Cost Control Manual

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TITLE: Cost ControI ManuaI - TabIe Of Contents
DOCUMENT
DEPARTMENT: Finance & Accounting - Cost ControI
SECTION: Two ISSUE #: 1.0
KP800201
SUPERSEDES ISSUE #: None DATED:
PAGE
APPROVED: DATE: 01-Jan-99
1 OF 1
T ABLE OF CONTENTS
WHAT IS FOOD & BEVERAGE COST CONTROL ...............................................1
THE BASIC FOOD & BEVERAGE OPERATION ..................................................2
INTRODUCTION TO THE COST CONTROL PROCESS .....................................3
DESIGNING THE COST CONTROL SYSTEM.......................................................5
DEVELOPING FOOD & BEVERAGE STANDARDS ............................................7
PURCHASING & RECEIVING CONTROLS FOR F & B........................................9
EXTERNAL CONTROL CONCERNS ....................................................................13
CONTROL CONCERNS AT RECEIVING ..............................................................14
INTERNAL CONTROL CONCERNS......................................................................14
CONTROL CONCERNS DURING STORAGE ......................................................15
STOREROOM INVENTORY...................................................................................17
FOOD & BEVERAGE STOREROOM ISSUES.......................................................19
PRODUCTION CONTROL ....................................................................................20
VARIANCE FROM STANDARDS .........................................................................22
CHECKLIST FOR A PROFITABLE F & B OPERATION ......................................23
LABOR COST CONTROL......................................................................................28
EMPLOYEE EVALUATION CHECKLIST...............................................................29
WRITING THE MENU ............................................................................................32
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TITLE: Cost ControI ManuaI
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WHAT IS FOOD & BEVERAGE COST CONTROL
Cost Control, for short, is much more than putting a lock on the
storeroom door and making sure the staff does not steal. Cost
control provides a road map for management to stay on the right
track. Cost control begins with planning.
The person responsible for accuracy and implementation of the
control functions is the Director of Finance & Accounting, the
person responsible for compliance is the Director of Food &
Beverage, the person actually executing the cost control function is
the Cost Controller.
Discussion of the control process first addresses exactly what the
food and beverage operation must accomplish and how to establish
performance standards. Standards come from two primary sources:
Data from past performance matched with cost estimates for
past sales levels
A profit plan outlined by the operating budget
A manager cannot control costs without having something to
measure against. To know the actual cost of food and beverage
produced without knowing what it should be sold at is of little help.
s a cost of $ 400 per $1000 of sales good or bad? The
performance is considered good if the planned cost is achieved,
conversely the performance is bad if the cost is significantly greater
than planned.
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THE BASIC FOOD & BEVERAGE OPERATION
Generally a Food & Beverage operation offers the following
services:
Coffee shop (all day dining) operation
Dining room service,- ranging from family fare to gourmet style
Room service,- Food and Beverage provided to guests in the
room
Beverage operation,- alcoholic and non alcoholic beverage
served in a bar, as well in all restaurants
Banquet service,- groups, conventions and special functions
Others,- such as outside catering and retail sales
All other departments in the hotel have a support function, some to
a greater and some to a lesser extend.
The Director of Food & Beverage, the Executive Chef and the Cost
Controller are involved but not directly responsible with certain
functions leading to the actual Food & Beverage service operation,
subsequently cooperation between the support departments is
detrimental to the success of the Food & Beverage operation.
Labor and energy management must be created, implemented and
controlled along with procedures for managing all other program
resources and costs, - supplies, services, overheads and utilities.
An effective recording and accounting system, that yields
meaningful, accurate information on a timely basis, is necessary to
evaluate results and to make operation and control decisions.
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INTRODUCTION TO THE COST CONTROL PROCESS
The accounting and record keeping system takes information from
various components in the operating control system and develops
statements of current financial status which become the
barometer of the extent to which the operation is meeting
economic profit and cost containment objectives. As problems are
identified, corrective action, one of the steps in operating the control
system, becomes necessary to ensure all resources are effectively
managed.
