The Importance of Counting Costs: Principle of Food Preparation of 10
The Importance of Counting Costs: Principle of Food Preparation of 10
The Importance of Counting Costs: Principle of Food Preparation of 10
Welcome Notes:
WELCOME MY STUDENTS.
This module is all about the goal of any business in order for them to be profitable. This applies just as much to a food
service business. In this module, we’ll discuss ways to control costs and maximize profitability through better
management of manpower and ingredients.
II. OBJECTIVES:
Value the importance of counting the cost profit or loses in food business.
Before you proceed to the main lesson, test yourself in this activity.
GREAT!!!
You may now proceed to the main lesson.
The goal of any business is to be profitable. This applies just as much to a food service business. In this module,
we’ll discuss ways to control costs and maximize profitability through better management of manpower and ingredients.
Why do we need to understand how much things cost in the running of our food service business?
If we don’t control costs, it will eat into our margins. Even if we have a high volume of traffic, that doesn’t necessarily
mean we’re profitable.
The goal of any business is to earn a good profit, so keeping costs at a minimum while selling at the right price and
providing a good product is what we should aim for as operators.
Labor Costs
Labor costs comprise salary, allowances and fringe benefits for employees.
Fringe benefits include health insurance, education reimbursement, childcare and assistance reimbursement,
cafeteria plans, employee discounts, personal use of company owned vehicles and other similar benefits.
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The Importance of Counting Costs
Overhead Costs
Overhead costs, on the other hand, refer to costs that are not classified under labour and food cost.
This includes rent, utilities, taxes, marketing and advertising, office supplies, equipment, training, etc.
Food Costs
Food cost is the cost of all edible ingredients served or sold to customers.
This comprises the costs for fruit, vegetables, meat and all ingredients used in food preparation.
Food cost is also known as your direct cost and refers to the cost of an actual product being sold.
Because the quantity of dishes which are sold may vary and the cost of buying ingredients may fluctuate in
comparison to a forecast, your direct cost will also change from time to time.
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The Importance of Counting Costs
Imagine ordering enough fresh seafood to prepare 100 servings but only having 50 diners in the following two
days. The other 50 portions will be wasted. It’s therefore important to be conscious of the quantity of food you
purchase and produce to avoid unnecessary food costs.
2. Food is seasonal
The price and quality of ingredients will vary throughout the year. Purchase ingredients that are in season to take
advantage of fresh produce and better prices because of the increased supply.
Theft occasionally happens in some kitchens and therefore adds to food cost. Control this by monitoring your staff
and consider your current employee benefits to discourage stealing.
Just as dry pasta absorbs water and increases weight when it’s boiled, all ingredients change form during
processing and cooking. By monitoring these changes and finding the best way of handling and processing the
food, you can maximize yield.
A chef often has many options as to what form of food to buy. These decisions have to be made carefully to make
the smartest choice. An example would be buying a whole fish as compared to just a fillet. While the latter would
cost more because it has been prepared, less time would have to be spent preparing the dish for use in the
kitchen.
Set targets for the food you produce, considering both the quality and the preparation cost.
Quality refers to the characteristics of the food served such as flavor, consistency, texture, etc.
It is important for every kitchen staff member to be cost-conscious and know the basics of food costing.
Learn from your suppliers about market conditions, supplies and cost-effective suggestions
Make the most of regional dishes as locally sourced ingredients are usually cheaper
Be a smart buyer and consider the quality and amount of ingredients you buy
Explore the use of common ingredients across several dishes as an ingredient used only in one dish can be a loss
maker
Standard Recipe
This is a recipe or formulation that has been tried and tested and has been found to be consistently good.
It is documented on a piece of paper or card for easy access by chefs. This recipe card should be laminated or
placed in a clear book for protection.
AP (As Purchased)
This is the condition of a food item or ingredient when it was purchased or delivered. AP may refer to the form, cost,
weight, or volume. Hence the terms: AP form, AP cost: AP weight, or AP volume.
