution margin). These menu items are called STARS.
2. Some menu items are popular (high sales) but not profitable(low contribution margin). These menu items are calledSTANDARDS.
3. Some menu items are not popular (low sales) but areprofitable (high contribution margin). These menu items arecalled PUZZLES.
4. Some menu items are neither popular (low sales) nor profitable(low contribution margin). These menu items are calledPROBLEMS.
Menu Engineering classifies all menu items in the above manner.Therefore each menu item is either of the following :A Star.A Standard.A Puzzle, orA Problem.
In order to classify each menu item into one of the four basiccategories, managers must develop a practical way to define andmeasure the relative profitability and popularity of each menuitem. This can be accomplished by using information aboutstandard food cost and frequency of sales from the worksheet.
The basis of a menu item’s profitability is not the level of itsfood cost, but its contribution margin. It is therefore wrong toassume that the lower a menu item’s food cost percentage, themore profitable the sale of the item is to the operation.
The goal of effective menu planning and evaluation should beto increase the contribution margin of each menu item – notdecrease its food cost percentage.
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Menu Mix / Menu Mix PercentagesThe worksheet and the associated system guide us to gatherinformation about the sale of each menu item.
Popular items are those that customers order more, with arelatively high menu mix percentage. Thus star menu items arethose with relatively high contribution margins and high menumix percentages, while items classified as problems score relativelylow on both measures.
In performing a menu engineering analysis, it is not enough toconsider menu items individually. Each item’s contribution marginand menu mix percentage will provide measures for the item’slevels of profitability and popularity.
The requirement is to evaluate how high or low these levels arein comparison with all other menu items. What constitutes a highlevel of profitability or popularity?
For example, suppose that sales of a particular menu itemrepresent 10% of total sales. Is this a high menu mix ? Shouldthis item be classified as a popular menu item?
The answer depends on the menu mix percentages of all othermenu items and on the total number of items on the menu. Forinstance, if the menu in question contains ten different items, 10%of total sales may be regarded as a high level of popularity, butif there are only four items on the menu, this figure wouldrepresent a low level of popularity. By itself, a menu item’scontribution margin tells us very little about how profitable salesof this item are when compared with other menu items.
What is Popularity?
The basis for measuring the degree of popularity of each menuitem is called the popularity index. This index is based on the
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assumption (which an individual management could change) ofexpected popularity. For the purpose of analysis, each menu itemis assumed to be equally popular. This means that each item isexpected to contribute an equal share of total menu sales.Therefore, the expected popularity of each menu item is calculatedby simply dividing 100 % (i.e. Total Sales) by the number of itemson the menu.
For example, if there are 16 items on the menu (for analysis, aswe have done in our case study), and each item is assumed tobe equally popular, the sales of each item would be expected torepresent 6.25 % of total sales (100 % divided by 16 equals 6.25%).On the other hand, if there were ten items on the menu, eachitem would be expected to represent 10% of total sales (100%divided by 10 equals 10%).
Menu engineering assumes that an item is popular if its sales equal70% of what is expected. Thus the popularity index for itemson a given menu is defined as 70 % of the expected popularityof each item on that menu. The popularity index for a specificfood and beverage operation can be adjusted to a higher or lowerlevel depending upon the management’s emphasis on sellingpopular and profitable items.
For example, a food item on a 16 item menu would be consideredpopular if its sale represents 4.38 % of total sales (100% / 16 =6.25 % and 70 % of 6.25 = 4.38%). (More on this can beunderstood from the continuation of our case study later on). Onthe other hand, a food item on a ten-item menu would beconsidered popular if it accounted for only 7 % of total sales (100% / 10 = 10 % and 70 % of 10 = 7% ).
The concept of a popularity index makes it possible to measurethe relative degree of popularity of each item on a given menu.
With these tools of menu engineering, a menu can be appraised
29
for the profitability and popularity of menu items and furtherclassifies them as Stars, Standards, Puzzles, or Problems. Theresults of this appraisal exercise should be used to improve themenu.
What is Profitability?To understand profitability in terms of Menu engineering, we mustfirst understand Average Contribution margin.
The average contribution margin is calculated by dividing the totalmenu contribution margin by the total number of menu items soldduring the specified time period in which the data was collected.
Total Contribution MarginAverage Contribution Margin = –––––––––––––––––––––––
Total number of items sold
The Average contribution margin forms the basis for measuringthe degree of profitability of each menu item.
A high contribution margin for an individual menu item wouldbe one that is equal to or greater than the average contributionmargin for all menu items.
The concept of the menu’s average contribution margin providesa precise measure of each menu item’s profitability, and it is easilycalculated.
The figures of food cost of each portion of each menu item areavailable to us from the Standard Recipe cards.
The figures of total food costs of all the portions of all the menuitems sold can be calculated by summing up.
The total menu revenue (sales) can be determined by simplysumming the figure for each menu item sale.
The total contribution margin for all menu items is calculated bysubtracting total menu costs from total menu revenues.
30
Those items that are profitable (i.e. those with a high contributionmargin) are those whose contribution margin is equal to or greaterthan the average contribution margin for all menu items. Itemswith a contribution margin above this amount are, therefore thoseitems the property most wishes to sell.
Appraisal of menu items :
It is important to understand the appraisal of menu items for thepurposes of establishing their Menu item classification.
The results of the work sheet of the Coorgi food promotion – TheSpice of Life have been utilized for developing the Menu EngineeringWork Sheet. This forms page 43 of this module.
Let us analyze the food promotion’s cost and sales figures further.
Menu Engineering Worksheet
All the 16 menu items were listed in Column A. The informationabout the collected sales of each of the menu item, over the abovementioned two-week period were entered as total sold in columnB. By totalling up the number of portions sold as depicted inColumn B, we understand that a total number of 3608 portions(Box N) were sold over the two week period (of the 16 menuitems selected).
The menu mix (percentage of sales represented by each menu item)is calculated in column C. For example 541 portions of KozhiErachi soup were sold out of the total menu sales of 3608 portions.Therefore the menu mix of Kozhi Erachi soup would be
541 x 100–––––––––––––– = 15%
3608
The menu item’s per portion food cost is recorded in column D.
31
This is received from Standard Recipes. Each items selling priceis listed in column E. This information is received from the menu.
Column F lists the contribution margin (CM) of the menu item.To calculate the contribution margin for the Kozhi Erachi soupfor example, subtract its cost (Rs.35) from its selling price (Rs.175),arriving at a figure of Rs.140.
The total cost (column G) is calculated by multiplying the numberof each item sold (received from column B) by the item food cost(column D). The total cost for Kozhi Erachi soup is therefore541 x 35 = Rs.18935.
Menu revenues (column H) which relates to the per item menusale price, are calculated by multiplying the number of each itemsold by its selling price. Therefore the menu revenue for KozhiErachi soup would be 541 x 175 = Rs.94675.
The contribution Margin for the total sales of the menu item(column L) is calculated by subtracting the menu costs (ColumnG) from the menu revenues. In continuation, the menu contributionfor Kozhi Erachi soup would be Rs.94675– Rs.18935 = Rs.75740.
It is now possible to determine the average contribution margin(the basis for profitability), and the popularity index (the basis forpopularity).
In our example, the total menu costs (Rs.329680) are recorded atthe bottom of Column G (In box I) and is calculated by summingthe menu costs for each individual item.
Like wise, the total menu revenues are calculated by summingthe individual revenue for each item in column H. The total ofthese Rs.1475175 in our case are noted at the bottom of columnH (in box J).
32
The next step is to calculate the total contribution margin (ColumnL) for all menu items by subtracting menu costs (box I) from menurevenues (box J). Because a total of 3608 portions were sold (boxN) and because the total menu contributions margin is Rs.11,45,495.00 (box M), the average contribution margin is
Total contribution Margin M 1145495= –––––––––––––––––––––––– = ––– = –––––– = Rs. 317.49
Total number of menu items sold N 3608
Those items that are profitable ( i.e. those with a high contributionmargin) are those whose contribution margin is equal to or greaterthan the average contribution margin for all menu items. (Rs.317.49)
Items with a contribution margin above this amount are then,those items the hotel most wishes to sell.
Let us now understand the popularity of the menu item.
Column(R) in our example indicates the assessment of each item’spopularity. By comparing each item’s menu mix percentage(percentage of sales indicated in column C) with the popularityindex calculated for this particular menu we can make thejudgement. Because there are 16 items, each item has an expectedpopularity of 100 % / 16 = 6.25 % . Assume that the salesof a popular item should equal 70% of what is expected for it,the popularity index is 70% x 6.25 = 4.375 = 4.38 %.
In our example therefore, the popular item are those whose salesrepresent 4.38% or more of the total sales ( Box Q) For example,because the menu mix percentage ( Column C) for Kozhi Erachisoup is 15% its menu mix category is rated high ( Column R)(in relation to popularity index which in our example is 4.38%)
In contrast check out the Menu Mix % category of Kane RawaFry. The menu mix % for Kane Rawa Fry is 3.16% which is lower
33
than popularity index of 4.38%. Therefore its menu mix categoryis rated as low (Column R).
Given this information, it is possible to classify menu items.Consider the Kozhi Erachi Soup again. We just noted that thisis a popular item. Is it also profitable? Its contribution Marginis Rs. 140. This is less than the average contribution margin (Rs.317.49) and is classified as a relatively low contribution marginColumn (P). Kozhi Erachi Soup is popular but unprofitable.Therefore Kozhi Erachi Soup is classified as a Standard (columnS). In the same manner we keep plotting the status of a menuitem as per principles of menu engineering.
How does the knowledge of Menu Engineering help a Chef?
Once it is clear how to use the processes of Menu Engineering,it is very easy to formulate systems to apply this knowledge intoimproving the menu.
The benefits of menu engineering can only accrue if informationgained from the menu engineering analysis is used to improve themenu. What can a Food and Beverage Manager or a Chef dowith this knowledge about the various food item classifications?
Making STANDARDS into STARS
Standards are those items that are low in contribution margin,but high in popularity. Guests like these items, but unfortunately,Standards do not contribute their fair share of contributionmargin. The following are some ways to convert a Standard intoa Star :
1. Increase menu sale prices carefully. Perhaps the item ispopular because it represents a great value to the guest. If’prices are increased, the item may continue to be good value,may remain popular, and may generate a higher contribution
34
margin. This alternative may be most effective when the itemis unique to the property and cannot be obtained elsewhere.
2. Check out for demand. If a price increase for the menu itemmeets with acceptability, it may be useful to complement anincreased price with other strategies such as repackagingthe item or repositioning it on the menu. These otherstrategies may be designed to maintain or increase the item’spopularity while generating a higher contribution marginthrough the increase in selling prices. Increase prices in smallmeasures.
3. Relocate the item to a lower profile on the menu. Dependingupon the menu layout, certain areas of a menu represent abetter location than others. A Standard can be relocated toa less desirable area of the menu. Since the item is popular,some guests will search it out. Others will be drawn to higherprofile areas of the menu that list more profitable items thehotel wishes to sell.
4. Focus demand to more desirable items. Menu engineeringallows the sales of menu items which are high in popularityand high in contribution margin.
5. Combine with lower cost products. The contribution marginof a Standard can be increased if lower cost mealaccompaniments are offered with the entrée. Perhaps, forexample, higher priced vegetables and dessert accompanimentscan be replaced with other, less expensive items withoutreducing the item’s popularity. If this can be done, thecontribution margin will increase.
6. Consider reduction in size of portion. If the portion size isreduced, the product cost will be decreased and the contributionmargin will increase.
However, this method of making a Standard into a Star israrely used. A regular customer’s perception of value maydecrease if portion size is reduced.
35
Making PUZZLES into STARS : Puzzles are menu items thatare high in contribution margin but low in popularity - items thechef desires to sell since their contribution margin is relatively high.The challenge is to find ways to increase the number of guestsordering these items. Some suggested ways :
1. Focus demand to these items. Reposition the subject menuitem to more visible areas of the menu, or rename them. Usesuggestive selling techniques, develop marketing campaigns,use table tent cards, highlight the menu item on the menuboards at the entrance to the food & beverage outlet. Thesestrategies would improve the popularity of the menu item.
2. Consider a price decrease. Perhaps an item is low inpopularity because it does not represent a value to guests.If this is the case, the selling price might be reduced withthe contribution margin still remaining higher than average.This could lead to increased popularity, since a reduced sellingprice would represent a greater value to the guest.
3. Add additional values to the menu item. Offering a largerportion size, adding more expensive meal accompaniments orgarnishes, and using higher quality ingredients are among theways that value can be increased. These techniques may leadto increased popularity and to a contribution margin that islower, but still higher than the average generated by the menu.
Making PROBLEMS into STARS: Problems are those menuitems that are low in contribution margin and low in popularity.These menu items do not contribute their fair share of contributionmargin and they are not popular.
These menu items should be removed from the menu. Howeveran honest attempt should be made to convert these Problem menuitems into Stars.
Some suggested ways to make Problems into Stars :Increase the selling price of the menu item. A higher contribution
36
margin would be the result. Use the same tactics to increase itspopularity as those used for converting Puzzles into Stars,mentioned above.
Maintaining STARS : Stars are menu items that are high incontribution margin and high in popularity. These are those menuitems which the chef wishes to sell the most. How to maintainStars? Some suggested ways :
1. Maintain rigid quality and delivery benchmarks. Do notattempt to alter the quality of the menu item being served.
2. Position the menu item in a highly visible location on themenu. Make sure guests are aware of their availability.
3. Examine if the star is popular because it is a significant valueto the clients. Or, perhaps the star is not available in itsexisting form elsewhere in the same marketplace. These mightbe two instances in which the price could be increasedwithout a decrease in popularity.
4. Use suggestive selling techniques. Some of the techniquesfor focusing demand might be useful.
Menu Engineering : Other advantages :
1. The process and tools of menu engineering can be used toappraise the entire menu.
2. The process and tools of menu engineering can be used toappraise menu revisions.
Menu engineering is therefore the most important methodologyin the hands of a chef or a food & beverage manager to understandthe business in terms of profitability.
For example, if the popularity of an individual menu item remainsstable or increases while its contribution margin increases, therevised menu is a good one. With the tools of menu engineering,the worth of a revised menu can be objectively assessed.
37
If, for example, a previous menu generated an average contributionof Rs. 325 and a successive menu generates an average contributionmargin of Rs. 360, the new menu is better : the average guestleaves more in contribution margin than when the previous menuwas in use.
Computer based Menu management
Menu management computer applications help Chefs and Food& Beverage managers. Menu engineering is a menu managementapplication that helps evaluate decisions regarding current andfuture menu pricing, design, and contents.
The following are the important requirements in the business offood & beverage :
1. Chefs and managers must balance the menu pricing structureto arrive at the most profitable price to assign to a menu item.
2. To understand at what price level and sales mix does thebusiness maximise its profits?
3. To know which of the current menu items require
• repricing,• retention,• replacement, or• repositioning on the menu ?
4. To understand how should daily specials and new items bepriced ?
5. To understand how the success of a menu change beevaluated ?
Let us examine the menu engineering applications in greater detail.
Menu Engineering Analysis :
Correct data has to be entered into the program’s database.
38
Menu engineering requires that the user input each menu item’sfood cost, selling price, and sales history. This minimal input issufficient to generate a complete menu engineering analysis.
Following this data input and selection of the analysis option, themenu engineering can begin the work. As the analysis progresses,a menu item’s contribution margin and sales activity will becategorised as relatively high or low.
Procedures performed through a computer software are identicalto those described for the manual analysis. Eventually, each itemwill be further classified for both its marketing and pricing success.The menu engineering output is composed of the following reports:
1. Menu item analysis.2. Menu mix analysis.3. Menu engineering summary.4. Four-box analysis.5. Menu engineering graph.
The example of the Dakshin promotion – “Coorgi Food – The Spiceof Life” has been taken up further to illustrate computer basedmenu engineering.
Menu Item Analysis: An Understanding of the same shall beclearer from Annexure on page 44.
This is an item-by-item listing accompanied by selling price, portioncost, contribution margin, and item count which relates to numberof portions sold. The primary purpose of this report is to providethe user with a means by which to verify the data that is to beanalysed. This can be helpful when data has been manuallyentered into the program.
Menu Mix Analysis :Study the menu mix analysis report on page 45. This reportevaluates each item’s participation in the overall menu’s
39
performance. The percentage of menu mix (% MM) is calculatedas each item’s count divided by the total number of items sold,and multiplied by 100. Each percentage is then ranked as highor low depending upon its comparison with the menu engineeringrole for menu mix. The % CM share is calculated as each item’scontribution divided by the total contribution margin of all of theportions sold multiplied by 100.
The percentage each item has contributed to the menu’s totalcontribution margin is found in the column labelled % CM SHARE.Each item’s contribution margin is then ranked according to howit compares with the menu’s weighted average contributionmargin (ACM). A menu classification for each item isdetermined by considering its MM group rank and CM group ranktogether.
Menu Engineering Summary:
Study the example of Menu Engineering Summary in on page 42.Perhaps the most informative report produced by the MenuEngineering application, this analysis presents importantinformation in capsule form to produce a concise statement ofoperations.
The row labelled PRICE shows total menu revenue, average itemselling price, lowest selling price, and highest selling price. TheFOOD COST row contains total menu costs, average item foodcost, lowest cost item, and highest cost item.
The CONTRIBUTION MARGIN row shows total menu CM,average item CM, lowest item CM, and the highest item CM.
The DEMAND FACTOR row lists total number of covers, averagenumber of covers, lowest item count, and highest item count.
Much of the information in the body of this report is used
40
elsewhere in the overall menu engineering system. For example,the lowest and highest selling prices on the menu are termed pricepoints and can be used to help identify target market success. Thishelps marketing campaigns as the marketer is clear about thevariances of price points and the variances of a menu in termsof lowest cost menu item and highest cost menu item.
This report also contains the menu’s food cost percentage andnumber of items sold. Please see page 46.
Four-box-Analysis :A four-box analysis is presented on page 47.
This indexes the menu classifications developed in the menu mixanalysis report.
Menu Engineering supports the decision maker on strategies foreach menu item’s repositioning. It also supports him by informinghim of number of menu items found in each category.
The example exhibits four Standards, five Stars, three Problemsand four Puzzles.
Are five Star menu items out of a total of 16 menu items tooless for profitable business? Can we reduce the number ofproblems? Can we eliminate Puzzles or convert them to Stars?
This type of evaluation process begins with the four-box matrixand continues through the menu engineering graph.
Menu Engineering Graph :An understanding of the same shall be clearer from the exampleon Page 48.
The example illustrates a menu engineering graph, a useful meansto evaluate decision strategies. Because it indicates each competing
41
menu item’s position relative to all others, the menu engineeringgraph is the most powerful report produced by a menu engineeringapplication.
The vertical axis of the graph positions menu mix and thehorizontal axis positions contribution margin. Each item is thengraphed according to its CM and MM co-ordinates. It is especiallyimportant to note that not all items in the same classificationpossess identical characteristics. This technique, therefore, pointsout that a different menu engineering strategy may be appropriatefor items even though they are similarly segmented.
Limitations of Menu Engineering :
These are :
1. Menu engineering does not respond to items ready for sales,or are partially cooked, but not sold.
2. The calculations are limited to the costs mentioned in theStandard Recipe Card. This is sometimes inaccurate andapproximate.
3. Menu engineering process does not accurately point toportions of food items lost due to spoilage or unauthorisedconsumption.
The limitations of Menu Engineering are a few, the advantagesmany. Through a combination of sheer experience, and study ofmenu engineering, a Chef or a Food & Beverage manager cankeep the menu and menu revisions profitable to the business.
Weighted Average:Weighted Average is an average in which each quantity to beaveraged is assigned a weight. These weights determine therelative importance of each quantity on the average.
42
An
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44
An
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An
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46
An
nex
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- 5
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47
Annexure - 6
MENU ENGINEERING ANALYSIS– FOUR BOX ANALYSIS
STANDARDS STARS
KOZHI ERACHI SOUP COORG CHILLI PORKTARKARI SOUP PANDHI BARTHADHUCHERIYA VADE KAL YERA KOZHAMBU
KANDERA BONDA YERA VARTHA CURRYKARIVAEPALAI YERA
PROBLEMS PUZZLES
ALLEPPEY MEEN CURRY LIVER BARTHADHUVEINCHINA MAMSAM KANE RAWA FRYDAKSHIN TROLLEY KOZHI VARTHA CURRY
KOZHI FRY
48
An
nex
ure
- 7
49
CULINARY ECONOMICSMATERIALS MANAGEMENT
The Materials Management Concept
The important aspects of the materials management system are‘materials’, ‘time’, and ‘space’; and the operation of the systemaims to overcome the problems of ‘supply’, ‘distance’ and ‘time’,in order to obtain product for the minimum cost under theconstraint of established standards of production and service.
Materials management is to obtain the right quantity of materials,of the right quality, from the right source, at the right time, forthe right price.
Materials management can further be qualified as the organization,planning, implementation, and control of the procurement andmovement process of all material activities needed to ensure theproduction of the finished product. This means that materialsmanagement is directly involved with the activities of manyfunctional areas including purchasing, receiving, storing, issuing,production planning, production and sales (completion of foodservice)
Materials Management : Objectives
Primary objectives of Materials management are :
• Provisioning of materials in specified quantity in a cost-effectivemanner.
• Maintenance of supplies in line with the productionrequirements.
• Minimizing investments in storages and supply-line.• Maintaining high inventory turnover.• Maintaining low inventories.
50
Secondary objectives of Materials management are :
• Location of new sources of supply and vendor development.• Achieving cost efficiencies through standardization, quality and
reduction in purchase of scratch foods. Scratch foods arecommercially available products that help in constituting areceipe and reduce the time and efforts of production.
• Synergies of operations through planning and scheduling,storage, upkeep and maintenance of materials and materialhandling.
• Development of personnel through developing of the standardsand education of those standards.
Profits From Materials Management :
The movement of materials management supports distinctopportunities to improve profits either through reduction of costsor improved productivity. Profits may be obtained through theadoption of a number of methods, for example :
• Purchasing at comparatively low prices, in exchange for eitherbulk supplies or security of the contract.
• Ensuring high quality of raw materials through selection andconstant communication with selected suppliers.