Resources, the assets of the Food & Beverage operation can be
divided into seven categories:
People
Money
Time
Procedures
Energy
Materials
Equipment
All resources are in limited supply. No manager has all the
materials, money, and time that he or she would like to have. Part
of the managers job is to determine how best to utilize the
resources available to meet the required operational objectives:
Achieving targeted profit levels
Maintaining and increasing financial strength during changing
social and economic conditions
Observing guest, management and employee interests
Meeting professional obligations
Observing social concerns
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INTRODUCTION TO THE COST CONTROL PROCESS
(continued)
Management's first activity therefore must be to plan organizational
objectives, to establish benchmarks to be able to measure against.
If it can't be measured, it can't be managed.
Cost control is a series of coordinated activities to ensure that the
actual result closely matches the planned result. A measuring
devise, measuring the performance of the department and it's
employees.
The control system identifies problems early so they can be
resolved
Through the control system, necessary changes required by the
market, customer trends and competition are identified
The control system helps to identify and resolve common
mistakes
The control system is used to determine whether tasks are
being carried out correctly or not
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DESIGNING THE COST CONTROL SYSTEM
EstabIishing Performance Standards
Performance standards shouId:
Accurately reflect results desired by the Food & Beverage
operation
Be high enough to encourage excellence but not so high as to
become unattainable
Be specific and measurable
Once achieved be raised slightly without allowing reduction in
quality
Obtain feedback as part of the control system
Comparison of standards shouId
Be made frequently that problems can be corrected immediately
nvolve different time frames, daily and monthly
Be made regularly and become routine in the actual cost
development
Be cross checked by senior staff aside from the staff directly
involved
Sources of controI information
Averages developed by the industry
Data from past financial statements
Current operating budgetary information
Potential cost calculations versus actual results
Performance evaIuation
Variance between potential and actual cost must be analyzed
and corrective action initiated
The daily flush Food & Beverage cost report is the fast track
indicator
Certain performances need to be monitored over a period of
time, immediate action may be counter productive
n this case, daily monitoring is required
Corrective action
f proven to be necessary, must be immediate
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COST CONTROL SYSTEM IMPLEMENTATION
TimeIiness
Many control procedures are designed to present information at the
end of each day, such as the daily flush food & beverage cost
report. Other reports are based on cumulative data that amass
information as a fiscal period progresses. The monthly financial
statement, reflecting the actual operating result is one example.
However to be useful, such reports must be delivered immediatly
after the period ends.
Objective
t is essential that control procedures be developed with the
consensus of both, management and supervisory staff. Procedures
developed by the individual are usually biased and tend to be
ineffective due to reluctance in compliance.
Cost efficiency
A control system costing $ 5000 annually that reduces expenses by
$ 2000 is not an effective method. Also, control procedures must fit
into the workflow, if overzealous controls hamper productivity, goals
will not be achieved.
Accuracy in probIem evaIuation
A general statement, Labor cost is too high indicates a negative
operational result and must be obviously corrected. A specific
statement, During Banquet functions dish washing labor is 15%
over budget is a definite statement and can be addressed
immediately, corrective action targeted and initiated
Acceptance
All staff must understand and take possession of a control system.
Staff should participate in its development and be trained in its
application. Staff must understand and appreciate the need for
control, its benefits to the individual and the organization.
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DEVELOPING FOOD & BEVERAGE STANDARDS
The key cost control tools are Standard Recipe, Standard Portion
Size and Standard Portion Cost.
Standard recipes
A standard recipe is the blue print for producing any food item. t is
equally relevant to the production of beverages. A standard recipe
provides a summary of ingredients, quantity, portion size, garnish,
presentation and time of preparation. The principal advantage of
standard recipes is, regardless of who prepares an item, when
finished the product will look, cost and taste the same.