For example, the vegetable you bought with stalk, roots, and leaves are in AP form. It costs 1 Euro when you
bought it. That’s the AP cost. It weighs 3 kilos when you bought it; that’s the AP weight. It can fit in 6 measuring
cups; that is the AP volume.
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The Importance of Counting Costs
EP (Edible Portion)
EP is the amount of usable food/ingredients that can be used in food preparation after removing trimmings or waste
from the original AP form.
Let’s refer to the vegetable example in AP. Let us assume that only the leaves can be used and the stalks and roots
have to be discarded. The remaining leaves are what we call EP.
This is different from EP and refers to the amount of food served to guests after cooking. There are two types of RTS
weights:
1. RTS weight is lower than EP weight when moisture from food is lost during cooking. For example, roast beef losing
moisture after roasting.
2. RTS weight is higher than EP weight when water is absorbed during cooking. For example, dry pasta absorbing
water after boiling.
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The Importance of Counting Costs
Learn what makes up a Standard Recipe and determine the best way to scale it.
A Standard Recipe is a tried and tested formula that consistently meets a restaurant’s standards of quality and yield. This
provides:
When creating the Standard Recipe format, include the following information:
1. Name of recipe
2. Yield: includes total yield (weight, volume, count), number of portions and portion size
8. Directions: cooling, storing and storage time if it will not be served right away
- Food shots (optional): so that the staff will know the dish should look in terms of portion and presentation
- Note the ingredients exactly, stating how they are budgeted and outlined in a clear flow, including the presentation
and cooking time. This allows kitchen staff to ensure that a dish is always prepared consistently
- To compute the cost of a recipe, it’s important to know the cost of each ingredient based on the amount used. The
amount of ingredients is usually measured in:
Volume: How much physical space is taken up by an ingredient, measured in cups, teaspoons, litres, pints
Measurement Conversions
- There are two methods of measurements, the metric and imperial (US systems). Reference the formula below for
converting metric measurements to the US system:
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The
1 litre = 1,000 Importance
millilitre = 2.11ofpints
Counting Costs
Chinese Measurements
Scaling Recipes
- Recipe Scaling is also known as Recipe Conversion. It is defined as changing the amount of ingredients used in a
standard recipe to produce a different yield based on the number of portions that need to be prepared.
- The number of portions of each recipe to be prepared each day varies depending on forecasted needs. Scaling
recipes prevents wasteful overproduction or embarrassing underproduction, which is a potential source of lost
income.
Compute the Conversion Factor (CF) by dividing your desired yield by the original yield (number of portions in the
Standard Recipe)
Scaling Calculator
Use our scaling calculator to decide how much of each ingredient you require.
Food Costing
Determine your food costs to figure out your selling price of your dishes.
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- Food costingThe Importance
is important of Counting
to know Costs
as it has a direct effect on the profitability of a restaurant. It is the cost of your
ingredients and does not include other costs, such as labour and overheads. Food costing is an essential tool in
determining whether food costs targets are being met.
Know how much food cost is incurred on each recipe. This gives you a clear view of how much you can earn per
dish.
Study the way your competitor price their dishes against an industry benchmark.
Know when to reduce a recipe cost. If you keep up-to-date with your costing, and see that you are going beyond
your target cost percentage, you can easily plan how to reduce the costs.
Find out each menu item’s profit margin and decide which ones to promote through suggestive selling and
promotions.
- The following tools and calculations are important in deriving your food costs:
Standard Recipe: Costing based on a standard recipe makes it easy to compute food costs based on the servings
that are needed
Up-to-Date Ingredient Costs: Current prices should be the basis of costing, thus the need to do a price check from
time to time
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Recipe CostThe Importance
Sheet: For of Counting
recording Costs
data and all information about the recipe such as current unit cost, actual
ingredient cost and cost per portion
Step 1. Fill up the Recipe Costing Sheet with information based on the standard recipe to be based on a current
price list.
Step 2. Indicate the latest purchase cost of each ingredient based on a current price list.
Step 4. Add actual cost of each ingredient to get the total recipe cost
Step 5. Divide the total recipe cost by number of portions to get the cost per portion
For recording purposes, create a recipe cost sheet for each of your dishes. Here is an example.
