Controlling food Costs

1. Controlling food Costs How to get the most of your money

2. Tips on Lowering Food Costs • Raise prices to adjust to new food costs. • Cost out menu & price items accordingly. • Control portion sizes. • Minimize & track waste. • Spot-check prep staff ensure pre-cut portions weigh what they are supposed to. • Link the chefs pay to a pre-set food cost %. Set up an incentive deal for the chef. • Set up purchase order system. • Negotiate prices with vendors for bulk buying. Take vendor discounts when offered. • Organize storage room &keep inventory to a min. • Purchase based on a budget.

3. Standardized recipes • A standard yield: expected qty. of food that results from a standard recipe. Stated in the total quantity of food the recipe produces, such as 3 gallons of clam chowder & by the number of portions it produces, such as 48–8 oz. bowls. • A standard portion: consistent qty. of product served to each person each time it is served. • Portion control tools: scoops, ladles, a standard serving bowl, or count promotes consistency and customer satisfaction, and aids in insuring a business’ profit.

4. Determining Standard Food Costs • Cost per Unit Method • Yield Test • Cooking Loss Test • Standard Recipe Using 1 or up to all of these will help you determine your plate cost.

5. Edible Portion • Edible portion is the form in which the product is served. Little/nothing needs to be done to prepare a product in EP form. • Ex: purchasing prepared cheese, cake that needs only slicing; a case of 6 oz. chicken breasts needing only to be cooked; or a case of 24–10 oz. bottles of sparkling soda need only to be opened= ex.of EP. • Foods portion cost of a prepared item purchased in its EP form need to use the Cost/Unit Method.

6. Cost/Unit method Formula: PURCHASE UNIT COST # OF PORTION = STANDARD PORTION COST Example: The chef purchases a prepared cheesecake for $8.00. Using the12-slice portion, the Standard Portion Cost is calculated as follows: Purchase Unit Cost Number of Portions Standard Portion Cost $18.00 / 12 = $1.50 Practice Part 1

7. The Yield Test • Yield test:process of raw product purchased in “AP” form -broken down into EP & waste. • Purpose = is to determine the yield, the cost/lb, and the cost/per portion of a product purchased in an “AP” form.You break down the product into useable product &non-usable waste • Ex. Food/beverage items: Acase of green beans), poultry (a turkey), seafood or meat (10 lb. beef tenderloin), canned (#10 can chopped tomatoes), bottled (14 oz. artichoke hearts), &frozen items (5 gal. ice cream) prepared prior to purchasing. Many products are not 100% usable & include some waste.

8. Yield Test Step 1: Step 2: Calculate the Edible Yield %

9. Step 3: Number of Portions Step 4: Edible Cost per lb. AS PURCHASED COST / EDIBLE WEIGHT = EDIBLE COST/LB. Green Beans: $38.00 / 22 lb. = $1.73/lb. Step 4: Edible Cost per Portion

10. Cost Factor: Type 1: cost/Lb. • Illustrates the relationship b/w EP & AP in % or decimal form. • This means that the EP Cost/LB is 1.095 x >AP cost/lb.

11. Cost Factor: Type 2: cost/Portion • EP/Portion is .0203 x > than AP. = 20% increase. Practice Part 2

13. Recipe costing • By knowing the entire cost of the recipe, the business can determine the standard portion cost and adequate selling price, in order to insure that all costs in preparing the recipe are covered and profit is realized.

14. Recipe costing steps • Step 1: Fill in the required information: name of the recipe, standard yield, standard portion of ingredients including garnishes from the standard recipes. Post the AP price in the cost/unit column. • Step 2: Calculate the Individual Ingredient Cost. Ingredient qty. x price = individual ingredient cost. • Step 3: Determine Yield %: Look up in chpt.11 or book of yields if there is trim plug in edible yield % in form.

15. Recipe Costing Worksheet Recipe: Chicken Tetrazzini Yield: 48 servings Serving Size: 1/24 (12" x 20" x 2" pan)

16. Calculating the Cost of One Serving See practice p 3

17. Calculating Plate Cost Entrée: Fresh White Fish Dinner Costing Date: 8/03/20xx Total Entrée and Accompaniments Cost $6.89

18. Menu Pricing • Value Perception • Perception is reality • Pricing Psychology • Price endings of .99 more suited to qsr menus. • 0 and 5 endings more suited for full service menus • Economic Influences • Elastic vs. Inelastic • Flexible vs. Inflexible

19. Value PerceptionCheap or Expensive? vS.

20. Pricing Psychology Quick Service Full Service

21. Calculating Base Selling Price • Step 1: Determine the selling price multiplier by dividing the budgeted food cost percentage into 100% ($1.00). • Step 2: Determine the menu item’s base selling price by multiplying the estimated food cost by the selling price multiplier.

22. Contribution Margin (Gross Profit) Method • Works for a la carte menu items as well as grouped items: soup, entrée, salad, etc. • Uses operation-wide data to determine a $ amount that must be added to each major menu item’s food cost. • Can use the same contribution margin for all items or use categories. 2 versions of the formula: Combination: #1 #2 Practice Part 4

23. Pricing based on costs Pricing Factor or Multiplier: This formula gives a factor by which a food cost is multiplied to get a selling price. Formula: 100% / Desired food cost = Pricing Factor Pricing factor x Food Cost = Mathematical Price Example: Food cost is $2.73 and the desired food cost % is 35%. • 100%/35%=2.86 factor • 2.86 x $2.73 = $7.81

24. Changing Menu Prices • If food prices are rising rapidly customers may recognize the need of the operation to raise prices. • In periods of stable prices where other factors may dictate increases customers may not be as willing to accept price increases. • Sometimes menu items are removed and then brought back in anew manner with a higher price. • It’s not wise to raise all prices at once. • Market Price. • Daily inserts for items that have costs that fluctuate.