CHAPTER 2CONTROL CYCLE

MOVEMENT OF CASH AND GOODS

Purchasing

Accounting Receiving

Service Storing

Selling Issuing

Preparation

= Flow of goods= Flow of cash

The above chart indicates the movement of goods and cash at the various stages and at each stage some control techniques have

been put into force to reduce the food cost and have any corrective action if any deviation occurs.

ISSUINGIssuing is a process where transaction of commodities occurs through a system of either slips, token, is many cases cash. In other cases as credit point system and in few exceptions it is generally found that the delivery of commodities occurs through electronic mechanism.The steps requires in issuing are;

1. REQUISITIONING PROCESS

Over here it is found that as soon as a department finds shortage of goods and products the departmental heads ask his subordinate may fulfill all the formalities on an official document known as Inter Departmental Requisition Slip along with the quantity and the form of delivery. This slip is then delivered to the stores department.2. DELIVERY OF GOODS

As soon as the store personnel receive the requisition slip the goods are delivered to the barer of the slip, after the verification of goods and updating other formalities on the requisition slip. The stores personnel then further updates their bin cards, stock register, issue register and if possible the department wise the issue registration.

3. PERIODICITY OF DELIVERY

It has to mention that for smooth operation of stores issuing of goods can occurs only at selective timings either once in a day or once in every shift. This is done to have a better control over the flow and movement of commodities.

4. DECODING OF THE GOODS ISSUED

The goods which are stored in stores are marked, tagged or sealed with the help of an electronically generated base code system. The first decoding occurs at the time of issue where by the particular information is stored in data systems so as to indicate that the following goods have moved out of the stores and the responsibility of such goods regarding their movement, quantity and quality lies with the department which the goods have been issued to.

PREPARATION

The preparation of food takes 3 steps into accounts. They are:

1. Preparing the food item for cooking purpose (Mise-en-place).2. Cooking process (Actual)3. Holding and serving.

The control points which are used in Mise-en-place are:

Looking for wastage and spoilage. This is calculated as how much a particular commodity gives the non edible stuffs. Over here a definite edible yield is calculated in percentage terms. This element forms one of the key feature which helps in determining Standard Purchase Specification.

In cooking the following control techniques are implemented to maintain an effective cost and there by affecting the pricing strategy that a restaurant can have. The technique used are:

1. Recipe standardization.2. Substitution.3. Effecting calculation resulting into yield calculation.4. Having a check on pilferage and spoilage.5. Judicious allocation of funds into labour and

machinery. There by having a proper expansion path.6. Formulating standard preparation specification.7. Having a perfect floor plan.8. Calculating the cost of food either continuous or

batch wise.9. Having a approximately accurate demand forecast.

10. Categorization of F & B products in the respective categorize of cost verses profit margin.

In the service or holding the food items, observation should be made on portion controls and doing a regular sample check of the portion sizes.

1. RECIPE STANDARDISATION

Any food item that is served to the customer has to be standardized in terms of quantity, product specification, temperature, preparation time, cooking time and any other points which require hygiene handling of food. The major function of recipe standardization is to have a uniform quality, quantity which can act as a manual to the untrained staff to derive the conformity with said practices which is unique to its own catering establishment. Receipt standardization also helps to determine a standard cost on which the pricing strategy of the restaurant can be formulated. It further specifies the need of better time management, affective resource planning in terms of the material used and formulating itself as a bench mark against any variations in quality and quantity control.

2. SUBSTITUTION

In this case we final that due to the market driven demand where there is a gradual and sometimes rapid change in food taste. The production staff should be able to improve change or alter the specification of food taste whereby the market is satisfied by the operations of the catering establishments. This change can be done in the forms of the commodities used or substituting a present commodity with other commodities which is acceptable to

the palote of the customer. In substitution the preparation operations has to be cost conscious / effective, quality compromise with the yield percentage.

