Food & Beverage Management Procurement & The Mini-Bar

1. Food & Beverage Management Procurement & The Mini-Bar

2. F&B Management – Procurement Chapter 8 Purchasing to make money • Objectives of the lesson: • Understand the Procurement Process • Systems in Procurement • Why do we loose and make money • The Mini-Bar • History…..is it dead • Projects……..

3. Food & Beverage Management Purchasing to make money • Objectives of a good purchasing system • Suppliers – setting up standards • Paying the right price….. • Ethics in purchasing The Receiving Process • Storage of arrived goods…. • Inventory • Stock-take….Cost Control…….

4. F & B Management - Purchasing Objectives of a good purchasing system “Purchasing directly affects the bottom line. Every $, RMB, Euro, saved through effective purchasing increases the profit of the business” “Only the best possible purchasing programs can help managers achieve the best economic results”

5. The Purchasing Process

6. The Purchasing Process • Create a requisition form by Chef or F&B Dept. Storeroom • Storeroom & Purchasing Department creates a P O (purchase order) to the supplier. • Supplier confirms price via quote or delivers product with invoice and corresponding PO number • Product is received with invoice and checked according to Specifications. • Invoice is attached with PO that is sent to accounts department for payment and for Cost Control. • Product is kept in Storeroom awaiting final request from kitchen or outlet. • Product is issued to kitchen and used or sold…..clients pay for product / hotel makes money!

7. F & B Management - Purchasing Goals of a purchasing program • Buy the right product…..create purchase specifications • Obtain the right quantity • Pay the right price…. • Deal with the right suppliers……

8. F & B Management - Purchasing Goals of a purchasing program • Buy the right product…..create purchase specifications and communicate the specifications to the various suppliers in writing and pictures. What quality do you want to serve up, McDonalds Fries….grade of meat….Do you make / produce the “product” – buy bread VS making bread – buy in pastry VS pastry………A Make or buy analysis….Production Cost VS. Buy in cost……

9. F & B Management - Purchasing Goals of a purchasing program • Buy the right product….. A Make or buy analysis….Production Cost VS. Buy in cost…… To Buy or make your Bread……..? Production Cost per loaf: $2 (must include total space, rent, building) Labor cost per loaf: $2 (all On costs) Total Cost: $4 Buying Commercial bread: $5 Net saving of $1….x 50 etc

10. F & B Management - Purchasing Goals of a purchasing program 2. Obtain the right quantity – “The storeroom is full of cash”…… • Minimum / Maximum ordering system – ensuring par stocks are kept to optimal levels. Cash flow levels adversely if too much stock • Lead-time quantity…..time to re-order • Safety Stock… • Other factors: Changing prices, Storage, Waste, Theft, Limited supply, Quantity discount, Specials promotions etc

11. F & B Management - Purchasing Goals of a purchasing program 3. Pay the right price….not always the lowest price…….we all have to survive….. • Negotiate…….lowest price but a fair price • Quality factor….do you always need the best? • Combining deliveries if you are on a remote location….saving on delivery fee’s! • Pay cash…early settlement discount…3 to 5% • Change purchase size….Big bottle VS. normal • Promotions or buy more products from same supplier • Be innovative……think out of the square

12. F & B Management - Purchasing 3. Deal with the right suppliers…… • Select a local supplier……keep it simple, support if you can a local farm producer or grower of wine….they will in turn support you! • Visit the Supplier, you might re-think who you will use……do they have good facilities, safe, good Hygiene…are staff helpful. • Is the company financially stable…. • Are they Honest, fair, Dependable and have a good system….. • How do they import, are they an official agent…Dom Perignon

13. Security When Purchasing Security concerns • Kickbacks, send in wrong amount of good, price variance….fictitious supplier, fake products – or using another importer….. Ethical concerns • Gifts to buyer, travels, money • Honesty, weight messurement

14. Receiving Process OTHER RECEIVING TASKS • Marking products, so you can rotate products…..highlight dates….. • List of Rejected products, no PO, wrong delivery, part-order Step 1: Inspection against P O Step 2: Inspect Quality and Specification (Fresh Fish on top, frozen on bottom). Step 3:Delivery Invoice…in it correct, does it match, if not what then… Step 4: If okay, accept….sign off both driver and Clerk…. Step 5: Move product away from area – never leave, items walk! Step 6: Complete daily receiving records

15. STORINGTHE ASSETS • Security….think of produce as money • Opening & Closing times - CLEAR • Who can enter, how does the system work…limited access • Precious Storage for wine etc. • Good lighting • Stock-take – weekly & monthly

16. Purchasing Quality and storing • When storing maintain basic rules: • Rotate food stocks • F I F O – First-in First Out – But not early arrivals…. • Correct storage temperatures ….wine at 14 C degrees • Refrigerated storage – 5 C – • Dry Storage 10 C > 21 C • Frozen – Below 0 > -4C • Keep storage clean – pests and that the area is well maintained.

17. Purchasing – Recordkeeping • Vital to keep track of goods……banks don’t loose money…….they count every cent….. • Perpetual Inventory system…..like a cheque-book, still do stock-take • Physical Inventory System – stock-take • Reducing Inventory………HOW: • ISSUING: As important as receiving – strong records ensure the stock-take and actual stocks are recorded and where stocks are going to.