• Ensuring continuity of supply – particularly service elements.
• Through timing deliveries of input materials to occur whenrequired for optimum production and minimizing store inventorylevels.
51
MATERIALS MANAGEMENTPURCHASING
LEARNING COMPETENCIES
At the end of the module on Purchasing the trainee should becompetent to
1. Understand Value.
2. Understand goals of effective Purchasing.
3. Understand activities of Purchasing Cycle.
4. Understand Purchasing Cycle of Perishables.
5. Understand factors when purchasing food products.
6. Understand how to establish purchasing needs.
7. Understand equation between Quality and Value.
8. Understand how to measure Quality.
9. Understand how to develop Purchase Specifications.
10. Understand the Minimum and Maximum Ordering System.
11. Understand the Purchase Order System and its advantages.
12. Understand Controls in Purchasing functions.
13. Understand One Stop shopping systems.
14. Understand Centralized Purchasing, its advantages anddisadvantages.
52
PURCHASING - DEFINITION
Purchasing can be defined as a function concerned with thesearch, selection, purchase, receipt of products required forproduction. As a management function purchasing is also concernedwith the generation of requirement of various products and theaudit trail associated.
Historically purchasing function was a service activity. Managersviewed purchasing as a support function to purchase thoseproducts, supplies and services needed for production and serviceactivities. The concerns of management were to control productcost after the item reached the production areas, not necessarilybefore the production point.
For hotel managements the concern is to reduce cost of back-endoperations. Purchasing is a vital back-end operation. Efficientpurchasing systems are cost – effective and can result in increasedprofit margins and perfect product supply.
Role of purchasing system has evolved into sophisticatedfunctioning. Purchasing is continuously becoming more specific.Objectivity and well-defined rules have replaced older systems ofsubjective nature.
The supply markets are becoming dearer and dearer. The continuousadditional burden cannot be borne by prospective clients of anyhospitality business. The client is becoming increasingly intelligentand selective. He desires value for money. He is intelligently ableto compare products / offerings of different outlets, and reachhis conclusions of value for money. Obviously, the purchasingsystems have evolved to create competitive supply markets toensure client satisfaction.
Focus on a particular product, person or process is the keyword of business. Who is the purchasing being done for?
53
Obviously the client, the guest. Therefore it is surely the client whois the focus.
Hotel Managements have been responding to the changing needs,desires, and expectations of guests while recognizing the need toconsider both cost and quality aspects of purchasing decisions.
What has therefore evolved is a price / quality relationship.Excellent hospitality organizations closely monitor the changingneeds of their target markets. Keeping a client happy and satisfiedis a continuous requirement. Hospitality organizations that arewinners continuously meet or exceed guest’s expectations.
As an evolution other aspects of purchasing such as negotiation,creative pricing plans, quality and detailed knowledge about themarkets are currently formalized.
Purchasing should not be considered a simple matter of orderingneeded products.
PURCHASE SYSTEMS
Purchase Systems are quite complex. Effective purchasing ensureseconomic and operational benefits. The Purchasing System usedby any operator has a direct bearing in the value received by aguest.
Efficient and cost Effective Purchasing Systems give strengths to value received by the business, which gives strengths to the total dining experience as perceived by guests.
What do we infer from this?That price and quality of products purchased by a hospitalitybusiness are primary determinants of a positive guest experience.
What should the efficient management of any hospitalityorganization do?
54
It should :
• define its target markets as accurately and precisely as possible;and
• select products and services to offer efficiently focusing on theguest.
They must weigh the following vis a vis selection of products andservices:
1. Will the products / services sell and at what price?
2. Will the products / services be available and at what cost?
3. Will there be continuity in such availability?
4. What would be the bottom line effects of selling theseproducts/services?
5. How to maximize value received by the property, and the valueperceived by a Guest in the products/services that we offer forsale?
The list of products and services to be offered to a guest shouldbe completed only after judiciously studying the above.
CONCEPT OF VALUE
Value must be established and monitored based on the expectationsof the target markets. The customer’s perception of value is veryimportant in the evolving market competition scenario. Value canbe maximized only if management establishes systems to ensureoptimum results.
The value received by a customer is a function of quality, service,and price, within the constraints of intended use.
This relationship can be expressed as follows :
Quality × ServiceValue =—————————
Price
Let us assume that there is no change in quality or service. Value
55
has an inverse relationship with price. As price increases valuedecreases.
By contrast, value varies directly with changes in Quality and /or Service. If Price remains constant, and quality and serviceimprove, value increases.
When we study the module on SUPPLIER SELECTION, we shallnotice that Quality / Service / Value and Price have the sameconnotation to the hospitality unit, when it becomes the Customerto the supplier.
GOALS OF PURCHASING SYSTEM
The concept of value is clear from the previous understanding.The need of an efficient purchase system is to maximize valuefor its operation and its guests.
The following concerns need to be addressed whenever designingand implementing a purchasing system.
• Product • Price • Quality
• Quantity • Time • Supplier
WHAT SHOULD BE THE AIMS AND OBJECTIVES OF ANEFFICIENT PURCHASE SYSTEM?
The aims and objectives should be :
• To obtain the right product at the right price.
• To obtain the product of proper quality and purchased in thecorrect quantity.
• To obtain the product at the right time from the best supplier.
Purchasing Systems should be planned, implemented, and evaluatedto help ensure that these goals are met with regularly.
56
PURCHASING OBJECTIVES AND PROCEDURES
Purchasing cycle involves a variety of different procedures.Activities must be controlled when designing and managingpurchasing tasks.
Let us study the Purchasing Cycle.
The Purchasing Cycle is repeated every time products are ordered.Purchasing is a series of activities requiring special planning andcontrol procedures that create an audit trail.
An Audit Trail is a series of records, documents, and / or reportsthat trace the flow of resources through any operation.
Documents, records and reports should be maintained by theOperations Department to enable constant check-ups for correctnessof operation in so far as accounting processes are concerned.Audits normally occur months later than the actual operation hasbeen done.
What is the logical flow of work for the above?
The purchasing function encompasses a full range of managementactivities from listing supply needs to controlling inventory.Management of products is required both before and after theyhave been received by the operations.
Why is it a Management activity?
All management activities go through a cycle of planning,execution and follow up. Purchasing is therefore a managementactivity.
Linkages of Purchasing and Costs
Associated intimately with costs of various nature, are thepurchase functions of a hotel or a unit of the Hospitality Industry.
57
Let us start with the base line statement:
“PROFITS ARE THE KEY PRE-REQUISITES OF BUSINESS ”.
Let us discuss now the two basic parameters of a Food andBeverages business.
The two most basic parameters of a business are Purchase andSales.
In continuation of the above we understand the important issuesof the business as :
1 Proper positioning of a Food & Beverage outlet. Customersshould be satisfied and feel an inherent value of money.(Concept development)
2 Proper positioning of the menu.
3 Proper positioning of the price line of the menu.
4 Proper positioning of the standards in line with the menupositioning.
5 Proper positioning of the food standards.
6 Proper positioning of the service standards of the product.
7 Proper linkages of marketing and the menu product line.
8 Proper marketing itself
9 In continuation of point no. 5 i.e. Proper positioning offood standards and in line with the menu positioning,we shall have
• Proper production techniques.• Proper yields – better saleable value of the raw product.• Proper purchasing.
58
What does the word ‘proper’ mean here? Proper means in linewith the declared benchmarks of the organization. I shall takethis understanding further under the lecture “BRANDSTRENGTHS”.
What have we learnt?
We have learnt that if “Profits” are the key requisites of a businessthan “Proper positioning of sales and marketing is essential,and proper purchasing is very essential.
We started with these two parameters of a business - Purchaseand Sales.
Let us forget temporarily, the angle of sales and marketingand concentrate on the topic:
PURCHASING SYSTEMS
Just now, we discussed yields and increase in saleable values.
What are we saying?
We are saying that we need to position our purchase activitiesefficiently.
Please note the word efficiently. If any activity has to be efficient,it has to be based on certain well defined principles.
So that, we say that purchase is a management activity.
How did we start?
We started by talking of profits.
So that, we shall refine our earlier statement that purchasing isa management activity for maximizing values, for maximizingprofits.
59
Purchasing activity therefore is not only an activity formaximizing profits, it is also a series of conscious managementefforts in an efficient operation leading to customer satisfaction,and of course a continuation in supplies (We take another cuefrom this)
An efficient purchase activity therefore is a cost saving program.
Role of the Purchase Department
Is the Purchase Department responsible for “purchases” only?Well, that is its main function.
What are the other functions or Roles of a Purchase Department?
The Purchase Department is a hub of activity for thepurposes of the various departments of the hotel, etc. It controlsthe ultimate satisfaction of the client, and also the profitabilityof the hotel.
Purchasing is a full range of management activities. Every activityinfluences the nature and effectiveness of the system by whichthe hospitality industry purchases the products and services, forultimate goal of client satisfaction.
What are we saying?
Purchasing relates to activities that are designed to maximizevalue to the company and ultimately to the client.
Let us examine below the different Roles of the PurchaseDepartment in major organizations of the hospitality industry.
1. Management of the purchase office
Maintenance of necessary records - matters such as previousorders, past experiences with suppliers, orders in process -
60
all are important requirements of management of the purchaseoffice.
2. Requisitioning of regular supplies.
This is acting on the requests of either the stores personnelor those of the consuming departments directly. This involvesdealing with suppliers already contracted with for varioussupplies.
3. Purchasing of all commodities.
4. Ensuring continuity of supplies of all items of alldepartments.
5. Determining required Product Quality.
This is the setting up of desired quality levels of raw productssourced for various departments?
How is it done?
• By keeping the positioning of the organization in view.
• By keeping the expectations of the ultimate client in view.
• By keeping economic concerns of the organization in view.
6. Determining Quantity needs.
Quantities to be stocked are governed by the
� Quantum of their usage by the consuming departments,
� the geographical location of the hospitality unit (the timetaken by the supplier to service a Purchase Order), andalso by the
� storage capacities of the organization, either departmentallyor in central stores.
7. Selection of Suppliers
The most important role of a purchase department is to selectsuppliers in association with consuming departments. These
61
suppliers need to meet the technical specification of rawproduct line as desired. In our business these are known asStandard Purchase Specifications. Other evaluating featuresare prices quoted and negotiated, selection of products, andthe services offered by these suppliers. We shall exammesupplier selection in details later.
8. Negotiating Prices
These are the different tactics and strategies used to securethe lowest price without sacrificing product quality orservice of the supplier. This involves intelligent interpretationof the supplier market, the supplier, the hotel’s businessrequirements and priorities.
9. Cost Effectiveness
This is sourcing alternate sources of the same commodityensuring cost – effective supplies, or sourcing a comparable,acceptable commodity reducing cost inwards, (example of aimported good, involving taxes, etc. against a local produce.)
10. Market Research
The purchase department is expected to be in continuoustouch with the markets, and market conditions, andevaluating new products. The purchase department has to docontinuous research into products, markets, price trends, etc.This supports the purchase function of negotiationg prices.
11. Co-ordination with Production Department
Purchase department is responsible to co-ordinate withproduction department to standardize commodities, andtherefore reduce stock levels (reduce the values of Inventorylevels)
12. Emergency Purchases
Purchase department organizes emergency purchases ofvarious natures of all departments.
62
13. Co-ordinate Unusual consumptions
On a year-round basis consumption of stock items can bemonitored. Purchasing is done accordingly. However, unusualconsumption patterns of certain stock items occur in ourbusiness. Purchase department keeps an eye on unusualconsumption of stock items, analyze reasons in associationwith department heads, and arranges for replenishments.
14. Arranging for payment
Purchase department is the co-coordinator between thesupplier and the finance department. Agreements are alsorequired to be made by the purchase department with thesupplier for the modalities of payment. These are financialagreements and incorporated in the contracts.
15. To expedite or Follow up on Purchases
A follow up is essential in day-to-day working conditions ofa purchase department. This is to ensure that requiredproducts reach the facilities at the right time. Some suppliersbeing more conscientious need less follow up than others.
16. Maintaining Proper Supplier Relations
A professional relationship with various suppliers is essential.Certain legal and ethical elements come in to play in thismatter.
17. Receiving Products
The process by which products are brought into the operation,involving basic practices designed to check quality, quantityand the price.
18. Storing Products
Correct storage is vital to all products.
Products after receipt need to
- be either sent to the consumer department, especially thoseof emergency, perishable or highly perishable nature.
63
- Be stored in general stores under various categories, e.g.Food Stores, Engineering Stores, Housekeeping Stores, etc.etc.
19. Co-ordination with Controls
Purchase department needs to be in continuous touch withthe Controls department for various requirements of theControl Systems.
20. Inspection of Goods
This is basically a check system, during inventories or atvarious phases of production. This is done to determineQuality requirements. Items not moving during a particularperiod are recommended to the consuming departments fortheir proper and urgent usage. This is specially so for thoseitems which have “expiry dates” to them.
21. Controlling Inventories
Inventories are regularly done in the hospitality industry.This ensures physical product availability in storesagainst books, and to understand investments on “stock-in-hand”. A continuous effort is made to reduce Inventorylevels. These systems also help in maximizing effectiveand efficient usage of supplies, minimizing losses in qualityand reduce opportunity for theft or unaccountableconsumptions.
22. Reducing Dead Inventories and Surplus Equipment, Saleof Scrap, Used oil etc.
Selling of scraps or even equipment no longer needed by theoperating department is another function of the purchasedepartment. Sale of scrap is very often taken as profit of thedepartment.
23. Co-Ordinate with Senior Management
Any cost-effectiveness is towards the bottom line of the
64
department and that of the unit. For any cost incurred, atleast three times that much revenue needs to be earned inorder to be cost-effective, and ultimately profitable.
To Summarize:
Managing resources available or likely to be available is the PrimeManagerial Role of the Purchase Department. Good Purchasingmanagement continuously assesses needs, and when successful,satisfies those needs in a manner, which maximizes value for theoperation and its clients.
PURCHASING SYSTEMS -PREPARING SPECIFICATIONS
STANDARD PURCHASE SPECIFICATIONS
We studied earlier that all management functions are guided byprinciples. Minimum benchmarks have to be set to avoid anyarbitrary situation. These benchmarks help us to control.
• The Quality,• The Quantity, and• The Service of a product likely to be procured
What is a Purchase Specification?
In the simpler terms of explanation it is a specification for thepurchase of a commodity. This specification would list variousvalues associated with the purchase of that commodity.
So that, a purchase specification is a concise descriptionof the quality, size, weight, count, etc, required for a particularcommodity.
Purchase specifications are related to the establishment. Eachestablishment devises these specifications to suit
65
� their needs,
� their food and beverage product line,
� the price range,
� the policies,
� and the needs of the client.
These specifications are laid down by members of the managementteam; are directions of a central body in a key chain operationor a specific unit.
Why Prepare Specifications?
- How do we measure a supplier’s services? We do that bycomparing the purchase specifications against performanceof a supplier. So that purchase specifications are BenchmarkingExercises.
- Purchase specifications establish a buying standard of acommodity for an establishment, so that, a standard productis available for the food production and food service department,for ultimate goal of client satisfaction.
- The purchase specification informs the supplier (or intendedsupplier in case of a new supplier) the parameters requiredby the establishment. The supplier quotes his prices andnegotiations are done on these prices, keeping thesespecifications in view. The supplier is therefore informed ofprecisely what is required. This in turn assists the supplierin being competitive with pricing. The purchase specificationsare therefore a means of eliminating possibilities of ambiguity;and introduction of specifics.
Purchase specifications benchmarked for an establishmentsrequirements are called Standard Purchase Specifications(SPS).
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Copies of Purchase Specifications are marked to the consumingDepartment, the Receiving Department, the stores and the accountsdepartment, so that all understand and “speak the same language”.It gives guidelines to all as to the standards of Food & Beverageto accept.
Purchase specifications make all the concerned staff aware ofthe differences that can occur in the product, for example size,weight, quality, quantity etc.
Standard Purchase Specifications and Standardization
Use of purchase specifications helps to standardize purchasing,production and service systems.
This is good for� the hospitality operation,� its employees and� the guests it serves.
Use of a purchase specification provides a standard qualitydefinition for products purchased. It represents the productsrequired for standard recipes and which are perceived to provideoptimal value for the clients being served.
Use of specifications, then, helps to ensure consistent productquality regardless of the source of purchases. The hotel and theclients desire consistent quality. Properly developed and utilizedpurchase specifications help to ensure that there are no surprises.Everyone benefits from their use.
Specifications: The process of developing purchase specificationsoften begins with prevailing industry practices. Specifications offerseveral distinct advantages:
• In developing purchase specifications, hospitality personnelgain a better understanding of requirements and qualitystandards.
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• Receiving personnel can check incoming products against thequality requirements noted in the property’s specifications.
• Specifications may reduce the variety of products purchased andmanaged. The research involved in developing specificationsmay suggest additional ways to use the same product indifferent menu items.
• Specifications can lower purchase costs, since the operation willnot be paying extra for a product of higher quality thanneeded.
• Generic purchase specifications enable several suppliers toquote competitive prices, thus increasing the level of competition.
Developing Purchase Specifications
Let us look at a format for developing purchase specifications. Theformat below indicates the categories of information often included.Of particular importance are product use and test procedures.
A FORMAT OF DEVELOPING PURCHASE SPECIFICATIONS
What are the information levels required in a PurchaseSpecifications?
1. Name of the food & beverage operation :
2. Product Name :
3. Definition of the Product:The terminology used by the consumer department of theestablishment should be understood by the suppliers. Ifrequired diagrams or samples can be provided to the supplieror intended supplier.
4. Product Used for :(for example olives for garnish, bread for club sandwich,bread for regular sandwich, etc. etc.
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5. General Description of the Product :Provide general quality information about the desired product.
6. Detailed description :State here other factors, which would help to clearly identifydesired product. Examples of specific factors, which vary byproduct being described, may include :• Geographic Origin• Variety• Type• Style• Gradation:
• e.g. Extra large size potatoes for french fries. 5 in a Kgm.• Or 10 - 16 in a Kgm for Prawns without head, etc.
Product size, weight, or count:• e.g. per Kgm, per litre.• Or 15 drumsticks in a Kilogram.• Or 8 bananas per Kgm etc. etc.
Portion sizeBrand Name:
• e.g. Weikfield’s cornflour,• Or Tabasco,• Or Lea & Perrin’s Worcestershire sauce,• Or Kissans Tomato Ketchup etc, etc.
DensityMedium of packSpecific gravityContainer size
• e.g. per case of 24 tins of 400 gms. each• e.g. per case of 12 bottle of beer etc.
Edible yield, trimFat content
7. Special Notes:• For example cuts of meat,• For example fish without head and stomach.
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8. Product Test Procedures :Test procedures occur at the time of the receipt of the product,and also at the time the product is prepared / used. Forexamples, products expected to be delivered refrigerated, canbe tested with a thermometer. Products can be weighed orcounted physically. Product Test Procedures are very oftenused for butcher products, frozen products and dairy products.
9. Special instructions and requirements :Any additional information needed to clearly indicate qualityexpectations can be included here. Examples include labelingand / or packaging requirements and special delivery andservice requirements.
Regardless of the product for which quality standards are beingdeveloped, several minimum requirements must be addressed inevery specification. These requirements dictate that:
• An accurate quality description of the product should focus oneasily observable, testable features.
• A quality description should be realistic. When specificationsallow little or no deviation or allowance for slight differencesbetween desired and acceptable products, the likely result willbe higher prices. Overly strict specifications limit the numberof suppliers who can provide items and may even make itimpossible to purchase necessary items.
• Descriptions should be clear and simple. Excessive detail isneither practical nor helpful for the majority of purchasers and/or suppliers.
• Specifications should permit purchase of readily available productsin most instances. Costs rise dramatically and minimum purchasevolumes are significant when products must be prefabricatedfor the specific organization.
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• Supply from more than one vendor should be possible. Costsare reduced when several suppliers are able to provide productneeds.
• There should be flexibility for both the buyer and the seller. Thekey here relates to practicality and reasonableness. Specifications,which are too tight or inflexible, will defeat their intendedpurpose.
Some general information is required for all orders placed withsuppliers, but should not be included in purchase specifications.Examples include: general delivery instructions, personnelauthorized to purchase/receive products, quantity needed,agreed-upon purchase price, and purchase unit size. Thepurchaser’s concern is minimizing the need to modify purchasespecifications; quantity and purchase price often change fromorder to order.
Suppliers should understand the intended use of the product. Asexperts in their own product lines, they may suggest productalternatives, which are more suited to the property. The purchasershould also check the qualifications of eligible suppliers in orderto judge their expertise in a given area.
When product test procedures are indicated, quality requirementscan clearly be verified. Test information makes it possible toidentify substandard products.
Who Develops Standard Purchase Specifications?
Purchase specifications are developed through the efforts of severaldepartments, staff and other individuals. Let’s consider threegroups in particular: food and beverage personnel; purchasingstaff; and suppliers.
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Food and Beverage Personnel
The food and beverage department must make the final decisionsregarding purchase specifications for the products the departmentuses. The responsibility of menu planning rests with thisdepartment.
The expertise of the F&B Management is of great value inmeasuring the adequacy of specifications, from the perspective ofboth operations and guest satisfaction.
Purchasing Staff
The responsibility of the purchasing staff is to obtain informationand provide assistance and not to make the final decisions. Forexample, purchasers question suppliers, study applicable productdata, conduct make-or-buy analysis, and research topics suggestedby the food and Beverage manager or The Chef.
Purchasing staff arrange for sample/trial orders. Through use oftentative specifications, they obtain sample products for analysisand selection by food and beverage personnel. Purchasers canevaluate initial shipments of these samples and check to see thatincoming products meet specifications.
Purchasers also provide advice about specifications. Their experiencein developing specifications, working with eligible suppliers, andevaluating product samples is of invaluable assistance to linemanagers.
Suppliers
Suppliers are not directly responsible for developing specifications.They do, however, provide information and assist the hospitalityoperation in this process. In general, suppliers may:
• Inform properties about available products.
• Offer advice on activities and attitudes of other propertiestoward various products.
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• Counsel buyers regarding new products about to be introduced.Supplier’s representatives often learn about new products beforeoperators and purchasers do.
