Page 1 of 124

Note: THESE NOTES PROVIDED ARE FOR REFERENCE

PURPOSE ONLY. DEATILED EXAMS STUDY MUST BE MADE
FROM THE COURSE PACKS SCANNED COPY PROVIDED BY
THE UNIVERSITY, WHICH YOU MUST HAVE RECEIVED BY NOW.
THIS NOTES COVERS BOTH THE SUBJECTS: INVENTORY
CONTROL AS WELL AS F&B MANAGEMENT.

Define Hotels:
 A Hotel is defined as an establishment providing accommodation,
meals, and other services for guest, travelers and tourists, by the
night.
 They provide comfort and convenience to the guest.
 The primary objective of hotel is to make profit.
 Hotels can be located at highways, business cities, hill stations,
sea beaches, etc.
 In India hotels are rated according to star rating system.
What are restaurant defined as?
 Restaurants are defined as a place where guest pays to sit and eat
meals that are cooked and served on the premises.
 It is also defined as public meeting houses.
 Restaurant can be standalone or within the hotel.
 There can be several units also called as chains of restaurants
situated at different places.

How are payments made in canteens?

 In canteen the menu of the day is written on large hoarding or
board or it can be printed.
 This printed board or hoarding is usually kept near the service
counter where the cashier sits to collect cash and give coupons.
 The price of each dishes is marked on the printed menu or on the
board so it can facilitate the customer/guest.
 The service is usually counter style service. Payment is generally
by cash or the use of coupons.

Name the various type of table service?

The main characteristic of table service is that the food is served on
the guest table. There are 2 types of table service. This are as
follows.
1) Waiter service

Page 1 of 124
2) Bar counter service
1. Waiter service: served by the waiting staff on the guest table. It
further gets divided into 5 styles of service namely:
 English service
 American service
 French service
 Russian service
 Gueridon service
2. Bar counter service: Guests are served with snacks and drinks at
the bar counters with/without bar stools
List the main features of family service:
 This is also known as French service. In this style of service the
dish is presented to each guest from the left-hand side to help
himself/herself.
 For a small party of two to three guests, the dishes are placed on
the table with service implements and plates for the guests to help
themselves.
 Alternatively, all dishes may be placed on the table and the host
may serve all his guests at the table first or assist them in service
and serve himself finally.

Name the different types of buffets

Types of buffets are as follows:
• Sit down buffet
• Fork buffet
• Finger buffet
• Cold buffet (buffet-froid)
• Smorgasbord
• Display buffet

What are Sit down buffets?

• Space requirement is more.
• Dishes are displayed and guest help themselves or assisted service
is there.
• Common for both informal and formal function.
• Popular for wedding reception.

What are standing buffets?

• Where space is minimum this type of buffet is ideal.
• People stand and consume their meal
 Page 3 of 124

Popular in case of dealers meet etc.

What are Fork buffets?

• Simply where flat ware is used.
• When people stand and eat, it is not convenient to use knife, hence
fork is convenient to use.

What are Finger buffets?

• No cutlery is required
• Ideal for Indian food and finger buffet is popular for wedding
reception
• Popular in smaller establishment and outdoor catering.

What are Cold buffets?

• Display of cold cuts and cold hors’doeuvre are served.
• Popular in the western world.

What is smorgasbord?
• It is a Swedish word which refers to the type of Scandinavian buffet
style in Swedish cuisine.
• In Norway it is called kold bord and in Denmark Kolde bord.
• It’s typically a holiday or feast at which a family can help themselves
from a lavish buffet in front of the lake.

What are Display buffets?

• Display of ice carving, tallow sculpture, butter sculpture (center
piece)
• Salad display .
• Live counter
• Tawa counter
• Japanese teypanyaki (live counter)
• Chinese/Thai live counter.
• Carving and flambé items.

What are the Duties and responsibilities of food and beverage

manager?
 Directs and supervises all functions of kitchens, service areas,
purchases, stores, and stewarding
 Liaises with the department heads and directs them to achieve the
desired results.

Page 3 of 124
 Takes vital decisions on the managerial activities of planning,
organizing, staffing, motivating, and controlling.
 Formulates financial, catering, and marketing policies and
strategies
 Appoints right people for right job
 Prepares budget for the department consulting the departmental
heads
 Plans menus for various outlets in consultation with chefs and the
restaurant manager/s
 Designs and implements sales promotional activities
 Analyses sales and identifies markets
 Controls all three elements of costs—food cost, labor cost, and
overheads
 Organizes training programs.
 Implements hygiene and safety standards
 Monitors performance of the departments
 Takes decisions on equipment procurement, expansion of food
and beverage outlets, etc.
 Selects suppliers for kitchen commodities and alcoholic beverages

Write a Note on food service industry in India.

 Food Service Industry deals with the provision of food and

beverages to the people away from home
 Food service Industry in India traces its roots to the Community
feasts and the movement of people on religion
 Dharmashalas and Chatrams were built up to protect the lives of
the travelers.
 Barter system motivated people to travel for trade
 Traders shared accommodation with the owners of the house and
were given meals and drinks
 Invasions by many dynasties brought in their cuisines
 Mughal rule introduced ‘sarais’ to provide accommodation to the
travelers
 Europeans visited India for trade and the British colonized the
region
 They established hotels, and eateries and converted ‘sarais’ to
inns
 Page 5 of 124

 Introduction of Railways in the mid-nineteenth century increased

the mobility of people which introduced more eateries in and
around Railway stations
 ITDC was set up in Oct 1966 to develop and expand tourism
infrastructure
 Ministry of Tourism set up Hotel Management Institutions to
develop the man power to meet the needs of hotels, restaurants,
and other hospitality-based industries.
 Now many International chains of hotels and restaurants are
operating in India
 Today India has many top quality restaurants that are comparable
with international standards.

Role and function of Ministry of Tourism and ITDC

 Position tourism as a major growth engine
 Harness the direct & multiplier effect
 Focus on domestic tourism growth
 Position India as a global brand un-tapping vast potential of India
as a destination
 Create & develop integral tourism circuits
 Ensure that the tourist gets the feel of ‘True India’ QUALITY
SERVICE
 To improve diversify and expand tourism product
 To provide transport, entertainment, shopping & conventional
service.
 To provide innovative, dependable & value for money solutions to
the needs of tourism.

List & Explain the Classification of food service sector

Food service sector is classified according to
A. Priority given to the provision of F&B
B. Profit Motive
C. Market they cater to
A. Priority given to provision of F&b : It is divided into Primary Sector
& Secondary Sector
Primary Sector:
• Deals primarily with the provision of Food and Beverages
• Examples: Food service outlets of accommodation sectors,
various types of restaurants, and takeaways.

Page 5 of 124
Secondary Sector:
• Provision of Food and Beverages are not main activity but a
support activity
• Examples Institutional catering, transport catering, catering in
theatres, amusement, parks, industrial catering etc.

B. Profit motive : Further divided into commercial sector & welfare

sector

Commercial sector: Profit earning is the main motive of commercial

sector
Examples: Residential: Hotels, Motels, Resorts, Inns, and Clubs
etc.
Non-Residential: Restaurants, Fast food joints, popular
restaurants, pubs, bars

Welfare sector: Operates at no profit and no loss basis

Examples: School catering, university catering, hospital catering,
prison catering, military catering, etc.

C. Market they cater to: further divided into Non-captive, Captive, Semi-
captive
a. Non-captive: Caters to unrestricted market where the choices of food &
beverage service options are unlimited. Examples: They have a choice
over Restaurants, fast food joints, etc
b. Captive: Caters to restricted market where there are no options of food
& beverages. Examples: prisoners, hospital patients, residential school
children
c. Semi-captive: Caters to semi-restricted market where there are very few
options to choose in food and beverages. Examples: Passengers
travelling by train, air, etc.
List down the types of hotels and restaurants
Types of hotels are as follows:
• Inns: Inns are generally establishments or buildings where
travelers can seek lodging and, usually, food and drink
 Page 7 of 124

• Motels: a roadside hotel designed primarily for motorists,

typically having the rooms arranged in low blocks with parking
directly outside.

• Boatels : a waterside hotel with facilities for mooring boats.

• Floatels : a floating hotel, especially a boat used as a hotel.

• Lotels : hotels with helipad

• Metels : totally mechanized hotels

• Rotels : hotels on wheels.

Types of restaurants are as follows: (Please refer Singaravelavan text

book for the below mentioned types of restaurants. )

• Bistro
• Brasserie
• Coffee shop
• Specialty restaurant
• Fine dining restaurant
• Popular restaurant
• Dhaba
• Fast food joint
• Rôtisserie
• Barbeque restaurant
• Night club
• Discotheque
• Ice cream parlor
• Café
• Cafeteria
• Food court
• Kiosk
• Oyster bar
• Automats
• Pub
• In-plant service
• Bar

Page 7 of 124
 • Mobile catering vans
• Carvery
• Canteen
• Classic gourmet
• Holiday camps
• Grand luxe
• Drive inns
• Grill rooms
• Canteens
• Personality restaurants
• Milk & Snack Bar
• Filling stations
• Cafeteria

Which are the environmental factors that affect the food and
beverage service operations?
The factors that affect/effect the f&b service operation can be
External or Internal.
• External
– Political: Govt. policies and regulations , Tax laws
etc
– Economic: Increasing Cost ,Credit policies,
disposable income of the society, loan policies etc
– Social: Changes in eating habits, population
distribution, socio-economic grouping
– Technical: Advancement in food processing
technology, production and service equipment, and
information technology

• Internal
– Food and Beverage: Perishable commodities,
pilferage, wastage, and poor portion control
– Staff: High staff turnover, Absenteeism, Shortage of
staff, Poor supervision
– Control: Control and procedures on purchases,
stores, issues, cash

What are the different Styles of Food Service?

 Page 9 of 124

Food and beverage service styles can be broadly classified into three
main groups

1. Waiter service
2. Self-service
3. Assisted service

1. What do you mean by Waiter Service?

In this method of service, food and beverages are served to guests
by waiters at the guest’s place. It may be in a restaurant, hotel room,
flight, hospital, and so on.

This service is further classified into the following

English Service
American Service
French Service
Guéridon Service
Russian Service

What is English Service?

• It is also known as silver service. In this method, dishes are
presented and transferred to the guest’s plate using service
spoon and fork from the left-hand side of the guest while
beverages are served from the right hand side. It is regarded as
a formal service. It is implemented in upscale restaurants.
• Conduct clearance from the right-hand side
• Serve beverages from the right-hand side

Advantages
• Personalized service
• Customer satisfaction
• Waiters have scope to exhibit their service skills
• No plate wastage
Limitations

Page 9 of 124
 • Calls for high level of service skills, hence more labour cost
• More staff required
• Low seat turnover
• Slow service

What is American service?

• This is a simple and informal form of service.
• It is also termed as plated service. In this style, dishes are
neatly plated in the kitchen by the kitchen staff and placed at the
guest’s cover from the right hand side.
• Dishes such as prawn cocktail, salads, soups, masala dosa,
vada sambar, sandwiches, burgers, ice creams, and so on, are
served in this way.
• This style of service is followed in restaurants located in busy
areas, Coffee shops, fast food outlets, and casual dining
restaurants
• Beverages are also served from the right
• Clearance is done from the right-hand side
Advantages
• Service skill is not required
• Low labour cost
• Needs fewer waiters
• Quick service
• High seat turnover as service is fast
• Kitchen staff has scope for demonstrating their plating skills
Limitations
• No personalized service
• Chances of plate wastage
• Skilled waiters do not have scope to show their service skills
• Food may become cold
• More of kitchen time and labour

What is French service?

• This is also known as family service.
• In this style of service the dish is presented to each guest from
the left-hand side to help himself/herself. For a small party of two
to three guests, the dishes are placed on the table with service
implements and plates for the guests to help themselves.
 Page 11 of 124

• Alternatively, all dishes may be placed on the table and the host
may serve all his guests at the table first or assist them in service
and serve himself finally.
Advantages
• Service skills not required
• Low labour cost
• Seat turnover is more compared to silver service
• Quick service
• No plate wastage
Limitations
• Service staff will not be able to demonstrate their service skills
• Food may go cold
• Guests may spill or burn himself
• Needs more area on the table
• Guests may feel neglected

What is Russian Service?

• This is a very elaborate service and is termed as sideboard
service.
• In this style, large joints, roast poultry, whole fish, and so on,
that have elaborate garnish, are presented to the host, taken
back to the sideboard, carved, portioned, and served to the
guests with service spoon and fork.
• After service, dishes are kept on a hot plate in the sideboard to
keep them warm. Each course is served from the sideboard.
• This service is not practiced much in recent times.
Advantages
• High level of guest satisfaction
• Personalized service
• Waiters have scope to exhibit carving, portioning, and service
skills
• Good presentation
Limitations
• Calls for highly skilled staff, hence higher labour cost
• More wait staff required
• Low seat turnover, as time taken for service is more

What is Guéridon Service?

Page 11 of 124
 • This is also termed as trolley service. In this style of service,
dishes are prepared, carved, dressed, or flambéed on a trolley in
front of the guests and served with service spoon and fork. The
design of a trolley varies according to its purpose. Carving trolley,
flambé trolley, hors d’oeuvres trolley, cheese trolley, and liqueur
trolley are some of the trolleys found in restaurants offering
guéridon service.
• This type of service is practiced in luxury, up market
restaurants.
Advantages
• Highly personalized service
• High level of customer satisfaction as the dishes are prepared,
carved, or flambéed in their presence
• Good merchandising device
• Wait staff can exhibit their culinary, carving, and service skills
• High average spending power (high revenue/cover)

Limitations
• Slow service
• Low seat turnover
• Expensive style of service as it requires more service area and
highly skilled staff
• Chances of accidents are more
• More investment on service equipment
• Cooking in the service area may leave odour

What do you mean by Tray Service?

• In this form of service, the dishes ordered by guests are neatly
portioned and arranged on a tray with necessary cutlery and
taken to their rooms/beds/seats by waiters.
• Special trays are available to retain temperature of dishes. This
style is practiced in room service, hospitals, flights, and
institutional catering.

Advantages
Service skill is not required, hence low labour cost
Limitations
 Page 13 of 124

• Tray area may not be adequate to accommodate more dishes

unless the number of dishes and portion size are predetermined,
as in case of flight catering
• Waiters will not be able to exhibit their service skills
• No personalized service
• Food may go cold unless insulated trays are used

2. What do you mean by Self Service?

This is the simplest form of service methods where members of
service staff do not serve guests. Customers help themselves with the
dishes they would like to consume.
Self-service is classified into:
1. Cafeteria
2. Counter service
3. Vending

What do you mean by Cafeteria service?

There are two types of cafeteria service in practice. They are
1. Traditional cafeteria
2. Free flow cafeteria

1. Traditional Cafeteria
• It consists of a straight line of counters containing a variety of
hot and cold dishes. The customer starts from one end of the
line, picks up a tray and moves along the length of the counter as
he selects dishes he wants to have.
• The cashier, at the end of the counter makes the bill and
collects payment. This is not required if the meals are pre-paid.
Normally, the service counter is separated from the dining area.
• This form of service is widely followed in institutional and
industrial catering establishments.
Flow of activities in traditional cafeteria system
1. Guest enters

Page 13 of 124
2. Picks up the tray
3. Joins queue at the counter
4. Picks up the dishes of his choice as he moves along2.
5. Pays to the cashier at the end of the counter (not necessary, if pre-
paid)
6. Picks up cutlery and napkin
7. Goes to the dining hall to eat

2. Free-flow cafeteria
• In ‘free-flow cafeteria’ system, counters are segregated
according to the type of dishes offered—hot or cold, appetizers,
soups, breads, sandwiches, entrées, salads, pastas and so on.
• Trays and other essential service equipment are kept on tables
at convenient places. Guests pick up trays and go to counters of
their choice and select whatever dishes they want and exit
through the payment point at the entrance of the dining hall.
• In this system, counters are not arranged in a straight line, but
in shapes such as hollow-square, U, echelon or saw-tooth, and
so on, depending on the number of dishes on offer and shape
and size of area available.
There are two main types of layout—hollow square and echelon.

1. Hollow square: counters are placed around three sides of

service area, each having counters of different dishes
2. Echelon: Counters are positioned at such angles that
customers can flow within free flow area and also to save
space. A customer reaches the counter of his choice to help
himself
The following points should be considered while positioning the
counters of various categories of dishes in free- flow system
• the flow of guests
• location of most preferred category of dishes,
 Page 15 of 124

• Ease of replenishment especially to counters that are centrally

located, and so on.
Flow of activities in free-flow cafeteria system:
1. Guest enters
2. Picks up tray
3. Goes to counter of his choice
4. Picks up the dishes
5. Pays to the cashier
6. Picks up cutlery and napkin
7. Goes to the dining hall to eat

What is Counter Service?