3. YIELD MANAGEMENT

It is known to us that certain commodities in specified quantities give a different net edible hate compared to other commodities for e.g. Spinach vis-à-vis potatoes or meat item verses potatoes. In the first category / example the yield management difference was due to loss of water content during cooking and it the next example we could find the roll of shrinkage into practice.Yield management is important because it plays an important role in portion control and portion sizes. The yield management also stresses upon the working techniques of the preparation staff and their capacity of food handling. It has another major advantage that it acts as a tool for an effective production management.

4. PILFERAGE AND SPILAGE

In preparation areas it is generally observed that the preparing staff has the tendency to eat while preparing under the aliki (excuse) of food tasting. There might be another illegal consumption of food during holding and serving. Such illegal consumption is known as Pilferage and should be checked upon. This activity can be controlled by determining the actual weight of the food to be taken for tasting purpose or for sampling purpose. In preparation thee exists another problem of not working in the prescribed manner thereby resulting in wastage of food and in form of spillovers. These spillovers can affect the yield management very greatly and thereby increasing the cost margin.

5. FUND ALLOCATION

Fund allocation to the respective heads like labour and machinery require a judicious since

1. The attributes which contribute to these are having a future demand analysis done.2. Steps taken to meet that requirement.3. Calculating the marginal productivity and marginal efficiency of machines used.4. Finding out the equilibrium point between labour efficiency

and machine efficiency and thereby projecting a future expansion of preparation operations.

This graph shows the efficiencycomparison

MACHINE

LABOUR

Here, L+M =Z

Where,L = LabourM = MachineZ = Amount of money to output.

The future projections of demand are calculated on the bases of empirical observations, the past experience and the probability of increase in demand by what amount of percent.

6. PREPARATION / FORMULATION OF STANDARD PREPARATION SPECIFICATIONS

Like Standard Purchase Specifications and Standard Storage specification there arises a need of Standard Preparation Specification which acts as a protocol to the technical staff and helps to achieve a standard quality. This standard quality as discussed earlier is due to the presence of standardized recipes only. This preparation specification has some of the elements same as the procedure of standard recipes but differ in those areas where other works regarding food hygiene, food handling and floor cleaning is there. These specifications acquire a different importance.

7. FLOOR PLAN

The importance of floor plan is that it allocates the times division into different activities such as wise-en-place, preparation of quantity bases, preparation of quantity bases, preparation of food items, reporting activities, briefing activities and calculation activities. A typical floor plan would indicate the control over F & B items, require a specific indenting time and issuing time and the time by which the operations should be completed. It helps us in determining the number

of work staff required and the cost of establishment. For a layman, floor plan is same as daily time planner.

8. COSTING

There are various products which are prepared in the kitchen. Some of them may require the use of modern technology and others are prepared is a lot system or batch system for e.g. preparation of food items done on Al-a’-cart bases on a specific order bases or on a batch like coming from banquets and buffets and the other category might include the continuous preparation of food which is done with the help of techniques like cook chill, cook freeze, conveyor system or perpetual system. The important consideration to be noted over here, “Is how to calculate the food cost is it the price of raw material and variable overheads? Or “Is it because of the price taken of raw material, overheads, labour and fuel?” Generally in the kitchen the costing is done taking the price of raw-materials and fuel only. The composition or the percentage of this cost over the selling price is known as Cost Margin. If we are able to subtract certain average cost which includes labour and overheads then we are able to find the items contribution to the profit margin. These both parameters determine the efficiency of preparation operation and therefore like raw materials there should be enough control over fuel, quantity and quality labour work and other direct and indirect cost.Some times the costing is also affected by the bi-product which any preparation technique way gives off. In this case we have to do a separate costing of the bi-product, check out its utility, and know its economic importance and redistributing the cost on proportionate basis. If the bi-product has got the same value then the distribution of

average cost takes place otherwise the cost of this bi-product gets added to the food item in which this bi-product acts as a foundation or as a different commodity. Again on the bases of whether this bi-product is utilized as a foundation or just as another commodity the costing of undergoes a perceptual change.The control of the cost is done with the help of strict monitoring, calculating efficiency ratios like yield ratios, contribution of fuel towards the preparation of good and having a sound knowledge and perception of ABC Analysis and ABCD Control System.