Advantage of standard recipes
Predictable yield prevents over production
Need for supervision is reduced
Production scheduling is simplified
Certain tasks need less skills resulting in labor cost savings
Replacement duties are easier to schedule
Standard recipes yield standard portion sizes
DeveIoping standard recipes
A standard recipe is developed in conjunction with the planning
of a new menu
As new items are selected, the recipe is developed during the
cooking test
The chef assembles his team, the item is prepared, and each
step is monitored and recorded.
The new dish is presented to the Director of F & B, adjusted if
needed, if approved the recipe is written and a picture taken to
record the presentation
At this point the recipe is considered standardized
Concerned staff will be trained now to perfect the production
Prior to implementation, the service staff is introduced to the
new menu
Development of new drinks follows the same steps
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DEVELOPING FOOD & BEVERAGE STANDARDS (continued)
Standard portion size
Each standard recipe produces a standard portion size, the second
control tool key. Provided compliance is adhered to, every guest will
get every time the same dish or drink, identical in taste,
presentation and value
Standard portion cost
Standard portion cost is calculated by dividing the total cost with the
number of portions produced. ngredient cost is obtained from
current invoices. The basic method for the calculation is the same
for Food and Beverage
n the production of drinks, it is important to maintain the size of ice
cubes. The use of larger cubes will result in an increase in
beverage cost and a decrease in quality of the beverage.
Standard Food & Beverage cost is identicaI with potentiaI cost
and must not be mistaken for actuaI cost
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PURCHASING AND RECEIVING CONTROLS FOR
FOOD & BEVERAGE
There are four key eIements in purchasing food & beverage
Obtaining the right quality
Buying the right quantity
Buying at the right price
Buying from the right source
Purchasing procedure
The various sub departments from Food & Beverage issue a
PURCHASE REQUEST
The storeroom issues Purchase Requests when stock levels
reach a pre-determined re-order point
The Purchasing department executes the purchase following the
established procedure of obtaining quotes, selecting suppliers,
preparing and issuing PURCHASE ORDERS
The supplier delivers goods to the loading dock with an invoice
or a delivery notice
The receiving department transfers goods to stores or user
department, forwards the documentation to Cost Control
After the necessary processing, documents are forwarded to the
Finance & Accounts Department
Payments are initiated
The menu determines purchasing requirements
Food and beverage menus determine what products need to be
purchased. f it is not served, it should not be purchased. Rusty and
dusty cans and packets in the grocery store and untouched cartons
of frozen food in the freezers are proof that this principle is not
followed too many times. Similarly, too many times, beverage
stores and bars carry slow moving items.
Specifications define quaIity
Specifications must be developed for all products purchased. When
items are purchased by brand, such as liquor, the brand itself
becomes the specification, although detailed information regarding
size, shape, production and expiry dates are still necessary.
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FOOD & BEVERAGE (continued)
Purchasing specifications shouId incIude
Accurate quality requirements
Quantity estimates
Estimated purchasing frequency
Source definition
List of acceptable suppliers
Product name
Product usage
Product general description
Product detailed description
-Geographic origin
-Variety
-Type
-Style
-Grade
-Size
-Brand name
-Density
-Count
-Pack
-Container size
-Usable yield
-Usable trimmings
-Unusable trimmings
Specification compliance control is done twice, at point of entry, the
receiving dock and at the beginning of production.
Purchasing the correct quantity
The quantity of items purchased is as important as its quality. Over
buying will result in:
Excessive funds tied up in inventory
ncreased storage cost
Deterioration in quality
ncreased chance of misuse and pilferage
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Under buying will result in:
Shortage in production
Customer dissatisfaction
Emergency and rush orders at higher cost
nterruption of workflow
ncrease in labor cost
PerishabIe product purchase
Perishable products are purchased several times weekly by means
of a simple formula. Quantity needed minus quantity available
equals' quantity to be purchased. The interaction between
Storekeeper and Executive Chef is the catalyst for the process. The
DAILY MARKET LIST is the legitimate order form.
