Purchasing and Receiving

Chapter 3Purchasing and ReceivingMain IdeasForecasting Food SalesForecasting Beverage Sales Importance of Standardized RecipesPurchasing FoodPurchasing BeveragesPurchase OrdersReceiving Food and Beverage Products Technology ToolsPart 1Forecasting Food SalesForecasting future sales addresses the important operational questions of:“What will they order?”“How many people will I serve today?”Part 1Forecasting Food SalesThe proper amount of menu item production minimizes the chances of running out of an item before a meal period is over; and it minimizes the chances of having excessive amounts unsold when the meal period is completed.Forecasting Food Sales Popularity index is defined as the percentage of total guests choosing a given menu item from a list of alternatives.Popularity Index =Total Number of a Specific Menu Item Sold Total Number of All Menu Items SoldForecasting Food Sales Individual menu item forecasting is based on an item’s individual sales history:Number of Guests Expectedx Item Popularity Index= Predicted Number of That Item to Be SoldThe predicted number to be sold is the quantity of a specific menu item likely to be sold given an estimate of the total number of guests expected.Forecasting Food SalesFactors influencing the number of guests to be served include:CompetitionWeatherSpecial events in the areaHolidaysFacility occupancyAdvertising and promotionsForecasting Food SalesFactors influencing the number of guests to be served include: (cont.)Competitor advertising Quality of serviceChanges in operating hoursOperational consistencySales histories track past performance and thus they are not precise estimates of future sales.Forecasting Beverage SalesAlcoholic beverages are those products that are meant for consumption as a beverage and that contain a significant amount of alcohol. These products are generally classified as: Beer Wine SpiritsForecasting Beverage SalesBeer: Fermented beverages made from grain and flavored with hops Wine: Fermented beverages made from grapes, other berries and fruits. Spirits: Fermented beverages that are distilled to increase the alcohol content of the product; these are also referred to as liquors.Forecasting Beer SalesA specific beer brand might be sold in individual cans, bottles, or in kegs.Keg beer is also known as draft beer, or beer in a form of packaging in which the beer is shipped in multi-gallon units for bulk sale.Forecasting Wine SalesIn many operations the forecasting of wine sales will be divided into two parts:Wine-by-the-bottleWine-by-the-glassForecasting Spirit SalesLike beer and wine, the number of guests who order a mixed drink (a drink made with a spirit) can be recorded and analyzed.Unlike beer and wine, however, using that information to estimate the exact drink guests will request can be difficult. Standardized RecipesStandardized recipes control both the quantity and quality of what a kitchen will produce.A standardized recipe details the procedures to be used in preparing and serving each menu item.Standardized RecipesA professionally developed standardized recipe will contain the following:1. Menu item name2. Total yield (number of servings)3. Portion size4. Ingredient listStandardized RecipesA professionally developed standardized recipe contain the following: (cont.) 5. Preparation/method section6. Cooking time and temperature7. Special instructions, if necessary8. Recipe cost (optional)Figure 3.6Standardized RecipesSome managers use the following arguments against implementing standardized recipes:They take too long to use.My people don’t need recipes; they know how we do things here.My chef refuses to reveal his or her secrets.They take too long to write up.We tried them but lost some, so we stopped using them.They are too hard to read, or many of my people cannot read English.Standardized RecipesReasons for using standardized recipes include:Accurate purchasingDietary concerns are addressed because ingredients are identifiedAccuracy in menu laws are addressed because ingredients identifiedMatching food used to cash salesAccurate recipe costing and menu pricingNew employees can be better trainedComputerization of a foodservice operation depends on themStandardized RecipesWhen adjusting recipes for quantity (total yield), two general methods may be employed.Factor MethodPercentage TechniqueStandardized RecipesFactor Method: uses recipe conversion factor:For example, a 50 portion recipe can be converted to a 125 portion recipe: 125/50=2.5 2.5 is multiplied by each ingredient (except spices)Yield DesiredCurrent Yield = Conversion FactorFigure 3.7: Factor Method UsageStandardized RecipesThe percentage method deals with recipe weight, rather than with a conversion factor.Ingredient Weight/Total Recipe Weight=% of Totalthen% of Total x Total Amount Required= New Recipe AmountFigure 3.8: Percentage Method PurchasingPurchasing is essentially a matter of determining the following:What should be purchased?What is the best price to pay?How can a steady