• Guests select the dishes they want to have from the menu
displayed, buy tokens, and collect dishes over the counter
against the tokens. They may consume the dishes either in the
premises or get them packed as takeaway.
• Cafeteria, fast food outlets, canteens, food courts, kiosks, and
so on, follow this style.
Advantages
Quick service
Service skill not required
Less staff required
Low labour cost
High seat turnover
Limitations
No personalized service
No scope for talented wait staff to show their skills

What are Vending Machines?

• In this style, guests get the dishes/juices/packets/bottles from
machines.

Page 15 of 124
 • Customers may buy tokens or coins and insert them into the
vending machine and get whatever they wish to have by
selecting appropriate option.
• A wide variety of hot and cold dishes are available in this
system.
• Vending machines are installed in busy areas such as railways
and bus stations, airports, schools, hospitals, and so on.
Advantages
Effective portion control
Reduces labour
Service is available throughout the day
Good food cost control
No wastage
Hygienic
Low cost of operation

Limitations
-Absence of interaction with guests
-Limited selection of dishes
-Unreliability
-Power dependence
-Not suitable for large-scale operations
-Calls for regular servicing during which period service is not available and
leads to customer dissatisfaction

3. What is Assisted service?

• This is a combination of waiter and self-service.
• Service staff assist customers in service of water,
accompanying vegetables, sauces, sweets, and so on.
• The following are the examples for assisted service:
1. Buffet 2. Carvery
 Page 17 of 124

What is Buffet style of service?

• In buffet style of service, dishes are neatly displayed with
garnish in the appropriate containers and arranged attractively on
the buffet table in a proper order for guests to help themselves.
• The display has wide choice of both hot and cold dishes. Hot
dishes are kept in chafing dishes and the cold ones in
glass/metal/wood containers.
• Buffet can be broken into many sections such as soup, non-
vegetarian, vegetarian, salads and cold cuts, sweets, coffee/tea,
and so on
• Each section has appropriate service equipment.
• Carvings of ice, tallow, vegetable, fruits, and so on, may be
used as the centre piece
• Large number of people can be served within a short duration
of time. This type of service is suitable for function catering. A lot
of restaurants today favour this style of service for all three
meals.
Advantages
• Service skill is not needed
• Less service staff
• Low labour cost
• More guests can be served in a short period of time

Limitations
• No personalized service
• Skilled wait staff may lose interest as it does not give them
scope to demonstrate service skills
• Dishes may lose eye-appeal after repeated servings
• Possible congestion
• Poor food control

What is Carvery style of service?

• This style is practiced in large chain of hotels and restaurants.
The basic concept is that the roast joints are carved at the
carvery counter and the customers help themselves
• Carvery is open for luncheon and dinner and it also serves
alcohol.

Page 17 of 124
 • Table d’hôte menu is used in carvery which consists of three
courses with a selection of starters, three or four roast meats,
and a selection of sweets.
• Waiters serve first and third courses, while guests help
themselves for roasts at the carvery counter having three or four
varieties of roast meat and poultry.
Service sequence at carvery
1. Guests are greeted
2. Guided to the table and seated by the service staff
3. Menu is presented
4. Water is served in the meantime
5. Preference for first course is taken
6. First course is served with necessary accompaniment
7. First course is cleared and accompaniment of the first course is taken
away
8. Guests are guided to carvery. They choose the meat and get their portion
from carvery. Collect accompanying vegetables and sauces and return to
their tables
9. Bread and butter are placed on the table when the guests are at the
carvery
10. Main course plate is cleared along with side plate
11. Bread and butter are taken away and cruets are removed
12. Crumbing is done
13. Menu is offered to take preference of guests for sweets
14. Cutlery for sweets is adjusted
15. Sweet is served by the service staff
16. Sweet is cleared
17. Coffee is served by the service staff

What are the factors that influences styles of service?

 Page 19 of 124

The style of food service implemented by an establishment will depend

on a number of interrelated factors. Some of them are
1. Type of establishment
2. Location of establishment
3. Time available for service
4. Type of customers
5. Service skills available
6. Service area available
7. Type of dishes to be served
8. Turnover expected
9. Service equipment available

What are the Functions of food & beverage department?

Food and Beverage Department is responsible for

 The operations of all the Food and Beverage outlets
(Restaurants, Bars, Room service, Lounge, Banquets) Food
production, stewarding, stores, and Purchases.
 The supply of hygienically prepared wholesome food and
beverages to the guests
 Revenue generation
 Satisfying the different palates and needs of the guests
 Organizing the functions
Write a Note on kitchen stewarding.

• Kitchen stewarding is responsible for the upkeep and

maintenance of the kitchen department
• Manager—kitchen stewarding: He is responsible for the efficient
functioning of kitchen stewarding department. He has
supervisors and kitchen stewards under his control.
• Supervisors: For each section such as pot wash, ware wash,
kitchen cleaning, staff meal preparation etc is monitored by a
supervisor.
• Kitchen stewards- They carry out all the activities under the
directions of the supervisors.

Page 19 of 124
 Write a Note on Purchase department:

• Purchase Department: procures quality ingredients at

competitive prices on time as per the purchase specifications.
Purchase Manager is responsible for this department and he has
assistants.
• Stores: Store keeper is responsible for stores. He stores the
ingredients at right place and temperature, maintains the record
of receipts and issues, and controls the pest.

Write a note on inter departmental coordination

• Kitchen: the following F&B sections/departments coordinates

with kitchen
– Purchase and stores: Procures and issues materials
– Kitchen stewarding: Supplies clean pots and pans
– Restaurants, Banquets, room service, and lounge
serve the dishes prepared by the kitchen and provides
guests’ feedback
– Bar: Supplies wine, beer, and liqueur that may be
required by the kitchen for preparing certain dishes
• Service areas: the following F&B sections/departments
coordinates with service areas
– Purchase and stores: Procures and issues materials
required by the service areas
– Kitchen stewarding: Supplies clean and polished
service equipment
– Kitchen: Prepares dishes required by the service
areas including bar. Also supplest ingredients such as
fruits, cream, eggs, and so on required by bar

Describe the Qualities / Attributes of food and beverage service

personnel:

• The success of food service business depends on the quality

and behavior of the staff working. Following are the important
qualities required
• Personal hygiene: Well-maintained personnel hygiene
 Page 21 of 124

• Punctuality: Should report well before time on shifts

• Honesty: Honesty is the best policy. Staff to follow this policy
• Loyalty: Loyalty to the organization is very important
• Conduct: The conduct of the staff is very important with staff
and also most important with the guest
• Personality: He should have a pleasing personality
• Attitude towards the guests
• Sense of Urgency: The staff must show some sense of urgency
during service
• Product knowledge: Product knowledge is very important while
serving to the guest
• Local knowledge: local knowledge is an added advantage as it
come in helping and assisting the guest about the nearby
surroundings.
• Memory: Memory helps the staff to remember the likes and
dislikes of the specific guests.is very important in service
industry.
• Team Spirit : The staff should know that team spirit
• Communication skills: Should have excellent communication
skills

Write a short note on hygiene

• Skin to be clear and well maintained with proper nourishment if
any pimples.
• Hands to be sanitized
• Fingernails to be trimmed
• Nose , mouth & ears to be clean and maintained standard
hygiene practices in accordance
• Jewelry & perfume should not overpower the formal setup of
the organization
• Hair to be well trimmed with formal haircut
• Smoking strictly prohibited.
• Protective clothing in accordance with the department where
we work.

Write a short note on Good Hygiene Practices (GHP)

• Keeping the area clean
• Keeping the food containers clean
• Keeping away insects rodents and pests
• Keeping eatables in tightly sealed containers and refrigerated

Page 21 of 124
 • Washing hands regularly
• Keeping dish wash area and dish wiping cloths clean.

Short note on HACCP

• HACCP HACCP stands for Hazard Analysis and Critical Control
Points.
• This is a preventative food safety system in which every step right
from the manufacturing , to storage and distribution of a food
product is scientifically analyzed for microbiological, physical and
chemical hazards.

What is Risk Analysis?

Risk analysis is the review of the risks associated with a particular
event or action.
• Comprises of three things
1. Risk assessment
2. Risk management
3. Risk communication

What is Risk Assessment?

It is the systematic process of evaluating the potential risks that may
be involved in a projected activity or undertaking..
Following 4 steps are involved
1. Hazard identification: The identification of biological,
chemical, and physical agents capable of causing adverse health
effects and which may be present in a particular food or group of
foods.
2. Hazard characterization : The qualitative and/or
quantitative evaluation of the nature of the adverse health effects
associated with biological, chemical and physical agents which
may be present in food
3. Exposure assessment: The qualitative and/or quantitative
evaluation of the likely intake of biological, chemical, and
physical agents via food as well as exposures from other sources
if relevant. This step characterizes the amount of hazard that is
consumed by various members of the exposure population
4. Risk characterization: The qualitative and/or quantitative
estimation, including attendant uncertainties, of the probability of
occurrence and severity of known or potential adverse health
effects in a given population based on hazard identification,
 Page 23 of 124

hazard characterization and exposure assessment.During this

stage, estimates of risk are generated from the outputs of hazard
identification, hazard characterization, and exposure assessment

What is Risk Management?

 The processes, of weighing policy alternatives, in consultation
with all interested parties, considering risk assessment and
other factors relevant for the health protection of consumers
and for the promotion of fair trade practices, and, if needed,
selecting appropriate prevention and control options.

Risk management involves 4 points

1. Risk evaluation- to acknowledge and measure the risk
2. Option assessment- to seek a style (option )or method for
assessment
3. Option implementation- to implement the method or
option
4. Monitoring & review- to review and monitor the method

What are the General principles of food safety risk management?

• Risk management should follow a structured approach.
• Protection of human health should be the primary consideration
in risk management decisions.
• Risk management decisions and practices should be
transparent.
• Risk management should be a continuing process that takes
into account all newly generated data in the evaluation and
review of risk management decisions.
• Risk management should include clear, interactive
communication with consumers and other interested parties in all
aspects of the process

What is Risk Communication?

Risk Communication is the interactive exchange of information
and opinions throughout the risk analysis process concerning
hazards and risks, risk-related factors and risk perceptions,
among risk assessors, risk managers, consumers, industry, the
academic community and other interested parties, including the

Page 23 of 124
 explanation of risk assessment findings and the basis of risk
management decisions

What are the characteristic of Market Oriented Business?

• Includes high percentage of fixed cost. For eg. salaries
• Emphasis on earning more profits
• Emphasis on all form of selling and merchandising
• Flexible pricing policy.

What are the characteristic of Market Oriented Business?

• High percentage of variable cost eg. Advertising, office
supplies, etc.
• Emphasis on low cost to accomplish desired profits
• Emphasis on controlling cost on purchasing , portioning & labor
• Fixed pricing policy

What is F&B Management?

• Management is an art and science of being able to achieve the
objectives of the establishment through managing various
resources. These resources are
• MAN
• MATERIALS
• MONEY
• MINUTES (TIME)
• METHOD
• MACHINE

What is F&B Management Process? What are the functions of

Management?
The Management Process constitute of 4 Main Process:
• PLANNING
• ORGANISING
• DIRECTING
• CONTROLLING

FUNCTIONS OF MANAGEMENT are as follows:

I. PLANNING
 Page 25 of 124

It involves three policies

1. Financial policy: deals with cost and profits
2. Marketing policy: identification and reaching new markets
3. Catering policy: defines the objective of the management
and how to achieve it.

II. ORGANISING
There are two types of structures in an organization.
1. Line or vertical structure: authority is given in hierarchy on
different levels
2. Staff relationship or horizontal relationship: staff basically
can give in this nature.

III. DIRECTING
It refers to activities such as giving leadership to the staff
along with
• Incentives
• Promotion
• Appraisals
• Sort out staff problems
• Motivation

IV. CONTROLLING
Controlling has three phases
1. Setting of standards
2. Performance measurement against the set standards.
3. Taking corrective actions and revising and setting of new
standards if required.

What are the Objective of F&B Department?

• Identifying a definite market
• Meeting the requirements & expectations of the identified
markets
• Performing functions such as purchasing, receiving, storing,
issuing, production & sales
• Evolving an efficient controlling system
• Monitoring the prices and achieving competitive rates
• Right Pricing of the product.

Page 25 of 124
 • Collecting information on cost and sales and providing the
same to the management
• Volume Forecasting
• Developing human resource and training
• Maintaining inter & intra department coordination
• Obtaining feedback.

What are the Jobs that are available in Hospitality Industry ?

• Restaurant
• Clubs & pubs
• Hotels
• Fast food joints
• Catering
• Airlines
• Hospitals
• Institutional catering
• Recreation centres
• Railways
• Cruise liner
• Tour operators
• Government owned departments
• FMCG
• Confectionaries
• Casinos

Describe the food service industry.

 Most important industry this days with lot of investment
 Concept of eating out is gaining more and more importance
 Health & diet conscious has open new parameters within the
food industry
 Cater to the needs of various guests
 Many diversified catering organizations have developed.
 This has also increase overall profit margin within the business
players
 With a lot of emphasis on service and style of food prepared the
food industry has really become one of the most dynamic
industry to work for.
 Page 27 of 124

WHAT ARE THE CRITERIA FOR CLASSIFICATION OF FOOD

SERVICE ESTABLISHMENTS?
1. Product perspective
2. People / Guest perspective
3. Condition / Operational perspective

What is Product perspective?

It is based on the factor of food served or offered to the guest.
For eg. Ice-cream, dosa, burger. It has subdivisions to it.

1) Extent of menu

1. Limited menu: 10-12 dishes of same type

2. Full menu: 12-20 dishes of same type
3. Extensive menu: 20 + more dishes

2) Styles of service:
• Take away
• Have it in the restaurant
• May eat In the restaurant & OR take away
The style of service can be categorized further as per the following
 SEATING STYLES
 EXTEND OF SERVICE TO THE GUEST
 ATMOSPHERE
 CONSUMER ORIENTATION

 SEATING STYLES
1. No seating
2. Counter service
3. Booths
4. Table service

 EXTEND OF SERVICE TO THE GUEST

1. No service or self service
2. Minimal service for eg. coffee shops or buffet
3. Host service or moderately attentive service
4. Very attentive service for eg. Silver service
5. Extremely attentive service for eg. Gueridon service

Page 27 of 124
  ATMOSPHERE
1. Contemporary
2. Theme
3. Luxury
4. Family
5. Traditional
6. Fast food
7. Coffee shop
8. Breakfast lunch dinner
9. Refreshments snacks only restaurants
10. Clubs
11. Drive inns

 CONSUMER ORIENTATION
• This comprises of different types of people that come to visit the
organization
• They come to enjoy the food and services of the hotel followed
by other recreational activities and entertainment.

What is people’s perspective?

People in general can be classified broadly into 3 groups:
1. Customers
2. Guest
3. Clients

What is OPERATIONAL/CONDITIONAL PERSPECTIVE?

• Depends upon the operational styles. They are as follows.

1. Business motive
2. Business association
3. Business types

1. BUSINESS MOTIVE: Main aim MAY BE or MAY NOT BE

to earn profit. It is further classified into:
a) Commercial
b) Institutional
 Page 29 of 124

c) Industrial
d) Military
2. BUSINESS ASSOCIATION: Work in lieu with food joints and
eateries. It can be classified as follows:
a) Drug stores
b) Departmental stores
c) Theatre extensions

3. BUSINESS TYPES
a) Food contractors: This are agencies.
b) Franchise operations
c) Chain operators
d) Proprietorships

What are the objectives of food service system?

• To ensure guest satisfaction & fulfill the requirement of
prospective guests
• To provide excellent food & services
• To survive in the competition
• To make sales that covers cost & maximizes profit
• Perform management functions like purchasing, issuing,
storing, issuing ,production and sales & wastage control

What are the characteristics of food service process?

• The food service process is interrelated. For eg. Raw material---
storage---production---sales
• It has a recognizable structural approach
• The processes are specific & are designed to achieve a
particular objective.
• The service process also deals with elements like materials
equipment labor capital and also deals with social & economic
conditions

What are the subsystems of food service process?

• MANAGEMENT
• PLANNING
• ORGANIZING
• PURCHASING
• SUPPLYING

Page 29 of 124
 • PRODUCING
• MARKETING
• SELLING
• ACCOUNTING & CONTROLS

What are the weakness of food service operations?

• The management may fail to understand the significance of the
economic and social condition.
• It may not set the specific objectives accordingly
• The management may not consider the paying potential of the
guest.
• It may also ignore the competition.

What are the variables of food service operations?

The variables can be grouped into three heads:
1. Organizational
2. Customer service
3. Performance measure

What are the characteristic of organizational variable?

The characteristics are as follows:
 Nature of market being met
 Capacity
 Legislative control
 Staff working hours
 Scale of operations
 Marketing
 Staff capability
 Style of menu & drinks
 Specialized service equipment
 Service period/ opening time
 Provision & storage method
 Production & billing methods
 Checking methods
 Service methods
 Dinning arrangements
 Dishwashing methods
 Revenue control methods
 Page 31 of 124

What are the characteristic of customer experience variable?