For buying perishables a Call Sheet is used, three suppliers are
short-listed, they are given the specifications of goods to be
purchased on regular basis, They call-in the current prices which
are evaluated by the Purchasing Department. Based on cost,
delivery time, past history of reliability and consistency in product
quality, the supplier is chosen and the order placed, either by
phone, fax or E-mail.
Non perishabIe product purchase
A minimum / maximum system of inventory management is used for
determination of quantity to be purchased and when to be
purchased. Establishing the correct re-order point require identifying
past consumption rate history, anticipated consumption rate and
lead-time. The order point is the number of purchase units in stock
when the order is placed. The quantity is the number of purchase
units in stock plus the delivery lead-time. This is also the minimum
stock level.
Stock level = 8 cases
Lead time or safety level = 8 cases
Order point = 16 cases
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The maximum STOCK LEVEL is determined using following
assumption:
Purchase unit = case
Consumption rate = 2 cases per day
Order frequency = monthly
Monthly consumption = 60 cases
Lead time = 4 days
Lead time consumption = 8 cases
Safety level = 8 cases
Re-order point = monthly consumption + lead time
consumption + safety level
Therefore the consumption rate of 60 cases plus the lead time
consumption of 8 cases plus the safety level of 8 cases equals the
maximum stock level of 76 cases
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EXTERNAL CONTROL CONCERNS
Kickbacks
The Cost Controller and the Director of F & B must routinely review
invoices. Should too many purchases come from the same source,
a price comparison should be initiated
Fictitious company
Creating invoices from non-existent companies for goods never
received can divert funds. Payee names on company checks must
be regularly reviewed
Processing thefts
Suppliers may send an invoice through a second time
Incorrect credit memos
When goods are not at all or short delivered, a credit memo must
be issued and acknowledged by the delivery person, the Cost
Controller follows up and ensures delivery of shortage
DeIivery invoice error
Mathematical errors, short weight or count, wrong specifications,
substitutions
Purchasing theft
The Purchase Department orders for its own use at company
expense
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CONTROL CONCERNS AT RECEIVING
Untrained receiving staff
Staff ignorant of product knowledge, quality standards, receiving
procedures can result in substantial losses
Purchase order or caII order discrepancies
ncoming product and documentation must conform to order
QuaIity controI
Quality must confirm to specifications on record
Quantity controI
Bulk items must be inspected in their container, is the container full,
the product on the lower layers must be of same quality. Cartons
not sealed originally, must be opened and inspected. Poultry and
fish must be inspected for ice or water content
CaIibration of scaIes
WEIGHING SCALES at the receiving dock must be frequently
checked, re-calibrated if necessary
INTERNAL CONTROL CONCERNS
DeIiveries to storeroom
The Head Storekeeper is to ensure, he receives complete
consignments by comparing goods to receiving documents
DeIiveries to user departments
The user department has to acknowledge receipt of goods by
countersigning requisition or receiving document
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CONTROL CONCERNS DURING STORAGE
Limited access
Only authorized staff should be permitted in storerooms
Locking of storage areas
Stores must be fitted with secure locks and must be locked when
not in use
PerpetuaI inventory system
Bin cards maintained efficiently, will show correct product levels at
all times
Bar storage
Liquor cabinets in bars must be lockable when not in operation
OperationaI kitchen storage
Kitchen stores, reach-in and walk-in refrigerators and freezers must
be lockable when not in operation
Key controIs
Sign in sign out procedure strictly controls usage of keys
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QUALITY CONCERNS DURING STORAGE
mproper storage practices can reduce the quality of products in
storage, especially perishable goods but also wines and beers. The
following procedures will ensure that quality is maintained
throughout storage.