• Review and critique proposed specifications. Suppliers mayevaluate whether a product defined by the specifications isuseful. Whenever practical, specifications should apply toproducts offered from more than one supplier.
At this step, let us understand In-use Products, and New Products.
Standard Purchase Specifications for In-Use Products
When a product is in current use, the food and beverage personneland purchaser are both familiar with it and are able to judge itssuitability. They recognize the required characteristics and are ableto identify which product meets minimum quality standards. Letus examine the basic steps required to develop specifications forcurrent products.
Developing Standard Purchase Specifications for In-UseProducts
Step 1- Select a sample judged to be of proper quality.
Step 2- Ask the supplier providing the product to describe it (size,grade etc).
Step 3- Write a specification using information already discussed.
Step 4- Ask other eligible suppliers to criticize the tentativespecification:
• Does it describe the correct quality?
• Is it available from several sources?
Step 5- Modify the written description as necessary
Step 6- Use the specification
Exercise: To encourage cross section of trainees to developstandard purchase specification.
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Developing Standard Purchase Specifications for a New Product
Step 1- Give a verbal description of product need to reputablesuppliers of similar or same product line, and stress its use.
Step 2- Analyze sample provided by the supplier, or availablewith user apartment.
Step 3- Select product of correct quality.
Step 4- Ask supplier providing the product to describe it.
Step 5- Write a specification using information described earlier.
Step 6- Ask other suppliers to criticize the specification.
Step 7- Modify the specification as necessary.
After the specification is developed, purchasers should submitcopies to eligible suppliers, indicating that price quotationsshould be based on the quality descriptions defined by thespecification.
Standard Purchase Specifications for New Products
The above outlines the process, which can be used to establishspecifications for new products. Many trade references can alsoprovide assistance. Based upon this information, several suppliersshould be able to provide samples, which may accommodate thepurchaser’s needs.
Standard Purchase Specification for Central Purchase System
Centralised Purchasing is here to stay in our industry. Bycombining orders from many properties, advantage of volumepurchase discounts can be availed.
Participating purchasers of units agree on minimum qualityrequirements for items to be purchased. Frequently, developingspecifications acceptable to all concerned parties is one of the mosttime-consuming aspects to implementing a centralized purchasingsystem.
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A committee approach is frequently used in developingspecifications. Wide differences in specifications must generally beminimized in order to take advantage of volume discounts.Supplies/manufacturers help and support central purchase in thismatter.
Participation in centralized purchasing is not an independentdecision. Each unit is obliged to fall in line. It is possible topurchase some items through the Central Purchase system andpurchase others on an independent basis, though cost advantagesto centralized purchasing are decreased when this mixed approachis used.
Standard Purchase Specifications for Specific Products
Let us examine some examples :
Purchase Specification Factors: Specific Products
Meats• Inspection (mandatory)• Grading (if desired)• Descriptions• Weight / thickness limitations• Fat limitations• Aging of product (when needed)• State of refrigeration• Miscellaneous (packing, etc.)
Sea foods• Type• Market form (fish - whole, eviscerated, etc; shellfish - alive,
whole, shucked, etc)• Condition (describe flesh, eyes, skin, gills, etc.)• Grade (if desired and available)• Inspection (if available)
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• Place of origin (if necessary)• State of refrigeration• Miscellaneous (count, sizing, packaging)
Poultry• Kind (chicken, turkey, duck, goose)• Grading (if desired)• Inspection (mandatory)• Style (whole, breasts)• Size (weight limitations)• State of refrigeration• Miscellaneous (packing, etc.)
Fresh Fruits and Vegetables• Grade (if desired)• Variety• Size• Type of container• Weight per container• Count per container• Growing area
Processed Fruits and Vegetables• Grade (if desired)• Variety• Drained weight or count per case• Weight per case• Packing medium• Can/package size• Variety and/or style• Growing area (only if necessary)
Disadvantages of Standard Purchase SpecificationsStandard Purchase specifications tends to be idealistic in nature.Sometimes menu product range does not require the top mostquality e.g. Tomatoes for puree. Whether one purchases large
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tomatoes, which are meant for salad purposes, and are expensive,and makes a puree out of it, or purchases, smaller variety oftomatoes, which is cheaper, and makes a puree out of it, theresultant product is the same.
So that, if the Standard Purchase Specification does not specifythe size in relation to weight, the supplier can quote for and bringin expensive variety of the product, whereas a lower quality interms of purchase price can be as effectively utilized.
Unless the consuming and the purchase department are careful theycan easily over specify and buy goods of too high a standard than isreally necessary. The results in supplies quoting higher prices.
ENSURING STANDARDISATION IN PURCHASINGFUNCTIONS
We have learnt that to get a successful operation going, and toensure guest satisfaction in terms of Value for Money, the PurchaseFunctions have to be well defined managerial efforts. To ensuremeeting the desired goals, the Purchase Manager must obtain therequired products of the right quality and in the right quantityand in time.
What is this right quality and right quantity?
Is it an arbitrary decision on day-to-day basis by the userdepartment and / or the Purchase department?
No.
Well defined managerial efforts therefore relate to specific qualityrequirements set forth for every item purchased.
In the Food & Beverage business, these are usually dictated bythe demands of the clients in a particular geographical location,the positioning of the Food & Beverage outlets, and therefore themenu and its pricing.
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We have already studied what is “right quality”, and how to setstandards, what are Standard Purchase Specifications; and thevarious evaluation processes for these. We shall now study whatis “right quantity”.
Purchasing the commodities required in the correct quantity canhave far reaching effects in terms of product costs, operationalprofits, shelf life, storage capacity and reordering of supplies.
Purchasing the “Right” Quantity
The quantity of items purchased is just as important as properquality specifications. Problems occur when too much of aproduct is ordered. Money is unnecessarily tied up in inventory,which may result in cash flow problems. Over purchasingincreases storage costs, including interest, insurance, and rentedstorage space. Products can deteriorate in quality with time andare more likely to be damaged by overcrowding. The chance oftheft and pilferage increases when extra quantities are stocked.
Purchasing insufficient quantities also has disadvantages. Insufficientquantities may result in “Stock-out” situations, and may result in“Not-available Menu Items”. This translates into consumer dissonance.
In case of a “Stock-out” situation, production may have to berescheduled. Emergency open-market purchases may have to bemade. These open-market purchases not being subject to contractualrates - are expensive and time consuming. In certain cases discountsotherwise available for volume purchases can be lost.
Purchasing the proper quantity of products depends upon severalfactors. As sales of menu items increase, additional quantities ofrequired ingredients are needed. Higher product costs caused bychanges in market conditions may result in increased selling prices,which, in turn, may lead to decreased sales levels to guests. Inthis case, the need for continued purchase of the product shouldbe evaluated.
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How much to order?
We come to a pertinent question as a direct corollary of the abovethat we should have sufficient quantities for immediate needs andenough in stock, (either in the department or in main stores), tillthe supplies are replenished next time. We shall now speak strictlyin F&B related terms.
1. The menu primarily determines what item must bepurchased.
2. Current inventory in the storeroom is another factordetermining quantities to be ordered.
3. Quantum of pre-preparation of menu item.4. Co-ordination of efforts between the user and consuming
department.5. Ordering is done through Purchase Indent. Format of the
Purchase Indent is on page 168.
What happens when we effect a menu change?
Item needed for the earlier menu’s demands are sometimesunutilized, and remain in the main stores. Sometimes the salesof a particular menu item are lower than expected.
What is the result of this exercise?
The result is excess stock and less storage space for other needs.An effort should be made therefore to be efficient in menuplanning. An effort has to be made to analyze the quantity reservesas well as the current requirements. Effective use of reservesupplies should not be over looked when menus change. Productionchefs must inform Unit Financial Controller of possible change ofmenus and indicate consumption pattern of ‘Stores’ items.
The factors determining required products are therefore:� The menu� The menu items� Recipes� Ingredients
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Menus determine the product’s intended uses and properfunctions.
Management may also make judgments based on future prices.When prices are expected to change, managers may respond bybuying more or less of a product.
Maintaining a safety or minimum level of product on hand mayrequire buying a quantity above that actually needed. The purposeof over stocking is to allow for delivery delays, increased popularity(runs) of items, or other unexpected developments. On the otherhand, if large amounts of products are already in storage, thequantities purchased can be reduced. Available space may alsolimit quantities purchased.
Very often suppliers would not meet smaller purchase quantities.They may specify minimum purchase value or units. Sometimesbuyers may need to purchase less than optimal quantities whenstandard unit packaging affects quantity decisions.
We must also understand the following :
All foods deteriorate with passage of time. Some deterioratemore quickly than others. The organization should thereforeadopt a system that will ensure that only those quantities arepurchased that will be needed immediately or in the immediatefuture.
Purchase quantities need to be fixed for individual product.
How much to order depends on the useful life of the commodity.
For purchasing purposes foods are divided into two categories:Perishable and Non-Perishable.
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Purchasing cycle - Purchasing Perishable and Non-Perishablefoods
Products may be purchased for immediate use and for use overan extended time period. Extremely perishable items such as freshproduce, baked goods, and dairy products must be used immediately.Examples of products, which may be stored in inventory for longerperiods, include frozen products, canned goods, and groceries.
Perishable Foods
Perishables have a further classification of highly perishablefoods. For perishables and highly perishable food stuffs a dailyinventory is taken, quantities required for the next day orimmediate future are calculated (some of the perishables arepurchased for a two day period also taking into account weekly‘off’ days etc.)
At this stage, importance is given to consume those quantities thatare already on hand.
Therefore the purchase requirements for perishables must includedetermination of the quantities in stock.
The next step for these perishable commodities is determinationof anticipated total needs, of the business on hand. This is basedon historical data, on menus and consumption patterns.
The “quantity to be ordered” is obviously calculated by subtractingthe “quantity in hand” from the “total quantities required”.
Perishable products are normally ordered several times weeklyaccording to the following rule:
Purchase Quantity = Quantity Needed - Quantity Available
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The following are the steps of system used for determiningquantities of perishable products:
1. Determine normal usage rates.
2. Consider whether additional quantities are needed for banquets.
3. Determine the amount of each item currently in inventory.
4. Deduct that amount from the normal usage rate to calculatethe quantity to purchase.
5. Make adjustments as necessary for holidays, special events,or other factors unique to the order period, for example non-supply days.
Specimen of Perishale Order Sheet - Fruits & Vegetables is on page 166.
Specimen of Perishale Order Sheet - Butchery is on page 167.
Non-perishable Foods
Non-perishable foods do not deteriorate rapidly. Howevermonies are invested in “material in stock”. As profits are the keyrequisites of a business, any money tied up in non perishable foodstocks is not available to meet other operating expenses of thebusiness.
Non-perishables should be purchased in minimum quantities.
There are other benefits of effecting “minimum stock levels”.These are
- elimination of possibilities of theft.
- reduction of storage space requirements.
- reduction in number of staff handling and maintaining stocks.
Therefore food inventories have to be kept under controls of“minimum stock levels”.
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Minimum / Maximum Ordering System
In order to determine the quantity of non-perishable products topurchase, Minimum/ Maximum Ordering system can be used.This system is based on the fact that only a few of all productspurchased represent high-cost items or ones with a high frequencyof use. 80% of an hotel unit’s purchase price may be spent ononly 20% of all the products it buys. The development of aminimum/maximum ordering system should give first priority tothese high cost items.
Basically, the minimum / maximum inventory system helpsmanagers determine when products must be purchased and howmuch of each product to order.
1) A minimum level is the safety level that is the numberof purchase units that must always remain in inventory.
2) The maximum level is the greatest number of purchaseunits allowed in storage.
3) The Usage Rate : Purchase units should be ordered atthe rate at which they are used by the operation. Theusage rate is the number of purchase units used per orderperiod.
4) The Lead Time Quantity : In addition to usage rates, thehotel unit must also determine lead-time quantity for eachpurchase item. This is the number of purchase unitstypically withdrawn from inventory between the time theorder is placed and when it is delivered. Again, quantitiesare counted in terms of normal packing size.
This lead-time quantity is distinct from the safety (minimum)level of purchase units kept in inventory. The safety levelmust allow for such things as late deliveries and greaterthan normal usage.
5) Order Point : The order point is the number of purchaseunits in stock when an order is placed. The order pointis reached when the number of purchase units in inventoryequals the lead-time quantity plus the minimum safety level.Additional quantities of a product are ordered when thequantity available reaches the order point.
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The equation that we arrive at is :Purchase units at order point = Purchase units in lead time +Purchase units in safety level
The above equation means that if products are ordered at the orderpoint, the quantity in inventory will be reduced to the safety(minimum) level by the time products are received. When the orderarrives, the inventory levels for the product will again be broughtback to the maximum level. The maximum number of purchaseunits allowed to be stored will be the usage rate plus the safety(minimum) level.
The minimum/maximum inventory system can help hotelmanagement to attain an important purchasing objective toorder the “right” quantity of required items at all times of theyear. The system has several advantages as well as disadvantages.The advantages of using the system outweigh its disadvantages.
Let us study both:
Advantages
• Excessive inventory is prevented. This helps in reduction inthe quantum of valuable storage space.
• Possibilities of stock outs are reduced.
• The system is easy to use.
• To meaxure actual performance against experted performanceis possible throught usage of this system.
Disadvantages :
• Better computerized software system generates accurate andlarger statistics.
• The processes of calculation of lead time quantites, safetylevel, and order-point levels incorporate assumptions. Diffcultiesmay arise if these assumptions are wrong.
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• Time is required to develop minimum/maximum inventorylevels to manage specific store items.
• Specific sales promotions by venders make all data invalid.
What is a STOCK OUT?
Stock Out is a situation in stores when a product required by theproduction area is not available due to market conditions and /or due to poor management.
UNDERSTANDING MINIMUM / MAXIMUM ORDER SYSTEM
Let us take an assumed supply of grain sugar:
Purchase unit = kgms.
Usage rate = 20 kgms. Per day.
Order Period = 30 days.
Monthly usage rate = 20 kgms. Per day X 30 days= 600 kgms.
Lead Time = 7 days.
Lead Time usage rate = 7 days @ 20 kgms. Per day = 140 kgms.
Safety Level = 7 days @ 20 kgms. Per day = 140 kgms.
Order Point = lead time + safety level= 140 kgms.+ 140 kgms. = 280 kgms.
Maximum level = usage rate + safety level= 600 kgms.+ 140 kgms. = 740 kgms.
When ordering at the order point, the quantity to order is monthlyusage rate.
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CONTROLS IN PURCHASING FUNCTIONS
We have so far understood control procedures that apply priorto the actual purchasing task. Before the purchasing processbegins, the food and beverage operation should have :
specified minimum quality standards,
• calculated quantities of products to be purchased,
• determined order points for each purchase item, and,
• considered eligible suppliers.
It is important that control procedures be built into the actualpurchasing process as well.
For this purpose, we use a purchase order system.
With a purchase order system, a purchase order is sent to thesupplier who is awarded the order.
Copies of the form are retained in the purchasing department,and are also circulated internally among the receiving andaccounting departments.
The Purchase Order formally identifies the product, quantity,unit cost, and total cost that both the supplier and purchaserhave agreed upon. In addition, the Purchase Order mayinclude:
• Guaranties - of supply, quantity, time, latest software packageetc.
• Warranties - of HACCP certification for example.
• Payment requirements - bill submission and payments receivable.
• Inspection rights of the hotel unit– for example for HACCPchecks.
• “hold harmless” provisions - disclaimers for example.
• and other legal and contractual concerns.
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A Purchase Order, is the food and beverage operation’s recordof the specifics of all incoming supplies. The property must paythe agreed-upon price for no less than the agreed-upon quality,for the amount ordered.
Higher than necessary food and beverage costs are frequentlytraced to communication and coordination problems among theseveral departments or personnel involved in purchasing. Properlyused, the Purchase Order minimizes these problems.
FORMAT OF A PURCHASE ORDER(Please see Annexures on page 162)
Let us revisit the basic procedures found in the formal purchaseorder systems :
� Quality requirements for products to be purchased are identifiedin a standard purchase specification.
� Eligible suppliers are provided with copies of standardpurchase specifications and are informed that prices to bequoted should be for products of that quality defined by thespecifications.
� A range of legal / contractual obligations are defined by thehotel. These may be included as part of the purchase orderagreement, or they can be sent along with standard purchasespecifications and made to apply to all orders placed.
� Suppliers are asked to respond to requirements of pricequotation.
� When the purchase order is issued, one copy is given to thesupplier and additional copies are distributed as necessary toapplicable departments within the property. For example:food and beverage, receiving, accounting, and purchasingdepartment.
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� When the purchase order system is combined with formalbidding, a number of other requirements can be established.For example (a) Bids may need to be received back within aspecified time period, (b) penalties for failure to deliver therequired quantity and quality of products may be imposed, and(c) procedures to formally ask questions about required productsmay be addressed in a legally binding document.
This system of formal bidding is generally used by large operations.
Integrity Concerns :
In small food and beverage operations, where owners or managersmay purchase the products themselves, control procedures are lessconcerned with theft than with obtaining the best value. In largeroperations, where other personnel take on purchasing tasks,security becomes an important concern. The control process mustguard against several types of thefts that are possible during thepurchasing process.
What are the various types of thefts to be guarded against:
1. Kickbacks : In several common types of kickbacks, the buyerworks in collusion with someone from the supplier’s company. Thekickback can be money or gifts. Either way, the hotel is the loser.In one kickback scheme, products are purchased at prices higherthan necessary. The two thieves then split the difference betweenthe real and inflated prices.
Controls : To best control this type of theft, the owner or managercan routinely review invoices and ask questions, such as :
• Why are so many products purchased from the samesupplier?
• The selection of the suppliers can be reviewed.
• Price quotations can be solicited randomly from open marketto ensure that prices paid are the best for the required productquality.
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2. In another type of kickback procedure, the invoice is paddedby adding items that were not received, or it is increased by addingunreasonable charges for handling or some other service. Thisscheme works well when the same employee receives as well aspurchases or when both the department’s employees are involvedin this particular type of theft.
Controls : Separating the purchasing and receiving functions.
In large hotels the purchasing and receiving functions are separate,but are controlled by the Unit Financial Controller.
Under this system, products do not come under the control ofproduction staff until the time of issuing. This system helps reducethe possibility that one person, working alone, can implement akickback scheme.
3. Non-existent Companies : Purchasing personnel can steal bysetting up a non-existent company which then submits invoicesfor products never received.
Controls : Through periodically reviewing the selection of suppliersby examining the names of payees on company’s cheques.
4. One Supply–Two invoices : Suppliers may try to send aninvoice to the food and beverage operation for processing a secondtime.
Controls : To avoid this type of theft, operations need an internalsystem to verify which invoices have not been paid and to cancelinvoices when they are paid.
5. Delivery Invoice errors : These are intentional arithmeticerrors, short weight or counts, wrong quality and cost the hotelmoney.
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Controls : All arithmetic on invoices and statements should bechecked and proper receiving practices should be adopted to catchthese mistakes.
6. Credit Memo issues : In such cases the products are deliveredby an agent, a delivery man or a truck driver, and those throughcourier services.
When products are not delivered or when deliveries are short ofquantities ordered, a request-for-credit memo should be issued toreduce the original delivery invoice by the value of the items notdelivered. The supplier should then issue a credit memo to adjustthe account.
Controls : A request-for-credit memo should be written andattached to the delivery invoice. The manager should also alertthe U.F.C. to ensure that the supplier properly processes the creditto the buyer’s account.
This process should not become a practice and incidences of thisnature should be few in a financial year.
7. Quality substitutions : Quality substitutions occur when a priceis quoted for the proper quality item but a lower quality item isdelivered. Brand or label substitutions are also possible if receivingpersonnel are not familiar with products ordered.
Controls : Proper receiving practices can prevent paying more fora lower quality product. Brand or label substitutions are preventedby familiarizing the receiving personnel with products ordered.The supplier must exchange goods rejected with those productsof proper and agreed quality. Quality checks by user departmentensures receiving goods of “right” quality.
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8. Purchaser’s theft: Purchasers might practice a variety of otherthefts:
– Purchasing for their own use,– Reciprocal purchasing for their own benefit,– Purchasing products wholesale with the intention of
reselling them to selected employees or to others.
Controls : An effective Purchasing System can reduce thesethefts.
There is a grey area of purchasing ethics in which purchasingpersonnel may be offered gifts or free meals, invitations to parties,or other inducements. All of these enticements are, in large part,designed to increase the supplier’s business. Buyers must put theproperty first and make decisions based on what is best for theproperty rather than for themselves.
The following are some techniques to reduce the cost ofPurchasing:
1. Negotiate Prices : Many food and beverage managers believethat the price quoted by the supplier is “fixed”, and that thepurchasing involves simply soliciting price quotations and thenaccepting the lowest price quoted for the specified quality. So that,negotiate prices.
2. Review Quality Standards : Be sure that the proper qualityof products are being purchased. If, for example, products ofhigher quality than necessary are being used, purchase prices canbe reduced by using items of the correct quality.
3. Combine Orders : Sometimes purchase costs can be reducedif a larger order is placed with the supplier. The concept of “one-stop” shopping, which involves buying a wide range of productsfrom one supplier, recognizes this principle.
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4. Purchase in langer quantities : If practical, a larger numberof units of required products can be purchased. However thefollowing issues have to be weighed :
(a) Increased costs incurred in tying up money and inventoryspace.
(b) Enhanced possibilites of theft.(c) potential increase in spoilage.(d) other quality problems.
5. Pay cash : Some suppliers will quote a lower price if productsare paid for at the time of delivery. This also includes makingpayments promised, in time.
6. Change purchase unit size : For example, if powdered masalasare purchased in 100 gms. packing, per kilogram. This would costmore, than if a kgm packing is purchased. This process needssupport from the user department.
7. Consider centralised purchasing : Centralized purchasing, inwhich several properties of a hotel chain combine orders toincrease the volume of items order, and benefit from volumepurchases, and volume discounts. This is practiced in our company.This is discussed in detail later in this module.
8. Evaluate purchase of convenience foods : Sometimes, employeescan prepare products of acceptable quality, if the right ingredientsare available, at a lower cost, than that required for purchasingthe products in a convenience form, e.g. Rava idli mix. Evaluatesuch possibilities.