 Décor & ambience
 Food and drink available
 Guest profile
 Level of service
 Price range
 Value for money
 Cleanliness & hygiene
 Attitude of the staff

What are the characteristic of performance measure variable?

 Sales analysis
 seat turnover
 Customer spending power
 Departmental profit
 Revenue
 Turnover
 Productivity index
 Ratio of sales to complaints
 Stock

What are the different types of requirements of the guest?

The requirements the guest might be looking to satisfy while visiting
F&B outlets are as follows:
• Physiological: Includes need for special food for eg. Low
calorie, diabetic, allergic or special veg food.
• Economic: Includes fast food service as well as convenience of
location
• Social: This includes attending the event or function in order to
meet others.
• Psychological : Full filling of lifestyle needs & the need for
variety
• Convenience: The desire for someone else to do the work, for
eg. Outsourcing, saving efforts, etc

What are the characteristics of guest service?

1. Service level: Type of personalized attention given to the
customer

Page 31 of 124
 2. Service availability : Operational times and hours of the
service.
3. Level of standards : Includes the quality of F&B, décor and
ambience, level of professionalism
4. Service reliability : Consistency in the product offered.
5. Service Flexibility: Flexibility of the product offered

What are the levels of guest services?

The level of service to the guest can be divided into two
specifications…
1. Technical specifications
2. Service specifications

TECHNICAL SPECIFICATIONS
• Food and beverages offered to the guest
• Portion sizes
• Cooking methods
• Methods of presentation
• Covers
• Accompaniments
• Cleanliness
SERVICE SPECIFICATIONS
• Procedures & methods of services
• Meeting , greeting & order taking
• Seeking guest comments
• Dealing with guest complaints
• Payments
• Special needs of the guest
• Paying attention to the alertness of the employees & their
performance

Describe the Relationship between Demand Supply & Price

There are various determinants of consumer demand. The demand
for f&b is represented by this equation:
Qd = f(P,M,PR,T….)
• Qd is the demand of quantity of f&b
• P is Price of f&b
• M is Per capita income
 Page 33 of 124

• PR is Price of related goods T is Taste and preferences of

consumers
• F is summary of demand determinants.
• The above equation states that the demand of f&b is dependent
on the price, income of guest, taste & preferences of the guest
and so on…

For successful effective f&b control what are the 4 critical steps
require?
 Developing standards for various operations
 Training staff to follow the standards
 Monitoring and comparing the performances with the set
standards
 Taking corrective actions in case any deviations from the standard.

What are the limitations of food and beverage control?

 F&B control mechanism is not a confirm solution nor a permanent
preventive mechanism. Control system is dependent upon
reliable , accurate and updated policies and operations
 For efficient functioning of F&B control system, knowledgeable and
skilled people are required who can attain the desired and
expected goals which, sometimes may not be possible.
 The management needs to take action on their part to evaluate
and interpret the information in decision making, planning &
implementation process failing which the f&b control system won’t
run efficiently.

What are the Obstacles of F& B Control?

Food and beverage control tends to be more difficult than the

control of materials in many other industries. The main reasons for
this are:
1. The perishability of the produce/ product. Food, whether raw or

cooked, is a perishable commodity and has a limited life. The

caterer, therefore, has to ensure that he buys produce in the

Page 33 of 124
 correct quality and quantity in relation to estimated demand, and
that it is correctly stored and processed. (Beverages are normally
not as perishable as food and this contributes to their easier
control.)

2. The unpredictability of the volume of business. Sales instability is

typical of most catering establishments. There is often a change in

the volume of business from day to day, and in many
establishments from hour to hour. This causes basic problems with
regard to the quantities of commodities to be purchased and
prepared as well as to the staffing required.

3. The unpredictability of the menu mix. To add to the caterer's

problems is the fact that in order to be competitive and satisfy a

particular market, it is often necessary to offer a wide choice of
menu items to the customer. It is therefore necessary to be able to
predict not only the number of customers who will be using the
facility at a particular period in time, but as to what the customer's
selection will be from the alternatives offered on a menu. It is
seldom possible to be 100 per cent accurate, but in order to
control costs effectively, it is necessary to have some method of
volume forecasting as part of the total food and beverage control
system.

4. The short cycle of catering operations. The speed at which

catering operations take place, relative to many other industries,

allows little time for many control tasks. It is not uncommon that
 Page 35 of 124

items ordered one day are received, processed and sold the same
or next day. It is for this reason that in larger catering
establishments cost reporting is done daily or at least weekly.
Further problems, particularly with perishable foods, are that with a
short life for produce, items cannot be bought very much in
advance of their need; and the problem of availability at times of
produce relative to the price that can be afforded in relation to the
selling price.

5. Departmentalization. Many catering establishments have several

production and service departments, offering different products

and operating under different policies. It is, therefore, necessary to
be able to produce separate trading results for each of the
production and selling activities.

What are the main Objectives/Principles of food and beverage

control?

1. Analysis of income and expenditure: The analysis is solely

concerned with the income and expenditure related to food and

beverage operations. The revenue analysis is usually by each
selling outlet, of such aspects as the volume of food and beverage
sales, the sales mix, the average spending power of customers at
various times of the day, and the number of customers served.
The analysis of costs includes departmental food and beverage
costs, portion costs and labour costs. The performance of each
outlet can then be expressed in terms of the gross profit and the
net margin (i.e., gross profit minus wages) and the net profit (i.e.,

Page 35 of 124
 gross profit minus wages and all overhead expenses such as rent,
rates, insurance, etc.).

2. Establishment and maintenance of standards: The basis for the

operation of any food and beverage outlet is the establishment of a

set of standards which would be particular to an operation. Unless
standards are set no employee would know in detail the standards
to be achieved nor could the employee's performance be
effectively measured by management. An efficient unit would have
the set standards laid down in manuals often known as SOPs
(standard operational procedures) which should be readily
available to all staff for reference. Having set the standards, a
difficult problem always for the management of an operation is to
maintain these standards. This can be aided by regularly checking
on the standards achieved by observation and analysis and by
comments made by customers, and when necessary, conducting
training courses to re-establish the standards.

3. Pricing: An important objective of food and beverage control is to

provide a sound basis for menu pricing including quotations for

special functions. It is, therefore, important to determine food
menu and beverage list prices in the light of accurate food and
beverage costs and other main establishment costs; as well as
general market considerations, such as the average customer
spending power, the prices charged by competitors and the prices
that the market will accept.
 Page 37 of 124

4. Prevention of waste: In order to achieve performance standards

for an establishment, targets are set for revenue, cost levels and
profit margins. To achieve these levels of performance it is
necessary to prevent wastage of materials caused by such things
as poor preparation, over-production, failure to use standard
recipes, etc. This can only be done with an efficient method of
control, which covers the complete cycle of food and beverage
control, from the basic policies of the organization to the
management control after the event.

5. Prevention of fraud: It is necessary for a control system to prevent

or at least restrict the possible areas of fraud by customers and

staff. Typical areas of fraud by customers are such things as
deliberately walking out without paying; unjustifiably claiming that
the food or drink that they had partly or totally consumed was
unpalatable and indicating that they will not pay for it; disputing the
number of drinks served; making payments by stolen cheques or
credit cards. Typical areas of fraud by staff are overcharging or
undercharging for items served and stealing of food, drink or cash.

6. Management information: A system of control has an important

task to fulfil in providing accurate up-to-date information for the

preparation of periodical reports for management. This information
should be sufficient so as to provide a complete analysis of
performance for each outlet of an establishment for comparison
with set standards previously laid down (for example, budget
standards).

Page 37 of 124
 What is Food and Beverage control cycle? What are the 3
important phases?
The complete F&B Control Cycle comprises of 3 important
phases
3.1. Planning Phase
3.2. Operational Phase
3.3. Management control after event Phase.
The planning phase:
 It is difficult to run an effective catering operation without having
firstly defined the basic policies. Policies are predetermined
guidelines, laid down by the senior management of an
organization, which outline such matters as the market or
segment of the market that is being aimed at, how it is to be
catered for and the level of profitability/subsidy to be achieved.
 Policies in general are particular to individual companies and
establishments, although in the public sector operations, there
may well be broad national policies, for example for hospital
catering.
 A catering operation should have its policies clearly defined
before it commences business, and redefined whenever a
 Page 39 of 124

major change takes place, for example when a new theme is

chosen for a restaurant to aim for a different market segment.
 Ideally, in a large organization the policies should be written
down and periodically reviewed in relation to the current
business and future trends; however, in smaller organizations
there is not the communication problem of a large organization
and to formally draw up and commit policies to paper is not
So vital.
There are three types of policies. They are as follows:
 Financial policy

 Marketing policy

 Catering policy

What do you mean by Financial Policy?

 This will determine the level of profitability, subsidy or cost limits
to be expected from the business as a whole and the
contribution to the total profit, subsidy or cost limit that is to be
expected from each unit, and then from the departments within
them.
 This involves the setting of targets for the business as a whole
as well as each unit and the departments within them. Thus, the
financial policy for a large hotel will set profit targets for the
hotel, and departmental profit targets for the accommodation
and catering as well as other departments.
 The financial policy for the catering department will set the
overall target for the department itself, which will be further
divided into targets for the various restaurants, bars and
function facilities.

Page 39 of 124
 The financial policy for an industrial contract catering operation
will set the overall target for the operation, the level of subsidy
and the level of management fee, as well as the cost limits per
unit (meal or employee).

What do you mean by Marketing Policy?

 This will identify the broad market the operation is intended to
serve and the particular segment(s) of the market upon which it
intends to concentrate.
 It should also identify the immediate and future consumer
requirements on a continuous basis in order to maintain and
improve its business performance.
 It is obvious from the above that the broad market intended to
be served by a large city hotel could be broken down into the
specific segments of the various types of users of, for example,
the coffee shop, the carvery, the cocktail bar, the banqueting
rooms, etc. each having specific and different consumer
requirements.

What do you mean by Catering Policy?

This is normally evolved from the financial and marketing policies,
will define the main objectives of operating the food and beverage
facilities and describe the methods by which such objectives are to
be achieved. It will usually include the following:
a) The type of customer, for example high-spending business

executive, low spending female shopper, short-stay hospital

patient, etc.
 Page 41 of 124

b) The type of menu(s), for example table d'hote, a la carte, fast

food.
c) The beverage provision necessary for the operation.

d) The food quality standards, for example fresh, frozen, canned,

etc., and the grade of produce to be used.

e) The method of buying, for example by contract, quotation,

cash-and-carry, etc.
f) Type and quality of service, for example cafeteria, counter,

waiter, etc.
g) Degree of comfort and decor, for example square footage per

customer, type and style of decor, of chairs, tables, etc.

h) Hours of operation, for example twenty four hours, seven days

a week; 1200-1500 and 1800-2200 hours, Monday-Saturday,

etc.

What is Operational Phase ?

Having defined the policies (that is, predetermined guidelines),

it is then necessary to outline how they are to be interpreted
into the day-today control activities of the catering operation.
Purchasing, receiving, storing, issuing, production & sales are
involved in Operational Phase.

What are purchasing, receiving, storing and issuing control

procedures?
1. Purchase specifications are prepared for all main items.

2. Purchase orders completed in detail for every purchase made.

3. Purchases made from nominated or approved suppliers only.

4. Deliveries timetabled for a slack period so that quantity and

Page 41 of 124
 quality inspection may be efficiently carried out.
5. Copy of purchase order sent to delivery point for checking

against deliveries.
6. All deliveries entered on to the goods received report and credit

notes obtained for any variance between goods and delivery

note.
7. Credit notes obtained for all returned empties and ullages.

8. All deliveries to be entered on to bin cards, etc. on day of

delivery.
9. Issues of beverages to be against authorized signed requisition

only.
10. Cellar ledger and any other records kept to be up to date and

accurate.
11. Access to cellar restricted.

12. Check that all bottles are stamped with the establishment

stamp and are correct bottles for the particular bar. Check bottle
disposal area contains no 'foreign' bottles.

What is purchasing?

 Purchasing can be defined as 'a function concerned with the

search, selection, purchase, receipt, and storage and final use
of a commodity in accordance with the catering policy of the
establishment'.
 This suggests that the person employed to purchase foods and
beverages for an establishment will be responsible for not only
purchasing, but also for the receiving, storage and issuing of all
commodities as well as being involved with the purpose for
which items are purchased and the final use of them.
 Page 43 of 124

 Should it be managed inefficiently it creates problems which

often result in an unsatisfactory level of both costs and profit for
the establishment and dissatisfied customers.
 With no specifications for commodities there would be neither
quality standards nor quantity standards resulting in over-
ordering or under ordering as yields for items would be
indeterminable.
 The receiving department would only be able to check on
quantity and not on quality. The work in the stores and
preparation departments would be difficult with the quality of
produce varying greatly.
 Finally, it would be difficult to measure satisfactorily the
performance of departments if they were continually being
provided with non-standardized commodity items.

What are the points to have to be considered before purchasing a

product/item?
a. Product testing - to identify as a result of a series of taste panel
evaluations the particular products to be used.

b. Yield testing - to identify as a result of tests the yield obtainable

from all the major commodities used.

c. Purchase specifications - a specification is a concise

description in writing of the quality, size, weight, etc., for a
particular food or beverage item.

d. Method of buying - by contract, quotation, cash and carry, etc.

e. Clerical procedures - it is necessary to determine who

originates sanctions and places orders and what documentation
is required for control.

What is the Procedure of Purchasing?

Purchase procedure has the following stages:

1. Kitchens, Restaurants, Bars, etc send their requisitions to the

Page 43 of 124
store and stores intimates purchase department regarding the
requirements. The procedure and specimen for making requisition
slip can be seen in the chapter 'Storing and Issuing Control'.
2. Purchase officer makes the final list of items to be purchased
and decides the department./ supplier from whom to purchase and
the quantity and quality required.
3. Either he places order on telephone and sends the purchase
order later or the order is placed against purchase order. A copy of
the purchase order is marked to stores department so that stores
can receive the items as per the purchase specifications.
4. The goods are received along with the supply order by the
stores department,
The stores check the quality, quantity, weight etc. and checks the
purchaser order and supply order/After ensuring the right quality
and quantity he signs the supply order and returns the copy of
supply order to the supplier. A copy of the supply order is also
send to purchase department and accounts department. The
supplier sends the bill along with a supply order and purchase
order to accounts department for settlement of the bill.
5. The stores receive the goods; enter in the stores and supplies
to the respective department.

What are the main duties of the purchasing manager?

1. Responsibility for the management of the purchasing office, the

receiving, storage and cellar areas.

2. The purchasing of all commodities.

3. Ensuring continuity of supply of all items to user departments.

4. Finding cheaper (for same quality) and more efficient sources of

supply.
5. Keeping up to date with all the markets being dealt with and

evaluating new products.

6. Research into products, markets, price trends, etc.

7. Co-ordinating with production departments to standardize

commodities and therefore reduce stock levels.

 Page 45 of 124

8. Liaising with production, control, accounts and marketing

departments.
9. Reporting to senior management.

What are the points to be considered while selecting supplier?

 A supplier can be easily selected from among those that the
buyer has previously purchased from in that the quality of
goods received, price and service offered would be known.
 When seeking a new supplier caution must be exercised and
detailed enquiries made to cover at least the following points:
 Full details of the firm and the range of items they are selling.
 Copies of recent price lists.
 Details of trading terms.
 Details of other customers.
 Samples of products.
 Ideally, a visit should be made to any potential supplier to see
the size of the company, the full range of products, and the size
of processing and storage facilities, the size of their transport
fleet and to meet members of the management team.
 All of this takes up valuable time for the buyer, but is essential
in order to obtain a supplier with whom it is possible to have a
satisfactory business relationship, who will stock the quality and
quantity of commodities needed and who is able to offer a
satisfactory delivery performance within an acceptable price
range.

Page 45 of 124
 This procedure would convince the supplier of the
professionalism of the purchasing manager.
 Having selected suppliers and placed them on an 'approved
suppliers list', and after having purchased from them, it is
necessary to periodically evaluate their performance using a
rating system.
What do you mean by Purchase order?
 Purchase officer places the purchase order with the
suppliers giving details of the quantity and quality of items
required to be delivered.
 The purchase orders are made out with five copies
(according to old method), each copy being color coded to
aid the correct distribution of them. The color coding may
differ from organization to organization.
1) White Copy (original) sent to Supplier
ii) Yellow copy sent to accounts department
iii) Green copy sent to receiving department
iv) pink copy retained by the purchasing department
v) off white copy retained in the purchasing office and kept
in date order wise and retained till the goods are received
and then filled under order numbers

Advantages of Purchase order:

1. Written verification of quoted price.
2. Written verification of quantity ordered.
3. Written verification of the receipt of all goods ordered.
4. Written and special instruction to the receiving clerk, as
needed
5. Written verification of conformance to product specification
6. Written authorization to prepare vendor invoice for payment.