Product rotation - FIFO (first in first out)
Goods in storage the longest are issued first. ncoming goods are
stored behind or under previous deliveries. Dates on bin cards will
ensure compliance
Environment
Ensure that proper temperature, humidity levels and circulation is
maintained. n refrigerators and freezers it is imperative not to stock
to the ceiling or too close to walls
Dry storage temperature
Refrigerated storage temperatures
Freezer storage temperatures
SpoiIage
Ensure that spoiled items are discarded promptly to avoid
contamination. Proper procedures are to be adhered to
Sanitation
Regular cleaning schedules are to be developed and adhered to
rigidly. Defrosting, if not automatic must be done regularly in
refrigerators and freezers
Product handIing
Ensure that goods are handled correctly. Do not store items
sensitive to odors with strong smelling items. Do not touch items
like fruits, avocado pears, fresh fish with excessive force, bruise
marks will damage the goods
Storage quantities
Avoid over purchase. Follow the correct consumption cycle
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STORE ROOM INVENTORY
ActuaI storeroom inventory
nventories are required by the Finance and Accounts Department
to be able to project a healthy cash flow and by the Cost Control
Department to determine the food and beverage cost for the month.
The inventory turnover rate must be measurable to determine how
much money is tied up in stores. The turnover rate is calculated by
dividing the actual cost of food and beverage by the average value
of stock in store at the beginning and the end of the period. A high
turnover rate ensures a positive cash flow.
PhysicaI inventory
Physical storeroom inventory is the actual count of goods in unit
measures. Consistency in the method of the inventory count is
imperative. f the decision is made to exclude items in production
from the count, it has to be done for all periods. To include it in one
period and exclude it in the next would distort the result and any
comparison would be fruitless.
Products on the count sheets should be listed following the same
sequence as the storage shelf.
The quantity in storage is determined by actual physical count of
each item. One person counts, one person keeps record
Total inventory value is the cost of items in stock. The cost control
department uses the inventory records to calculate the food and
beverage cost for the period. The disadvantage of a physical
inventory is that it shows only what is actually on the shelf.
PerpetuaI inventory
The perpetual inventory however provides information on what is
available and what should be available. t operates like a checking
account, as products are issued the balance decreases and new
delivery arrives? the balance increases. Data is entered on bin
cards.
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STORE ROOM INVENTORY (continued)
Production inventory
The production inventory is to a great extent an estimate. t would
be difficult to determine exactly what are the exact quantity and
content of a pot of beef stew in the refrigerator or stockpot boiling
on the stove. Production inventory values become more reliable
after several periods have been measured and data can be
compared.
Beverage inventory
The basic control procedures apply to both, food and beverage,
however liquor and wines are relatively expensive and are popular
targets of theft. Special inventory procedures are required.
The number of unopened bottles is counted
The remaining quantity in opened bottles is determined, either
by dipstick method or visually judged to the nearest eight of the
bottle
Add the number of unopened bottles and the number of shots in
opened bottles to find the total behind the bar inventory
Add the storeroom inventory and the behind the bar inventory
for the total beverage inventory
Calculate the cost of inventory
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FOOD & BEVERAGE STOREROOM ISSUES
All food issues are subject to a duly endorsed Requisition Form.
After completion of the transaction the original of the form with all
pertinent signatures affixed is forwarded to the Cost Control
Department for tabulation and subsequent cost calculation.
Beverage issues are handled identically for beer, soft drinks, mixers
and cordials. Wine and liquor is handled on a full for empty bottle
principal. This method ensures a balanced bar stock and prevents
theft to a certain extent.
All bottles are marked with a non-removable seal and empty bottles
are broken or severely defaced to prevent reuse.