9. DEMAND FORECAST

The calculation of the demand forecast is done with the help of the following rules:

Know the previous corresponding demand. Know your cost margin and contribution to profit margin of

various food and beverage items. Know at what rate the market is expanding or contracting. Know your capacity of cornering the amount of market share. Know the type of market in which your catering establishment

operates. Having determined the near about probability of the

actualization of the anticipated expansion and contraction and knowing the future prices of production and segregating all these rules into item wise classification.

10. CATEGORIZATION OF F& B ITEM

The preparation staff should know each items cost margin and contribution to net profit margin. On the bases of the above two parameters F& B items are categorized into four groups namely

I. High cost margin – high net profit margin. II. High cost margin and low net profit margin. III. Low cost margin and high net profit margin.IV. Low cost margin and low net profit margin.

On this bases the F& B items are categorized as Stars Cash Cow Puzzle Dogs

The preparation staff would maintain stars, monitor cash cows, try to modify puzzle, and eliminate the dogs. This kind of exercise is done on a regular bases and this forms like recipe standardization.In case of holding or service the other key point which acts as a control is portion control.

11. PORTION CONTROL

Definition

Portion is the measurement specification that an organization or catering establishment follows which may be in terms of weight, number or size for a specified price rendered for that particular commodity and should be able to provide the required satisfaction to that consumer. “The control over the portion is one of the trickiest techniques of preparation staff. The organization may control the portion size by allocating the specific size and measurement of a pouring ladle, marking the crockery, camouflage under the logo of the organization, performing periodic sample test, doing the test hypothesis with accepted variations of plus or minus

5 % in small numbers and weight and allowing the +/- 1 % in case the quantity is large. Portion can also be controlled by calculating the various loss percentages which can occur as a baking loss, loss of water content, determining the temperature of cooking and holding, having an overall comparison vis-à-vis the competitors.

YIELD

The percentages of the edible that is obtained from the raw-materials after omitting, pilferage, laboratory test, wastage, spillage and loss on workingSELLING

In catering sector the selling process occurs as soon as some aspect of service or F & B item is consumed. From the accounting point of view revenue or the sales is calculated at the incidence of consumption. Till the time the customer pays the bill such sales are considered as Credit Sales. In catering division there are generally 3 forms of service which accounts for the sale of F & B products. They include:

1. Cafeteria Service2. Table Service 3. Buffet service

Generally in the above 3 forms of service a common method of operation is followed which includes

A. Attracting the customers.B. Receiving the customer.C. Making the customer comfortable D. Taking orders E. Delivering the orders.F. Presenting the billG. Accepting the payment.

H. Seeing of the guest.I. Try to provide after sales-service

The various mechanisms which have to be adhering are:

1. ▪ Accuracy of the order taken:

The selling staff should know the requirement of the guest. He should verify and confirm the order for two important reasons.

▪ Wrong order delivery may affect the reputation and goodwill of the catering establishment.

▪ Wrong order delivery would increase the selling cost and would result in a loss of F & B inventory.

2. ▪ Proper Communication:

There should be a proper communication between kitchen staff and service staff. Any abbreviated form used in the communication should be crystal clear to the kitchen staff and does not create a chaos in meaning. For e.g.:- would PBM refer to Paneer Butter Masala or something else. To overcome this there should be a uniform abbreviated forms followed in the catering establishment.

3. ▪ Holding Temperature

The food which has to be sold should be hold in their respective specified temperatures. Foods which are served cold should be stored at a temperature of 70 C.

4. ▪ Discrimination of Colleagues:

The kitchen staff should not show any form of discrimination against waiting staff should this happen the customer who has placed the order last night receive the order before the order of another guest who has placed his order before that respective guest. This might create resentment among the customers and might affect the cost of goods by a substantial margin.