What do you mean by Delivery Note?

Delivery Notes:
 Delivery note comes along with each supply and this delivery
note is sent by the supplier.
 Page 47 of 124

 The delivery note is compared with the purchase order for

the quantity ordered.
 The delivery not is usually in duplicate.
 Goods received are as per the purchase order and delivery
note then the original copy of the delivery note is retained by
the receiving department and the duplicate copy is signed
by the receiving department's official and send back to
supplier through delivery man.
 In case the goods supplied are not as per specifications or
the goods supplied are less then ordered then credit note is
prepared and is signed by the delivery man.
 A copy of the credit note is send to supplier through delivery
man, a copy is send to purchase department, accounts
department, control department and a copy is also retained
by the receiving department.

Specimen of Purchase Order.

Page 47 of 124
What is Goods Received Book?
Goods Received Book:

 All goods received are recorded in the Goods Received Book.

 This remains as a permanent record of all the goods received
by the receiving department.
 For each day a separate goods received book's page is
allotted. This is usually maintained by small hotels.
 Larger hotels prefer to maintain analytical receiving book.
 Separate columns are made for meat, chicken, vegetables,
frozen food, milk, grocery, etc.
 This gives information at a glance that how much quantity
under various head is received on a particular day.
 The receiving department should be well equipped with the
various equipments so that the goods can be received
efficiently made both the quantity as well as quality can be
inspected.

What are Sources of Supplies?

1. Wholesalers
2. Local producers
3. Manufacturers
4. Packers
5. Local farmers
6. Retailers
7. Cooperative associations

In most instances, the food service operator will deal with several
of these sources of supply to obtain the necessary foods. For
example, a restaurant may turn to a local producer for dairy and
bakery products, a packer for canned meats, a wholesaler for
fresh meats, a different wholesaler for canned fruits and
vegetables, and a local farmer for eggs.
 Page 49 of 124

What is Centralized purchasing?

 Widely used by chain operations and occasionally established
by small groups of independent operators with similar needs.
 Under a centralized purchasing system, the requirements of
individual units are relayed to a central office, which determines
total requirements of all units by the dealer or for delivery to a
central warehouse.
 This method obviously requires that a whole system for
distribution be maintained and operated by the organization
doing the centralized purchasing.

What are the Advantages of centralized purchasing?

1. Food and beverage can be purchased at lower prices
because of volume.
2. Desired quality can be obtained more readily because the
purchasing agent has a greater choice of markets.
3. Food can be obtained that meet the purchaser’s exact
specifications.
4. Larger inventories can be maintained, ensuring reliable supply
to individual units.
5. The possibilities for dishonest purchasing in individual units
are greatly reduced.

What are the Disadvantages of centralized purchasing?

1. Each unit must accept the standard item in stock and has little
freedom to purchase for its own particular needs.
2. Individual units may not be able to take advantage of local
specials at reduced prices.
3. Menus are normally standardized thus limiting the individual
unit manager’s freedom to change a menu.

What do you mean by Periodical purchasing?

Page 49 of 124
 Certain items are not purchased on regular basis and are
procured periodically. The procedure adopted for their purchase
is usually quotation, cash and carry or contract purchasing.
Usually either the non-perishable items are purchased through
periodical purchase system or those items which may not be
required on regular basis.

Describe the procedure of Receiving?

1. The quantity of goods delivered matches the quantity which has

been ordered. This means that all goods will have to be

weighed (for example, fresh fruit, vegetables, meat, etc.) or
counted (for example, cases of sliced peaches).
2. The quality of goods delivered is in accordance with the

specification stated on the purchase form, for example checking

that the grade of New Zealand lamb is correct or that a delivery
of apples is of the extra class quality.
3. The prices stated on the delivery note are in accordance with

the prices on the purchase order form.

4. When the quantity or quality (or both) of the food delivered is

not in accordance with the purchase order or an item is omitted

from the order a 'request for credit note' is raised by the
receiving clerk. When this happens with the daily delivery of
perishable foods it is essential that the purchasing manager is
informed, as an alternative source of supply or possible product
may have to be found quickly to minimize any inconvenience to
the production department.
5. An accurate record is made in the 'goods received book'

recording details of the delivery.

 Page 51 of 124

What is an Invoice?
THE INVOICE
 Every time food is delivered to an establishment, it should be
accompanied by a document that lists the items being
delivered.
 For food, the document is normally an invoice, which is the
same as a bill.
 An invoice is usually presented to the receiving clerk in
duplicate by the person making the delivery, who will expect the
receiving clerk to sign and return the second copy.
 This serves as an acknowledgment to the purveyor/supplier
that the establishment has received the products listed on the
invoice.
 The original is, in effect, a bill that must be routed to the
bookkeeper or other individual responsible for paying bills.
 The acceptance of invoices not listing prices should be
discouraged: Prices should be checked as the food products
are received. Otherwise, it is possible that a purveyor/supplier
may bill at the wrong prices, either by accident or by design.

Page 51 of 124
Specimen of Invoice

What are the different methods of receiving?

BLIND RECEIVING :
The copy of purchase order supplied to the receiving department
does not show the quantity ordered. The invoices, delivery notes
are send to the accounts office directly. The receiving department
has no other option then to count each and every item physically
and receive the exact quantity / weight counted by him

PARTIAL BLIND RECEIVING:

When the invoice contains the name and quantity of the items
delivered are present but the price of the product are missing, it’s
 Page 53 of 124

called as partial Blind receiving

INVOICE RECEIVING METHOD:
This type of receiving is made against the Purchase Order of the
items that are ordered by the establishment to the supplier

Describe the procedure of Storing & Issuing control?

 The main objective of a food store & food storing is to ensure
that an adequate supply of foods for the immediate needs of
the establishment are available at all times.
 Foods when accepted at the receiving department are
categorized as perishable and non-perishable items.
 The perishable items go straight to the kitchens, where they
would be stored in either refrigerators or cold rooms depending
on the item.
 Perishable foods going direct to the kitchen are often referred to
as being on direct charge in that they will usually be used within
one to three days of delivery by the kitchen.
 Meat, fish, dairy produce, fruit and vegetables, and deep frozen
foods should be stored separately from each other.
 The non-perishable items (for example, canned foods) go to a
food store where they are unpacked, checked for any damage
and placed on racking.
 The stores normally are stacked with items that are issued
daily, being located near to the door where issues are made,
with the remainder being arranged in a logical sequence.
 Grouping of commodities together, for example, all canned
foods, dried foods, etc., each can be arranged into sections.

Page 53 of 124
 What is important, is that the layout chosen should be one that
minimizes the distance walked by the storekeeper.
 When this is determined the stock-taking list should be printed
in the same order in which items appear in the stores so as to
enable stock-taking to be done quickly and efficiently.
Describe the procedure of Issuing?
 This should take place at set times during the day and only
against a requisition note signed by an authorized person, for
example head chef or restaurant manager.
 When the requisition is a large one it should be handed in
several hours before the items are required to allow the store
keeper plenty of time to collect all the food items together.
 The pricing of issues is usually at the 'as purchased price',
ignoring any small discounts.
 This is made easy in the case of non-perishable foods by
marking the current price on all items when they first come into
the store.
 The pricing of perishable items is often done by the control
office after they have been issued as they have access to the
suppliers' invoices.
 Page 55 of 124

Specimen: Requisition Slip for Food Stores.

Describe the Selling stage.

This important stage of operational control needs to take into

consideration the following points:

 A checking system - this is necessary to keep control of the

number of covers sold and of the items sold. This may be done
through a standard type of waiter's check system or through a
till roll or in the case of hospital patients, by the summary and
analysis of completed individual patient menu cards.
 The control of cash - this is vitally important. It is necessary to
ensure that all items sold have been paid for and that the
money is received or credit has been authorized.

Page 55 of 124
 Clerical procedures - these would be necessary to control items
sold and the money received or credit entitled., and would often
include a restaurant checking system, meal and sales analysis,
cashier's paying-in book, etc.

What do you mean by Meat Tag?

 In the majority of catering establishments such items of food as
meat, special processed meats such as hams, and fish such as
smoked salmon, constitute the most expensive of the
purchased foods. Because of this high cost it is not uncommon
for units operating a detailed control system to set up a form of
special control of these items:
Tagging expensive food serves many purposes:
1. It aids the control of expensive foods.

2. It requires the receiving clerk to weigh and record each item,

and to check against the specific purchase specification weight

range.
3. It assists in obtaining a more accurate daily food cost

percentage figure.
4. It assists in controlling the stock levels of these items.
 Page 57 of 124

Specimen: Meat Tag.

What do you mean by Quantity inspection/verification?
 A person must be nominated to be responsible for physically
counting and weighing goods and checking that the quantity and
size of items in the delivery matches the purchase order.
 If there is a shortage in the delivery the purchasing manager or a
member of the management must be informed.
What do you mean by Quality inspection/verification?
 This is particularly important with perishable foods where
inspection may be made by a senior chef.
 A head cellar man may inspect beverages.

Page 57 of 124
 Whenever possible the items should be checked against the
appropriate purchase specification.

Which are the three main performance criteria that are normally used
in a rating system in accordance with the supplier: (CONTROLS ARE
SAME FOR BOTH FOOD AS WELL AS FOR BEVERAGES)
a. Price Verification.

b. Quality/ Quantity Verification.

c. Delivery Verification.

A. Price Verification
 The cheapest item is not necessarily the best buy; often a
cheap item is of a low quality. One supplier may specialize in
lower quality goods at a lower price while another may
specialize in high quality goods at higher prices.
 Both suppliers are specialists and both may supply the same
buyer with similar goods but of different qualities.
 Which supplier the buyer chooses depends on the quality
required - the corresponding price will then have to be paid.
 Price, however, is not always related to quality. The purchasing
manager needs to guard against this.
 The lower the price coupled with an above average quality of
goods the higher is the price performance rating.

B. Quality/ Quantity Verification

 Page 59 of 124

 This is the ability of a supplier to supply the buyer consistently

with goods of the desired quality & quantity as laid down in the
purchasing specification.
 Consistency in meeting the purchasing specification would give
a high quality & Quantity verification rating.
C. Delivery Verification
 This is the ability of the supplier to meet agreed delivery times
and dates with the buyer. Prompt deliveries mean that the
goods will be delivered when required and when staffs are
available to check them efficiently for quantity and quality.
 Late deliveries will often add to the pressure of work at the
receiving department, when other goods are also being
checked in, and to possible complications in the production
department.
 The nearer the scheduled delivery date and time the higher the
delivery performance rating.
 The rating of suppliers using these three criteria provides a
guide to the buyer, in an objective way, for negotiating further
purchasing agreements between suppliers of similar
commodities.
What are Bar control procedures?
1. Bar stock to be replenished by written and authorized

requisitions, or by using a 'full for empty' bottle system.

2. Bars to use standard recipes, standard drink sizes and

glassware.
3. Bars to sell 'house brands' for all drinks unless specifically

requested by the customer, as they will normally give a higher

Page 59 of 124
 gross profit. 'House brands' may, for example, be determined by
a brewery owning a chain of pubs, restaurants and hotels,
when it would quite naturally wish to sell its own products in
preference to those of its competitors; or by a company that has
no liquor ties but negotiates a price advantageous contract with
a supplier. In both cases the prices paid for the particular 'house
brand' would normally be lower than if purchased otherwise.
4. Check that all bar sales are properly recorded.

5. Periodically check proof of liquor in open bottles if tampering is

suspected.
6. Check that beverage price lists are displayed and freely

available to customers.
7. Check frequency of 'breakages' recorded.

8. Check 'shortages' or 'overs' recorded by accounts department

for each bar.

9. Check that bar staff have no access to till rolls, etc.

What are Beverage control procedures?

1. Check and cross-reference delivery notes, credit notes,

invoices and goods received report.

2. Check arithmetic to all paper work.

3. Check correct discounts are being allowed.

4. Check delivery notes, etc. to cellar inwards book.

5. Maintain beverages perpetual inventory book.

6. Maintain container charges and credits for period inventory.

7. At set periods complete a full inventory of all chargeable

containers, for example crates, kegs, soda syphon, etc.

 Page 61 of 124

8. At set periods complete a full inventory of cellar and compare to

beverages perpetual inventory book.

9. Prepare a stocktaking report of value and type of goods, rate of

stock turnover, etc.

10. At set periods complete a full inventory of the stock of each bar

for beverage control reports.

11. Maintain daily and to-date beverage control reports, the amount

of detail depending on the size of the unit and the volume of

business.
12. Prepare end of period beverage reports for management and

highlight any problem areas for corrective action.

What are different kinds of Bar Thefts and frauds?

1. Staff brings in their own bottle of spirits and sells the contents to
the customer and then pocket the money- can be prevented by
a vigilant security department frisking each employee on entry
and exit.

2. Bar staff consume drinks on duty. Bar staff help themselves to

the odd drink and soon get into the habit of drinking on duty as
a result guest often end up with short measures of drinks which
compensates for the alcohol consumed by the bartenders –
routine checks must be conducted by the Asst. Food &
Beverage Manager and any staff suspected of having
consumed alcohol must be sent for a blood test and
subsequently strict disciplinary action should be initiated.

3. Staff fails to ring up each drink served and pocket the cash paid
by the guest. This result in a busy bar with lower cash takings-
surprise checks must be conducted by Senior F&B Beverage
Staff and the controls department to nip such practice in the
bud.

Page 61 of 124
4. Staff provides free drinks to family and friends this again results
in lower bar sales as well as short pouring to other guests to
compensate for the same- surprise checks must be conducted
by Senior F&B Beverage Staff and the controls department to
nip such practice in the bud.

5. Bartenders dilute drinks. When a group of guests order their

third or more drink they are less likely to detect weak drinks.
The excess alcohol so obtained is sold by the bartender and
the resultant amount is pocketed- surprise checks must be
conducted by Senior F&B Beverage Staff and the controls
department to nip such practice in the bud.

6. Staff under charge the customer- Senior Captain should check

each billing in his shift.

What are the main objectives of Receiving of beverages and

describe its control system?
1. The quantity of beverages delivered matches that which has

been ordered. This requires a methodical approach to checking

the goods against the purchase order and the delivery note.
Items would be in standard units of crates, cases, etc., with
standard contents of a specific size. Crates and cases should
be opened to check for such things as empty, missing or broken
bottles.
2. The quality inspection is simple, but again requires a thorough

and methodical approach. It involves checking the brand name

and label on each item, the alcohol proof, the vintage and
shipper, against the delivery note and the purchase order.
3. The prices stated on the delivery note are in accordance with

the negotiated prices shown on the purchase order form.

4. When the quantity or quality (or both) of the beverage delivered
 Page 63 of 124

is not in accordance with the purchase order, or an item is

omitted from the order, that a request for credit note is raised by
the receiving clerk or cellar-man.
5. An accurate record is made in the goods received book

recording details of the delivery.

6. An accurate record is kept of all chargeable empties delivered

and returned.
7. Deliveries of beverages are timetabled with the suppliers, often

to an afternoon, when receiving and cellar staff are normally not

so busy and the receiving area is free from other deliveries.

What are objectives of Storing & Issuing of Beverages control?

Storing
Once beverages are received they must be removed
immediately to the cellar and a tight level of control maintained at
all times. The storage of beverages is ideally separated into five
areas as follows:
1. The main storage area for spirits and red wine held at a dry and

draught-free temperature of 55°-60°F (13°-16°C). This area is

also used for the general collection and preparation of orders
for the various bars and the storage of keg beers when there is
a reasonable turnover.
2. A refrigerated area of 50°F (10°C) for the storage of white and

sparkling wines.
3. A further refrigerated area of 43°-47°F (6°-8°C). This is really

necessary only when the turnover of kegs is slow as otherwise

they may be stored at 55°-60°F (13°-16°C).

Page 63 of 124
4. An area held at a temperature of 55°F (13°C) for the storage of

bottle beers and soft drinks.

5. A totally separate area, from those above, for the storage of

empty bottles, kegs and crates. This area needs to be as tightly

controlled as the beverage storage area, not only because of
the returnable value of the crates and bottles, etc., but to
prevent free access by bar staff when an 'empty for full' bottle
method of issuing is in operation.
6. The bottles are unpacked in the cellar and stored correctly

(table wines with an alcohol content of less than 16 per cent by

volume are stored on their sides, bottles of fortified wine, spirits
and vintage ports are stored upright) on shelves or racks in the
same order as on the standard bottle code.
7. The objective for preparing a standard bottle code is to

eliminate the confusion of bottle sizes, spelling of names and

different brands, and to establish an appropriate starting point
for the control of beverages.
8. All requisitions, inventories, wine lists, etc., are related to the

code/bin list.
 Page 65 of 124

Specimen: Requisition Slip for Beverage Stores.