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PRODUCTION CONTROL
Compliance with production standards
Staff must be fully aware of standards. Training programs for
new staff and refresher sessions for long time staff must be held
regularly
nformation in word and picture must be available clearly
displayed at work stations
Utensils and equipment required to produce the required
standards must be available at the workplace
Management must show interest and participation in the task
and its results
Portion control is part of the established standards and must be
adhered to. t determines the production volume, influences
manpower deployment and has a most direct impact on the cost
Production planning sessions are to be conducted by the senior
production staff on regular basis
ControI during food production
All available cost control tools are to be used
Storeroom issues should reflect only the actual quantity needed
Ensure continuous supervision for maximum compliance
Ensure wastage during processing of raw materials is minimized
Ensure raw material quality standards are met
Monitor staffs behavior during production
Maintain proper records of processed item distribution
Record spoilage immediately
Ensure scales and measuring devices are accurate
Ensure machines and machine parts function properly and don't
create delays or shortcuts
Ensure sanitary principals are adhered to
Maintain records of production data
Record leftovers
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PRODUCTION CONTROL (continued)
ControI during beverage production
Most control measures are similar to food production
Use established standard recipes
Use established standard glassware
Ensure that portion control devices are used
Ensure that over pouring is kept to a minimum
Monitor staff's performance especially during rush hours
Monitor preparation and usage of garnishes
Monitor returned mix drinks
Hold Bartender responsible of his bar par stock
ControI during food and beverage service
TimeIiness. To have a satisfied guest, food must be served
correct, and in the time anticipated by the guest, same applies to
beverage
Communication. Communication between production staff and
service staff is detrimental, considering the necessity to serve a
complete order in one period
Favoritism. Avoid favoritism, production must follow the order
sequence in the kitchen, same in the main service bar and bar
MISE EN PLACE. Mise en place must be sufficient to cope with
one service period, running out of stock is not an option for
either, food or beverage
Temperature. Serve hot food hot and cold food cold, a salad on
a warm plate is not acceptable
Portion. Ensure portion sizes are adhered to, this is especially
important when dishes are not consisting of pre-portioned
pieces
Presentation. Ensure compliance with presentation standards,
a repeat guest expects a specific dish to look identical as during
the previous visit
Food issue. f an expediter or a food checker is used in the
kitchen, their overriding authority during service must be
respected
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VARIANCE FROM STANDARDS
Frequently the actual cost varies from the potential cost. Minor
variances, unless they are unusually repetitive, are acceptable.
A bartender pouring a little extra for a repeat guest
A Maitre d'hotel serving a side order without extra charge
A child being served a normal portion but charged a child's
portion
These are very common and acceptable occurrences and are
absolutely at the discretion of the senior staff, however proper
records must be kept to substantiate variances.
Major and repeat variances must be investigated immediately and
corrective action taken.
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CHECKLIST FOR A PROFITABLE F & B OPERATION
The following points will help to ensure that the actual food cost
does not exceed planned levels.