9. Discontinue unnecessary supplier services : Costs incurredby suppliers for such services as storage, handling, delivery, and“grace” periods for the payment of bills, may all be included inthe product purchase cost. Unit should carefully consider exactlywhat services are desired and ask suppliers if purchase prices willbe reduced if other undesired services are discontinued.
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10. Consider promotional discounts: “Opportunity buys” (forexample, items that a supplier plans to discontinue or hasoverstocked), sometimes arise, and, if the products can be usedby the operation, these represent significant savings over regularprices.
One Stop Shopping Systems
Due to Globalization of products, a new class of supplier hasevolved. This is a supplier who can procure anything for the hotel.This means that the supplier has broadened their lines to carrya vast range of products. This is called One-Stop shopping service.This is against the system of suppliers of specific product lines,such as meat, fresh produce, milk products, canned goods andother grocery items.
Currently One Stop Shopping system cannot be used extensively.This is an expensive prposition. This supplied does not have acontracted supplier of his own. This supplier buys requiredproducts from open markets himself. This process does not allowhim Economies of Scale to be passed on to the hotel. This systemcan be used only for selected specialized requirements.
What are the advantages of this One Stop Shopping Service :
1) The system obviously eliminates the potentially time-consumingprocess of selecting individual suppliers.
2) The system reduces time necessary to negotiate with suppliers,process orders, and receive incoming goods.
3) Dealing with one supplier tends to build the supplier’s trustin the operation and provides purchasing leverage for theoperation.
4) The system provides for volume efficiencies received byconsolidating orders from a single source, resulting in lowerprices.
5) The system supports “just-in time” purchases.
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The disadvantages of this One Stop Shopping Service :
a) Higher Prices - Suppliers selling popular products at a competitiveprice typically sell other items at a higher markup. When allproducts are purchased from one supplier, prices paid for someitems will likely be higher than those available elsewhere.
b) Decreased Variety within a product line – Suppliers offerrelatively few varieties of each item and, in many cases, onlyone. A supplier also undertakes a special product from a bulksupplier to him or from a manufacturer. This manufacturermay introduce a new version, or an improved product andsell this in the market. However the said one stop shoppingservice supplier, having already stocked sufficient quantities ofthe older version, is forced to offload his stocks on to the hotel.
c) Lack of special information - One of the important function ofa supplier is to keep informing the hotel about new productsin the market. With the increased number of product lines thereis a decreased likelihood that the supplier is an expert in eachof the many items being offered by him. The supplier’s ownproduct knowledge may reduced with the increased supply line.
The advantages and disadvantages of One – Stop ShoppingSystems must be weighed to suit needs of operations. An “off andon” usage of one stop shopping service is ideal.
Centralized Purchasing
Centralized purchasing refers to purchasing at a central,geographical location, products common to requirements of allunits of a chain of hotels. ITC GREEN CENTRE, corporateheadquarters building at Gurgaon houses the Central Purchasedepartment for our company.
Chain Operation Advantages:The objective of centralized purchasing is to achieve a better, moreefficient purchasing system, one, which shall ensure costeffectiveness.
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What is meant by that?Centralized purchasing is one that will generate lower prices forproducts and services while ensuring that the required quality isreceived.
Combined buying power of Centralized Purchasing supports strictcost consciousness and purchasing a product of standardized quality.
Products are evaluated at the place of centralized purchasing, forquality. New products in the market are also examined for variousparameters of product change, product replacement, and productupgradation in line with continuous changes and demands of theoperators.
With the system of the products being evaluated at a centralizedpoint, units of the chain need not spend so much time with salesrepresentatives of various companies for individual evaluation.This helps in allowing individual units of a chain to spend moretime in other managerial functions.
Centralized purchasing reduces service and delivery requirementsand therefore management is easier. Many suppliers find supplyingto a central purchase to their advantage as a means of sharinginformation with a large group of business. In case of Centralizedpurchasing, instead of an individual supplier, large distributors oreven the manufacturers are interested in product supplies, toachieve their markets penetration better, and to seek marketingadvantage of this association.
The over all effect of centralized purchasing is to consolidate andcentralize the purchase system allowing even the smaller units ofthe chain to gain the competitive edge of volume purchases,otherwise enjoyed by large operation hotels. Why ? Becausesuppliers reward volume customers.
Is the centralized purchasing advantageous in all working conditions?
No
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There are certain disadvantages also. These are :
- The individual food service operator looses some autonomy indetermination of quality. In certain product ranges theadvantage of local product or local specials is lost, specially atreduced prices.
- The central purchase can be at times slow.
- The individual unit purchase managers loose supplier’s loyalty.
- The individual unit’s operators need to set aside their owncreativity and competitive urges in so far as a product lineis priced and it is mandatory on them to fall in line.
- The centralized purchasing depends on orders being placedon them by individual units weeks in advance of their actualrequirement. Sometimes these are done on monthly basis andsometimes on quarterly basis. For imported goods the ordersare placed on central purchase on yearly basis.
- Individual units are worried about the next supply in casethey miss the current ones. The forecasted requirementtherefore is wrong sometimes, the activity resulting in overprocurements.
Whatever may be the drawbacks, centralized purchasing is a wayof management of chain hotels, and is here to stay. The benefitsof economies of scale obtained by individual units through thecentral purchase option are many and great.
The Process of Centralized Purchasing:
Total requirements of all units of the chain are conveyed to acentral office. The quotations from various suppliers are soughtfor bulk quantities. Suppliers supply to a centralized point.
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To summarise:
The centralized purchase system therefore gives strength toindividual units of a chain by :
- being cost effective.
- bringing centralized evaluation of product line.
- bringing standardization of product line - greater choice ofmarkets.
- bringing reduction in service and delivery requirements.
- ensuring greater control over dishonesty of individual unitfood purchases.
- allowing crosscheck of quality of commodities by units of achain as well as the central purchase department.
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CULINARY ECONOMICSMATERIALS MANAGEMENT
RECEIVING
LEARNING COMPETENCIES:
At the end of this section the trainee should be competent to :
(a) Understand, identify and describe Receiving Controls.
(b) Understand the basic steps involved in receiving products andreceiving procedures.
(c) Understand the system of payment of bills.
(d) Understand the Post-Receiving activities.
RECEIVING PROCEDURES
For proper receiving a thorough knowledge is required of- Quality specifications.- Details regarding Price and Quality.
Post receiving follow-up procedures are very important to confirmthat the “right” products are being received.
Irrespective of the size of the operation, the basic receivingprocedures should be followed as products are received. Thefollowing are the steps in product receiving :
1. Check incoming products against the Purchase Order :Receiving should not accept :
a. Items not ordered.
b. Receive partial or no deliveries of required product.
c. Receive items of unaccepted quality.
The operation does not want to pay a higher-than-agreedprice. Checking incoming products against the PurchaseOrder removes possibilities of error.
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2. Quality – Check - Check incoming products againstStandard Purchase Specifications :
Checking incoming products against Standard PurchaseSpecifications requires trained receiving personnel. Ourcompany has Standard Purchase Specifications benchmarkedfor all products.
A representative of the user department is required to checkand accept specialized items for example those of ingredientsmeant for the food production department. Therepresentative recognizes the quality characteristics forevery item purchased. Cost of the products to the hotelunit is based on quality agreed upon.
Testing procedures at times help arrive at true qualitycharacteristics. Wherever necessary, especially in case offood products, it is necessary to check product temperature,weight, trim, grade and refrigeration stage. For examplefor receiving meat products/milk.
3. Quantity Check – Check incoming products against thedelivery invoices: The supplier provides the deliveryinvoice, which becomes the basis for processing payments.
A definite policy must be developed, implemented, andenforced for measuring, weighing, or counting all incomingproducts to ensure that the proper quantity of product isdelivered and billed.
After product quality and quantity are verified, the invoicecan be signed. An invoice is part of the andit trail.
4. Accept Incoming Products : This is normally done by signingthe delivery invoice. At this point, ownership of the productsis transferred to the property, and the products become itsresponsibility.
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5. Complete receiving documents : This is to make sure thatall information is provided. Information from the deliveryinvoice is abstracted and made into a daily receiving report(called DRR).
6. Move Accepted Products to Storage Immediately : Checkto see that products are promptly moved to the properstorage areas. Employee theft is possible particularly inrespect of food products at this point. Quality of productsneeding low temperature storage will deteriorate if they areleft at room temperature.
Delivery personnel should not be allowed anywhere, except thereceiving. Areas suppliers or representatives should not be involvedwith storage activities.
Delivery Timings
Receiving involves time-consuming but important tasks. Toaccommodate the schedules of responsible staff (those from thekitchen for example), delivery times can be limited. Non-acceptance of deliveries is common at certain times.
The receiving personnel need cooperation from other departmentsin the food service establishment or the hotel. They must coordinatepurchase requisitions from the departments with the deliveryschedules of suppliers.
Ideally, receiving should take place during slow periods in theoperation’s daily business cycle. By scheduling deliveries at thesetimes, the receiver’s undivided attention can be given to thereceiving duties. The establishment’s delivery hours should beposted on the back door as a guide for suppliers. These shouldalso be communicated to the supplier/s for compliance in writing.The receiver should be available during the times when deliveriesare expected.
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You’ll recall the Purchase Cycle at this point.
The Purchase Order, delivery invoice, and daily receiving reportmust be assembled. The three documents are routed, sometimesthrough the purchasing department, and eventually reach theaccounting department for final processing and payments.
In certain operations, the receiving staff is responsible for aninitial verification of invoice extensions. Invoice extensions involvechecking to ensure that the number of units purchased, whenmultiplied by the agreed-upon-purchase price, equals the supplier’scharge.
Even if receiving employees verify charges, the accountingdepartment should check over all arithmetic on invoices asan integral part of the payment process. This then is a dualcheck.
The daily receiving report (DRR) is sent to the user department,before forwarding to the purchase department. This helps toconfirm that types and quantities of products received, fit therequirements dictated by levels of product sales. This activity isspecially undertaken for Perishable and Highly Perishable products.(Happens as a procedure in our company)
CONTROLS IN THE RECEIVING FUNCTIONS
The planning and control that goes into the purchasing processis wasted if no one makes sure that the products delivered meetthe operation’s standard purchase specifications. Specific staffmembers only signs the invoice. Great care must be taken to ensurean effective receiving process. Receiving is an important part ofthe product cost control system.
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WHO RECEIVES? : RECEIVING PERSONNEL
Effective receiving requires knowledgeable receiving personnel.Staff must be trained to receive properly. They must know productquality standards and be able to recognize them when productsare delivered. They must also understand all receiving proceduresand know how to complete internal receiving records.
Receiving persons should ensure strict hygiene and sanitationstandards. This is important to safeguard the interests of healthof guests and employees. Maintenance of Personal Hygiene byreceiving personnel is of importance.
Receiving personnel should be able to use all required equipment,facilities and forms. Because of the volume of written informationto be processed, receivers must be literate.
Only selected and trained employees should be permitted to receivefood and non-food products. Properly trained receivers know whatto do when there is a problem with product deliveries. In thisrespect, the receiving function is just as important as the purchasingfunction.
The receiving area should be near the delivery door. Since properreceiving requires that most items be weighed or counted, accuratescales are necessary along with other equipment such as calculators,marking pens, rulers, files, thermometers, and transportationequipment.
Marking and Tagging
Marking and Tagging puts invoice information directly on items.For example, marking case goods or bottles of liquor with thedelivery date and price makes it easier to judge whether stockrotations is effective. While valuing inventory, cost data can betaken directly from the cases or bottles; this saves the time.
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Recording the unit price on products makes it more likely thatthe operation staff members will think about them as alternativeforms of cash. Therefore, they will be more careful in handling,portioning, and controlling waste.
Tagging is often used with meats and seafood and is done whenthe products are received. Handy tagging machines are availableto facilitate the process.
The following are the advantages of tagging meat or fishitems:
In order to complete the tag, the receiving employee has to weighthe product.
Calculating food costs is easier since the information about costson the tag can be entered onto a requisition form when the productis issued.
Theft and pilferage may be better controlled since the tag numberhelps to identify the products that should be in storage.
Inventory procedures are simplified since needed information isnoted on the tags. The physical inventory process is speedier.
Stock rotation can be maintained more easily. This is the goal ofthe first-in, first-out (FIFO) inventory system.
Calculating yields and understanding per portion and per kilogramproduct cost especially in the case of butcher products is facilitateddue to the process of tagging.
POST RECEIVING ACTIVITIES
Purchasing department staff should compare the purchase orderdelivery invoice, and other receiving records routed from the
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receiving department with their own copy of the purchasingdocuments.
They should check for the following :
� Whether any discrepancies exist between qualities, quantities,and prices agreed upon at time of purchase and thoseactually received.
� Whether any products are back ordered or out of stock.
� Whether results of expediting were effective.
� Whether any problems require invoice adjustments.
The role of the purchasing department extends far beyond theactual purchasing of items. Purchasing goals involving price,quality, quantity, supplier, and time are more consistently met byscreening source documents as they move throughout the variousdepartments. This provides the necessary audit trail and auditsystem of checks and balances for accounting.
THEFTS WHILE RECEIVING PRODUCTS
Examples of supplier theft possibilities when products are receivedare as follows :
� The supplier may deliver lesser quality items, for example10% fat in chicken, instead of 4% fat, and the operationpays the price for the higher quality.
� Short weight or short-count products may be delivered sothe food service operation pays for more products than itreceives.
� Thawed products may be represented as fresh, while theoperation pays the higher price for fresh.
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� Ice may be ground into ground meat products. Meat maybe sold with excess trim.
� Weight of ice and / or packaging may be included in theproduct weight on which price is based.
� “Slacked out” seafood - frozen fish, thawed and packedin ice - may be sold as fresh.
� Expensive cuts for example steaks and inexpensive meatmay be combined in one container, and when the entirecontainer is weighed, the operation may be billed for moreexpensive steaks than are actually in the container.
� One empty liquor bottle may be included in a case of 12bottles.
These are just a few of the many ways that suppliers can stealfrom the property by overcharging for amount and / or quality.To help guard against theft at receiving, some basic principlesshould be followed :
1. Have different people receive and purchase.
2. Train the employee to receive properly. Receiving is tooimportant to leave to whoever happens to be handy.
3. To the maximum extent possible, schedule product deliveriesat slow times so that receiving personnel, who may haveother duties, have time to receive correctly.
4. Have deliveries made to a specified area of the facility, andbe sure weighing scales and other equipment are availableand are used. Weighing scales and measuring equipmentshould be checked often for correctness.
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5. After receipt, immediately move products to storage. Chancesfor employee theft increase the longer products remainunattended.
6. Do not permit salespersons or delivery / route personsaccess to back – of – the – house production or storageareas. To the maximum extent possible, the receiving areashould be close to an outside exit and visible to managementpersonnel.
7. Lock the outside door of the receiving when the area isnot in use. Receiving personnel should have deliverypersons in sight during their entire visit.
POST RECEIVING PROCESS - BILLING
The Billing Process is the involvement of the accounts departmentin the procurement process. The steps are :
1. Receipt of a copy of the purchase order.
2. Receipt of the delivery invoice.
3. Checking of the Invoice Extensions, if any.
4. Delivery Invoice used to establish amounts owed to thesupplier. Amounts owed to the supplier serves as basic inputfor various finance related reports for example–food costreport.
5. Processing supplier’s bills for payment :
(i) Supplier sends a statement covering all delivery invoiceswhich have already been received by the accounts dept.through the receiving dept.
(ii) The invoices are retrieved on receipt of the statement.
(iii) Invoices received already are matched with invoice number,date, amount owed, and other information noted on thestatement.
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(iv) The total of all invoices is verified to confirm that theamount requested on the statement is correct.
(v) One payment cheque is made to cover all the invoices.
(vi) The invoices are attached to the statement and informationabout payment date, cheque number, cheque amount arerecorded. Rubber stamps are used to quickly andconsistently indicate needed information.
Alternately processing of supplier’s bills for payment can beachieved through inputs of invoice. The basic informationrecorded on each of the invoice remains same.
(i) No statement is sent separately by the supplier.
(ii) Invoice extensions are checked.
(iii) Assuming a few days to complete the activity of paymentthe invoices are filed for a future date of the month. e.g.if the payment date is 16th, then allowing say 3 days forthe payment process, the invoice is filed for the 13th. Thiswill allow time for that activity and for mailing thesupplier’s payments.
In either case, the statement with attached invoices or invoicesalone, should be filed by supplier name after payment. Copies ofthe purchase order are also filed to make documentation complete.
PROCESSING CHEQUES FOR PAYMENTS
Ideally all payments except petty cash expenses should be paidin cheque. Funds to pay bills are never taken out from day today revenues. The rule is to bank revenues first.
Payment by cheques and invoice / statement processing shouldbe done by different employees. As a process, ITC limited-Hotelsdivision has two signatories for cheques.
The invoice / statement with supporting records – purchase orderinvoice, and receiving reports – is given, along with the cheque,to a management official to sign. A specific person or supplier‘s
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organization should be designated on the cheque, rather than“cash” or “bearer”. Top-level management should routinely examinethe list of cheques written to keep current with new suppliers andtransactions.
COMPUTERISED RECEIVING SYSTEMS
Computer technology is now helping some food and beverageoperations with the receiving task. Fidelio Property Managementis one such system. The receipts are organised in such a way thatproduct delivery size, shape, volume, quantity, price etc is mentionedin a coded form, which is computer – usage friendly.
A scanner is used to “read” this information, and at the sametime, update the perpetual inventory levels and develop dailyreceiving and other reports desired by the operation. For example,once a receipt of various perishable and non-perishable productsare made, and entered, it is very easy to take a print out of areport of say, “tinned products received on x day” or “potatoesreceived from 1st of the month to 31st of the month”.
Computerization therefore helps in rapid generation of importantcontrol information with minimal chances of error.
ITC Maurya has completely computerized materials managementsystem. Traines of Welcomgroup Management Institute must makean affort to study the system and benefit from such learnings.
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CULINARY ECONOMICSMATERIALS MANAGEMENT
SUPPLIER SELECTION
LEARNING COMPETENCIES
At the end of this module the trainee should be competent to:a) Understand why it is important to select suppliers correctly,
and towards value creation to the hotel unit.b) Enumerate the factors that should be considered when selecting
suppliers.c) Understand the qualifications of a good supplier.d) Understand Informal and Formal buying systems.e) Understand the various approaches to suppliers.f) Differentiate the ways of identifying supply sources.g) Create systems for evaluating suppliers of in-use products and
those for suppliers of new products.
SUPPLIER SELECTION
The Objectives of an effective Purchasing System have beendiscussed. Let us examine them again.
The Objectives of Effective Purchasing should be Purchasing ofthe right product, of the right quality and right quantity, at theright time and price from the right supplier.
In certain market conditions supplier selection options are limited.There may be only a few possible suppliers for purchases in remoteareas. In situations of a seller’s market, a product may beavailable only with a specified distributor or retailer. This oftenhappens in case of branded products, and also in the case ofequipment purchase. In a seller’s market, the objectives mentionedabove, are sacrificed in terms of quantity, time and price.
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In such a seller’s market, decision has to be taken whether to buythe product or not. The product can be removed from offer tothe hotel clients.
Taking off a menu item from the menu offer due to a majoringredient being subject to seller’s market, is an example of thesame in the food and beverage business.
Let us examine cases when management is able to select froma number of suppliers offering products of similar quality. Thisis called a Buyer’s market. How is the supplier selection decisionmade in these buyer’s markets?
Styles of Buying
Many elements affect the supplier’s selection process. The goalsof purchasing from the right supplier should be realized. Thepurchasing system should be changed from routine order placingto careful considerate buying. All elements that affect supplierselection process should be considered.
Let us examine two types of suppliers, having different volumesof business.
Supplier A has a relatively small business volume. He may havedifficulty in meeting large volume requirements of a large hospitalityorganization.
Supplier B, in total contrast, is a large volume dealer. This typeof supplier may have difficulty in meeting small volume requirementsof a small sized hospitality organization.
Informal Buying Methods :
A systematic approach to purchasing system should be made. Itis therefore essential that management practices are incorporatedinto these Purchasing Systems.
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To be cost-effective is the goal of management practices. Themodules on Costs and Purchasing System explain this eminently.We have also related right purchases of products towards valuecreation for a client, and his satisfactory experience.
Value to a client can be reduced due to incorrect purchasing.
Incorrect purchasing can be• in terms of type of product, or• in terms of quantities, or• in terms of quality of product, or• in terms of cost of subject purchase, or• in terms of duration of completion of the order.
The above can be in part measure or in totality, or in combinationof one fault and other.
Irrespective of the hotel unit and its volume of business, correctmethods should be used to monitor purchasing systems.
Let us recall the topic on security concerns in Purchasing.
A Purchasing system may purchase regularly from the samesupplier. They may therefore build complete trust in the supplier,and may use very informal buying methods.
The most important part of a purchase negotiation is Price. Thetrust between the purchaser and the supplier may be so muchthat an order is placed without inquiring about the price.
Purchase has a cycle of activities. Proper in house written recordsof products, quantities required, standard purchase specificationsand agreed upon price are kept. Sometimes these records are notkept, and a purchasing system depends on the supplier orsupplier’s representative to do the needful.
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These types of purchasing methods lead to inefficiencies anderrors. An individual’s memory cannot be trusted. A person whoorders may not be the one who receives incoming products.Without an in-house record of purchases, there is no way toconfirm that incoming items match those ordered in terms ofpurchase price, quantity and quality.
Total trust, as noticed from above can lead to errors. Parametersof effective purchase systems are not met, and ordering isambiguous.
The above mentioned are examples of Informal Buying Methods.
Formal Buying Methods
Purchase Order System is a Formal Buying Method.
Selection of a supplier by the operation is often a result of thetype of purchasing system used. Suppliers should make effortsto understand the systems of the hotel unit and fit into the same.
Supply Concepts in Purchasing SystemsProducts received by a hotel unit are directly related to thepurchasing system employed. System gets what it demands.Systems vary as per the nature and volume of the business, andsupply concepts reflect a variety of individual approaches.