Issuing of beverages and its controls

 Issuing of beverages should take place at set times during the day

and only against a requisition note signed by an authorized

person, for example head barman, banqueting head waiter, etc.
 Ideally when the requisition is a large one it should be handed in
several hours before the items are required to allow the cellar staff
plenty of time to assemble the order together.
 Requisition notes are usually made in duplicate, one copy being
retained by the cellar-man so that entries can be made to the
cellar records and then it is passed to the control or accounts
office, while the second copy is retained by the person who

Page 65 of 124
 originated the requisition and handed in with the daily takings and
other control documents.
What are the different Sources for Purchasing Beverages?
1. Wine shippers: They only make deals with larger

establishments
2. Wholesalers: They usually have larger varieties of beverage

available.
3. Beverage Manufacturers : Spirits and alcoholic beverages of

larger quantities are purchased from them.

4. Cash and carry Method: Used only on emergencies .i.e. on the

spot buying if needed.

5. Auctions: Usually for Vintage bottles.

What is Par stock?

In hotel industry, Par stock is a widely used term which is the
standard way to determine the minimum level of supplies to meet
daily demands of daily hotel operation. Proper application of par stock
can ensure smooth functional activity.
Explain the main objectives of stocktaking:
1. To determine the total value of all beverages held in stock. This will

indicate if too much is held in stock and if it is in line with the

financial and catering policies.
2. To identify slow-moving items.

3. To compare beverage usage at cost with beverage sales in order

to calculate beverage gross profit.

4. To deter pilferage and check security and control systems.

5. To determine the rate of stock turnover.

6. The value and volume of the closing stock are also checked
 Page 67 of 124

against the information from the perpetual inventory ledger cards

for each beverage.
7. The stock take should highlight any differences and indicate the

efficiency of the cellar staff and the beverage control system.

What are the things that are involved in Post Operational Control:
Management after the Event Phase.
This final phase of food and beverage control is divided in three main
stages:
1. Food and beverage cost reporting. The cycle of production is very
short and the product is perishable. These factors together with the
variations in demand for the product necessitate up-to-date reporting
at least weekly if not daily.
2. Assessment. There is a need for someone from the food and
beverage management team in the case of a large unit, or the
proprietor or manager of a small unit, to analyses the food and
beverage reports and to compare them with the budget for the period
and against previous actual performance.
3. Correction. A control system does not cure or prevent problems
occurring. When the analysis of the performance of a unit or
department identifies that there is a problem, it is up to management
to take the necessary steps to correct the problem as quickly as
possible.
What is The Reality of Control?
 The amount of control necessary is related to the size and
complexity of an operation.

Page 67 of 124
 The larger the number of outlets within an operation, the more
sophisticated should be the level of control.
 However, it is important to realize the extent to which any control
system can be totally efficient.
In reality no control system will be 100 per cent efficient for such
basic reasons as:
1. The material product (apart from purchased beverages) is very

unlikely to be 100 per cent consistent as to quality or the final yield

obtainable from it.
2. The staffs employed are unlikely to work to a level of 100 per cent

efficiency at all times, in spite of the fact that operational manuals

may exist.
3. The equipment used is also unlikely to work to the level of 100 per

cent efficiency and this could well affect the yield obtainable.
4. The customers' choice of dishes can well be different at times to

some of the budgeted sales mix, therefore affecting all production

forecasts as well as the average spend per customer and the
budgeted gross and net profit figures.

What are the Methods of Food Control?

 Food and beverage production control may be regarded as
consisting of four basic stages of pre-control which together should
reduce wastage and therefore reduce higher costs than necessary
from over-production, loss of business opportunity from a shortage
of items being available, and loss of revenue from giving excess
portion sizes.
 Page 69 of 124

The four basic stages are:

1. Production planning.
2. Standard yields.
3. Standard recipes.
4. Standard portion sizes.

 When this four basic stages are practiced in a food and beverage
operation they should aid management in controlling costs, setting
standards and achieving customer satisfaction.
 The production of beverages needs to be tightly controlled as the
contribution to profits from beverages is usually higher than that
from food.
What is Production Planning or Volume Forecasting?
 Production planning, or volume forecasting as it is also known, is
the forecasting of the 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 volume forecasting are as follows:
1. To facilitate food cost control for the establishment.

2. To facilitate the purchasing of foodstuffs, particularly perishable

items, and ensure appropriate stock levels are maintained.

3. To reduce the problem of food that is left over and how it is to

be re-used, or customer dissatisfaction when insufficient foods

are available.
4. To gear production to demand by forecasting the number of

meals to be served for a given meal period, for example the

number of dinners to be sold in a particular catering outlet for a
period of seven days; and on a more detailed level, to predict
the number of menu items that will be taken by a specific
number of customers.

Page 69 of 124
5. To enable a comparison to be made between actual and

potential volume of sales, and for corrective action to be taken if

necessary.
6. An initial forecast is made either at a set period in advance, for

example a month, or when the major food orders are placed.

7. This initial forecast / estimates the total number of meals to be

sold by the establishment and the estimated total of each menu

item.
8. In the case of a large hotel with a variety of catering outlets, a

more detailed forecast would be made for each individual

outlet.
9. Factors that need to be taken into account at this stage are the

season, and hence the weather forecast for that time of year;
past popularity of menu 1 items; major events occurring in the
area - feasts, shows etc., that are likely to attract a larger than
average number to the establishment's normal catchment area,
any sales campaigns currently being promoted by the
operation, etc.
10. The initial estimate is later adjusted, usually one or two days

prior to the day of production, so that a more accurate forecast

may be made. On the basis of this updated information, any
changes that may need to be made with regard to staff
scheduling, food purchases and requisitions etc., should be
made as soon as possible.
There are a number of aids or management tools that may be
employed by an establishment to assist the forecasting and
planning of production.
 Page 71 of 124

What do you mean by Standard Yield?

 The standard yield of a particular food product is the usable
part of that product after initial preparation, or the edible part of
the product after preparation and cooking.
 For example, the standard yield for a whole fillet of beef is the
number of fillet steaks that will be available for cooking and final
sale to the customer after the fillet is trimmed and any
unwanted meat removed. Any usable trimmed meat should be
taken into account with the standard yield.
 In large establishments buying in large quantities of food per
week, standard yields may be available for almost all the
commodities - meat, fish, vegetables, etc. In smaller
establishments standard yields may only be determined for the
more expensive cuts of meat or fish such as whole fillets,
lobsters, salmon, etc.
What are the advantages of Standard Yield?
1. Standard yields determine the most appropriate and

advantageous size/weight to buy a particular commodity in.

2. They assist in determining the raw material requirements for the

production levels anticipated from the production forecasts, and

therefore act as an aid in the purchasing of the establishment's
foodstuffs.
3. They act as a 'double check' for the purchasing department.

Should an unsatisfactory delivery of meat, for example, be

made to an establishment and is unnoticed at the receiving bay,
this delivery is subject to a second 'checking' procedure in the
kitchen where the meat should yield a standard number of

Page 71 of 124
 portions.
4. They act as a safeguard against pilferage or wastage occurring

in the kitchen as the actual and potential yields can be

compared and this acts as a measurement of the efficiency of
the production department.
5. Finally, they are an aid to accurate food costing for particular

dishes offered on an establishment's menu, as the cost factor

can be established.

What do you understand by Standard Recipes?

 A standard recipe is a written schedule for producing a
particular menu item, specifying the name and quantity of the
item to be produced, the constituent ingredients necessary for
its production, and the method of preparation.
 This is the basic information contained in a standard recipe
although it may also include such information as the costing of
the dish, its nutritional value, etc.
 Detailed recipe cards are usually kept in the food and beverage
control department for cost and price updating, only the basic
information needing to be included on those cards that are
displayed in the production area - often together with a
photograph of the end product.
The use of standard recipes by an establishment has a number of
advantages.
1. Accurate food costing can be determined for particular dishes

and from this the cost per portion may be calculated. It is

necessary to have the food cost of a dish for the purpose of
 Page 73 of 124

pricing it for sale to the customer, in order to make the required

gross profit. In certain institutional establishments, such as
hospitals, it is important to know the precise nutritional value of
the dishes being given to certain patients. By itemizing the
ingredients for a particular dish the nutritional value of it is
easily calculated.
2. They are an aid to purchasing and internal requisitioning. By

taking into account the following day's production forecast

requirements the head chef is able to use the standard recipes
to calculate the quantities of foodstuffs he/she will require the
following day. In some catering establishments the head store-
man may have a copy of the standard recipes and when the
next day's forecast requirements are sent, the head store-man
is responsible for calculating the quantity of foodstuffs that need
to be sent to the kitchen.
3. Standard recipes are particularly useful in the preparation of

items in the kitchens, both as a reminder to present staff of the

preparation procedure, and also as an aid to the training of new
employees. More importantly the use of standard recipes in the
production area ensures that the customer will always receive a
standardized product.
4. Standard recipes are an aid to menu planning. New additions to

the menu, for example, may be accurately costed and balanced

with the other items on the menu, not only in terms of price, but
also in appearance, flavour, colour, etc.
5. They may be used as a basis for compiling standard portion

sizes which, if used in conjunction with standard recipes and

Page 73 of 124
 standard yields, will together form the basis of a very effective
production control system.

Specimen of Standard Recipe.

 Page 75 of 124

What do you mean by Recipe files?

 Recipe files should be maintained by the establishment
containing the type of information that has just been described.
These files may be assembled in two ways: the first is manually,
and the second is by the use of a computer.
1. Manually. Cards of a standard size may be maintained

containing details of all the individual dishes offered on the

establishment's menu or menus. Such details would include, for
example, the standard recipes for the particular dishes and their
standard portion sizes.
2. The file would then need to be classified, for example, under

such headings as meats, vegetables, desserts, etc., and each

dish numbered so that any particular item may be easily
located.
3. This system of maintaining a recipe file is, however, very labour

intensive; every time it is necessary to alter the details of a dish

in any way, the recipe card must firstly be located, then the
changes handwritten or typed, and the card then placed back
into the recipe file.
4. Should the management wish to change the menu completely,

a detailed list of all the menu items, their gross profits, etc.,
would be needed and this would take a considerable amount of
time as it would have to be prepared manually.
5. This system is also very open to human error and in a large

establishment could take up a considerable amount of space.

Page 75 of 124
 By computer.
Some establishments are now using computers to store their
recipe files. The same amount of detailed information must first be
collected, but here instead of writing the details on to cards, the
information is typed into a computer.

What do you mean by Standard Portion Sizes?

 A standard portion is the quantity of a particular food item that
will be served to the customer.
 The quantity may be measured in terms of ounces (for
example, a 4 oz portion of meat), or a numerical quantity (for
example, one bread roll per person).
 The portion sizes of the food items are determined by
management in conjunction with the heads of both the kitchen
and restaurant departments.
Standard portion sizes in the operation may be established in
several ways.
1. By buying in pre-portioned food items, for example 8 oz. rump

steaks, pre-wrapped packs of butter and condiments, etc.

2. By buying in food items in bulk and portioning them in the

production kitchen before service, for example, pre-plating

salads to be served in a display cabinet in a cafeteria line.
3. By portioning food items as they are being served to the

customer, for example, food in hot bain-maries in a cafeteria

line being plated and served when the customer requests the
food item.
 Page 77 of 124

What is Production Planning / Volume Forecasting in relation to

Beverages?
 Production planning, or volume forecasting, is the forecasting of
the volume of sales for an establishment for a specified period
and the detailing of the volume of sales for each outlet such as
a dispense bar, cocktail, bar, cash, and inclusive function bars,
etc.
 The method is more straightforward than that for food because
the product is usually non-perishable and therefore there is very
little waste, and also the product is generally purchased in a
ready-to-serve state.
 It is common practice to have established par stocks for all
selling outlets. A standard par stock is a predetermined number
of bottles of each item and brand used in a particular bar, and
the size of the par stock is calculated to be sufficient to meet
the demand for a busy day plus a safety factor.
 The main purpose of a standard par stock is to help determine
the average daily consumption of a bar, to assist with
requisitioning, and to promote good control over the stock.

What is Standard Yield in beverages?

Page 77 of 124
 The standard yields of beverage products may, with few
exceptions, be accurately calculated, because for the majority
of beverages there is little wastage and all the contents of, for
example, a bottle of spirits may be used.
 For the purpose of beverage control all beverages bought in to
an establishment should have standard yields calculated, on
which the pricing of each drink may be based, and to control
wastage and pilferage.
 If, for example, a 750 ml bottle of wine is bought in, allowing
150 ml of wine to a glass, five good measures should be
obtained.
What is Standard Drink Recipes in Beverages?
 Standard recipes should also be compiled for the majority of
beverage products offered for sale by the establishment.
 Like standard yields, standard recipes may be very accurately
produced as all the contents of a drink may be itemized on the
standard recipe.
 Only a certain number of standard recipes may be produced for
an establishment, and help from the sales histories may be
particularly useful - they ensure that the recipes for the most
popular drinks have been standardized.
 With such a variety of components with which to make different
drinks, it would not be practical to write standard recipes for
every possible combination; so the bar staff should be provided
with a book or books chosen by management on how to
prepare those varieties of drinks that may be rather unusual or
rare.
 Page 79 of 124

 Computer terminals and visual display units may be used in

bars where the mixing and service details of various drinks can
be displayed to order giving a speedier visual recipe than using
a book.
 Bar staff should also be provided with the correct equipment for
measuring and mixing drinks.
 Standard bar equipment would include such items as a fruit
knife and board, sticks for cherries and olives, ice bowls, fruit
squeezers, a cocktail shaker and stirrer, etc.
What is Standard Portion Sizes in Beverages?
 As with standard recipes, standard portion sizes for beverages
should be easier to control than those for food products.
 With some beverages, for example a bottled baby orange juice,
all the contents of the bottle will be emptied into the customer's
specific glass for example, a high ball glass.
 Other beverages such as spirits need to be measured before
being poured into the customer's glass, the use of optic
measurer can be an accurate method.
 Another aid to control the portion size is to use standard
glassware for specific drinks.
 This not only helps staff to become consistently accurate when
free pouring drinks but it prevents customer dissatisfaction
when they may receive the correct portion size but served in a
larger glass when it appears the portion size is smaller than the
previous drink.
What are Automatic beverage dispensing machines?

Page 79 of 124
 A more recent method for controlling accurately beverage costs
and ensuring standard portion sizes is to use automatic
beverage dispensing machines.
 The bottles of beverage are inverted and connected with small
bore pipes within a locked storeroom, to each selling outlet.
 The advantages of this method are numerous, but include the
following:
1. The drink size is pre-set and the drink automatically measured.

2. The yield is consistently higher than when using other methods

as the bottles drain completely into the dispenser.

3. Each drink can be metered by the selling outlet. This helps with

inventory control and the calculation of estimated bar revenue.

4. It prevents bar staff from handling bottles. Every drink that they

need for a customer is obtained by just pressing the correct

drink button on the dispenser.
5. Many beverage dispense machines are connected to

microcomputers so that they can measure the drinks, dispense,

display the prices, print the guest's bill, as well as maintain the
inventory and analyses drink sales.
There are some disadvantages in using beverage dispensing
machines, such as:
1. Unsuitability for certain types of beverage operations, for

example a cocktail bar in a luxury type hotel where the clientele

expect personal service with the mixing of their drinks.
2. The cost of installing dispensing machines is high, although the

higher level of control should help to repay the initial costs

relatively quickly.
 Page 81 of 124

3. In general they are only suitable for use in bars with a very high

volume of sales and where the customer is not so concerned

with traditional bar service.

What do you mean by Standard purchase specification?

 Standard Purchase specifications should be used whenever
possible in purchasing.
 A purchase specification is a concise description of the quality,
size and weight (or count) required for a particular item.
 Each specification would be particular to an establishment and
would have been determined by members of the management
team (for example, the purchasing manager, head chef and the
food and beverage manager) by reference to the catering
policy, the menu requirements and its price range.
 Copies of the specifications should be kept by the relevant
members of the management; the goods received clerk and the
food control clerks and sent to all suppliers on the 'approved
suppliers list’.

The reasons for preparing specifications are:

1. It establishes buying standards of a commodity for an
establishment so that a standard product is available for the
kitchen and restaurant to prepare for the customer.
2. It informs the supplier in writing (and often aided by a line
drawing or photograph) precisely what is required, and it assists
the supplier in being competitive with pricing.
3. It provides detailed information to the goods received clerk
and the store man as to the standard of the foods to accept.
4. It makes staff aware of the differences that can occur in
produce, for example, size, weight, quality; quantity, etc.

What are the Advantages of standard purchase specification and

standard yield?
 Required for those who prepare them to think carefully and
document exactly what their product requirements are.
 Leave no doubt in suppliers’ minds about what they are quoting
on thus

Page 81 of 124
 reducing or eliminating misunderstanding between supplier and
establishment.
 Eliminate, for frequently purchased items, the time that over the
telephone
or directly to sales persons each time the product is needed.
 Permit competitive bidding.
 Allow the person responsible for receiving to check the quantity
of delivered
goods against a written description of the quality desired.

Specimen: Standard Purchase Specification.