18. Purchasing Systems Large operations require automated systems to save money, time and get results to forecast business cash flow & improve efficiencies. • MICROS • Market Boomer • EPMX – Bellwether Software

19. Systems -A Senior Controller’s View…. • WinCheck , a larger Hotel, food orientated purchasing , recipe/ menu management system that can be used in a modular format. Can be purchased in a cut down form for smaller properties. Interface with Micros POS to obtain comparisons of actual usage ( via a stock take) compared to the rung up via the till usage. • Quest, is a world wide functions or large stadium POS & purchasing system. Good capabilities to record consumptions over a particular time period or types of functions i.e. used at a race course & consumption per race meeting is used to predict purchases for the next similar meeting. • HIS , is a pub / bottle shop inventory /POS system . Good for the numerous combinations of packaged beverage sold in the botte-shops these days..

20. Purchasing Systems A Senior Controller’s View • From my experience some systems try to do much and end up not doing any of the tasks well( particularly when the accountants get involved in the inputting the information the general ledger etc.) • Common Challenge - Explaining to FOH & BOH staff the importance of the accuracy of the information that they input into any system. Therefore important to get feedback from them of what works for them & making it as simple to use as possible.

21. Purchasing Systems • Theft / Wastage- For BOH & FOH this is very situational & is it a book loss or actual. • Lack of training is a barperson ringing a up beer A but is actually serving beer B ?They may have the same retail value but not the same cost value. So before the word 'theft" can be used , ensure internal systems have been checked & tested. • Once this is done, is it happening in the same outlet / staff member ? etc. For food wastage , have the correct wastage factors been applied in the recipe. IE how much of the complete carrot is lost in the peeling process? • How much of the packet of scallop's is actually water. • Loss % should only be a couple to either to either Sales or Inventory stock holding

22. The Mini-Bar • A mini-fridge-bar is a small, private snack and beverage bar, that is often found in 5 star hotel rooms. • A minibar comes in refrigerator stocked with a precise inventory. • The bar is commonly stocked with small bottles of alcoholic beverages, juice, and soft drinks. It may also include candy, cookies, crackers, and other small snacks. • Prices are generally very high compared to similar items purchased from a store, because the guest is paying for the convenience of immediate access and also the upkeep of the bar.

23. The Mini-Bar • The refrigerated Mini-Bar was invented in the 1960s. • International hotel chains expanded the concept mainly in 5-star hotels as Hilton, Sheraton & Hyatt’s. • 1974 Hilton HK expanded the concept…….increasing beverage sales by 500% and global beverage sales by 5% for Hilton…….big money! • Mini-bar sales dropped a stunning 28 percent from 2007 to 2012, according to a study from PKF Hospitality Research. • Today the Mini-Bar game has changed……….. hotels are rethinking the formula, introducing tailored items or concocting ways to make treats harder to resist and including the Mini-Bar in the rate……

24. The New Mini-Bar • THE SAVOY HOTEL • Art Deco Cocktail Shaker ($138) • Savoy-Exclusive Toffee Tin ($16) • Savoy Shortbread ($13) • Savoy Rosy Apples Sweets ($10) • Savoy Smoked Almonds ($8) • THE CARLYLE HOTEL: • Dean & DeLuca Chocolate Bars ($9) • First Aid Kit ($9) • Louis Roederer 'Cristal Champagne ($500) • Purell Hand Sanitizer ($6) • Carlyle Zagat Guide ($12)

25. The Mini Bar selection

26. MINI BAR INCLUSIVE WITH ROOM RATE

27. MINI BAR INCLUSIVE WITH ROOM RATE

28. PREVIOUS MINI BAR SELECTION

29. MINIBAR – PROPOSED

30. MINI BAR INCLUSIVE WITH ROOM RATE • The substantially of this Mini Bar to be added to the Room Rate, • it’s a value added service, basically it is up-selling. • Avoids guest complaints • Avoids guest disputing the rebates for Mini Bar, when families stay, who may • actually have consumed the products • Front Office avoids calling Mini Bar to check rooms on early check out • Late charges for Mini Bar – below RM 30 is waived • If guest pays by cash and if there is any late charges from Mini Bar, • it’s a write off • Other hidden charges – paper cost, telephone cost, • Manning – Current 2 staff…………but will require 3. • PREVIOUS SYSTEM: Mini Bar 1 staff (1 morning shift and 1 staff afternoon shift ) are used to check, open bill and replenished Mini Bar for only bar guest room. • They do not check lock bar, do not check DND and clear bar rooms. • With Mini Bar inclusive in room rate in place, 3 employees • (2 staff morning shift and 1 staff afternoon shift) are required to • check and replenish daily Mini Bar stock for 320 rooms.

31. Review of learning PROCUREMENT • Objectives to purchase for success…. • Setting up complete systems… • Receiving & storing • Record keeping – stock takes • On-line Purchasing systems THE MINI-BAR • History • Then & Now • The future of the Mini Bar • Innovative • Including the Mini-Bar in the rate