supply be assured?PurchasingWhat Should Be Purchased?Product specification (spec) – a detailed description of an ingredient or menu item.A spec communicates, in a very precise way, with a vendor so that an operation receives the exact item requested every time.Each menu item or ingredient should have its own spec.PurchasingA professionally developed spec includesProduct name or specification numberPricing unitStandard or gradeWeight range/size – countPurchasingA professionally developed spec includes (cont.)Processing and/or packagingContainer sizeIntended useOther information such as product yieldFigure 3.9 Product SpecificationContainer SizesPurchasingProduct yield is the amount of product remaining after cooking, trimming, portioning or cleaning.Product yield has a direct impact on product costs PurchasingWhat Is the Best Price to Pay?The best price is more accurately stated as the lowest price that meets the long-term goals of both the foodservice operation and its vendor.Make vs. Buy decisionsBid sheet – comparison shoppingPrice comparison sheet – after managers have received bids from suppliers, they can compare those bidsBid Sheet Price Comparison Sheet PurchasingBid sheets and price comparison sheets are a good place to start.Other determining factors: vendor dependability, quality of vendor service, and accuracy in deliveryPurchasingMinimum order requirement is the smallest order that can be placed with a vendor who delivers.If the minimum order requirement cannot be met using the lowest prices, then the manager may have to choose the supplier with the next highest price to fill a complete order.PurchasingHow can a steady supply be assured?Suppliers have a variety of prices based on the customer to whom they are quoting them.It is simply in the best interest of a supplier to give a better price to a high volume customer.Cherry Pickers – how suppliers describe the customer who gets bids from multiple vendors, then buys only those items each vendor has “on sale” or for the lowest price.PurchasingSlow pay means high pay (higher prices paid).Vendors can be great source of information related to new products, cooking techniques, trends and alternative product usage.PurchasingOne vendor versus many vendorsStaples and non-perishables are best purchased in bulk from one vendor.Orders for meats, produce, and some bakery products are best split among several vendors, perhaps with a primary and secondary vendor in each category so that you have a second alternative should the need arise.Purchasing EthicsEthics have been defined as the choices of proper conduct made by an individual in his or her relationships with others.Is it legal?Does it hurt anyone?Am I being honest?Would I care if it happened to me?Would I publicize my action?Kickbacks always hurt the companyPurchasing BeveragesDetermining which wines to buy is a matter of selecting both the right product and packaging form for an operation’s needs. To do so managers must first determine if they will sell wine by the:GlassSplit or half-bottleCarafeBottleWine Bottle SizesSpirits Purchasing Spirits have an extremely long shelf life; the period of time they can be stored with no significant reduction in quality. Thus, managers can make a “mistake” and purchase the wrong spirit product or too much of one without disastrous results, but only if that product can be sold over a reasonable period of time.Spirits Purchasing Spirits Purchasing Well liquors are those spirits that are served when the guest does not specify a particular brand name when ordering. The name stems from the concept of the “well,” or the bottle holding area in the bar.Call liquors are those spirits that guests request by name, such as Jack Daniel’s, Kahlúa, and Chivas Regal. Extremely expensive call liquors are sometimes referred to as premium liquors.Beer Purchasing Beer is the most highly perishable of alcoholic beverage products. The pull date, or expiration date, on these products can be as short as a few months or even a few weeks.Because of this, it is important that the beverage operator only stock those beer and craft beer items that will sell relatively quickly.Beer Purchasing Purchase Orders A purchase order (PO) is a detailed listing of products requested by a buyer.A PO may include a variety of product information but must always include the quantity ordered and the price quoted by the supplier. The purchase order (PO) should be made out in triplicate (3 copies.)Purchase Orders The written PO form should contain space for the following information:Purchase Order InformationItem NameSpec #, if appropriateQuantity OrderedQuoted PriceExtension PriceTotal Price of OrderVendor InformationPurchase Order NumberDate OrderedDelivery DateName of Person who Placed OrderName of Person who Received OrderDelivery InstructionsCommentsPurchasingThe advantages of a written Purchase Order are many and include the following:Written verification of quoted priceWritten verification of quantity orderedWritten verification of the