Describe the layout of Stores

 Page 83 of 124

The main objective of a food store & food storing is to ensure

that an adequate supply of foods for the immediate needs of
the establishment are available at all times.
 Food when accepted at the receiving department are
categorized as perishable and non-perishable items before it
goes inside the stores.
 The perishable items can go straight to the kitchens, where
they would be stored in either refrigerators or cold rooms
depending on the item.
 Meat, fish, dairy produce, fruit and vegetables, and deep frozen
foods should be stored separately from each other.
 The non-perishable items (for example, canned foods) go to a
food store where they are unpacked, checked for any damage
and placed on racking.
 The stores normally are stacked with items that are issued
daily, being located near to the door where issues are made,
with the remainder being arranged in a logical sequence.
 Grouping of commodities together, for example, all canned
foods, dried foods, etc., each can be arranged into sections.
 The store should have good ventilation preferably air
conditioner so that the shelf life of the products present will be
more.
 The layout of the store should benefit the movement of the staff
working.
 Trolley access to pick-up heavy food material should be easy.
 What is important, is that the layout chosen should be one that
minimizes the distance walked by the storekeeper

Page 83 of 124
  When this is determined the stock-taking list should be printed
in the same order in which items appear in the stores so as to
enable stock-taking to be done quickly and efficiently.
 Whatever form of layout is used, it is advisable that the stores
stock lists should be printed in relation to the layout so that
stock taking becomes convenient.

 The stores should be well ventilated with temperature control so

that the products which are stored in the stores don not get
spoiled.

 While making the layout of the stores the ease of cleaning the
stores should be taken into consideration, shelves and racks to
store the commodities and gangway or aisle to easily commute
should also be considered.

What are the Characteristics of A market oriented business?

1. A high percentage of fixed costs, for example rent, rates,

management salaries, depreciation of buildings and equipment. This

high percentage of fixed costs remains fixed regardless of any
changes in the volume of sales. A hotel restaurant is an example of
an operation with high fixed costs.
2. A greater reliance on increases in revenue rather than decreases in

costs to contribute to the profit levels of the establishment. The

implication here is that in seeking to increase the business's
profitability, more emphasis must be given to increasing sales (for
example, by increasing the average spend of the customers or by
increasing the number of customers) rather than by reducing costs.
For this reason the close monitoring of all sales in a market oriented
business becomes of prime importance.
3. An unstable market demand for the product, thereby requiring a
 Page 85 of 124

greater emphasis on all forms of selling and merchandising of the

product to eliminate shortfalls in sales.
4. More likely to have a more flexible pricing policy.

What are the Characteristics of A Cost Oriented business?

1. A lower percentage of fixed costs, but a higher percentage of variable

costs such as food and beverage costs. The percentage of variable

costs in cost oriented establishments varies with changes in the
volume of the business's sales.
2. A greater reliance on decreases in costs rather than increases in

sales to contribute to the budgeted profit levels of the establishment

Thus in seeking to increase the performance level (budgeted revenue
and profit) of a cost oriented business more emphasis should be
given to reducing the overall costs of the operation in such areas as
purchasing, portion sizes, and labour levels.
3. A relatively stable market demand for the product. In comparison to

market oriented businesses, cost oriented operations enjoy a

reasonably stable demand for their products.
4. More likely to have a more traditional fixed pricing policy.

LIST DIFFERENT TYPES OF TRANSFERS

Food Transfers can be categorized in following manner:
1.1- Under kitchen transfers:
 when food is transferred from one kitchen to another, records must
be maintained as regards to the item & amount so transferred.

Page 85 of 124
  For the purpose of determining the cost for each unit the amount
transferred must be credited to the cost of the unit which is
receiving the item.
 In some hotels all food items may come to central kitchen for
commissary for reissue to the same or other unit on succeeding
days.
 All such items are returned are recorded on transfer memo or
other similar form to determine food cost.

1.2- Intra unit transfers:

 wine , cordial, brandy , ale for the production of sauces parfait
certain baked item & rarebits etc. are purchased by food dept. for
use in the kitchen , kept in the store until needed & then issued on
requisitions directly to the kitchen.
 The quantities & value listed on requisition are used for
calculation of cost. However these supplies are maintained in the
bars & not advisable to maintain additional quantities for specific
use in kitchen.
 Therefore F & B transfer’s between kitchen and bars occurs most
frequently. Similarly some food like lemon , orange eggs, cream
which are available in the kitchen could be transferred by the bars
for making of shakes or cocktails, in these case it is not always to
buy theses products only for bar use when they can by easily
acquired from the kitchen.
 All theses transfer’s are made in F & B Transfer Memo. At the end
of the day all thse memos are sent to the control office where it is
entered in daily issue sheet to adjust the cost figures to achieve
greater accuracy.

1.3- Inter unit transfers:

 there are many small chain operations that produce some items &
then distributed those items to other units of the chain.
 If the ingredients for the baked goods come from regular supplies
of the unit in which the items are processed, record must be made
of cost of ingredients.
 Otherwise the food cost of the producing unit may be overstated
by the value of the ingredients used and the cost of the receiving
unit being understated by the value of the food they receive.
 As per the matching principle the aim of the management is to
match costs and sales. The food sales be reported separately for
 Page 87 of 124

each unit and food cost figures which do not include the cost of
those food sold, cannot be matched with sales.
 Therefore, it is necessary to use the transfer notes to record all the
ingredients used in the production of finished products for transfer
to other units.
 This will make it possible to credit cost of the producing unit. If
each units receives an equal share of goods produced then one
should divide the cost of goods produced & credit to the producing
unit by the number of units to which item had been transferred &
increase the food cost of each by equal share.
 In case the distribution is not equal in all the units, some equitable
means like standard cost, must be used for apportioning cost.

Explain different types of Price Methods?

1. Actual purchase price
method:
The closing inventory is values at actual purchase price. This is possible if
the units are marked with those prices.
Eg. if 20 cans are markede with their purchase price one can easily
calculate their value as follows:
2 cans @ rs 20 each Rs. 40
10 cans @ rs.30 each Rs.300
5 cans @ rs.40 each Rs.200
_______ ____________
17 Rs.540

2- Latest purchase price method:

In case actual prices are not marked on the commodities, it is assumed that
the stock has been properly rotated during the month & the units remaining
in the shelf are those recently purchased. The latest price of closing
inventory is known
Eg. 10 cans @ Rs. 30 each = Rs. 300
7 cans @ Rs. 40 each = Rs. 280
_______
Rs. 580
________

3- Recent purchase price method:

Page 87 of 124
In operation where number of unit received on a particular date is not
known, the common practice is to use the most recent purchase price in
valuing the closing inventory. The closing inventory on the basis of most
recent purchase price will be:
17 can @ Rs. 30 each = Rs. 510

4- Earliest purchase price method:

The earliest purchase price method is suitable in period of high inflation.
The management directs that costs are to be kept at relatively higher order
to minimize profits. The profits are minimized in financial statements in
order to decrease income taxes. In times of rising prices, the closing
inventory is valued at earliest purchase price. The valuation is done as
follows:
10 cans @ Rs. 20 each = Rs. 200
10 cans @ Rs. 30 each = Rs. 300
________
Rs. 500
_________

5- Weighted average price method:

This method is suitable in case of large quantities of stocks and when there
is no certainty about the rotation of stock. The weighted average purchase
is calculated by multiplying the number of units in opening inventory in each
purchase by their individual purchase prices, adding these values to
determine a total value for all units together and then dividing by the
number of units involved.

What are cyclic menus?

 These are a series or set of menus that are repeated at

set periods of time by a catering outlet.
 For example, menus may be planned for a three-week
cycle, and at the end of the three weeks the same menus would
be repeated.
 Generally the longer the period of time between the
menus being repeated, the shorter the choice of menu items.
 Page 89 of 124

 For example, a menu offering only two or three main

courses would need a cycle of between twenty to twenty-four
days to avoid early repetition, whereas a menu offering a choice
of six or seven main course items may only need a cycle of
between ten to twelve days.
 The type of catering establishment must therefore have
an influence on the length of the cyclic menus being offered.
 For example, in a hospital with an average stay of just
over a week, a two or three week cycle may be appropriate;
whereas for guests staying at a resort hotel or people living in
residential establishments such as homes and universities, a
larger cycle menu would be necessary to avoid repetition and
monotony.

What are the main advantages of the cyclic menus?

 Repetition of menu items aids in the preparation of standard
recipes, procedures for preparation, etc., in the production
kitchen.
 This repetition is also instrumental in the establishment of
standard training procedures, efficient work flows, good
utilization of equipment, etc.
 Staff scheduling and rostering may be accurately calculated
when fairly precise production requirements are known.
 This enables labor requirements to be increased or decreased
according to the forecast production needs, and this in turn
helps to reduce kitchen and restaurant labor costs.
 With a set range of menus available, customer preferences for
certain items will soon become apparent, and this in turn will aid
further production forecasting and planning by the
establishment and aid in reducing purchasing and production
costs.
 By analyzing sales, certain dishes may be identifiable as being
very popular. Should this happen, full advantage should be
taken of this with the aim of establishing a reputation for the
dish.

What are the main disadvantages of cyclic menus?

Page 89 of 124
  The range of menu items offered may be too repetitious and
hence become monotonous for the customer if the cycle is too
short for the type of establishment.
 For example, the same foods are offered on the same day each
week.
 It can also become monotonous for the staff if the menu is
limited, resulting in staff boredom and lack of motivation and
flair.

What are the objectives of Menu Planning?

1. The menu must satisfy guest expectations.
2. The menu must attain marketing objectives.
3. The menu must help achieve quality objective.
4. The menu must be cost effective.
5. The menu must be accurate.

1. The menu must satisfy guest expectations: Because guest satisfaction

is a byword of dinning service management, your menu must, above
everything else, reflect your guest’s tastes and preferences – not the
chef’s, the food and beverage director’s nor those of the manager of the
particular dinning outlet.

2. The menu must attain marketing objectives: While part of marketing

is discovering what guests want, another important aspect is providing
for their needs at convenient locations and times and at prices that they
are willing and able to pay. In some cases, excellent product
development, pricing and promotion will convince guests that you have
what they desire – even if up until now they never knew what it was that
they’d been looking for.

3. The menu must help achieve quality objective: Quality concerns are
closely related to marketing concerns. It is important that you clearly
understand all aspects of quality requirements and develop menus that
incorporate these standards into your food menus. High quality and
 Page 91 of 124

good nutrition go hand – in – hand. A menu that helps achieve quality

objectives would also offer enough choices to the guests so that they
can order a nutritionally well-balanced meal. Other aspects of food
quality include flavor, texture, color, shape, consistency, palatability, flair
and guest appeal. As you plan the menu, remember to balance it so that
textures, colors, shapes and flavors are not repetitive.

4. The menu must be cost effective: Both commercial and institutional

food service operations should plan menus that recognize financial
restraints. Generally, commercial properties cannot attain their profit
objectives unless their product costs, which the menu often dictates, fall
within a specific range. In institutional food service operations,
minimizing costs is also the menu planner’s responsibility. Whether you
plan a menu for a commercial or an institutional operation, you must
select menu items that are within the operation’s budget.

5. The menu must be accurate: You are responsible for telling the truth
when you formulate menus. You must not mislabel a product, describe it
inaccurately, or deceive the guest by your menu presentation. The menu
is a powerful advertising tool. It can influence what guests order and
their expectations. If your food service operation does not deliver the
type of products that your menu represents, your guests may feel
cheated and never return.

What are Menu Planning Procedures?

 The first step in the process of menu planning is the Procedures.

 Always begin by focusing on your guests.
 Take into account the factors that motivate guests and help determine
their wants and needs.
 Quality is the foremost factor, which concerns the menu planners most.
The next factor being the want or need of the guest.
 The following points should be taken into account while planning a
menu:-
i. Retention of adequate product quality levels.
ii. Cost of ingredients

Page 91 of 124
iii. Availability of ingredients.
iv. Skill of the production staff.
v. Availability of equipment and the space required to prepare them.

What are the Tools required for planning a menu?

 Since the task of menu planning is fairly complex find a workplace that is
free from interruptions and distractions and gives you plenty of elbow
room.
 Some of the aids that you will want to have close at hand as you develop
your menu include:
i. Copies of old menus, including the menu you currently use in your
operation.
ii. Standard recipes.
iii. Inventory information and lists of seasonal foods, best buys etc.
iv. Cost per portion
v. Sales history
vi. Production records
vii. A glossary of menu terms.

What are the Constraints in Menu Planning?

The resource available to the food service operation affects the menu. The
following are the constraints, which you face while planning a menu:

i. Facility Layout / design and equipment: - You must have the space and
equipment available to produce all the items offered on the menu. If
not, your staff may need to prepare convenience foods.

ii. Available Labor: You must hire an ample number of employees with the
required skills to manage, prepare, and serve all the items on the menu.
If skilled labor is not available to prepare menu items, you may need to
implement training programs or reconsider including such items on the
menu.

iii. Ingredients: Before you make your final selection, choose the standard
recipe, which your production staff will use. Also, make certain that all
 Page 93 of 124

the ingredients required by each recipe will be available during the life
span of the menu.

iv. Marketing Implication: Guest preferences should be a primary concern

when you plan the menu. Even though certain menu items may be
practical to serve from your property’s point of view if your guests do
not care for them you should eliminate them. Another marketing
concern of menu planning deals with the meal period involved.

v. Quality Levels: You must know what level of quality the guests expect
and how to incorporate quality requirements into the food items
offered on the menu. The level of your employee’s skills and knowledge
and the availability of equipment and specific ingredients all affect the
quality of food.

vi. Costs: Food items that are expensive to prepare should be priced at a
level, which compensates for their high costs. You must know the cost
of preparing specific menu items and their possible selling prices. If the
cost of a menu item is excessive, you may decide not offer it.

What do you mean by Menu Merchandising?

 A menu is the primary communications, sales and public relations tool of
a restaurant.
 It may not bring your customers into the restaurant, but once they are
there, the menu determines what they will order and how much they
will spend.
 Thus a menu is important to running a successful and profitable
restaurant.
 A menu card is a compilation of items available in the restaurant put on
paper in form of words and illustrated in printed.
 It should be colorful, attractive, and clean and reflect quality, style and
theme of the restaurant. A dirty, poorly printed, hard to read menu
creates a negative impression.
 An attractive, colorful, well-written menu, on the other hand puts the
customer in the ordering mood.

Page 93 of 124
 The average customer does not always come to your restaurant knowing
exactly what he or she wants, unless yours is a very fast food operation.
Instead, the menu guides the decision of what to order, and the right
words and pictures appropriately arranged determine both what and
how much the customer orders.

What are the Components of Menu Designing?

1. Compiling Menu Data: The following table helps you in compiling your
data. It can be used for all the various categories of the menu;
appetizers, soups, salads, sandwiches, entrées, side orders, desserts and
beverages – both alcoholic and non-alcoholic. A table is made of six
columns – item number, description, cost, price, profit, and popularity –
for every entrée, appetizer, dessert, salad and sandwich. This
information helps the owner and the menu designer to decide which
items to feature in each category. For example, if an item is profitable
but not popular, it should be given more prominence on the menu and
presented in a way that will win more consumer acceptance. Once a
table for each category has been filled out, the designer can devise an
effective menu that should increase profits. Following are some
examples: -
a. Appetizers: Six appetizers is the average number for a fairly large
menu.
b. Soups: A soup du jour (soup of the day) can be listed in the menu or
on a daily supplement, which makes the soup list more flexible.
c. Salads: There are two types of salads: the entrée salad and the
salad that accompanies the main course, the two should be
differentiated on the menu.
d. Entrées: The entrée section generally can be divided into the
categories of meat – Beef, pork, lamb and veal; seafood – fish and
shellfish such as shrimp, crab and lobster; and poultry, including chicken,
turkey etc.
e. Side orders: Side orders or extras may accompany a complete
dinner or luncheon or be served as a la cart items.
f. Desserts: Desserts can be listed on the entrée menu or separately
on a dessert menu. They also can be presented on a tray or dessert cart.
 Page 95 of 124

g. Specials: They are an important part of the menu; they provide

variety, spice and flexibility to an otherwise stable bill of fare.

2. PRICING: In addition to deciding what to serve, the restaurant operator

must decide what to charge for each item. Pricing is determined by cost,
what the market will bear – and what the competition will allow.

3. TARGETING THE MARKET: The restaurant market is so varied that not

every segment can be covered by one restaurant or even a whole
restaurant chain.

4. DESIGNING AND PRINTING THE MENU: The selection of a designer,

writer and producer of a menu depends in part on the size and location
of the restaurant.

What is Pricing & the Importance of Pricing? OR Factor affecting Pricing ?

Price is summation of all sacrifices made by a consumer in order to
experience the benefits of a product.
Importance of Pricing:
1. Income earning: Price is sometimes said to be the only means by which
a company directly earns income. All other marketing mix components
are cost creating or expense producing.