Short - Term vs Long - Range : Suppliers sometimes only storeitems. When a product is needed by the hotel, the same is deliveredto him by the supplier. If orders are not placed on the supplierin time, the hotel unit can get into an emergency situation in sofar as that product is concerned. The supplier may be able torescue the hotel unit. This is a short-term focus.
As against this the long-range focus involves data recording andcareful handling of the same. This data management could be for
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a whole range of product supply related issues, that is quality,quantity, type, cost per unit and reasons of purchase. The datamanagement can also be for quality of service of the supplier.
Usage of this data to advantage by the hotel through formulationof strategies and goals is the long-term focus. Planning becomesdetailed and consistent.
Quotations received from suppliers are mostly for fixed periodsof time. Hotel division- ITC limited has a system of contractingwith various suppliers for a year-long contract. Therefore, it is notpossible to change suppliers, before the term of supply contractedfor has expired.
It is totally dependent on managers of hospitality organizationsto choose a system based on the short term or one linked to long– range commitments, or a combination of both, for differentproducts.
Number of Suppliers : Many factors decide the number ofsuppliers for a product in food business. These facters have beendiscussed later on in this module.
Some food service operations require fewer suppliers than others.By consolidating buying efforts of a particular period, orderingis simplified and the operator has an opportunity for volumediscounts. This is specially so for grocery items.
Dependency on a single supplier is a risky proposition. Lack ofcompetition allows for indirect increase in costs. Supply shortages,deterioration in quality and increase in price are the burdens ofhaving a single supplier. In certain markets however, a singlesupplier for a product is beneficial. This is basically because ofhis risk-taking capacity and efficiencies of delivery.
Since the overall goal is Profit - maximizing, value in purchasefunctions is important and alternate vendors are selected as
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approved suppliers. A good business relationship results from atleast two suppliers for most of the products. Non-perishables arebest purchased in bulk from one vendor. Orders for perishablesare often split among several suppliers, with a primary andsecondary supplier for each category. Our company does thispractice.
Market Information : Some suppliers automatically provideformal, written market information each month. In certain instances,suppliers telephone managers with market updates, as conditionsof supply change.
Sales representatives are another source of information.However, sales representatives feedback may be purposefullyinadequate, in so much as he has to sell a certain numbers ofa product, which may get outdated, with technologicalimprovements. Due to a sales representative’s requirements to sellfixed numbers of a product, he may not publicize and recommenda new product with technological improvements. This mayhamper purchasing decision.
Some suppliers provide additional service in the form of computerdata. This service allows management to identify where controlefforts must be focused. Suppliers furnish price reports on a regularbasis.
Quality vs. Price : Inadequate knowledge of standard purchasespecifications results in poor standards of Purchase Orders.
Quality is difficult to control when written standard purchasespecifications are lacking.
In some other supply systems, quality is defined by management’sstandards. The increased emphasis on quality helps ensure thatthe operation is sure to receive the products specified. In addition,
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the cost and quality control systems of the operation arestrengthened. This improves customer satisfaction, and is directlyresponsible towards a brand gaining strength.
Intended Use : Due to the mention of purchase specifications,the intended use of the product is accurately defined. Yields ofproducts enhance due to the supplier understanding the intendeduse. In case of short fall in the quality of the product, subsequentto this, due to reasons beyond control, the supplier may offeradditional benefits, discounts, or additional portions / productsto meet up with the original quality / yield requirement, and alsogive substitutions.
Values in the purchasing system are increased whenmanagers control. Checks that address quality, service, and priceat unit level, have to be built into this purchasing system. On theother hand, value is reduced when the amount of time thatmanagement spends controlling the system outweighs thebenefits received.
Selection of a Supplier
How does an institution select a supplier?A supplier is selected through the Purchase Department.
1. A supplier can be one who has supplied earlier to theinstitution.
2. A new supplier can be selected.
Previous Supplier
He is one who has supplied same or similar goods to theinstitution already. There is, therefore an awareness of the qualityof goods supplied, the price that he charged, the type of servicethat the supplier provided. e.g. speed of response, follow upefforts etc.
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New Supplier
When selecting a new supplier, caution must be exercised anddetailed enquiries made to establish credentials of the intendedsupplier.
Several Enquiries to a new Supplier include :
1. Full details of the firm and the range of items they are selling.2. Copies of the recent price lists.3. Details of their trading terms.4. Details of other customers.5. Samples of products.
Subsequent to the study of the above, a visit to the premises ofa potential supplier is made.- This helps to understand the size of the supplier’s organization.- This helps in understanding first hand the range of products
the supplier is marketing.- The storage facilities of the supplier.- The processing facilities (if any)- The transport owned by the supplier.- This helps to evaluate the quality of hygiene and sanitation
in the systems of the supplier• His procurement processes.• His storage systems.• His supply systems.
This involves spending time with a prospective supplier, but worthit to- Develop a healthy and satisfactory business relationship.- To develop a supplier who is willing and financially capable
to stock the quality and quantity of products that an institutionpurchases.
- To develop a supplier who is knowledgeable about thecommodity he is likely to supply.
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- To develop a supplier who is able to offer a satisfactory deliveryperformance, with an acceptable price range.
Subsequent to the above process, the selected suppliers areconsidered as approved suppliers and trial orders are given tothem to further judge their services.
After having purchased from the supplier then performanceis periodically evaluated, based on
1. Price Performance
2. Quality Performance
3. Delivery Performance
PRICE PERFORMANCE
Let us examine two types of suppliers :
One supplies a product of lower quality at a lower price andthe other supplier may supply a product of superior quality athigher rates.
Both suppliers are selling their products. It is dependent on thepurchaser to choose the quality that he requires. Once a qualitystandard is set, other parameters of delivery performance are setup, the price line of the different suppliers is examined. The lowerthe price the better it is.
QUALITY PERFORMANCE
Consistency is the key word. A supplier should be consistent withthe quality of each of his supplies.
To ensure this consistency, the purchaser, to obtain desired quality,lays down standards. These are called standard Purchasespecifications. We have already discussed these in the module onPurchase Systems. Consistency in meeting the standard purchasespecifications would give a high quality performance rating.
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DELIVERY PERFORMANCE
A supplier is of no use if he supplies product of good qualityagainst laid down purchase specifications, is price competitive,but does not supply in time.
The ability of the supplier to meet agreed delivering times anddates with the purchaser is called delivery performance.
Goods should be delivered when required, and also, when staffqualified to check these goods are available. Late deliveries all addto pressures of work at the purchaser’s receiving and consumptiondepartment. The nearer the scheduled delivery date and time,the higher the delivery performance rating.
A system of evaluating supplier’s performance during a performanceperiod is to give numerical ratings.
Price is measured by comparison of prices of each supplier of thesame product with the same standard Purchase Specificationsin a known trading period. The lower the price, the higher therating figures.
Quality is measured by the ability of the supplier to provideproducts consistently and matching the required standard PurchaseSpecifications. The performance is calculated as percentage of thetotal orders placed on the supplier. Poor quality of supplies,returned, would lower the rating figure.
Delivery Performance would be calculated against the percentageof deliveries made on time. The majority of deliveries made ontime would give a high rating figure.
To summarize: Who is a good supplier?
A good supplier is one with whom the organization can have along-term relationship. The characteristics of a good supplier thatwe have examined are :
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• The supplier’s capability and commitment to perform well.
• The supplier must be able to consistently provide the properquality and quantity of products.
• The supplier must meet requirements of hygiene & sanitation.
• The supplier’s understanding of the organization’s market; andone who contributes by positive ideas of how best to meet thismarket’s needs.
• The supplier must inform the organization about new orimproved products, which may be applicable to their operations.
• The supplier must provide timely information regarding pricechanges, to ensure price – competitiveness.
• The supplier must have an ongoing interest in improvingproducts and services provided to the purchasing organization.
• The supplier should follow up on problems, resolve difficultiesthat arise, and negotiate any concerns of the business of thepurchaser.
• The supplier must be financially capable of growing with thepurchaser’s business.
• The interests of the purchaser and the supplier are served whena co-operative, working relationship exists.
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CULINARY ECONOMICSMATERIALS MANAGEMENT
STORING AND ISSUING
LEARNING COMPETENCIES :
At the end of this module the trainee should be competentto :
1. Understand the objectives of a storage system for foodservice operations.
2. Understand the definition of a storage area.
3. Understand the types of storages.
4. Understand how to plan storage spaces.
5. Explain how an inventory classification system supportsdesigning cost-effective inventory control procedures.
6. Understand the ABCD inventory classification system.
7. Distinguish between “directs” and “stores” in relation tothe inventory systems of food and beverage operations.
8. Identify steps that can be taken to ensure security in storageareas.
9. Describe procedures for maintaining product quality duringstorage.
10. Understand the reasons to design and implement effectiveinventory record keeping systems.
11. Understand why should inventory turnover rates bemonitored?
12. Calculate an inventory turnover rate.
13. Understand physical inventory system and perpetualinventory system.
14. Understand methods used to determine the value ofproducts held in inventory.
15. Identify concerns of a computerized inventory system.
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CONTROLS IN STORING AND ISSUING
The storing and issuing control points play an important role inlinking receiving and production. Storing and issuing systemsaffect product costs and quality.
Products in storage represent money in terms of both their initialcost as well as the cost to replace them if they are stolen, spoiled,or damaged because of improper storage practices.
There are many reasons why strict and issuing controls are neededin food and beverage operations. Products can be stolen whenissued from storage to production areas. Also, mistakes in issuingcan result in more products being used in production thannecessary. This, in turn, can result in wastage and unnecessarilyhigh costs.
Moreover, since systems of assessing daily food and beverage costsare based, in part, on the value of daily issues, it is essential toknow exactly how much of each product is issued.
STORING CONTROLS
As soon as received products are moved to and placed in storageareas, their quality and security can be ensured by the controlprocedures built into the hotel’s storage system. The principles ofeffective storage system for both food and beverage products focuson three primarily concerns:
1. Keeping products secure from theft.2. Retaining product quality.3. Providing information necessary for the financial accounting
system – Audit Trail.
STORAGE
Storage involves arranging goods in specified areas within spaces
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earmarked for particular materials, till they are required for useby the production, service or other departments. The planning ofstorage spaces depends on three basic factors :
1. Nature of foods to be stored.2. Quantities in which food are stored.3. Length of time for which they are stored before use.
TYPES OF STORAGE
Depending on the speed with which foods spoil, they are classifiedas perishable, semi-perishable and non-perishable, each typerequiring different types of storage conditions. These have to bekept in mind at the time of planning storages.
There are basically two types of storages, dry and low temperaturestorage. These are further subdivided according to the temperaturesrequired.
PLANNING STORAGE SPACES :
Planning and set up of storage areas depends on a hotel’s• menu,• service excellence of the supplier, and• purchase policies.
Menu / Product offerThe nature, complexity and size of a menu decides the requirementsof ingredients. The Chefs should also advise the U.F.C. about theapproximate quantities of these ingredients that would be requiredin a working period.
Service excellence of the SupplierExcellence of service of supplier supports a hotel unit in storingless quantities of products required.
On the contrary if the services of a supplier are not upto the mark,or if the hotel is located way out of the local market, additionalquantities of ingredients would need to be stored.
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Purchasing policies of the hotel.Dry ingredients can be ordered on a “Just in time”, weekly,fortnightly or monthly basis.
INVENTORY CONTROL POLICY
There is need for controls in operations, and the need to be cost-effective. However, tight controls are not practical for regulatingcosts of all the food and beverage items.
What is to be done? Each property has to understand the costsof its menu item ingredients and decide control measures. Managersand Chefs should control food & beverage menu item ingredientsin relation to their costs per portion or in relation to theirperishability. This rule also governs theft prone items in relationto their costs.
One approach that has been universally accepted and practicedis the ABCD classification for Foods in Inventories. Food productsare categorized according to:(i) their perishability.(ii) their cost per serving.
Let us examine the categorization :
Class A products : High in perishability, High in cost per serving.eg : Fresh shellfish, fresh fish, fresh meats.
Class B Products : Low in perishability, High in cost per serving.eg : Frozen seafood, frozen meats, canned seafood, canned meats,frozen vegetables, preserved speciality items, eg : Stuffed Olives(in India), Canned Imported Goods.
Class C Products : Comparatively low in perishability,Comparatively low in cost per serving. eg : Fresh poultry, dairyproducts, fresh produce.
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Class D Products : Low in perishability, Low in cost per serving.eg : Spices and Seasonings, Condiments, Staples.
High –––––––––––––––––– Perishability –––––––––––––––––– Low
High Class A - Products Class B - Products
High in Perishability Low in PerishabilityHigh in cost per serving High in cost per serving
eg: Fresh Shellfish eg: Frozen seafoodFresh fish Frozen meatsFresh meats Canned seafood
Canned meatsCanned Imported goods
Cost per Frozen vegetables Serving Preserved specialities.
Class C - Products Class D - Products
Comparatively low in Low in perishabilityperishability Low in cost per servingComparatively low in costper serving
Eg: Fresh poultry Eg: Spices and Seasonings Low Fresh produce Condiments
Dairy products Staples (Flour, Sugar)
For purpose of inventory, food products are often separated intotwo categories : directs and stores.
Directs are products that are purchased more or less for immediateuse. These are perishable products and are purchased several timesa week. These products are relatively inexpensive. Some examplesare fresh fruits, vegetables, dairy products, etc.
These products are called ‘Directs’ because they are transferredimmediately to production areas after receiving. The products canbe held in workstation storage areas. The primary concern withDirects is receiving, rather than storage.
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Directs are :
(i) not entered into storage records. They are immediately sentfrom the receiving to the production department. These areitem of perishables, highly perishables, milk products, importedgoods, or goods meant for special occasions.
(ii) not considered part of the inventory system.
(iii) considered part of the food costs of the day on which theyare received.
Stores are relatively expensive and generally of non-perishablenature.
Stores are :
(i) purchased less often than Directs. e.g : Once a week, oncea month or even once in several months depending uponusage rates, inventory levels and type of products.
(ii) part of the inventory system.
(iii) purchased in quantities necessary to rebuild inventory levels.
(iv) part of a minimum / maximum purchasing and inventorysystem.
(v) tightly controlled, mostly on count / weight basis.
(vi) necessarily part of a well defined issuing system to removethem from inventory.
At this point it is very important to understand the InventoryControl Procedures.
INVENTORY CONTROL PROCEDURES
There are several reasons for designing and implementing effectiveinventory record keeping systems:
• Financial accounting systems need inventory values to generatemonthly statements. The value of products in inventory isconsidered part of the property’s current assets.
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• Daily control procedures may require knowing the quantity ofproducts currently available.
• Inventory records help managers determine not only when toorder new products, but also how much of each product toorder.
Security Concerns in Storage Areas :From the understanding of ABCD Inventory Classification andthe difference between “Direct” and “Stores”, we know whatitems are to be tightly controlled and what locations are to beconsidered storage areas.
As a direct corollary we must design the security procedures toensure correctness of usage, and keeping products secure in storetill they are sent to the production areas. The following are thesecurity procedures:
(i) Limited Access : Allow only authorized personnel in the storerooms. These may include management, and staff of receiving,Stores and Control department. The requirement is to reducepossibilities of employee theft.
(ii) Lockable Storage Areas : The Store room, the freezer, andbeverage storage areas should be lockable. One section of thestorage areas may be used to store expensive items. This sectioncould be a lockable dry storage area or a lockable reach inrefrigerator or both. Store room personnel can still access the othersections of the store.
Normally there is a locked storage area maintained with ina locked storage area. This could contain liquor or expensiveitems.
Store room Key Control :
Keys should be accessed by only staff members. Locks should bechanged in case of a loss of keys and when employees leave
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the organization. The custodian of all keys is the U.F.C.Instead of keys, combination locks with changeable combinationor plastic card “swipe” system as used for guest rooms can beused. The purpose of all the above is to prevent thefts of products.
Maintaining Quality during Storage :
Quality of products in storage can reduce due to improper storagepractices. All products spoil. Some spoil very fast, some take moretime to spoil. Same is the case with wines and beers. We learnteven that costs are incurred even when products are no longeravailable for sale. Products that spoil are no longer available forsale. If products are still sold then client value is affected.
What is to be done? :
Rotate Products :
The First in - First out (FIFO) inventory rotation method is a goodrule. The products hold in inventory the longest, shall be the firstto be issued to production areas.
Newly received products should be kept behind or underproducts already in storage. These should be marked with datesof receipt. At the time of issuing comparison of the dates of receiptis done.
Properly Controlled Environments :
• Maintain proper temperature, humidity control and ventilation.Use accurate thermometers and check them routinely. Desiredtemperatures of various storage areas have been discussedearlier in this module itself.
• Do not allow discard of spoiled items without the authorizationof the management. The effectiveness of quality control methodscan be assessed.
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Sanitation Practices :
Set schedules of cleaning procedures. This applies to all types ofstorages. Equipment of storage, eg : racks, bins, trays should bemade of non-porous and easily cleanable material. Shelving unitsshould permit air circulation.
Proper Storage :
Products should be stored properly. Store products in their originalpacking, away from the wall, to allow air-circulation. Some itemsthat absorb odours, such as flour should be stored away fromproducts that give off odours such as onions. Opened productsshould be stored in clean, labeled, dated and covered containersdesigned for food storage. Let us discuss various processesregarding storeroom, storeroom controls, and inventories.
STORE ROOM REQUISITIONS
The requisition is used to communicate information from therequesting department (for example, the kitchen), to store roompersonnel. This form identifies the type and quantity of productto be removed from the stores inventory.
Based upon this authorized requisition, items are issued fromstorage to the requesting user department. The term ‘user’ refersto the line operating department requiring the items to be issued.
A tight fisted approach to authorization of consumption isdesirable, and this is most effectively done with a STORE ROOMREQUISITION.
Specimen of a Store Room Requisition Form -(See Annexure on page 163)
Inventory TurnoverGood food management demands that sufficient supplies of foodbe available for use when needed. However, excessive amountson hand leads to :
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1. Spoilage, because food must be held too long, before being used,2. Excessive capital tied up in inventory,3. Higher than necessary labour costs to handle the greater
amount of food,4. Greater than necessary space allocated to storage and,5. Unwarranted Opportunities for theft.
It is impossible to establish a set number of food items that shouldbe in the storeroom or a fixed value in absolute terms for foodin inventory. Why? This is because :
1. Larger establishments need greater storage space and morefood in storage than smaller ones, and
2. All food service establishments have slow periods of businessduring the year, when less food than normal is needed on thepremises.
3. The number of products in the inventory are dependent onthe type and class of business product offer to client. For foodand Beverage this is compounded by the requirement ofdiversity on buffets and the inherent creativity
One important function of keeping accurate inventory records is toallow managers to assess how much money is being invested innon-productive inventory. The value of goods in inventory istypically calculated on a monthly basis to provide information forfinancial accounting systems; for example ICE (Internal ControlEfficiency) meetings. Non- productive inventory refers to productsin storage that are not issued to production areas during the timeperiod (usually monthly) covered by financial records.
In order to determine how much money is tied up in non-productive inventory, managers measure the inventory turnoverrate. The inventory turnover rate shows the number of items ina given period, that inventory is converted or turned intorevenue. In financial terms, it measures the rate at whichinventory is turned into food or beverage costs required to generatefood and beverage income.
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Management must in some way determine that appropriate – butnot in excess- levels of food are kept in inventory. One methodis to calculate how often the inventory of food on hand has beenordered and used during a period of time.
Let us examine two extreme parameters of ordering. If one wereto order sufficient food to last one full year, the amount wouldbe excessive and would lead to waste, inefficiency, and greaterthan necessary costs. On the other extreme, if one were to orderenough food to last only one day, stock-outs discussed earlierwould result. Savings would surely come in by purchasing inlarger varieties.
Somewhere in between the two extremes is an idealized amountof food to have on hand for a specific period. This amount willvary from place to place, and will be determined by many factors,including the amount of cash available for such purposes, thespace available for storage, and the time necessary to receive foodonce it is ordered. For most organizations, an amount to last oneor two weeks is considered normal.
To measure how often food has been ordered and used, calculatethe frequency of turnover of the food in the inventory. For example,if an organization orders and uses an inventory two times eachmonth, an inventory turnover of twenty-four times each yearwould result, and this is in line as mentioned above. All food isnot turned over during the prescribed period of time. Perishableswill turn over daily, and some non-perishables, for example canneditems, will turn over much less frequently.
Calculations are typically made when physical inventories aretaken – once a month.
Inventory turnover rates can be determined for food and beverageproducts in storage.
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The inventory turnover is calculated by dividing the cost of food(or beverages) used by the average food (or beverage) inventory.The average inventory value is determined by adding the valueof inventory at the beginning of the month to the value ofinventory data the end of that period and then dividing the sumby two.
For example, to calculate the inventory turnover rate of foodproducts for a month, assume the following data:
Food inventory value at beginning of month Rs. 102000Food inventory value at end of the month Rs. 114000Cost of food used Rs. 273000Average food inventory = Beginning Inventory + Ending Inventoryfor month 2
Average Inventory = 102000 + 114000For month 2
= 216000 = Rs. 108000 2
Food Inventory Turnover = Cost of food used for monthAverage food inventory for month
= 273000 = 2.53 times. 108000
In this example, the value of inventory is turned into revenue onan average of 2.53 times during the month. This means that 2.53times the average amount of daily inventory must be purchasedsometime during the month to keep the operation supplied.
What is the meaning of the above ?
If each month’s results were the same, (hypothetically), the totalfor the year would be 30.36 (2.53 X 12 months) times each year,or once every 1.71 weeks (52 weeks divided by 30.36). So thatInventory turnover would be once every 1.71 weeks, in line withour understanding
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The inventory turnover rate is an important tool to use inmanaging inventory levels. As this rate decreases, more money isbeing invested in inventory. If too much of the property’s fundsare being used to purchase excess products for inventory- cash flow problems may result and create other difficulties
for the operation.- products may spoil or otherwise deteriorate in quality because
of excessive inventory levels.
On the other hand, as the turnover rate increases, less money isbeing invested in inventory. As average inventory levels arereduced, however, a point will be reached at which stock-outsbegin to occur. Guest dissatisfaction and operating problems canresult. This has been explained earlier.
Therefore, to properly control the property’s investment in inventory,managers must determine the best turnover rate for their particularoperations. This process requires monitoring.