receipt of all goods orderedWritten and special instructions to the receiving clerk, as neededWritten verification of conformance to product specificationWritten authorization to prepare vendor invoice for paymentPurchase OrderReceiving Food and Beverage Products In proper ordering and receiving one individual places the order, while another individual is responsible for verifying delivery and acceptance of the product.Auditors are individuals responsible for reviewing and evaluating proper operational procedures. They can determine the potential for fraud or theft.Receiving Food and Beverage Products The requirements for effective receiving are:1. Proper location2. Proper tools and equipment3. Proper delivery schedules4. Proper staff trainingReceiving Food and Beverage Products The receiving area must be large enough to allow for checking products delivered against both the delivery invoice, which is the seller’s record of what is being delivered and the PO; the buyer’s record of what was ordered.ReceivingAccessibility to equipment required to move products to their proper storage area and to dispose of excess packaging is important. Receiving areas must stay free of trash and clutter, as these make it too easy to hide delivered food items for later attempts of theft.ReceivingRemember that the delivery person is also a potential thief.The receiving area should be kept extremely clean, since you do not want to contaminate incoming food, or provide a carrying vehicle for pests. The area should be well lit and properly ventilated.Receiving Food and Beverage Products Although the tools and equipment needed for effective receiving vary by type and size of operation, some items are standard in any receiving operation. These include:ScalesWheeled equipmentBox cuttersThermometersCalculatorsReceiving Food and Beverage Products Delivery SchedulesSome operators are able to demand that deliveries be made only at certain times. These are called acceptance hours. The operation may refuse to accept delivery of products at any other time.Some large operations prefer to establish times in which they will not accept deliveries. These are called refusal hours.Staff TrainingReceiving clerks should be trained to verify the following product characteristics: weight, quantity, quality, and price.Receiving clerks should be required to weigh all meat, fish and poultry delivered, with the exception of unopened Cryovac (sealed) packages.When an item is ordered by weight, it should be verified by weight.Credit MemosShorting is the term used to indicate that an ordered item has not been delivered as requested. When a vendor shorts the delivery of an item you ordered, that item may or may not appear on the delivery invoice. If the item is listed on the delivery invoice, the delivery driver should sign a credit memo. A credit memo indicates an adjustment to a delivery invoice must be made.Credit Memo Receiving BeveragesWhen receiving beverage products, the following items are of special concern and should be verified:Correct brandCorrect bottle sizeNo broken bottles or bottle sealsPull dates (beer)Receiving BeveragesWhen receiving beverage products, the following items are of special concern and should be verified: (cont.)Correct vintage or year produced (wine)Correct unit priceCorrect price extensionCorrect invoice totalVerifying PriceIn the area of training staff to verify proper pricing, two major concerns should be addressed:1. Matching PO unit price to delivery invoice unit price2. Verifying price extensions and totalsReceivingA contract price is an agreement between buyer and seller to hold the price of a product constant over a defined period of time.Extended price is the unit price of an item multiplied by the number of units delivered.ReceivingNever assume extensions are correct because a computer did them!If a supplier consistently shorts an operation, that supplier is suspect both in terms of honesty and lack of concern for the operation’s long-term success.Training your receiving clerk to assess and evaluate quality products is a continuous process. Receiving RecordsSome large operations use a receiving record when receiving food.A receiving record generally contains the following information: name of supplier, invoice number, item description, unit price, number of units delivered, total cost, storage area, and date of activity.Receiving reports can be helpful if it is important to record where items are to be delivered, or have been delivered. Receiving RecordsTechnology ToolsThis chapter focused on managing food-related costs by controlling the areas of forecasting future sales, using standardized recipes, effective purchasing, and proper receiving.Technology ToolsThere are a variety of software programs that are available that can assist managers in purchasing and receiving. These include:Recipe Software: To forecast production, cost and adjust recipesPurchasing Software: To create bid sheets and prepare purchase ordersReceiving Software: To record deliveries