2. Brand image: The price level at which a product sells can be major
contributor to brand image. Certainly a major strategic price decision
concerns whether to meet, or to price above or below, the competition;
this fundamental to the product positioning decision.

3. Deciding factors: Price can act as a deciding factor in allocation of

household resources.

4. Flexibility: In times of inflation price becomes critical importance to

business. Costs of creating & delivering a service may increase quite
significantly. Without an appropriate increase in price, margin will be
insignificant.

5. Market segmentation: Price sensitivity is important criterion in market

segmentation. Some segments like the pleasure traveler- are more price
sensitive than others.

Page 95 of 124
6. High price leads to failure: Many new product failures have been
attributed to consumer dissatisfaction with value & pricing.

7. Competition: In market where products are not well differentiated by non

price variable an Increase in price can cause a significant drop in
demand &by a drop in price can cause competitive retaliation. Price
change can therefore be particularly difficult decision for products such
as a bed & breakfast establishment.

8. Speedy selling factor: Price partly determines the speed of a new

product adoption. A low price which is regarded as a relative advantage
over competitors accelerates the adoption process.

What are the most important Pricing objectives?

Pricing objectives relate directly to marketing objectives which, in turn, depend

upon company objectives. Pricing objectives fall into 4 categories: profit-oriented,
sales-oriented, and competition-oriented and, for welfare organizations, cost-
oriented objectives.

(a) Profit-oriented:
 maximization of profit
 optimum profit
 satisfactory profit (known as ‘satisfying’)
 maximum positive cash flow
 maximum total contribution (calculated as total revenue less total
variable costs)
 target return on investment (profitability)
 rapid payback – i.e. early recovery of capital investment
 harvesting i.e. reap cash for use in other ventures

(b) Sales oriented

 maximizations of sales volume
 satisfactory sales volume
 market share gain or maintenance
 target trial purchase level
 target repeat purchase level
 market penetration
 Page 97 of 124

(c) Competition-oriented
 maintenance of price differentials
 matching competitors

(d) Cost-oriented
 break-even
 meet costs

What is Cost?
A major input to the price decision is the cost of producing and
marketing the product. Assuming the presence of a profit objective,
during the course of a financial year all costs must be recovered and
a profit made, although a company may suffer short-term losses in
order that long-term profitability is enhanced. Different types of costs
are as follows:

 Fixed costs do not vary with changes in sales volume. Examples are
rent, rates, salaries, insurances and depreciation.

 Variable cost varies in proportion to sales. Examples are foods,

beverages and laundry.

 Semi-fixed costs vary in sympathy with, but not in proportion to, sales
volume. Examples are power, telephone and wages.

 Total costs are the aggregated fixed, variable and semi-fixed costs in
a specified budgetary period.

 Average cost is total cost divided by number of units’ sold-rooms,

guest nights or covers; also known as ‘unit cost’ or ‘average total
cost’.

 Marginal cost is the increase in total cost caused by one more unit of
output-i.e. accommodating 1 more guest.

Page 97 of 124
 Direct costs are those which are traceable to a department or unit.
Examples are food and kitchen labor.

 Food cost is regarded as largest expenditure for the business.

 Indirect costs, also known as ‘common’ or ‘joint’ costs, are not

traceable to particular units or departments. An example is general
management.

 Controllable costs are those which management has the capacity to

restrain. Examples are casual labor and food.

 Uncontrollable costs, such as rates and insurances, cannot be

restrained by management.

 Discretionary costs are those which are incurred at the discretion of a

particular person, normally of elevated status, such as the general
manage. Examples are landscaping of grounds and refurbishment of
rooms.

 Relevant costs are those which are pertinent to a given decision.

 Opportunity costs are the costs of not taking a particular course of

action. If a restaurant is deciding whether to invest in refurbishment
of existing premises or opening a second unit, the opportunity cost of
pursuing one course of action is loss of the other.

 Standard costs are accepted or model costs for a given

product or sales volume. The true costs of producing a meal vary
from day to day according to input prices paid for meat, vegetables
and other ingredients. Management prefers to use standard costs
to calculate profit margins rather than make daily computations.

 Unit Cost may be food & beverage portion as in the cost of

one item or hourly unit of work. In F&B business unit cost are
commonly in average unit cost rather than actual unit cost.
 Page 99 of 124

 Prime Cost is a term used in the Hotel Industry to refer to the

cost of materials and labor. (Food, Beverage and Payroll)

 Historical cost are all cost are historical - that is, that they can
be found in business records, book of account, financial statements,
invoices, employees’ time card and other similar records. It is used
for establishing unit cost, determining menu prices and comparing
present with past labor cost.
List different types of Discount?
 Seasonal discounts. Prices vary according to season – normal
season, high season and low season. High-season hotel prices may
be inflated by 20 per cent, and discounted by up to 60 per cent in the
low season. The winter weekend break attempts to offer low-season
value for money.
 Volume discounts. These are offered to 2 types of customer – the
regular person, and the bulk buyer who may or may not be a previous
purchaser. Business travellers may obtain special corporate rates of
up to 20 per cent off rack rate, whereas the bulk-buying inclusive tour
operator negotiates from 25 to 60 per cent discount according to
season. To qualify for the corporate rates, Best Western customers
must sign up for a minimum of 500 bed-nights over 6 months. Some
hotel groups have tiered discount systems, where the depth of
discount increases as patronage increases

 Trade discounts. These are offered to wholesalers and retailers of

hotel products. Travel Agents make a 10 per cent commission on
room sales.

 Cash discounts. These are offered to customers who pay cash rather
than buy on credit. This reflects the lower administration costs for
cash transactions. Prompt payers are also offered discounts. Cash
flows are improved as a result.

What are the different Types of Pricing Methods?

Page 99 of 124
 Cost-plus Pricing Method
This technique is in widespread use and follows the approach of
percentage profit margin added to costs to give a price:
C + f(C) = P
Where C = costs
f = the percentage mark-up
P = price
(For example: Rs1.00 + 80% (Rs1.00) = Rs1.80)

Rate of Return pricing Method: This method is based on relationship of net

profit to capital investment. The possibility of reaching net profit targets is
greater in the rate of return pricing.

What do you mean by Breakeven point ?

The aim of breakeven point / pricing is to calculate the price, which will
enable the company to break even – i.e. neither make a loss nor a profit,
but recover its total costs. The price-setter can then experiment on paper
to see if it can be increased above the breakeven price with a view to
producing profit.
In the breakeven pricing costs are treated as either fixed or variable such
that:
TC = FC - VC

Where TC = total costs

FC = fixed costs
VC = variable costs

What are the different types of Employee Compensation?

 Direct compensation
 Indirect compensation
 Differed compensation

What Does Direct Compensation Include?

The monetary benefit offered by an organization to its employees in return
for their service is called direct compensation. This includes an employee’s
base pay (hourly wage or annual salary), performance-based variable pay,
 Page 101 of 124

bonuses (rewards for special occasions or exceptional performance) as

well as stock options (a right to purchase a part of business as a reward for
exceptional service).
Types of direct compensation
Salary and wage
Direct compensation includes basic annual salaries or hourly wages paid to
workers in return for their services to the company account. It refers to the
monetary benefits received for work done for a specific duration like an
hour, a week, a month or a year. It includes workers’ financial
compensation payments, contractual payments, pay for unscheduled time,
and overtime, as well as any retroactive pay.
Car allowance
Companies may offer their employees the use of a car and/or a fuel
allowance. They may also cover the cost of parking, public transportation,
or cab fare for the employee.

Housing allowance
If workers have to relocate because of work, companies may provide their
workers with a housing allowance. Some companies even provide
accommodation to facilitate the process of relocation.
Medical reimbursement
Companies may offer workers medical reimbursements for medical claims
covering not only workers themselves, but also their family members. The
claims include reimbursement for medical bills as well as health insurance.
Leave travel allowance
Some organizations provide their employees with leave and an allowance
for recreational travel. These allowances are scaled based on the
employee position and length of service with the company.
Special/Other allowance
Direct compensation also covers some special allowances. These include
meals, commissions, mobile phone expenses, travel expenses, club
memberships, insurance, reduced interest loans, and more.
Other direct compensation options include incentive pay linked to
exceptional performance and occasional bonuses for special occasions
Indirect Compensation

Page 101 of 124

 Indirect compensation
refers to non-monetary
benefits offered and
provided to employees
in lieu of the services
provided by them to
the organization. They
include Leave Policy,
Overtime Policy, Car
policy, Hospitalization,
Insurance, Leave
travel Assistance
Limits, Retirement
Benefits, Holiday
Homes.

Leave Policy

Different types of leaves like Sick Leave , Privilidge Leave , Comp-off ,

Maternity Leaves, Funeraal Leaves , etc

Overtime Policy

Employees should be provided with the adequate allowances and

facilities during their overtime, if they happened to do so, such as
transport facilities, overtime pay, etc.

Hospitalization

The employees should be provided allowances to get their regular

check-ups, say at an interval of one year. Even their dependents should
 Page 103 of 124

be eligible for the medi-claims that provide them emotional and social
security.

Insurance

Organizations also provide for accidental insurance and life insurance

for employees. This gives them the emotional security and they feel
themselves valued in the organization.

Leave Travel

The employees are provided with leaves and travel allowances to go for
holiday with their families. Some organizations arrange for a tour for the
employees of the organization. This is usually done to make the
employees stress free.

Retirement Benefits

Organizations provide for pension plans and other benefits for their
employees which benefits them after they retire from the organization at
the prescribed age.

Holiday Homes

Organizations provide for holiday homes and guest house for their
employees at different locations. These holiday homes are usually
located in hill station and other most wanted holiday spots. The
organizations make sure that the employees do not face any kind of
difficulties during their stay in the guest house.

Flexible Timings

Organizations provide for flexible timings to the employees who cannot

come to work during normal shifts due to their personal problems and
valid reasons.

What is differed compensation?

Page 103 of 124

The compensation which the employee gets after he retires from the
organization is called as differed compensation. E.g. Pension benefits,
Social security

What are the factors affecting Labor Cost?

 Labor turn over
 Training
 Legislation
 Contracts
 Part time staff
 Outsourcing
 Sales volume
 Location
 Equipment used
 Layout of the organization
 Service styles
 Duty hours
 Weather
 Management
What is labor contract?
A labour contract or contract of employment is a kind of contract used in
labour law to attribute rights and responsibilities of/ to the employee. The
contract is between an "employee" and an "employer".
What is Outsourcing?
Outsourcing is a practice in which an individual or company performs tasks,
provides services or manufactures products for another company --
functions that could have been or is usually done in-house. Outsourcing is
typically used by companies to save costs.

What does staff turnover means?

Staff/ Employee turnover refers to the number or percentage of workers
who leave an organization and are replaced by new employees. Measuring
employee turnover can be helpful to employers that want to examine
reasons for turnover or estimate the cost-to-hire for budget purposes.

Factors to consider while doing costing for Standard Dish /Menu/ for
Events?
To do costing, it is necessary to identify the direct and indirect costs
involved in operating the menu/dish. Balancing these costs will determine
the ultimate success of a restaurant/event
 Page 105 of 124

Direct costs
These are the food costs and relate to the ingredients that go towards
compiling the menu.
In order to identify the food cost, absolutely everything that goes into a dish
has to be taken into consideration, including the salt and pepper, the
amount of oil or butter used in the cooking, the potential wastage and
portion size.
Bear in mind the following:
• Fish is generally expensive to buy, so the cost is high and the margin low.
• Pasta is inexpensive, so the cost is low and the margin high.
• Some dishes will always be more popular (high volume) than less popular
(low volume) ones. Chicken, for example, in India is generally a high
volume dish compared with beef.
• Balancing the costs of a menu requires the juggling of the number of low
cost/high margin/low volume dishes alongside the number of high-cost/low-
margin/high-volume dishes.
Controlling wastage
Controlling wastage is a key factor in keeping food costs down, otherwise
the financial loss can be enormous.
If Rs50 of food is wasted a day, it can add up to Rs250 a week or Rs12,500
a year. Therefore chefs need to be as careful as possible, using every part
of an ingredient in different way. For example, a whole chicken can be
utilized by using the breasts in a main course dish, the legs in a terrine and
the wing tips and carcass for a stock.
What are the factors that affect food cost?
Food cost can be affected by several factors
1. Weather/Temperature
All crops are affected by the weather during the growing season. If the
growing season is too wet, too dry, or too cold, or too hot, crops cannot
thrive. A scarcity or shortage of a crop may mean it will cost more. When a
good growing season results in a surplus, food prices may go down.
2. Pests/Disease
Like weather, factors such as pest damage and disease can destroy a crop
or affect livestock production.

Page 105 of 124

3. Transportation Costs
When the price of oil and gas are higher, it costs more to transport food
through the steps from farm to plate (e.g. to processing facility, to the
store). This can impact the price of food.
4. Labour Costs
The agri-food system requires a lot of people to make it work (farmers,
packers, processors, retailers, etc.). Many job opportunities exist in this
system. If the cost of labour goes up (e.g. minimum wage is increased)
food prices may increase.
5. Other
Political and economic situations can influence the price of food, either up
or down.

List the methods used to do Beverage Costing?

1. Actual Price Method: Beverages are charged according to their actual
price
2. Sample Average Price Method: the averages of all Purchased price of
the stock at various point is taken for calculating the price.
3. Weighted Average Price: Quantity issued at various times are
considered for Pricing
4. LIFO (Last In First Out): Normal rotation of stock but priced as per
Last Pricing of the stock
5. FIFO (First In First Out) : Priced as per Earlier Purchased stock
6. Inflated Price Method: Certain percentage is increased on Cost Price
7. Standard Price Method: All the Beverages to be charged for fixed rate
as decided by the management. The rates are revised latter.
What are the Factors to be considered while pricing Alcoholic/ Non
Alcoholic Beverages?
 The Market/Type of Clientele it caters to.
 The overheads/Labor Cost it is involved with
 The actual cost of the Bottle(for Alcoholic Beverage)
 Other Miscellaneous expenses might be Spillage, broken Bottles ,etc.

Formulas
Liquidity Ratios
S.
RATIOS FORMULAS
No.
 Page 107 of 124

1 Current Ratio Current Assets/Current Liabilities

2 Quick Ratio Liquid Assets/Current Liabilities
Absolute Liquid Absolute Liquid Assets/Current
3
Ratio Liabilities
Profitability Ratios
S.
RATIOS FORMULAS
No.
1 Gross Profit Ratio Gross Profit/Net Sales X 100
2 Operating Cost Ratio Operating Cost/Net Sales X 100
3 Operating Profit ratio Operating Profit/Net Sales X 100
4 Net Profit Ratio Operating Profit/Net Sales X 100
Return on Investment Net Profit After Interest And Taxes/
5
Ratio Shareholders Funds or Investments X 100
Return on Capital Net Profit after Taxes/ Gross Capital Employed
6
Employed Ratio X 100
Earnings Per Share Net Profit After Tax & Preference Dividend /No
7
Ratio of Equity Shares
Dividend Pay Out Dividend Per Equity Share/Earning Per Equity
8
Ratio Share X 100
Earning Per Equity Net Profit after Tax & Preference Dividend / No.
9
Share of Equity Share
Dividend Per Share/ Market Value Per Share X
10 Dividend Yield Ratio
100
Market Price Per Share Equity Share/ Earning
11 Price Earnings Ratio
Per Share X 100
Net Profit to Net Net Profit after Taxes / Shareholders Net Worth
12
Worth Ratio X 100

Working Capital Ratios

S.
RATIOS FORMULAS
No.
1 Inventory Ratio Net Sales / Inventory
2 Debtors Turnover Total Sales / Account Receivables

Page 107 of 124

 Ratio
Receivables x Months or days in a year / Net
3 Debt Collection Ratio
Credit Sales for the year
Creditors Turnover Net Credit Purchases / Average Accounts
4
Ratio Payable
Average Payment Average Trade Creditors / Net Credit
5
Period Purchases X 100
Working Capital
6 Net Sales / Working Capital
Turnover Ratio
Fixed Assets Turnover
7 Cost of goods Sold / Total Fixed Assets
Ratio
8 Capital Turnover Ratio Cost of Sales / Capital Employed
Capital Structure Ratios
S.
RATIOS FORMULAS
No.
1 Debt Equity Ratio Total Long Term Debts / Shareholders Fund
2 Proprietary Ratio Shareholders Fund/ Total Assets
Capital Gearing Equity Share Capital / Fixed Interest Bearing
3
ratio Funds
Debt Service Net profit Before Interest & Taxes / Fixed Interest
4
Ratio Charges

Overall Profitability Ratio

S.
RATIOS FORMULAS
No.
Overall Profit Ability Net Profit / Total
1
Ratio Assets

Formula for Rooms:

Number of rooms occupied

Occupancy Percentage = ----------------------------------- X 100
Number of rooms available
 Page 109 of 124

Number of rooms occupied by more

than one guest
Multiple occupancy percentage =
---------------------------------------------------------------X 100
Number of rooms occupied

Total Room Revenue

Average Rate per Guest =
-------------------------------- Number of
Guests

Single room revenues at rack rate

Potential Average single rate = -----------------------------------------
Number of rooms sold at singles

Double room revenues at rack rate

Potential average double rate = -------------------------------------------
No. of rooms sold as doubles

Some more formulas:

 Cost / sales x 100 = Cost %
 Sales = Variable Cost + Fixed Cost + Profit
 ARR = Room Sales / Rooms Occupied

What is meant by the term variance analysis?