If the turnover rate is calculated monthly, the manager can learnof any increases or decreases in inventory turnover and respondaccordingly. This method is detecting turnover trends.
It may also be a good idea to calculate turnover rates for specificproduct categories. One would expect highly perishable items(such as fresh meats and seafood, fruits and vegetables) to turnover more rapidly than less perishable items (such as spices staples,and frozen or canned products).
INVENTORY SYSTEMS
Inventory Recording Systems
This is necessarily a Store room Accounting and Control System.Food in storage represents a substantial investment to the foodand beverage operation, which spends 20% or more of theirincomes on food purchases.
Inventory control is the management of storage activities by
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accounting personnel, and not by the user department. Throughthe separation of duties and responsibilities, the accountingdepartment discourages theft and pilferage by being closelyinvolved with storage activities.
There are two basic kinds of record keeping systems for productsin storage: physical inventory and perpetual inventory. A physicalinventory system involves actual observation and physical countingof stored products on a periodic basis.
A perpetual inventory system involves keeping a running balanceof the quantity of stored products by recording all newlypurchased items as they enter storage areas and all quantitiesissued from storage to production areas.
Physical Inventory System
A physical inventory system is used to assess the value of foodand beverage products in inventory on a monthly basis. Inventoryvalue is counted as a current asset and inventory values, bothat the beginning and end of the financial period, are a factor inassessing food and beverage costs, and calculations of FoodInventory Turnover.
The Unit Financial Controller decides the design of the physicalinventory system.
What products should be considered in making an inventorycount?
This decision is partially related to the question of which are tobe considered storage areas under the control of the inventorysystem. For example, does inventory include products in broken-case and work station storage areas? What about products inprocess, such as frozen poultry thawing in the refrigerator? Whatitems are “stores” and included in inventory, and What items are“directed” and excluded from inventory?
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How should monetary value be assigned to products in inventory?
1. One method is to calculate the actual cost of stored productsat the time the physical inventory is made.
2. Another method is to use the average costs of stored productsover several inventory counts.
3. The last-in, first–out (LIFO) inventory valuation and
4. The first-in, first–out (FIFO) inventory valuation.
Under the LIFO system, the costs of the products most recentlyadded to inventory (last in) are the costs assigned when productsare issued (first out). This leads to cost of sales figures that moreaccurately reflect current replacement costs. It also tends to createa smaller total inventory value. That is, since the most recent (andusually most expensive) costs are the first to be “issued”, theremaining inventory is made up of the earlier (and usually lower)costs.
Conversely, under the FIFO system, the oldest (and usually lowest)costs are “issued” first, leaving the more recent (and usuallyhigher) costs remaining in inventory. This creates a higher totalinventory value and a lower cost of sales.
How should costs of such items as opened containers of spicesin production areas be handled?
Often, the cost of such opened, unused items is assumed to averageout. In other words, their value is thought to remain approximatelythe same from month to month. So, once an estimated cost isestablished, it can be used monthly.
What procedures should be used in counting the products ininventory?
Persons involved in managing storage areas should not takeinventory count alone. Perhaps the food inventory can be taken
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by the Chef, or an officer of the Food & Beverages ControlDepartment, while the Food and beverage manager takes thebeverage inventory. In both situations, a representative from theaccounting office can assist in conducting the physical inventory.
As stored products are observed and counted, a physical inventoryform can be used to record inventory information. When reviewingthe form, note:
1. Products can be listed in the same order as they are foundin the storage area (or on the perpetual inventory form). Listingproducts in this sequence makes the task of locating items onthe form easier when taking the inventory count. It alsoreduces the likelihood that products will be missed wheninventory is taken.
2. The storage unit is the basis on which products are purchasedand costs are assessed.
3. The amount in storage is determined by actually counting allitems in storage. With one technique, one person counts whilea second person records the quantities on the inventory form.In another, two people can make independent counts andcompare results before entering information on the inventoryform.
4. Purchase price is the cost per storage unit of the product. Priceinformation is easier to record if products are marked withtheir unit prices before they are stored.
5. Total price is the total cost of the amount of each product ininventory, and is calculated by multiplying the number ofstored items by the purchase price per storage unit.
6. The next two columns are used to repeat the above inventoryvaluation procedures for a second month.
7. The total food and beverage costs calculated by the physicalinventory are given to accounting personnel to use in developingfinancial statements. They can also be used to calculateinventory turnover rates.
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Physical Inventory formA physical inventory indicates only how much of eachproduct is in inventory and the actual value of all stored products.Two serious disadvantages of a physical inventory system arethat it does not indicate how much of each product shouldbe available and what the value of products in inventoryshould be. A perpetual inventory system compensates for theseproblems.
Perpetual Inventory System
It is one of the most important accounting control tool.
As items enter the storage, the quantity is recorded on theperpetual inventory record, to show an increase in inventory. Asitems are removed by using the requisition form, the quantitydepleted is also recorded. This running balance enables thecontroller (a member of the accounting department), throughphysical observation and count, to match how much product isavailable to how much should be available.
Differences between these figures give a measure of the effectivenessof inventory control systems.
Specimen of a Perpetual Inventory Form(See Annexures on page 164)
Controls of these type assist the purchasing function in thefollowing ways:
1. As theft / pilferage is curtailed, quantities of products requiredin inventory are reduced, and as a result, the total amountsof money committed to inventory is decreased. At this pointof time understanding of the Inventory Turnover is important.
2. Since a Perpetual Inventory system logs item quantity, suchrecords provide the usage rates and other inputs useful inmaking purchase decisions.
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3. A Perpetual Inventory system reduces stock – outs caused byinaccurate record-keeping.
Prevention of losses represents :• A real saving to the Operation,• and also contributes to the maintenance of inventory levels.
Perpetual Inventory system of record keeping is not necessary forevery item in the store, but should be done for “A” Value Productsat least, i.e. those that represent the largest portion of food costs,either being expensive, or by virtue of their high consumptionpattern.
Bin Card SystemA bin card provides further control over the storage of products,specially the expensive ones. A bin card system is useful to controlspecial items.
A bin card is a small index card that is affixed to the shelvingreserved for these items. The quantity put on or taken off theshelves is noted on the bin card. In this way, a running balance(perpetual inventory) is maintained and managers can quicklyverify available amounts by comparing a physical inspection withthe quantity indicated on the bin card. Both these totals should,of course, equal the amount noted in perpetual inventory records.
Incorporating a bin card system with physical and perpetualinventory procedures provides for a very tight inventory controlsystem.
Format of Bin Card - (See Annexure on page 165)
A physical count is still necessary with a perpetual inventorysystem to verify the accuracy of the inventory balances. Whenusing a perpetual inventory system, staff members who maintainthe perpetual inventory records should not perform the physicalinventory used for verification.
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When the physical count of a product differs from the quantityindicated on the perpetual record, a control problem may exist,and management must determine the reason for the variance.Perhaps products are not being recorded at the time of receiptor issue, or perhaps theft is occurring. The purpose of controlprocedures is to indicate when such problems exist. Management’stask is to discover why a problem exists and, of course, to correctit.
Computerized Inventory Management :ITC Hotel Maurya - The Luxury Collection has inbuilt acomputerized inventory management system. All trainees areadvised to study the system.
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CULINARY ECONOMICS –FOOD PRODUCTION CONTROLS
LEARNING COMPETENCIES :
At the end of the module the trainee should be competent to :
1. Describe the process of food production planning and itsimportance.
2. Understand food production quantity requirements for varioussegments of business.
3. Understand the value of trends to estimate food productionrequirements.
4. Understand the Weighted Time Series method to forecast foodproduction quantity requirements.
5. Understand Yields, production losses, and Standard Yields.
6. Understand calculation of Yield percentages.
7. Understand the process of using Yield percentages to calculatecost per servable unit.
8. Understand calculation of Standard Portion Cost.
9. Understand process to calculate Standard Food Cost Percentage.
10. Describe the advantages of Standard Portion sizes.
11. Understand how to use Standard Portion sizes.
12. Identify important control procedures for food productionareas, including control of quantities of food production.
The key requirements of a business are :
• To offer good value to a client. Value has already beendiscussed on page 54.
• To generate revenues and profits.
Profits are the key pre-requisites of a business. Culinary businessesbehave in the same way.
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If the above two key requirements of the business are met, it is goodbusiness.
Controlled food production in hotel business ensures workingtowards the goals of cost-effectiveness.
ITC Limited, Hotels Division has defined Food production Qualitystandards. What needs to be established are the Quantity standardsof Food Production.
The quantities of Food Production vary due to the variation in thesize of client foot-falls.
Food production is labour-intensive activity. The task of managingand controlling food production are impossible to disconnect frompersonal supervision, and direct through personal experience.Experience therefore counts a great deal towards establishingquantities of food production.
FOOD PRODUCTION PLANNING
Food production planning is aimed towards :
• ensuring quality food products.
• dining experiences that meet or exceed guest expectations.
Food production comprises of the following three control points:
• preparing.
• cooking.
• holding.
In essence, food production planning is simply getting ready forproduction. Planning ensures that raw products, personnel, qualitydelivery systems, and equipment are available when ready.
Under or over utilization of resources should be avoided. Planningensures enhanced possibilities of removing serious economic andmarketing faults.
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Each hotel unit of ITC LIMITED is unique in terms ofculinary product offers. Each food production unit isunique accordingly. In addition, the personal culinary strengths ofeach of the Executive Chef or Master Chef define the overalltrend of client affections, and in essence the quantum of foodproduction.
Each hotel unit of ITC LIMITED must develop specific proceduresfor production planning that are suited to its own unique needs.However, a typical strategy is to first forecast productionrequirements and then translate these requirements into productionplans.
ESTIMATING FOOD PRODUCTION REQUIREMENTS– EXPERIENCE OF CHEFS
As mentioned above, the experience of a chef is invaluable indetermining quantities of food production. “Gut-feeling” and“intuition” add value to the “experience-value” of a chef.
ESTIMATING FOOD PRODUCTION REQUIREMENTS– TRENDS
Trends set in culinary businesses. These trends change due to
• Type of clients and their requirements.
• Market conditions.
Food Festivals and Food Promotions help set trends and increasefoot-falls into the business. It is these Food Festivals and FoodPromotions which exhibit to clients the unknown talents of theperforming chefs.
A la Carte culinary businesses are often dependent upon season,weather conditions, national and local events, and sometimes onfinancial conditions of the market.
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Trends for A la Carte businesses come out clearly when historicaldata is maintained in the form of Sales Histories. This is made veryeasy these days through the usage of computers.
Sales histories help identify trends of consumption. This helps inidentifying quantities of products required for expected productionactivities for a particular forthcoming period.
Client expectations change. So do quality standards. These qualitystandards in case of food production can be those of the
• Quality of food,
• Quality of service,
• Quality of ancillary experiences.
Therefore Quality is not a fixed standard. It evolves as expectationschange. Quality is relative to market perceptions of what is correctand relative to the type of the food service organization.
The tools aiding decisions on “right” Quantity standards of foodproduction are :
Experience of the chefs. This could be in terms of estimating whichof the menu items would move faster, and which need enhancedquantity levels of production. While A la Carte business can bejudged statistically on these issues, for buffet and banquet business,it is, “gut feeling” and “intuition” which are aided by pureexperience.
Trends of consumption:
Menu Engineering. Menu Engineering has been discussed in detailsearlier. Menu engineering worksheets especially the Menu itemanalysis helps in understanding of the consumption pattern of Ala Carte menu items. Production quantity levels of the immediatefuture can be determined accordingly.
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Formulating Production Plans
Production Planning or Volume Forecasting is the forecasting ofthe volume of sales for an establishment, for a specified time period,for example a day, a week or a month.
The aims and objectives of Production Planning are as follows:
1. To facilitate the food cost control for the establishment.
2. To facilitate the purchasing of foodstuffs, particularly perishableitems, and ensure that appropriate stock levels are maintained.
3. To reduce the problem of food that is left over and how it isto be re-used, or customer dissatisfaction when insufficientfoods are available.
4. To gear up production to required demand by forecasting thenumber of meals to be served for a given meal period, forexample, the number of portions of a menu item to be soldfor lunch or dinner for a period of seven days. Productionplanning is also to forecast the number of menu items that willbe taken by a specific number of customers.
5. To enable a comparison to be made between actual andpotential volume of sales, and for corrective action to be takenif necessary.
An initial forecast is made either at a set period in advance, forexample a month, or when the major food orders are placed. Thisinitial forecast estimates the total number of meals to be sold bythe establishment and the estimated total of each menu item. Inthe case of a large hotel, with a variety of catering outlets, a moredetailed forecast would be made for each individual outlet. Factorsthat need to be taken into account at this stage are the season, andhence the weather forecast for that time of year; past menu items;major events occurring in the area - that are likely to attract a largerthan average number to the establishment’s normal catchment area,
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any sales campaigns in terms of food festivals or food promotionscurrently being promoted by the hotel, etc.
The initial estimate is later adjusted, usually one or two days priorto the day of production, so that a more accurate forecast can bemade. On the basis of this updated information, any changes thatmay need to be made with regard to staff scheduling, foodpurchasing, and requisitions, etc. should be made as soon aspossible.
There are a number of aids or management tools that may beemployed by an establishment to assist the forecasting and planningof production, and the Standard Cost tools are part of thesemanagement tools.
ESTIMATING FOOD PRODUCTION REQUIREMENTS- SALES HISTORIES
Sales Histories can be used to identify trends of consumption. Thishelps in identifying quantities of products required for expectedproduction activities for a particular forthcoming period.
A careful analysis of previous sales can help control productionquantities. The most important criteria of production quantityplanning is to reduce left – overs and wastages.
Seasonability of business, weather conditions, special events,community and national events, etc. affect production estimates.These must be taken into consideration in forecasting productionrequirements during planning.
Sales history records can be used to estimate production requirements.Trends can be identified through usage of sales histories and usedto predict future sales. Let us take up an example to understandthe process of forecasting production requirements :
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PORTIONS OF MAGGI’S FARM SOLD IN THEMONTH OF OCTOBER 2008
DATES DAYS NO. OF TOTAL PORTIONSGUESTS SOLD
1.10.2008 WEDNESDAY 200 20
2.10.2008 168 19
3.10.2008 212 22
4.10.2008 165 23
5.10.2008 132 19
6.10.2008 192 22
7.10.2008 173 22
8.10.2008 WEDNESDAY 184 26
9.10.2008 174 27
10.10.2008 178 16
11.10.2008 182 14
12.10.2008 196 26
13.10.2008 218 24
14.10.2008 169 25
15.10.2008 WEDNESDAY 188 17
16.10.2008 209 18
17.10.2008 218 23
18.10.2008 216 28
19.10.2008 208 26
20.10.2008 201 25
21.10.2008 199 18
22.10.2008 WEDNESDAY 198 28
23.10.2008 164 23
24.10.2008 221 32
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25.10.2008 278 30
26.10.2008 301 28
27.10.2008 308 27
28.10.2008 168 16
29.10.2008 WEDNESDAY 308 34
30.10.2008 311 32
31.10.2008 308 28
TOTAL 6547 738
NO. OF DAYS 31 31
AVERAGE 211.19 23.81
Average Guests per day=211 and Average portions per day= 24
On 29.10.2008 out of a total number of 308 guests, 34 guests orderedMaggi’s Farm. This amounts to 11.038% (34/308 × 100 = 11.04 %)
Once the total number of guests for the next Wednesday (5.11.2008)is estimated, the percentage can be used to estimate the numberof portions of each menu item required. For example, assume thata total of 325 guests are estimated for the next Wednesday (5.11.2008).If the chef assumes that the same percentage of guests will orderthis Entree, the estimated number of Maggi’s Farm Portions neededfor next Wednesday (5.11.2008) can be calculated as follows :
Estimated Portions to be sold
= Estimated Guests × Percent as a Decimal
= 325 × .1104 = 35.88 = 36This process is repeated to estimate production requirements for allother menu items, and for all other days in the forecast period.
COMPUTER’S USAGE, TIME SERIES, TIMES SERIESFORECASTING AND ANALYSIS
Computers can be very useful in the projection of productionrequirements. Electronic files can store historic data, and
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the computer software can be developed to apply these recordsfor future use. Computer systems tend to employ time seriesanalysis.
Time Series Forecasting and Analysis
Time series is a sequence of data points measured typically atsuccessive times, spaced at uniform time intervals.
Time series forecasting is the use of a model to forecast future eventsbased on known past events: to forecast future data points beforethey are measured.
Time series analysis accounts for the fact that data points taken overtime may have an internal structure such as autocorrelation, trendor seasonal variation that should be accounted for.
Time Series Analysis allows for weighting of historic data withrespect to its recency. This forecasting method assigns moreimportance (weight) to recent occurrences or trends. In otherwords, if we are attempting to forecast how many Maggi’sFarm meals would be ordered coming Wednesday (5.11.2008),we could base our projections on data from five previousWednesdays.
For purposes of this example, assume weights of 5,4,3,2, and 1for the prior Wednesdays, with 5 representing the most recentWednesday (29.10.2008). Last Wednesday (29.10.2008), 34 portionsof Maggi’s Farm were sold, the previous Wednesday (22.10.2008),28 portions, before that (15.10.2008) 17 portions, before that(8.10.2008) 26 portions, and prior to that (1.10.2008) 20 portions.To project portions of Maggi’s Farm required for coming Wednesday(5.11.2008) the following steps were taken :
Multiply each week’s number of portions sold by its respectiveweight and total the values :
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34 × 5 + 28 × 4 + 17 × 3 + 26 × 2 + 20 × 1 = 170 + 112 + 51 + 52 + 20 = 405
Divide the computed total by the sum of its weights. This will yieldthe weighted projection :
405––––––––––––––––––––– = 405 / 15 = 275 + 4 + 3 + 2 + 1
Time series analysis projects that approximately 27 portions will beconsumed coming Monday (5.11.2008). To forecast the number ofportions likely to be sold for all the menu items of the menu, thesame process can be adopted.
The computer may develop its forecasted projections basedupon stored data, manually inputted data, or data transferredfrom POS systems. Its output can also be helpful in developingpurchase order requirements and labour needs, and for providingadditional assistance to management. Computer forecasts areperformed quickly and accurately, which increases their value to theoperation.
FOOD PRODUCTION CONTROL
Food and Beverage control begins with the Menu. Menu is a majormarketing tool. The menu also dictates what items are to beprepared.
Let us focus on basic concerns of the business that are at the coreof controlling the production process.
QUALITY REQUIREMENTS
It is important to understand quality requirements.
Operating Standards: These come out from the depth of ManagementPolicies. Management Policies are resultant of the efficient handlingof Guest expectations.
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Guest expectations give ideas to make Quality requirements ofOperating Standards.
Controls during Production
Controls during production are adhering to established operatingstandards. Control procedures must help the operation’s ability tomeet its required standards.
The Standard Cost Tools needed to control Quality are :
• Standard Purchase Specifications
• Standard Yields
• Standard Recipes
• Standard Portion Sizes, and
• Standard Portion Costs
These control tools provide procedure for uniformly purchasing,producing and serving products of the required quality.
Standard Purchase Specifications incorporate quality requirements.They dictate the minimum quality and other requirements that allproducts must meet. These are immediate quality links betweenthe chef’s requirements and the supplier’s abilities.
• Standard Purchase Specifications have been discussed atlength in the chapter on Purchasing. Let us understand theother Cost tools.
• Yields, Yield Tests and Yield Management
It is very important for a professional chef to understand Yields,and how to conduct Yield Tests and manage Yields to the advantageof the hotel unit.
Simply defined Yield is the amount of product that is saleable byweight or volume. This therefore sets the premier understandingof Yields in relation to the raw commodity weight, as purchased.
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The difference of weight between “as purchased” weight andsaleable weight is termed as Production loss.
This directly means that yields are dependent upon quality standardsof a Purchase specification. For a chain operation the Purchasespecifications of each food commodity are set precisely for thisreason – to get maximum yield, across the chain.
Simply illustrated, poor defining of a Standard Purchase Specificationwould encourage vendors to supply raw commodities with pooryields.
Very often in culinary businesses, upon examination of the needsof the businesses, raw commodity is purchased on the basis of freshset of Standard Purchase Specifications.
What does the above mean?
If for example, a hotel unit has a large amount of boneless chickenpreparation, and in relation very limited requirements of the chickenbones; it would be wise to purchase only boneless chicken. TheStandard Purchase Specifications of boneless chicken would be verydifferent from that of the Standard Purchase Specifications forchicken required for roasting, or for Tandoori, or for requirementsof the European grill.
When further Yield Tests are done for boneless chicken received formenu item requirements the percentages would be definitely higherand nearer to 100 %.
However, if full chickens are received, and Yield Tests are done onthe same to make them boneless, the yields would be much lowerand be nearer to 50%.
Why? It is because the Standard Purchase Specifications for bothcases of raw commodity purchases are different. In addition,
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different dynamics work when suppliers quote for boneless chicken,as they have an opportunity to sell the chicken bones and otherby-products in the market.
Standard Yields are arrived at by conducting yield tests. Whiledoing a Yield test, it is advisable to use as large sample as is possible.This ensures accuracy and yields which are nearer to the truth.
Once benchmarks for Yields are set for a product for a hotel unit,the next Yield testing should produce results in line with thebenchmarks, or higher in Yields. If lower yields are received, thenexamination is required of the quality of receiving against standardpurchase specifications, and that of losses during storage, etc.At times, particular weather and seasonal conditions ensure pooreryields. This is particularly so for seafood.
Yield testing should have a larger requirement - that is to understandStandard Yields, which is ideal yield and potential or actual yields.The food production operation is thought to be doing a fine jobif the actual yield is equal to the Standard Yield. In case ahigher yield is achieved, then the higher value becomes the nextbenchmark, and all future yields are matched against the freshbenchmark.
It is very essential at this point to understand the Bone to Meatratio. Understanding of the Bone to Meat ratio is an extension ofthe understanding of Yields.
How much saleable meat comes out of a particular raw commodity,through a defined Standard Purchase Specification, in relation tosaleable meat that would come out of the same raw commodity,but with a different Standard Purchase Specification?
Higher benchmarks of saleable meat in terms of absoluteweight would decide qualification of Standard PurchaseSpecification. This is so for all raw commodities for food productionrequirements.
