chapter 9 monitoring foodservice operations ii daily food cost

7/29/2019 Chapter 9 Monitoring Foodservice Operations II Daily Food Cost

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Principles of Food, Beverage, and Labor CostControls, Ninth Edition


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All foods can be categorized as eitherdirects or stores in food control, the totalcosts for these two are the two basiccomponents of the daily food cost.

As discussed earlier, directs are charged tofood cost as received. Therefore, todetermine food cost for any given day, onemust know the total of directs received on

that day. This figure is readily available ifthe Receiving Clerk's Daily Report or asimilar form is completed each day.


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Stores purchases are added to inventory andcharged to the food cost when issued.

One must determine the value of stores issuedon a given day, each day, to obtain the second

principal component of food cost for that day. If all foods issued from inventory are listed on

requisitions, the determination is not difficult.One merely prices and extends each requisitionfor foods issued on that day and then adds thetotals for all requisitions to obtain the totalcost of stores issued.


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In operations where transfers are made(promotion expense, employees meals, andsteward sales, for example), values for theseshould be determined daily and taken intoaccount as well. One would determine their

value and then credit the daily food cost forthat amount.

The value of any alcoholic beveragestransferred from the bar to the kitchen for usein food preparation should be charged to food

cost. Many establishments credit daily food cost for

the value of employees meals.


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Opening inventory is the dollar value of all food

on hand at the beginning of the accounting period.

Purchases are the sum cost of all food purchased

during the accounting period.

Total Available is the sum of the beginning

inventory and purchases.

Closing inventory refers to the dollar value of all

food on hand at the end of the accounting period.


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Cost of food consumed is the actual dollar value

of all food used, or consumed, by the operation.

Employee meal cost is a labor-related, not food-

related cost. Free or reduced-cost employee meals

are a benefit much in the same manner as medical

insurance or paid vacation.

It is important to note that ending inventory for one

accounting period becomes the beginning inventory

figure for the next period.


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Cost of food sold is thedollar amount of allfood actually sold,thrown away, wasted

or stolen. It iscomputed as follows:

Opening Inventory

PLUS Purchases

= Total Available

LESS Closing Inventory = Cost of Food Issued

PLUS / MINUS Adjustments

= Cost of Food Consumed LESS Employee Meals

= Cost of Food Sold


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Cost of directs (from the receiving clerk's dailyreport) + Cost of stores (from requisitions) + Adjustments that increase daily cost

(transfers from bar to kitchen; transfers fromother units)

Adjustments that decrease daily cost(transfers from the kitchen to the bar: food tobar (directs), gratis to bar, steward sales,

promotion expense) = Cost of food consumed Cost of employee meals = Daily cost of food sold


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By itself, the daily food cost percent for anyone day may not be a very accurate figure.Many restaurants purchase directs everyother day, and this will affect daily foodcost, making it artificially higher on the days

when directs are received and charged tofood cost and correspondingly lower on theother days.

To help overcome the problem of artificiallyhigh food cost percent one day and low food

cost percent the next, most operations alsocalculate food cost percent to date.


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Food cost percent to date is defined as thecumulative food cost percent for a period. Ittakes into account all food costs and all foodsales for all days so far in the period.

To determine this cumulative food costpercent (food cost percent to date), onedivides cost to date by sales to date.


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1. Shows food cost, food sales, and food costpercent for any one specific day and for allthe days to date in the period, and

2. Compares these figures to those for asimilar period.


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Some foodservice operators also determinewhat the value of the closing inventoryshould be, based on records indicatingpurchases and issues. This is defined as

book inventory. Those who determine abook inventory value normally do so tocompare it with the actual inventory value.

A method of establishing the value of thebook inventory is readily available to those

who maintain daily food cost figures. Thisform provides a means for maintainingcumulative book inventory figures for aperiod.


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Opening inventory (closing inventory for thepreceding month)

+ Purchases (total stores purchases for theperiod, as listed on

receiving reports) = Total available (total value of the stores

available for use during the period) Issues (total stores issues for the period,

as listed on requisitions) = Closing book value of the stores

inventory


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Acceptable reasons arean occasional humanerror in costing outrequisitions, the use ofthe most recent

purchase price ratherthan actual purchaseprice in valuing thephysical inventory, andthe mismarking ofactual purchase priceson items when thatmethod is used.

Reasons that arenever acceptableinclude issuingstores without

requisitions,allowing meats toage to the extentthat they become

unusable and mustbe discarded, andthe theft of food.

John Wiley & Sons, Inc. 2009

chapter 9 monitoring foodservice operations ii daily food cost

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