Purchasing
Purchase specifications to be used
Seasonal and special value options are taken advantage of
Obtain competitive prices
Lowest priced supplier complying with specifications gets order
Deals are to be avoided
Don't buy for inventory, buy for production
nsist in prompt payment of bills by the Finance & Accounts
Department
Try to obtain food prices separate from delivery charges
f it is not on the menu it is not purchased
Receiving
All incoming food is checked
nvoice extensions are verified
Food records are marked with date and cost
Receiving equipment is in prime condition
Deliveries are only accepted at published times
Receiving staff is thoroughly trained
Goods are forwarded to store or user promptly
Substandard goods are rejected at all times
Spot count of portion controlled items is done
Meat, poultry and fish is un-crated before inspection
Cartons or baskets of fruits and vegetables are inspected down
to the bottom layer
Storage
FFO is practiced at all times
Goods are stored away from walls and off the floor
Opened containers are resealed
Sensitive items are stored away from items emitting a strong
odor
Spoiled food is removed promptly
Proper storage conditions are maintained at all times
Goods in freezers are tightly wrapped to avoid freezer burn
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(continued)
Storage
Thawed food is not re-frozen
Storage areas are locked when not in use
Storeroom access is limited
Employee packages are checked
Safeguards are set up for expensive items like Caviar and Foie
Gras
nventory valuations and immaculate records are maintained
Production stores are locked when not in use
Monthly inventories are done by more than one person
Issuing
Only items accompanied by signed requisition form are issued
FFO is practiced
Direct issues are recorded like all other issues
ssuing at published times only
All issues are recorded and data forwarded to cost control the
same day
Food Production
Staff is trained to perform required tasks
Standard recipes are followed
Proper supervision is practiced
Production equipment is maintained in prime condition
Food production is scheduled in line with anticipated business
Reuse of leftovers is planned
Mise en place procedures are practiced at all times
Choice of menu items is kept as low as the market allows
Spoilage during production is kept to a minimum
Daily reconciliation between food prepared and food sold is
done
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(continued)
Food service
Correct ordering procedures are followed
Plate waste is analyzed
Portion size standards are adhered to
Quality standards are met
Adequate service equipment is available
Checking (billing) procedures are adhered to
Dining room staff controls skippers
F & B transfers are properly recorded
Menu analysis is made frequently
Menu change is initiated before the scheduled time if necessary
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CHECKLIST FOR PROFITABLE BEVERAGE OPERATION
Purchasing
Quantity purchase is necessary to build up pre-determined par
stock levels
Utilize special deals and discount offers to purchase pouring
brands or house brands
Maintain a variety of house brands, give guests a choice
Par stock levels are frequently reviewed to determine necessary
change required by shift in sales mix
nventory turnover should not be less than double
Purchase beverage by brand names and state required bottle
sizes
Bills to be paid promptly
Beverage Manager must be involved in product selection
process
Purchases are made in largest practical bottle size for house
brands and banquet service
Receiving
ncoming beverage is checked against purchase orders
nvoice extensions are verified
Deliveries are only accepted during published hours
Bottle prices are marked on bottles upon receiving
Beverage is removed promptly to storage
Defaced and damaged bottles are rejected
Wet and punctured cases are inspected thoroughly
Purchasing does not get involved in receiving
Storage
The perpetual inventory system is used
Storage areas are locked when not in use
Access is limited
tems are shelved according to inventory records
Physical inventory is used once a month to assess validity of
perpetual inventory
Bin card system is used to control in and out
Locks are changed in random intervals
Non removable bottle stickers are used
Par stock levels are maintained
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27 OF 33
CHECKLIST FOR PROFITABLE BEVERAGE OPERATION
(continued)
Storage
Storage temperatures are maintained
Spot checks are made frequently by senior management staff
Issuing
ssues are made to maintain bar par stock levels
Store room requisitions are completed
ssues are made only during published hours
ssues are made only by store room personnel
Beverage service
Standard recipes are used
Standard glass ware is used
Standard portion sizes are used
Portion control tools, jiggers, shot glasses are used
Staff is properly supervised
Beverage served meets quality standards on record
Policies regarding staff drinking at bars are strictly enforced
Complimentary drinks are only endorsed by authorized staff
Records for complimentary drinks are maintained
A transfer system for beverage to kitchen and other outlets is
established
Drink prices are established by the Director of F & B only
Bottle stoppers are used
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DOCUMENT
KP800101
PAGE
28 OF 33
LABOR COST CONTROL
Why controI Iabor cost
Direct labor costs have a strong tendency to rise out of proportion
and eat into the profit margin. Uncontrolled, rising labor cost affects
profitability of the operation adversely. The factors that influence
labor cost must be identified and controlled:
Minimum wage scales increase periodically.