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Let us take up an example of chicken. If the chicken has to be turnedinto boneless meat for menu item requirement, an instant thoughtwould be to buy bigger and bigger birds. That is not essentiallythe right act.
Why? This is because larger birds would probably present higherratios of bones in relationship to saleable meat. The quality of meatin larger birds may be tougher, and not in line with the end-productquality requirements.
An understanding of Standard Portions shall be clear later. A listof Standard Portions is set up in the meat fabrication departmentand is available in the kitchens.
Relating the cost of a Standard Portion is very easy throughfurther calculations on a declared yield test. This is donethrough calculation of the “as-purchased” weight in relation tothe saleable weight. Cost per portion of the raw product isused in Standard Recipes, which have already been discussedearlier in this module.
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An example of Yield testing and the format for the same is producedhere :
WELCOMGROUP MANAGEMENT INSTITUTE,GURGAON
Date___________ Day ___________
YIELDS FOR BONELESS CHICKEN
WEIGHT RANGE SPECIFICATION : 1000 GMS. – 1200 GMS.(WITH SKIN, WITH NECK)
NUMBER OF BIRDS : 100 NUMBERS.
TOTAL WEIGHT : 115 KGMS.
AVERAGE WEIGHT OF THE BIRD : 1 KGM. 150 GMS.
YIELDS :
(A) BONELESS CHICKEN LEG : 27 KGMS. 100 GMS.
(B) BONELESS CHICKEN BREAST : 14 KGMS. 150 GMS.
(C) CHICKEN FILLET : 3 KGMS. 950 GMS.
(D) TRIMMINGS (FOR MINCE) : 4 KGMS. 150 GMS.
WASTAGES, BONES/BY PRODUCTS : 65 KGMS. 650 GMS.(WINGS, SKIN, BONES, TAIL)
SALEABLE YIELD : 49 KGMS. 350 GMS.
PERCENTAGE OF SALEABLE YIELD : 42.9 %(A) + (B) + (C) + (D)
PERCENTAGE OF WASTAGES,BONES / BY PRODUCTS : 57.1 %
• Standard Recipes
A client requires good value. He requires a standardized menu item.His positive dining experience is based on a culinary selection with
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which he identifies or has pleasant expectations of. The client’sexpectations are required to be met and exceeded on each of hisvisit.
In other words a standardized culinary product supports a positiveguest experience.
The main tool to standardize a culinary product is a Standard Recipe.
A Standard Recipe for a culinary product defines what all ingredientswould go into a recipe, in which order and in what proportion orweight or measure.
Quality ingredients for the Standard Recipe are purchased throughdefining of standard purchase specifications.
The portion of Method in a Standard Recipe defines how theproduction of the menu item would progress, and how much timewould be required for an individual step and for the entire recipeto be completed.
The format for a Standard Recipe lists out the equipment usedfor production and that for service. Therefore properly developedrecipes can also help define effective work practices. StandardRecipes are indicators to kitchen stewards to be ready withthe production and service equipment within easy reach and insufficient quantities, especially during the peak periods ofbusiness.
The effort is to pin down all the factors that would contribute toa positive guest experience.
Standard recipes therefore play a very important role in the overallcontrol system of a culinary operation.
When standard recipes are developed, and followed, production
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costs can be calculated. Standard recipes support menu pricingprocess and decisions.
Benchmark of service are also developed through the use ofstandard recipes. These standards are essentially the timethat would be required between the ordering and pick up, andthe standards of pick up and service – generally called ServiceGuarantees.
Service Guarantees are designed to inform the service staff ofimportant parameters of food production and service. This helps intraining and removing ambiguity. Besides name of the menu item, aService Guarantee has sections like description of the dish, outletname, selling price, method of cooking, major ingredients, serviceware, pick up point, pick-up time, portion size, garnish, accompani-ments, service style, and whether it is a hot or a cold service.
The Standard Recipe format followed by our company is producedbelow. Columns like sensitivity ensure safety standards and additionalinformation that informs a newly detailed chef on how to proceed.
As the ingredients are specified, Standard recipe is an important toolfor the Purchase process.
Standard recipes are therefore an important Production tool todeliver quality and for cost control measures.
· Standard Portion
Standard recipes indicate standard portion sizes. A clientexpects the same portion size for a particular menu item.Standard portion size supports client satisfaction and consistentmenu item costs.
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161
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162
Portion control tools like ladles, scoopers and weighing scalesshould be available to facilitate dishing out of defined portions.
· Standard Portion Costs
Once standard recipes and portion sizes are established, astandard portion cost can be established. Recipes and portionsare pre-costed.
A standard portion cost is determined by dividing the totalingredient costs of recipes by the number of portions thestandard recipe yields.
The prices of ingredients for costing purposes are establishedfrom contracted rates of suppliers.
PURPOSE OF PRODUCTION CONTROLS
The purpose of production controls is to ensure quality whilecomplying with cost limitations. Maintaining prescribedstandards is easier when general cost control procedures arefollowed. Let us examine them :
1. Standard cost control tools are support tools. Use themconsistently and efficiently.
2. Have a tight-fisted approach towards requisitioning perishablesand highly perishable products from suppliers, and requisitioninggroceries from the stores. What comes into the production areawould either be used or lost due to pilferage and over-production.
3. Ensure consistent training of standards and standard costcontrol tools and food production processes.
4. Minimize food waste. What remains in the hands of chefs canbe controlled, what gets out cannot be controlled. This isespecially so of buffet dish outs and banquet quantities.
5. Use only the right quality ingredients. Right quality oftenmeans controlled consumption.
6. Keep a sharp eye on employee consumption. Keep the staff
163
on their toes especially in case of menu items prepared for theclient. Unmonitored consumption increases costs.
7. Require that no item be discarded without prior approval ofmanagement. This applies to items spoiled in storage as wellas items improperly prepared. Encourage use of SpoilageReports. This shall help in pin-pointing responsibilities, andput staff under pressure to perform.
8. Use the process of Menu Engineering intelligently. Match issueand production records with sales records to assess the extentto which issued products generate revenue.
9. Seek employee participation in matters to reduce costs andimprove processes.
10. Be sure measuring and weighing tools and equipment arealways used to prepare food and beverage items. Make surestaff uses portion-control tools – scoops, ladles, weighingmachines, volume measures, etc. – when portioning food itemsfor service.
11. Accurately access leftovers and fine-tune the quantities of menuitems to prepare during the next production schedule.
12. Use leftovers creatively when possible in future production.However, remember that quality decreases over time, such aswhen hot items are held for service, cooled, stored, and thenreheated. In addition, there are sanitation concerns thatoverride the cost control considerations. For example, potentiallyhazardous leftovers can create sanitation problems if improperlyhandled and re-served. Balance controlling food costs withmaintaining established food quality levels.
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SPICES SPECIFICATIONS
SL. INGREDIENTS / DESCRIPTION UNITNO.
1. Zeera Powder KGMFine powder free from foreign substances andmoisture. Date of packaging and details ofcontents displayed.
2. Saffron GMSOrange brown stigmas of the plant which aredried, with a pungent aroma and a bitter flavour.Long strands, free from impurities, correct weight.
3. Zeera Whole KGMEven grain size, free from stalks, impurities andmoisture. Should not be broken.
4. Chilly Whole KGMDeep red in colour, free from stalks, Impuritiesand moisture. Even sized and should not havediscoloured or damaged members.
5. Bay Leaf KGMClean smooth dry leaves. Free from deformities.Leaves should not have holes.
6. Mustard Whole KGMEven grain size, dark purple colour, free frommoisture and impurities.
7. Black Pepper Whole KGMEven sized unbroken corns, free from impurities,even black colour.
8. Pista Dana KGMEven green colour, free from dark specks or insects.
9. Saunf Ordinary KGMLight green colour, even size, and free from stalksand impurities. Strong aroma.
10. Ajwain KGMStrong flavour, free from dust, impurities, stalksand insects.
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11. Dhania Whole KGMWhole, even colour and size grains. Free fromstalks and other impurities.
12. Panch Phoran KGMEqual quantities of saunf, zeera, mustardseeds, kalonji and methi. Free from impurities.
13. Methi Seeds KGMEven size, light yellow colour, free from stonesand other impurities.
14. Kashmiri Chilly Powder KGMFine powder, dark and bright red in colour.Pungent flavour and free from moisture.
15. Ordinary Chilli Powder KGMFine powder, bright red colour, free from impuritiesand moisture.
16. Haldi Powder KGMBright yellow colour, strong aroma, fine powderfree from moisture.
17. Dhania Powder KGMFine powder free from foreign substances.date of packaging and details of contentsdisplayed.
18. Black Pepper Powder KGMCoarse powder, dirty black, specky, free fromdust impurities and moisture.
19. White Pepper Powder KGMLight colour, pungent flavour, date of packagingand details of contents specified.
20. Mustard Powder KGMLight yellow coarse powder, slightly specked.Pungent flavour. Date of packaging and detailsof contents specified
SL. INGREDIENTS / DESCRIPTION UNITNO.
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21. Small Elaichi KGMSmooth and even sized, light green in colour.Strong aroma, free from insects and impurities.
22. Large Elaichi KGMLarge size, rough black exterior, even size andfree from insects and impurities.
23. Cloves KGMEven size dark colour. The bud should be Intact,strong flavour, free from impurities.
24. Dalchini KGMDark brown 3 inch long strips, free fromsticks and stalks, strong sweet flavour,smooth texture.
25. Javitri KGMEven size unbroken flower, even pink in colour,free from dust and broken pieces.
26 Jaifal KGMEven size full round shape, strong flavour,free from insects and broken pieces
SL. INGREDIENTS / DESCRIPTION UNITNO.
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VEGETABLE SPECIFICATIONS
SL. INGREDIENTS / DESCRIPTION UNITNO.
1. Aubergine (Brinjal) KGMRound / long, uniform dark purple colour, shinyskin and Green top stem. Firm, free from bruisesor wormholes. (200-300) gms each.
2. Aubergine Baby (Brinjal Masala) KGMEven in shape and good green colour. No skinblemishes and no long stems attached.
3. Banana [Green] KGMEven shape with green skin. Not too many blackmarks on the skin, free from bruising and dirt.
4. Bean Sprouts KGMTrimmed of the roots with no browning on thecut marks. Creamy white with no blemishes orbrown spots.
5. Beetroot KGMDark purple in colour with smooth skin surfaceand no deep cracks or splits. Top leaves trimmedand roots free from soil. Tender and smooth skinwith no bruises. No stem to be attached.
6. Bitter Gourd (Karela) KGMBright green colour, shiny ridged surface. Firmwith minimum seeds. 10-14/Kg. Seeds shouldnot be red.
7. Broccoli KGMHeavy, compact, dark green head with no yellowflowers or purple leaves. Leaves trimmed to thestem. Head to be full and not in small pieces.
8. Brussel Sprouts KGMBright green, firm head with crisp leaves. Morethan 1inches diameter, no yellow leaves orwormholes. No black spots. No roots to beattached.
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9. Cabbage [Red] KGMHeavy head firm and solid, deep purple incolour. No roots attached. Leaves to be withoutdecay, worm holes or blemishes.
10. Cabbage [White] KGMHeavy head for size. Leaves to be without decay,worm holes or blemishes. No roots to be attached.No loose leaves. Firm and solid, light green incolour. 600-800 gms.
11. Capsicum [Coloured] KGMShiny skinned and firm to the touch. No softspots and rotting flesh. Good even colour. Fresh.
12. Capsicum [Green] KGMFirm, plump pepper. Flesh should be brightlycoloured. Dark green, shiny skin, tender andcrisp. No discoloration, bruises or soft patches.12/Kg. Seeds should be soft and tender. Shouldyield on gentle pressure.
13. Carrots KGMSmooth skinned, conical surface. Should breakwith a snap. Colour may vary from red to orangein summer. Core should not be stringy and shouldnot exceed ½ inches in diameter. Firm andbrightly coloured usually bought without its topto reduce moisture loss. Soft and sprouting carrotsto be avoided. No moist patches.
14. Cauliflower KGMBright white to creamy white flower. Firm andcompact head with outer leaves attached.Freshness of the leaves is an indicator of freshhead. 1pc. / Kg. Stalk to be trimmed from thebase. No brown spots and free from worms.
15. Celery PC/Firm, clean, crisp, brittle stalks with bright green KGMleaves and should not be wilted. 650-800 gms.each. Stems should not be hollow or spongy frominside. A fleshy ribbed stalk vegetable colourvaries from healthy green to white. Should nothave brown patches.
SL. INGREDIENTS / DESCRIPTION UNITNO.
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16. Chilli Achaar KGMEven colour and size. Medium green in colourand crisp to break. No soft and rotting spots.
17. Chilli Green KGMDark green and smooth shiny surface. Seeds tobe soft and white. Even long shape. Shouldsnap when bent. Should have a thick skin.Not overripe.
18. Chives KGMAbsolutely green, firm and fresh. Free from debris.
19. Cornbaby KGMEven in size. No stem to be present and thecorn to be crisp and pleasant to the taste.Should be ready to use.
20. Bamboo Shoot KGMFresh pale yellow. Approximate size 5” to6” per piece.
21. Cucumber KGMShiny and firm, crisp with a waxy appearance.3-3½ inches in diameter. Dark green in colour.Not shriveled and no yellow marks. The seedsshould be soft and small. 5” to 6” size. Average(6-8)/Kg. Should not be bitter in taste, witheredin appearance.
22. Chilli Red [Large] KGMShiny skin free from brown spots. Colourdeep red, flesh should not be dry, wrinkled,or broken. Should not have mud.
23. Curry Leaves KGMShiny dark green leaves with no spots of fungus.Flavourful on pressuring with fingers.Characteristic odour when crushed.
24. Dhania-hara (Coriander Leaf) KGMBright green, fresh white leaves. Standing leavesnot wilted. Young plant without flowers with lightaromatic smell. Not too much stem attached, freefrom sand and dirt.
SL. INGREDIENTS / DESCRIPTION UNITNO.
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25. Dill Leaves KGMBright green in colour, separated leaves, not wet.No wilting or rusting.
26. Dry Coconut PCDark brown husky covering, heavy for its size.No soft spots on the surface. Weight 500 gms.
27. French Beans KGMBright green and velvety to touch, snaps withdistinctive clean break with strings. Seed to besmall and not prominent in pods. Long and crisp.
28. Garlic Peeled KGMBig cloves with no traces of skin. Highly aromatic,Plump firm heads. Should not have a foul smell.Should be free from sprouts and spots.
29. Garlic Whole KGMClean with external colour. 2 inches diameter.Should not be shriveled or with dried bulbs.Bulbs to be full fleshed with large cloves andnot with too much moisture. Tight root averagecount 16-22 per kg. Heavy for its size, wellfilled bulbs, interior of good quality.
30. Ginger KGMHighly aromatic and pungent with a thin edibleskin, large, fresh, full even pieces, not stringy.No mud on the surface, inside to be moist andwith a distinctive smell.
31. Green Peas [Shelled] KGMFresh juicy crisp tender pods with a good greencolour. The pods should be full with peas. Peasto be green in colour with no worms or foul smell.
32. Leeks PCBright white colour of stalk, crisp fleshy leaveson the stalk. (3-4) pcs./Kg. Should be straight,firm and intact should have bright green topwithout any brown patches.
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33. Lettuce Fresh KGMBright green colour with fresh crisp tender leaves.Excess soil removed if supplied with roots. Leavesto be attached properly to the root and the rootshould not be rotten.
34. Lettuce Green PCBright green colour with fresh crisp tender leaves.Excess soil removed if supplied with roots. Eachpiece should have 5 fully green leaves. Leaves tobe attached properly to the root and the rootshould not be rotten.
35. Red Lettuce KGMFresh, crinkled leaves with no rust spots. Stalkscleaned from soil. Leaves to be crisp and notwilting. Leaves to be attached properly to theroot and the root should not be rotten.
36. Lime (Nimboo) KGMBright yellow in colour, firm and heavy for itssize. Should be resilient to thumb pressure. 25-30pcs per kg. No dry skin or spot on the skin.
37. Marrow KGMLong and tubular with a full body without anycrinkles or bruising. Even colouring. No dirt stainson the marrow and only one-inch of stalk attached.
38. Methi (Fenu Greek) KGMFresh, crisp and dark green with no brown orwilted leaves.
39. Mint Leaves KGMLarge dark green leaves, not scarred and notwilting. Stem to be trimmed off above the roots.Characteristic aromatic smell. Should be crisp.
40. Mocha (Banana Flowers) KGMBright purple in colour with a full head. Base tobe clean cut and not edged. Petals should be firmand show no signs of aging or browning. Shouldbe fresh.
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179
41. Mushrooms Button KGMCap closed at the stem, firm and white notexceeding 2-cm in length. Should not be bruisedor moldy.
42. Mushroom Oyster KGMGrayish creamy colour with large stocks ofmushroom. Not wet or wilted and a firm texture.Must be fresh looking.
43. Okra (Lady Finger) KGMBright green in colour. 3” to 4” long, smoothvelvety surface, crisp and tender tip. Should notlimp or have bristles. Seeds should be brightwhite and small.
44. Onion Brown KGMFull bodied with firm flesh. No roots attachedand not sprouting from the top. Excess flaky skinto be taken off. No dirt attached. Not shriveled.
45. Onion Green KGMSlender stalks with a white base and long brightgreen stems. No wilting of the leaves, no dirtattached and leaves not to be rusted or rotten.
46. Onion Small KGMSmaller sized onions with a firm body, no stalkand no roots attached. Soil and excess skin to betaken off. 20 pcs/Kg.
47. Papaya Green KGMFirm green papaya of a pale orange-yellowcolourinside. No rust marks and blemishes on the skin.Even sizing of the fruits.
48. Parsley Bunch KGMBright green, firm, crisp leaves. No blackish orwilted bunches. Tight heads with more leavesthan stalk.
49. Parwal KGMStripy Green and firm to touch. No brown patchespresent. Not ripe.
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50. Basil Bunch KGMClean leaves, flavourful on pressuring with fingers.Thin stems.
51. Pumpkin Red KGMBright orange outer skin, soft orange colourinside. Skin to be smooth and free from anyinjury or cracks. Heavy for its size.
52. Pumpkin White KGMCreamy green outer skin, Skin to be smooth andfirm. Even shaped, free from any cracks or injury.Tender white and firm.
53. Raddish Red BUNCHRound and red in colour, with a crispy and juicyflesh. Well-formed, smooth, firm, tender and crisp.Should be of medium size, heavy bulb and sharptaste. Crisp texture inside.
54. Raddish White KGMWhite colour and elongated appearance. With freshgreen leaves. Not over ripe or dry. Sharp taste andcrisp core. Tip should break when twisted. Skinshould be clear.
55. Raw Mango KGMDull green waxy skin with no blemishes. Evensized fruits, pale inside. Hard to touch.
56. Ridged Gourd KGMFresh, juicy dark green in colour, should be tender.Should not be fibrous.
57. Saag Lal KGMPurple in colour, young leaves, and thin stems.Should be free from sand.
58. Saag – Pui KGMDeep green in colour, crispy, should snap, freshleaves. Should not be wilted, have no wormholes,blemishes or bruises. Should not have black spots.Should be clean.
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59. Saag Sarson KGMDark green leaves with stems trimmed, leavesshould not be small in size, moldy or worm eaten.
60. Snake Beans (Barbatti) KGMLong shaped with no rust or brown marks on theskin. Not rubbery to bend and not showingdullness due to aging.
61. Banana Leaves PCS.Should be young shoots. Not torn, no brownpatches, clean.
62. Sonja Phali (Drum-sticks) KGMShould not be woody, fleshy with translucentseeds. More than half inch in diameter.
63. Spinach KGMFresh, dark crisp leaves. Stems should be trimmed,stalks should snap when bent. Should be storedupright. Leaves should not be worm eaten orwilted /damaged. Should not be wilted, damagedor with wormholes.
64. Spring Onions KGMLeaves bright green in colour, unbroken stem upto 7” long. Bulbs to be white not more than 3 cmin diameter. No bruised leaves. Yellow, wilted anddamaged leaves to be avoided.
65. Squash KGMFirm skinned either yellow or green in colour.No rust marks or blemishes on the skin and ofan even size of the vegetable. Firm to the touchand soft or mushy.
66. Tamarind (Imli) KGMSmall dark sets, reddish in colour. Light green,firm crisp skin, small seeds, bright with pulp.
67. Tinda KGMLight green, firm crisp skin, small seeds, andbright white pulp.
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68. Tomatoes Large KGMMature but not over ripe or soft. Large size,smooth firm and pulpy 80-100 gms. No blackspots. 12 nos./Kg. Uniform shape, colour to bebright red. Should have no bruises or blemishes.Fresh. No leaf or stalk to be attached.
69. Tomatoes Small KGMMature but not over ripe or soft. Even mediumsizes, smooth, firm and pulpy and should notbe with dust particles. Uniform shape, colour tobe bright red. No leaf or stalk to be attached.40-50 Gms. each.
70. Tomatoes Regular KGMEven colouring of the skin with no greencolouring. Must be moist and red when cut. Nostalks or leaf attached. (60-65) Gms. Each.Uniform shape, colour to be bright red.
71. Turnip KGMCreamy white colour with purple blush.Thin Skinned smooth and tender. (10-12)/Kg.No Cuts or bruises
72. Yam (Arbi) KGMBrown outer skin with a firm yellow creamishflesh. Long cylindrical shape, firm with dry outersurface. No wet spots, rotting or dirt attached.
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183
SL. UNITNO.
FRUITS SPECIFICATIONS
SL. INGREDIENTS / DESCRIPTION UNITNO.
1. Table Apples KGMBright red colour with fruity aroma, crispy andjuicy, having moderate to low acidity, highsweetness, even spherical shape. Firm andresilient to pressure with no defects or decay,internal browning, broken skin or bruises.5-7/Kg. No stalk or leaf attached.
2. Cooking ApplesLight green in colour, strong flavour. KGM
3. Table Oranges KGMThin loose skinned, heavy for its size, juicyinside. Predominant flavour.
4. Juice Oranges KGMBright orange colour, heavy for its size, sweetjuice, even colour. No dry flesh inside, skin firmwith no excessive pith. Average 9 nos./Kg.Skin should be thin.