Variance analysis, in budgeting (or management accounting in general),

is a tool of budgetary control by evaluation of performance by means of
variances between budgeted amount, planned amount or standard
amount and the actual amount incurred/sold. Variance analysis can be
carried out for both costs and revenues.

What are different forms of taking inventories?

 Periodic / Physical inventory: It is done by physically counting the
stock at the end of the year. Usually done annually in large
organizations.

Page 109 of 124

 Perpetual inventory: It gives the balance of inventory available at any
desired time. Hi-tech computerized systems (POS) are used and the
inventory is constantly updated.
 Book inventory: It is the amount of inventory recorded (per item) that
is presently in stock.

What foods are perishable?

 Perishable foods are those likely to spoil, decay or become unsafe
to consume if not kept refrigerated at 40 F° (4.4 °C) or below or
frozen at 0 F° (-17.8 °C) or below.
 Examples of foods that must be kept refrigerated for safety include
meat, poultry, fish, dairy products, and all cooked leftovers.
Refrigeration slows bacterial growth and freezing stops it.
 There are two completely different families of bacteria that can be
on food: pathogenic bacteria, the kind that cause foodborne
illness, and spoilage bacteria, the kind of bacteria that cause foods
to deteriorate and develop unpleasant odors, tastes, and textures.

What foods are nonperishable?

 Baking items: canned pumpkin, sweetened condensed milk,
extracts (i.e. vanilla), pie fillings (cherry, banana crème, etc.)
 Beans: chili beans, pork and beans, black beans, pinto beans,
butter beans, lima beans, refried beans, navy beans, hominy,
etc.
 Boxed mixes: corn bread, cookie mix, muffin mix, stuffing, Au
gratin boxed potatoes and other varieties
 Breakfast items: oatmeal packets, whole oats, cereal varieties
 Canned fruit: mixed fruit, mandarin oranges, apricots,
cranberries, sliced peaches, pear halves, pineapple chunks,
etc.
 Canned meat/fish: SPAM, potted meat, chunk light tuna,
red/pink salmon
 Canned soups (including Campbell’s, Progresso, Healthy
Choice and more): clam chowder, vegetable, tomato, chicken
noodle soup, French onion, cream of celery, vegetable beef,
cream of mushroom, etc.
 Page 111 of 124

 Canned vegetables: beets, diced potatoes, sweet potatoes,

asparagus, sliced carrots, corn (cream style, whole kernel),
green beans, peas, tomatoes, etc.
 Condiments: ketchup, mustard, mayonnaise
 Noodles: mac & cheese, Ramen noodles, pasta side dishes,
egg noodles, spaghetti, noodle bowls, boxed noodle varieties,
Spaghetti-O’s, Chef Boyardee cheese/meat ravioli, Pastaroni
 Rice: rice side dishes (Zatarain’s, Rice-a-Roni, Spanish rice,
etc.)
 Sauces/Dressing: pizza sauce, pasta sauce, sloppy joe sauce,
BBQ sauce, hot sauce, a variety of salad dressings
 Household items: dish liquid
 Personal care items: floss, toothbrushes, toothpaste, bar soap,
deodorant, mini bottles of shampoo, conditioner, body lotion
 Other items: peanut butter, pickles, tomato paste, jelly/jam,
soup broth, syrup, Crystal Light flavor packets, canned chili,
microwave popcorn, Jell-o, pudding, taco shells/kits, a variety of
snack foods, etc.

FOOD COST CONTROL CHECKLIST

Page 111 of 124

PURCHASING
Person doing the purchasing is designated in writing.
Purchasing/product specifications are written and used.
"Special deals" are questioned.
All purchasing is planned (budgeted) and controlled.
RECEIVING
Person receiving is NOT the person who orders. (The person
ordering can assist with receiving, but he/she cannot sign forms to
“receive” the goods.)
Persons receiving are designated in writing.
Deliveries are checked for accurate weight, number, price,
temperature, condition, etc. (Managers should spot check.)
Shipping/receiving documentation is accurate and complete.
Return/credit policy is in effect.
Delivery times are established and enforced.
STORAGE
All items are stored as quickly as possible. (Frozen products should
be stored immediately; all others as quickly as possible. e.g.,
produce, fruits, meat, poultry, fresh seafood, dry/canned grocery
items, paper supplies, chemicals, cleaning supplies, etc.)
The first in, first out (FIFO) method is used.
All items are dated and priced. (Aids in with inventory.)
Access to inventory is limited to authorized personnel.
Storage areas are secure and controlled.
Storage areas are kept clean, dry, and in good repair.
 Page 113 of 124

FOOD COST CONTROL CHECKLIST (cont.)

SECURITY
Access doors are locked.
Storage areas are locked.
Key controls are in place and used rigorously.
INVENTORIES
Sensitive items are inventoried at least weekly.
Inventory procedures are accomplished according to policy.
Discrepancies/losses are investigated, acted upon, and guarded
against.
RECIPES
Standardized recipes are used.
Conversions are calculated accurately.
Recipes are costed out at least every 3 - 6 months
MENU PRICING
Recipe cost-cards are calculated from current prices.
Menu mix is designed to achieve the desired Cost of Goods
percentage.
Portion sizes are priced correctly.
Prices are calculated using the Cost of Goods Method in
accordance with Task 5.5.
All self-serve items are figured into menu prices. (Catsup, mustard,
relish, etc).

Page 113 of 124

FOOD COST CONTROL CHECKLIST (cont.)

PORTIONING
Portions are standardized and calculated correctly.
Correct serving and portioning utensils are available and used.
Correct portion cups, bags, containers, etc., are used.

WASTE/SPOILAGE
All spilled, spoiled, and unusable items are recorded.
Preparation pans are scraped to ensure full use of product.
Usable by-products/leftovers are used, NOT thrown out.
Correct yield is obtained from produce with minimal waste.
Preparation/Pull Par levels are accurate and used.
Standardized recipes are used.
Correct preparation methods are used.
Correct thawing, holding, and handling procedures are used.
Temperatures are monitored and maintained in refrigerators,
freezers, and on the steam/service lines.
SALES CONTROLS
Everything leaving the kitchen/service area is rung up or
documented according to local policy.
All food items prepared, but NOT sold, are recorded, calculated, and
accounted for in Cost of Goods Sold percentages according to local
policy.
Promotional coupons or discounts are recorded under gift
certificates or advertising and promotions according to local
accounting policy.
Employee meals, sodas, etc., are accounted for per local policy.
 Page 115 of 124

What are the different methods of Purchasing?

 Open market buying: carried out by most of the establishments.
Quotations of food items are invited from the suppliers and the
best one is selected based on requirements and specifications of
the management.
 Formal buying: Follows the same ways of Open Market buying but
done in very formal way. Tenders/bids are send by newspapers,
emails, post etc. and on a specific date mentioned the tenders are
opened. The lowest bidder with perfect match with the
specification is appointed as the supplier.
 Negotiated buying: The negotiations are done on the prices and
quantities of the food items supplied.
 Wholesale buying: A contract is signed with the wholesaler for
purchase of goods at specific price for a definite future.

What is centralized purchasing?

 A purchasing system in which all the departments of a company
with a wide geographical distribution can make purchases
through a common purchasing organization.
 Centralized purchasing aids finding the best deals with local
vendors for the corresponding location of the company
department.
 Avoids duplicity of orders and promotes benefits arising from
the high volume bulk discounts, lower transportation and
inventory management costs, organized transactions and
improved vendor relationships.
 Usually located at company headquarters.

Advantages Of Centralized Purchasing

- Bulk quantity of materials can be purchased at a low price with favorable

purchasing terms.
- The service of an efficient, specialized and experienced purchase
executive can be obtained.
- Better layout of stores is possible in centralized stores.
- Economy in recording and systematic accounting of materials.
- Transportation costs can be reduced because bulk quantity of materials
purchased.
- Centralized purchasing avoids reckless purchases.

Page 115 of 124

- Centralized purchasing discourages duplication of efforts.
- Centralized purchasing helps to maintain uniformity in purchasing policies.
- Centralized purchasing helps to minimize the investment on inventory.

Disadvantages Of Centralized Purchasing

- High initial investment has to be made in purchasing.

- Delay in receiving materials from the centralized store by other
departments.
- Centralized purchasing is not suitable, if branches are located at different
geographical locations.
- In case of an emergency, materials cannot be purchased from local
suppliers.
- Defective materials cannot be replaced timely.

List the different books maintained for record keeping

1. A Cellar Inwards Book
This provides accurate reference to all beverages coming into the
cellar, and posting data for the cellar man’s bin cards. Whenever necessary
it is a useful check against the perpetual beverage inventory ledger held in
the food and beverage control or accounts office. An example is given in
 Page 117 of 124

2. Bin Cards
These are provided for each individual type of beverage held in stock
and record all deliveries and issues made, the cards being fixed on the
shelves or racks against each beverage, the bin card numbers referring to
the same bin numbers as the wine list and originating from the standard
bottle code list.

Page 117 of 124

3. Cellar Control Book
This provides a record of all daily deliveries to the cellar and the daily
issues of each beverage from the cellar to the various bars and should
cross-check with the entries on the bin cards and the perpetual inventory
ledger held in the food control or the accounts office.

4. Beverages Perpetual Inventory Ledger

This master ledger, which is prepared in the control or accounts
office, consists of cards prepared for each individual type of beverage held
in stock. The purpose is to keep a daily record of any purchases of the
separate types of beverages and of the quantities issued from the cellar to
each individual bar or other area, and to record a perpetual inventory
balance for each item. The information is obtained from the suppliers'
delivery notes or invoices (adjusted at times with credit notes) and the daily
beverage requisition notes from the different bars. When the physical
stocktaking of the cellar is undertaken, the physical stocktake figures
should match to those in the perpetual inventory ledger.
5. Ullages and Breakages
 Page 119 of 124

It is necessary for any ullages and breakages to be recorded on a

standard form, together with an explanation, and countersigned by a
member of the food and beverage management department. The
frequency of the recording of any ullages and breakages would determine
the necessity for management to take corrective action.
The term 'ullage' is used to cover all substandard beverages such as
bottles of weeping wines, bottles of wine with faulty corks, unfit barrels of
beer, etc., which, whenever possible, would be returned to the supplier for
replacement. Breakages of bottled beverages usually occur by mishandling
by cellar and bar staff.
6. Empties Return Book
Many of the containers of beverages such as crates, kegs, beer
bottles, soda syphons, etc. are charged for by the supplier against a
delivery. It is therefore necessary that control is maintained on these
charged items to ensure that they are returned to the Supplier and the
correct credit obtained. A container record book is required which records
all containers received from the various suppliers, containers returned and
the balance matching the stocktake of containers.
7. Hospitality Book
This is necessary to record the issue of drinks to the kitchen and
other grades of staff as laid down by the company policy.
What are the modes of Payment?
CASH
 The payment received in cash should always be checked in
front of the guest and at the same time when change is given
then it should be counted back to customer.
 In this method complete payment is made in cash and therefore
the currency notes should be checked for their authenticity and
proper shape.

Page 119 of 124

 CREDIT CARDS
 If the payment is made by credit card, the first step is to check
its validity.
 Then a voucher is made out and filled in with the required
details.
 The customer is then requested to sign the voucher after which
the operator should check and match the signature with that on
the credit card.
 The customer copy should be given to the guest.
 The validity of the credit card is checked by passing it through
the electronic machine after which the details of the credit card
are printed on the form of itemized bill which the customer then
signs. (One copy of this itemized bill is given to the customer for
his record)

DEBIT CARDS

 The use is similar to the above, but the amount used is

immediately deducted from the customer’s account.

CHEQUES

 When accepted cheque, the cashier should check the following

information;

 Correct date
 Filled amount (correct/incorrect)
 Signed by the person indicates on the cheque
 Match the signature of cheque card.

TRAVELLER’S CHEQUE

These may be issued by the travel agent (if travel agencies and hotels
have tie up or any type of contract). The travelers cheque must be signed
once when issued and again when to pay.
 Page 121 of 124

What are the advantages of computerized checking systems?

 In today’s food service operations, computer has become an integral
part and is used in every sphere of operations. Computerized pre-
check systems are extensively used in food and beverage control.
 It eliminates revenue leakages by ensuring that all the orders are
billed.
 It reduces clerical errors to minimum.
 It avoids duplication of work.
 It saves time.
 It generates bills quickly without any mistake.

Short Notes:

Electronic cash register

 An electronic cash register is a mechanical device used to calculating

and recording sales transactions.
 It usually prints a receipt for the customer.
 It has an attached drawer for storing cash.
 The cash drawer can be opened after a sale, except when special
keys, which only senior employees have.
 This reduces the risk of cash pilferage.

Its following advantages are;

 Print checks, including the printing of previously entered items.

 Provide an analysis of sales by waiter per hour shift period.
 Provide an analysis of sales made by type of product.
 Analysis of sales by method of payment (cash, cheque, credit card,
etc…)
 Complete automatic tax calculations and cover service charges.

What is Sales Summary Sheet?

 The sales summary sheet is an analysis of all the transactions/cash

taken during the particular period of service.

Page 121 of 124

  It is prepared to know the revenue generated through the sales of
food, beverages, the modes of bill settlement- cash, cheque, credit
card, amount charged to room accounts, tax amount, discounts given
etc. the basic information required in a sales summary sheet includes
the following:
 Date
 Bill number
 Table number
 Number of cover per table
 Bill amount
 Modes of payment- cash, credit card, cheque, posted to room
 Analysis of food, beverages, and other sales items.

What are Point of Sale (POS) Terminal?

 Point-of –sale systems are computerized system incorporating
registers, computers and peripheral equipments, usually on a
computer network.
 These systems keep track of sale & can generate records used in
accounting and book keeping.
 POS registers are connected to touch screen monitors, magnetic strip
readers, bar code terminals, etc. the data is fed to various terminals
and it can be accessed in various output units.
 This system integrates the data and reduces the manual work. For
example- if a bill is made in the restaurant, it will be automatically
posted in the guest bill, if a KOT is made it can be displayed in the
kitchen or can be printed in the kitchen.
 These systems can also generate reports required by various
departments at any given point of time, can control reservations,
guest history, guest registration, sale summary sheet etc.
What is a cashier report?
 This report gives an overview of financial information for single
restaurants, restaurants groups or a consolidated view of all
restaurants within the organization.
 Sales are displayed by cashier (e.g. cashier name or 100/200/300
cashier).
 This information can be filtered for single restaurants, restaurant
groups or a consolidated view of all restaurants within the
organization.
 Page 123 of 124

 This report is available in multiple views: Daily, Weekly, Monthly,

Specified Period, Fiscal (if available), and Live (if available).
 Cashier information is entered in the Setting - Cashiers where the
Cashier Number on the POS is entered so it corresponds with the
Description on the POS.
 The information displayed is a summary retrieved from the POS
system, and includes a detailed breakdown of that period's sales
information.
What is a Cash Book?
A book in which receipts and payments of money are recorded. There are 3
types of Cash Books
1. Single column Cash Book
2. Double column Cash Book
3. Triple column Cash Book
What is a Purchase Book?
Purchase book (Purchase Register) is the book of original entry in which all
the transactions relating to only credit purchase are recorded.

What is Sales Book?

The sales day book is a manually-maintained ledger in which is recorded
the key detailed information for each individual credit sale to a customer,
including: Customer name. Invoice number. Invoice date. Invoice amount.
What is Purchase Return Book?
Purchases returns journal is a book in which goods returned to the supplier
are recorded. This book is also known as returns outwards and purchases
returns day book. Goods once purchased on credit may subsequently be
returned to the seller for certain reasons.
What is Sales Return Book?
When a business sends the ordered goods back to a vendor it is recorded
in sales return book. At times the buyer may return goods due to poor
quality, inaccurate quantity, untimely delivery or other reasons. It is also
called returns inwards and an appropriate sales return or a returns inward
book is maintained.
What is a Journal Entry?

Page 123 of 124

Journal entry is an entry to the journal. Journal is a record that keeps
accounting transactions in chronological order, i.e. as they occur.
What is a Ledger Entry?
Ledger is a record that keeps accounting transactions by accounts.
Account is a unit to record and summarize accounting transactions.
What is P&L Account?
An account in the books of an organization to which incomes and gains are
credited and expenses and losses debited, so as to show the net profit or
loss over a given period. A financial statement showing a company's net
profit or loss in a given period.