Competition in the skilled labor market raises labor costs
Generous wellfare programs influence labor costs
Keeping up with productivity in a competitive market means
higher labor costs
Maintaining normal operations becomes gradually more
expensive
Benefit packages, incentives needed to attract skilled labor, are
expensive
Cutting labor cost by hiring inexperienced staff will result in loss
of quality
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DOCUMENT
KP800101
PAGE
29 OF 33
EMPLOYEE EVALUATION CHECKLIST
Begins work as scheduled
Performs work assignments effectively
Works in clean safe and sanitary manner
Has an even temperament
Can work well under pressure
Can make decisions if required
s creative in approach to work
Works well on his own
Needs constant supervision
Meets set quality standards
Follows procedures
Personal grooming is neat
s dependable , reliable and consistent
Follows instructions
Cooperates with fellow workers and superiors
Should be considered for promotion
s a fast learner
s honest
Accepts responsibility
Performs work inside assigned time
Makes contributions to improvement
Other comments
DeveIopment of Iabor performance standards
Quality requirements
Productivity levels
Performance standards
Performance analysis during trial period
Schedule is not changed during trial period
Questions during anaIysis
Does staff provide the quality required
Does staff provide the quantity required
Does the staff seem overworked
s the performance above average
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DOCUMENT
KP800101
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30 OF 33
EMPLOYEE EVALUATION CHECKLIST (continued)
ImpIementing Iabor cost controIs
Establish standards of performance
Establish standards of quantity
Establish standards of quality
Monitor operation results
Compare operations results to performance
Take corrective action if variance is too big
Solve problems
Don't allow spin off to develop
NOTE
The unit of measure can be expressed in dollars
Several benchmarks can be created but one and the same used
for any one period
Labor cost control should be developed for all departments
Evaluation should be broken down by sub department,
productivity standards in bar and kitchen are different
Comparisons should be separated by shift as well
Financial results are expressed in dollars not hours, conversion
must be worked out
n a case like number of meals produced per cook, a dollar
value may not be applicable
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DOCUMENT
KP800101
PAGE
31 OF 33
EMPLOYEE EVALUATION CHECKLIST (continued)
CheckIist for Iabor controI
Direct job instructions are made available
Job descriptions are made available
Job specifications are made available
Organization charts are made available
New employees are thoroughly briefed
Supervisory staff is involved in the recruitment process
New hires and replacements are initiated from within
Transfers and promotions first, new hire last
Supervisors keep track of employee social activities
Back ground check is mandatory
Final interview is with the Division Head
Tests during interview are encouraged
nterview methods are to be trained
Orientation programs for new hires and transferees are
mandatory
New hires spend the first days with direct supervisor
Buddy system is initiated
Training programs are set up, continuous and ongoing
Training needs are constantly evaluated
Evaluation procedures are strictly adhered to
Staff is told about evaluation criteria
ControI staff numbers
Manning guides are available
Salary scales are given as guidelines
Manning levels are based on productivity requirements
use of casual labor is encouraged
Supervisors use productivity results in scheduling
Supervisors use split shift, part time and casual for scheduling
Supervisors are expected to simplify tasks when possible
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DOCUMENT
KP800101
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32 OF 33
WRITING THE MENU
The Executive Chef is given a menu brief by the management
The brief informs what direction the management wants to take
Market research comes next
Market trends are considered
The Executive Chef writes a menu draft
The Director of F & B approves it
The Executive Chef writes the recipe cards
The Executive Chef test cooks each item
Modifications are ongoing during the process
tems are presented to the Director of F & B
Final adjustment
tems are presented to the General Manager
Cost is calculated
Pricing strategies are discussed
Changes on the basis of cost are made
The potential cost is calculated
Based on anticipated market mix
Budgeted food cost must be achieved
Portion sizes are established
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DOCUMENT
KP800101
PAGE
33 OF 33
WRITING THE MENU (continued)
Purchasing specs are developed
Food items needed must be incorporated in the market lists
Recipes are updated as final prices and material become
available
Menu goes to print
Print quantities should reflect how long the menu is in use
ntroduction to service staff prior to implementation

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