5. Yellow Bananas KGMGreenish yellow, firm fresh full plump, no dryand black patches, size not less than 7 inchesfrom stem end to tip, should not be overripeand mashed.
6. Green Bananas KGMRich green in colour. No black marks, ripe.
7. Kinoo KGMFirm texture, strong flavour. Bright orange colour,heavy for its size, sweet juice, even colour. Nodry flesh inside, skin firm with no excessive pith.
8. Mango Dusseri KGMThin bright orange to yellow skin with a smoothsurface. Full, firm, resilient to gentle pressure. Pulpshould be bright orangish, no stringiness at all. Seedshould not be more than 1/4th the size of wholemango. Flavour sweet with typical light flavour.
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SL. INGREDIENTS / DESCRIPTION UNITNO.
9. Mango Langra KGMGreenish yellow colour with firm skin, sweet andflavourful smell, flesh bright yellow and juicy.Seed flat and thin, not more than 1/4th
of thepulp. No bruises or blemishes – minimum fiberin the pulp.
10. Mango Alphonso KGMBright yellow to orange coloured skin, noblemishes, full, firm resilient to pressure. Fleshto be sweet and plentiful. Average 4/Kg.
11. Papayas (Local) KGMOrangish yellow colour in summer with traces ofgreen acceptable in winter. Tested for ripeness byshaking- if seeds are loose and rattle then papayais ready. Pressure applied on apex should indent.Average weight 1-1.5/Kg. Fresh, should avoid softand bruised fruit.
12. Papayas (Banglore) KGMOrangish yellow colour in summer with traces ofgreen acceptable in winter. Tested for ripeness byshaking- if seeds are loose and rattle then papayais ready. Pressure applied on apex should indent.Average weight 1-1.5/Kg. Fresh, should avoid softand bruised fruit
13. Disco Papaya KGMFlesh should be bright orangish, seedless ornegligible white seeds. Taste sweet and texturenot very hard or soft. 4-5 /Kg.
14. Black Grapes KGMPlum red in colour full bunches, skin thin, pulpsweet and juicy, no moulds, wet sticky or decayedgrapes. No soft, squashed or overripe grapes.Approximately 400 gms. / bunch.
15. Green Grapes KGMLight green colour, ripe, full bunches each bunchof even conical shape, firmly attached to stems,no loose, squashed, soft or over ripe grapes.Skin should be thin, pulp juicy and sweet. Averageweight of each bunch - 400gms.
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16. Black Grapes Seedless KGMAs name suggests no seeds, plum red colour,skin thin, pulp juicy and sweet. No soft, squashedor over ripe grapes. Packed tightly in bunches.No mould formation.
17. Grape Fruit KGMBest quality, juicy. Yellow colour of the skin.Pinkish hue when cut.The flesh may be sweet,sharp tasting and acidic. Should be juicy, neithertoo big nor too small.
18. Pomellos KGMLight greenish yellow skin, should be heavy forits size, juicy and full flavoured, Should not betoo huge or too small in size as they lacksweetness and have acidity and weak flavour.Tapers slightly at the stem. May or may nothave seeds.
19. Water Melon KGMThe rind is thick and fragile. Dark green colour,plump, heavy for its size, good flavour. Nodiscolouration, browning or dry patches. Fruitshould be free from blemishes, broken skin andother defects. Should be deep red in colour whencut. Should be juicy with smooth seeds, should befree from white streaks.
20. Chickoos KGMDark brown coloured thin skin, firm surface.Pulp dark brown, soft, juicy and sweet. Shouldnot have bruises or soft patches. Should not havewormholes. 8-10/Kg.
21. Peaches KGMNice, firm, pleasant, small and sweet in taste.
23. Green Coconut KGMFresh, even size, no black marks and tender skin.Should yield at least 8 full ounce per Coconut.
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186
24. GuavasFirm, fresh and sweet. The sizes vary from 2.5 KGMcm to 10-cm. Thin pale green skin, which turnlight yellow as they ripen. The flesh varies fromwhite through to deep pink or salmon red.
25. Table Sweet Lime KGMBright greenish yellow colour, thin skin, fruitshould be plump, firm and heavy for its size,juicy and having a good flavour. No blemishes,bruises or other defects. Fruit should not be soft orspongy, no sour smell. Average. – 5-6/Kg.
26. Juice Sweet Lime KGMBright greenish yellow colour, thin skin, fruitshould be plump, firm and heavy for its size,juicy and having a good flavour. No blemishes,bruises or other defects. Fruits should not be softor spongy - No Sour smell Average 5-6/Kg
27. Gooseberry KGMFirm sweet and in shell.
28. Pineapple KGMOuter skin thick scaly, orangish green in colour.Ripe ones should show softness around apexwhen pressure is applied. Flesh of distinct whitishyellow colour, soft, fiberous sweet and juicy. Fruitshould be heavy for its size and base should bewell trimmed. No rot or mould formation.
29. Baby Pineapple KGMOuter skin orangish green, ripe ones should showsoftness around apex when pressure is applied.Flesh of distinct whitish yellow colour, soft, sweetand juicy. Fruit should be heavy for its size andbase should be well trimmed. No rot or mouldformation.
30. Pears KGMGreen, brown or yellowish in colour, clean andbright. Soft juicy flesh, crisp and with good flavour.Not wrinkled, no scars, damage, insect or worminjury. Supplied with stalks attached. 10-12 /Kg.Creamish flesh.
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187
31. Pomegranate KGMHeavy for its size. Seeds not too large.
32. Pears Hard KGMGreen brown colour, clean and bright. Soft Juicyflesh crisp and good flavour. Not wrinkled,no scars, damage, insect or worm injury.Supplied with stalks attached. 10-12/Kg.
33. Large Plums KGMFirm, smooth texture and not sour.
34. Custard Apple KGMFirm sweet center. Heart shaped or oval and canweigh up to 450 gms. Light or tan greenish quiltedskin, which develops brown patches when thefruit is ripe. The flesh is with a lot of seeds, sweetsour mellow in taste and custard like. The fruitshould be unblemished.
35. Apricot KGMBright orangish yellow colour, plump and fairlyfirm, juicy with good flavour and tender flesh,should not be decayed or shriveled, seed shouldbe easily unattached from flesh.
36. Strawberries KGMBright red colour with even shaped fruits andleaves, should be fresh with no blemishes, bruises,soft spots or moulds. Should not be acidic. Shouldbe of even size and colour. Should be very carefullyand securely packed. Should be firm and shiny.
37. Marsh-melon KGMSmooth texture, sweet inside and heavy for its size.
38. Star Apple KGMBest quality.
39. Kabuli Anar KGMDeep red flesh and minimum of seeds. When cutjuice should come out freely.
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SL. INGREDIENTS / DESCRIPTION UNITNO.
40. Mango Chausa KGMOval shaped, long, sweet, with no fiber. Skingreenish yellow. Flesh to be golden yellow. Seedto be thin. Should not be overripe. Neither hardnor too soft. Should not have wrinkles on theskin, no bruises, blemishes or wormholes. Skinshould be smooth and shiny. Should not bedirty. 5 / Kg.
41. Mango Fazli KGMFlesh yellow in colour, skin should be green incolour. Huge for its size. Should be fresh andsweet. Neither hard nor too soft. Should not havewrinkles on the skin, bruises, blemishes orwormholes. Skin should be smooth and shiny.Should not be dirty. 2-3/Kg.
42. Mango Himsagar KGMYellowish green in colour. No fibre, flesh is deepin colour. Should not have spots, no wormholes.Neither hard nor too soft. Should not havewrinkles on the skin, no bruises, blemishes. Skinshould be smooth and shiny. Should not be dirty.
43. Plums KGMRich colour, smooth, the flesh is juicy, sweet orsour. May vary from red to yellow in colour, softtip is the best guide.
44. Lychies KGMThe skin is brownish with a white translucent,pearly flesh and is refreshingly juicy. The tastevaries as the fruit matures. Should not have a badodour, no insect, Stem should be attachedaround 3”-4” to keep it fresh.
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MILK AND MILK PRODUCTSSPECIFICATIONS
SL. INGREDIENTS / DESCRIPTION UNITNO.
1. Milk [Skimmed] [Toned] [Whole/Full Cream] LTShould be fresh, clean, only from dairy cows.Free from objectionable odours or flavors. Sp.gravity of 1.028 at 60 degree F. Should haveminimum 4% butter fat content and minimum6.25% non-fat milk solids. Homogenized andpasteurized. Sealed and dated packets. Possibilityof tetra packs will be appreciated.
2. Single Cream LTFat content should be above 18%. No fat globulesin cream. Not yellow in colour or grainy to touch.Cows cream only, should not be sour. Homogenizedand pasteurized.
3. Double Cream LTFat content should be above 48%. No fat globulesin cream. Not yellow in colour or grainy to touch.Cows cream only, should not be sour. Homogenisedand pasteurized.
4. Paneer 50% Fat LTPure white in colour with a good consistency.The binding should be firm and should nothave 20% of water by weight. Should be odourlessand have a mild creamy taste. Should be suppliedin moist clothes of polythene to prevent drying.Should be free from bacteria.
5. Chenna KGMSoft, pleasant smell. Should be free from bacteria.
6. Khoya KGMSoft and firm with no objectionable odour. Shouldbe free from bacteria.
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EGG SPECIFICATIONS
SL. INGREDIENTS / DESCRIPTION UNITNO.
1. Eggs NOSThe egg should be fresh, clean and washed andwith an unbroken shell. The white should firmand gelatinous. Eggs to be of uniform size andweight not less than 55 gms. To be supplied inplastic trays. Each tray holding 30 eggs. Whenopened yolk should be bright yellow in colour,firm and free of blood spots with a tight whiteof an egg. Not to float on water turf.
2. Country Eggs NOSThe egg should be fresh, clean and washed withan unbroken shell. The white should firm andgelatinous. Eggs to be of uniform size and weightnot less than 55 gms. To be supplied in plastictrays. Each tray holding 30 eggs. When openedyolk should be firm and free of blood spots witha tight white of an egg. Not to float on water turf.
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FISH SPECIFICATIONS
SL. INGREDIENTS / DESCRIPTION UNITNO.
1. Calcutta Bekti Fillet (Without Collar Bone) KGMHead, backbone and fins to be removed, Bellyshould be clean, flesh should be light pink incolour, no bad or foul smell, scales shinny andskin to be firm, without collarbone,weight 1.2-1.7 Kg.
2. Bombay Bekti Fillet KGMSkin to be firm and light pinkish in colour andshould be moist. Odour to be fresh and pleasant.Belly should not be torn, swollen or sagging. Eyesto be protruding and no scales falling off. Gillsto be bright red, gutted. Weight 1.5-2 kg.
3. Indian Salmon Fillet KGMSkin to be firm and bright pink in colour whengutted. Odour to be fresh and pleasant. Bellyshould not be torn, swollen or sagging. Eyes to beprotruding, wet and transparent. and no scalesfalling off. Gills to be bright red, gutted.
4. Indian Haddock Fillet KGMSkin to be firm, odour to be fresh and pleasant.Belly should not be torn, swollen or sagging.Eyes to be protruding and no scales falling off.Gills to be bright red, gutted. Weight 4-5 Kg.
5. Prawn Large KGMFirm flesh, shiny and wet surface. Head shouldbe intact. Tail springy when touched. No badodour. 9-11 pcs/Kg.
6. Prawn Medium KGMFirm flesh, shiny and wet surface. Head shouldbe intact. Tail springy when touched. No badodour. 16-17 pcs. /Kg.
7. Shrimps KGMFresh flesh, should be firm, crisp and dry. Shouldnot be limp. Shell should be shiny and peeled.No bad odour. No cracks and hole in shell.
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8. Pomfret Whole Large KGMEyes should be bulging and shiny. Skin shouldbe shiny and smooth. Gills should be bright andred in colour. Tail should be firm. When cut theflesh should be firm and belly should not beswollen and sagging. Weight 350-400 gms.
9. Pomfret Small KGMEyes should be bulging and shinny. Skin shouldbe shiny and smooth. Gills should be bright andred in colour. Tail should be firm. When cut theflesh should be firm and belly should not beswollen and sagging. Weight 200-250 gms.
10. Hilsa Whole KGMSkin should be firm. Scales firm, bright and shiny.Eyes should be wet, transparent and protruding.Gills deep red in colour. Tail should be springy.Belly should not be torn, sagging or swollen.Average weight per fish should be 1.2-1.4 Kg.Not frozen should be fresh.
11. Rohu/Katla Whole KGMSkin to be firm. Odour to be pleasant. Belly shouldnot be sagging. Eyes to be protruding and noscales falling off.
12. Cafeteria Fish Cut KGMRohu/Katla fish. Should be fresh. Weight of wholeshould be 2.5-3 Kg. The pieces should be neatly cutcut to be ready to fry. 70-80 gms/piece without head.
13. Prawn Small KGMFirm flesh, shiny and wet surface. Head should beintact. Tail springy when touched. No bad odour.20-22 pieces/Kg. Shell should be firm and not soggyThe flesh should be bright off white in colour, thetentacles should be intact if received head on itshould have a pleasant smell.
14. Salmon Whole KGMSkin to be firm, odour to be fresh and pleasant.Belly should not be torn, swollen or sagging.Eyes to be protruding and no scales falling off.Gills to be bright red, gutted. Weight 2 – 2.5 kg.
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15. Prawn Jumbo KGMFirm, flesh shiny and wet surface. Head shouldbe intact. Tail springy when touched. No badodour. 5-6 pieces/Kg. Shell should be firm andnot soggy The flesh should be bright off whitein colour, the tentacles should be intact if receivedhead on it should have a pleasant smell.
16. Indian Silver Salmon KGMSkin to be firm, odour to be fresh and pleasant.Belly should not be torn, swollen or sagging.Eyes to be protruding and no scales falling off.Gills to be bright red, gutted. Weight 2 – 2.5 kg.
17. Crab KGMShould be alive with claws tied. Should beheavy and plump. A sign of plumpness is whenthe abdomen touches under the shell, is slightlylifted. The shell should not be broken infragments or pieces. Weight 3-4 pcs/Kg.
18. Mud Crab KGMShould be alive with claws tied. Should be heavyand plump. A sign of plumpness is when theabdomen touches under the shell, is slightly lifted.The shell should not be broken in fragmentsor pieces. Weight 550-600 gms/Kg.
19. Prawn Headless Large KGMFirm, flesh shiny and wet surface. Tail springywhen touched. No bad odour. Wt. 18-22 piecesper Kg. Shell should be firm and not soggyThe flesh should be bright off white in colour,the tentacles should be intact. If received head on,it should have a pleasant smell.
20. Prawn Headless Medium KGMFirm, flesh shiny and wet surface. Tail springywhen touched. No bad odour. Wt 26-28 pcs.Per Kg. Shell should be firm and not soggyThe flesh should be bright off white in colour,the tentacles should be intact. If received head on,it should have a pleasant smell.
SL. INGREDIENTS / DESCRIPTION UNITNO.
194
21. Lobster (Fresh) KGMBought live. Identified by the reflex actions of theeyes, antennae and claws. Should not show anysigns of damage from fighting or have any signsof missing pieces. Average 12” in length andapprox. 800 to 1100 gms.
22. Lobster (Sand) KGMWeight 3-4pieces per Kg. Shell should be firmand not soggy The flesh should be bright offwhite in colour, the tentacles should be intactif received head on it.
23. Lobster (Rock) KGMWeight 2 pieces per Kg. Shell should be firmand not soggy The flesh should be bright offwhite in colour, the tentacles should be intact. Ifreceived head on, it should have a pleasant smell.
24. Prawn Jumbo Headless KGMFirm flesh, shiny and wet surface. Head shouldbe intact. Tail springy when touched. No badodour Same as Jumbo prawns. Weight 7-8 pcs. /Kg. Shell should be firm and not soggy The fleshshould be bright off white in colour, the tentaclesshould be intact if received head on.
25. King Fish Whole KGMSkin should be shiny, odour fresh and pleasant,belly intact. Eyes should be wet and transparentand scales should be firm. Gills to be bright rightand tail should be springy. 2 – 2.5 Kg.
26. Reef Cod Fillet KGMFresh, odourless, not sticky to the touch. Skinless,belly removed. Only usable meat to be accepted.Weight 2 – 3 Kg. a fillet.
SL. INGREDIENTS / DESCRIPTION UNITNO.
195
CHICKEN SPECIFICATIONS
SL. INGREDIENTS / DESCRIPTION UNITNO.
1. Broiler Chicken KGMDressed weight should be 1.2 Kg. inclusive ofthe skin and neck. Feet to be cut from the hockjoint. Neck to be 1.5 inches long from the carcass.Should be free from deformities, blood clots.Breasts and legs free from cuts, tears and missingskin. Birds to be well developed and even sizedistribution No broken bones, free from discolouredskin and flesh. Flesh to be plump and fat. Shouldnot be dark yellow and mushy to touch.
2. Tandoori Chicken NOS600-700 gms. in weight. Without skin. Fresh.No bad odour. Neck to be 3 inches long from thecarcass. Should be free from deformities. Breastsand legs free from cuts, tears and missing skin.Birds to be well developed and even sizedistribution. No broken bones, free fromdiscoloured skin and flesh. Flesh to be plumpand fat. Should not be dark yellow and mushyto touch.
3. Capon KGMDressed weight should be 2.2-3 Kg. inclusive ofthe skin and neck. Feet to be cut from the hockjoint. Neck to be 3 inches long from the carcass.Should be free from deformities. Breasts and legsfree from cuts, tears and missing skin. Birds tobe well developed and even size distribution.No broken bones, free from discoloured skinand flesh. Flesh to be plump and fat. Not darkyellow and mushy to touch.
4. Chicken Liver KGMShould be deep reddish brown in colour. Shouldhave a shiny surface and free of excessive fat.Should not be slimy to touch and no bad odour.
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5. Boneless Leg And Breast KGMNo skin, no cartilage or socket joint. Bright palepink flesh, no dryness. No signs of injury orblood clots. Excess fat and sinews removed.Fresh and not frozen. Packed in 1Kg. packetssent on ice.
6. Small Chicken KGM700-800 gms. Rest same as chicken.
7. Chicken Bones KGMBright and pink, fresh feel. Not slimy or sticky.No smell.
8. CHICKEN WINGS KGMFull wings with blob of bird attached.No Feather stalks. Packed in 1Kg. bags.
9. Chicken Curry Cut KGMEven mix of breast and leg pieces. No excessiveneckpieces. No splintered bones, [STAFF] cleaneven cuts. Fat should not be excessive. No offodour. Fresh and not frozen.
SL. INGREDIENTS / DESCRIPTION UNITNO.
197
MUTTON / LAMB SPECIFICATIONS
SL. INGREDIENTS / DESCRIPTION UNITNO.
1. Mutton Curry Cut [For Cafeteria] KGMFree from smell. No bone splinters. 60-70 Gms/piece. Properly trimmed and no fat/skin present.No excessive shoulder bones or shoulder botis.Should have a uniform mix of leg, shoulder andthigh botis. Should come chilled in clean baskets.
2. Mutton Chops KGMTrimmed and cleaned from the bone. Meat to besmooth and bright red in colour. No blood clotor blue patches
3. Lamb Leg KGMThe hind legs separated from the thighbonedown. No flaps of fat or tissue attached. Noportion of spine or tail attached. Feet off at theankle. The colour of the meat should be brightand brick red. The meat should not have bluebruises, blemishes or purple blood clots. Norancid / rotting smell in the meat. No slimeformation on the meat. Weight 1.8-2.2 Kg.No bad odour.
4. Lamb Liver KGMDark red colour. Shiny smooth exterior, freefrom slime, whole piece, free from odour.
5. Lamb Kidney KGMBrown in colour, tender and flavourful, shouldbe plump, firm, should be shiny with no off smell.
6. Lamb Fat KGMFat from kidney region. Butter texture, smoothwhite colour. No yellow patches and free fromblood, spots and slime. Should not have anunpleasant odour.
7. Lamb Brain NosWhole brain, plump, pleasant smelling and freefrom odour, blood and slime, shiny exterior texture.
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8. Khassi Leg Pair KGMShould be with a tail and aitchbone attached.Should have smooth, moist and not excessivecovering of fat films. Weight (2.5-3) Kg. per pair.Tail should be attached for identification up tothe receiving point. However the weight of thetail should be deducted from the final quantitiesreceived.
9. Kidney Fat - Mutton KGMChunky even pieces of fat. Should be free of anyflesh. The fat should be creamy white in colourand smooth in texture. No offensive smell.
SL. INGREDIENTS / DESCRIPTION UNITNO.
199
BEEF AND PORK SPECIFICATIONS
SL. INGREDIENTS / DESCRIPTION UNITNO.
1. Beef Round Cut NOSShiny surface with brick red colour, trimmed ofexcessive fat. Meat should be tender with no badodour. No yellowing of tissues and tendon.
2. Beef Fillet KGMShiny surface with brick red colour, trimmed ofexcessive fat especially at the head. Meat shouldbe firm, tender with no bad odour. No yellowingof tissues and tendons. When pressure is appliedto the fillet with the finger and the thumb thenthey should penetrate the surface. Excess wastemeat attached should be trimmed. Side stripshould not be present.Approx. wt. (1.3-1.8) kgs./fillet.Should be received fresh and frozen.
3. Beef Kidney Fat KGMWhite and firm. Marbled texture. Membrane easilyremoved, not slimy. Received fresh.
4. Shin Bone NOSLarge center of marrow, bones not to be slimy ordull in colour. No dirt or grains on bones.
5. Ox - Tail NOSWhole length, without skin. Non-slimy. Small blobat the base of tail attached.
6. Ox Tongue NOSPink purple in colour with coated skin. No Slimeor discolouration, no smell.
200
SL. INGREDIENTS / DESCRIPTION UNITNO.
7. Pork Leg KGMFlesh should be firm and pink and no traces ofmoisture. Fat marbelling should be firm and evenand the trotters should be missing. Should not havea bad odour. Skin to be free of Hair, Unblemishedfirm and dry to touch. The skin should be creamyin colour and properly cleaned of all dirt and thefat should be evenly distributed and visible.