5. ▪ Placing of Multiple Orders: When a particular order is received about a same F & B item, but which requires some alteration, some modification and some distinct preparation style. It should be a matter of concern that each order should be prepared in the way it is demanded. Suppose a fillet of beef demanded a bleu is provided were done and the other customers order of rare is provided just done, then it increases the food cost of the catering establishment.

6. Having a proper count of plates incase of buffet style of service. In this case, the plates act as a token for the recognition of sales. Therefore it is imperative to have a proper count of the plates and monitor their misuse if any.

7. Putting a Scanner in the Holding Area:

This is the latest technology implemented to stem out any pilferage, guest dissatisfaction over the holding area which captures the sensory images of F & B items and determines their portion size and portion weight, along with budged crockery.

8. Providing a Prompt Service or Clearance:

By the time the guest finishes the food and wait for the clearance, the bill has to be kept ready incase the customer leaves the property without paying the bill. In cafeteria, table and buffet service, controlling the food cost is more tedious incase of table service and selling at this point requires great care.

ACCOUNTING

Accounting is a process, a numerical mechanism whereby a collection of the amount is done by from the customers and processing the information for the managerial analysis and evaluating the customers and providing them a credit rating on their payment behavior and simultaneously formulating a plan to recover the bills and stopping the various frauds which might occur during the cashiering process.Accounting is a step for formulating the receivables management policies which uses a manual and technical process and also goes for the process of factoring for the recovery of bills and determining the bad debts.In the process of accounting the following modus-operandi exist in every establishment irrespective of how simple or complex the accounting mechanism is:

I. Collection of information from check pads. II. Generation of bill or estimates or revised estimates.III. Forming a leaf of the bill generated.IV. Presentation of bill to the customer.V. Accepting the mode of payment whatever required.VI. Evaluation of the various mode of payment.

VII. Cashiering duties. The control systems which are found in accounting process are considered below:-

I. Checking of omissions and errors II. Checking of double entries [ One thing enter twice ]III. Proper maintenance of the different currency.IV. If the acceptance is of various currency then proper maintenance

of the different currency.V. Keeping a strict check on the flow of foreign currency.VI. Maintaining of vouchers on slips when dealing with other mode

of payments.VII. Upkeep of electronic cash register. VIII. Accepting the notes before refunding the left amount. IX. Positioning of the cashbox away from the site of everybody.X. Formulating a strict key and lock mechanism.XI. Cross check of the bills and formation of their bill wise

information and preparing a sells summary report and denomination report.

XII. Optional: - Processing of the tokens to regulate more strict vigilance on cash flow.

The various mechanisms used in accounting process are:-

Manual System Computerized System ECR System Electronic Media System

USE OF COMPUTERS IN COST CONTROL

Computers and their sibling’s cacceriories are very important tools in the smooth running of operation and helping the operation and helping the operations to minimize the cost. These efficiencies can be achieved by the following means.

A) Predetermined Software.B) Having right accessories like sensors, sensory plate, decoders,

encoders, servilance lights and trays etc.C) An ability of the catering establishment to adopt the blue tooth

technology.The scanners are used to determine the portion size and sensory plates are used to determine the quality whereby the information is subjected to the various statistical programs installed in the software. This information generates a wide energy of data to take the managerial information and put an effective control technique in reducing costs. Even the use of standardized recipe, SPS, SSS etc. is automatically designed. The computers also provide an alert sign when it detects any abbreviations in the procedure and informs the required necessary corrective action.Computers have been employed to perform the complex task of menu engineering and menu analysis whereby the computers take the required information from the stores department, information of issues and indent and from the information that scanner and sensory plates gather and relays the information.

Computers have also been programmed to perform yield management on the products of the catering establishments.

FORMAT OF A CREDIT MENU

FORMAT OF PURCHASE ORDER FORMATFORMAT OF ABIN CARDFORMAT OF INTER-DEPARTMENTAL REQUISITION FORMFORMAT OF A TAG