Selling Price
- Once you have your food costs, you can figure out the selling price of your dishes. The basic formula is:
Your selling price should include all costs plus the profit you would like to earn.
What Should the Food Cost Percentage of Your Selling Price Be?
- To compute the selling price, we need the food cost to only be a certain percentage of the selling price.
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The amountThe Importance
varies from oneofrestaurant
Counting Costs
section to another, and is influenced by other costs, such as labor,
overhead, and target profit. It generally falls within the profit of 30 to 45%.
Their newest recipe was calculated to have a food cost of $25 per portion.
Applying the 33% rule, the target selling price = $25 divided by 0.33 = $75.75
Given this number, the restaurant can decide on the final selling price considering other factors such as
competition, volume and labor costs.
Yield Management
Learn how you can manage yield to reduce costs and increase profits.
- Yield is the serving portion served or sold to diners. The terms that affect yield are AP, EP and RTS, as discussed
in Topic 2. Managing these factors will help you maximize yield percentage, thus lessening costs and increasing
profits.
Yield is:
Yield Management
- Under yield management are three topics. Mastering these will help you manage yield effectively:
Yield Test
- Yield percentage is also known as YP%. It’s the amount of usable food left divided by the original weight of the food
when purchased. To find the YP%, it’s important to know which form or cooking method will give you a higher yield.
Yield Percentage (YP%) is the percentage of sellable or servable food after waste, trimmings and cooking reactions are
considered. YP% is affected by:
Maximizing efficiency in human resources is not just about hiring the right number of staff. It’s about hiring the right people,
training them and retaining staff.
Recruiting
While personality is important, quantifiable skills and experiences are also vital to know if the person can lead and
transfer skills.
Understand what the market rate for salaries for different job roles is before you make a job offer.
5. ___________Labor costs does not comprise salary, allowances and fringe benefits for employees.
6. ____________ Overhead costs, on the other hand, refer to costs that are classified under labor and food cost.
7. ___________ Food cost is the cost of all edible ingredients served or sold to customers.
8. ___________ Theft occasionally happens in some kitchens and therefore adds to food cost.
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The Importance
9. ___________ of has
Chef often Counting
manyCosts
options as to what form of food to buy.
10. ___________ Quantity refers to the characteristics of the food served such as flavor, consistency, texture, etc.
VI. GENERALIZATION
- Make a reflection about the topic in not less than one hundred words.
KUDOS!
VII. ASSIGNMENT
Direction/Instruction:
2. ____________ it tells how much physical space is taken up by an ingredient, measured in cups,
teaspoons, liters, pints
3. _____________ cites us how many units of the ingredient you require, measured in pieces.
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4. The Importance
____________ of Counting
is also known asCosts
Recipe Conversion. It is defined as changing the amount of ingredients
used in a standard recipe to produce a different yield based on the number of portions that need to be
prepared
6. _____________ costing based on a standard recipe makes it easy to compute food costs based on the
servings that are needed
7. _____________ current prices should be the basis of costing, thus the need to do a price check from time
to time
8. _____________ for recording data and all information about the recipe such as current unit cost, actual
ingredient cost and cost per portion
9. ____________ it includes all costs plus the profit you would like to earn.
VIII. EVALUATION
2. ___________ Maximizing efficiency in human resources is not just about hiring the right number of staff. It’s
about hiring the right people, training them and retaining staff.
3. __________you don’t have to understand what the market rate for salaries for different job roles is before you
make a job offer.
6. ___________ to compute the selling price, we need the food cost to only be a certain percentage of the selling
price.
7. __________ Selling Price = (Food Cost + Labor Cost + Overhead Cost) + Profit
8. __________ the number of portions of each recipe to be prepared each day does not vary on forecasted needs.
9. _________ Recipe Scaling is also known as Recipe Conversion. It is defined as changing the amount of
ingredients used in a standard recipe to produce a different yield based on the number of portions that need to be
prepared.
10. _________ To compute the cost of a recipe, it’s important to know the cost of each ingredient based on the
amount used. The amount of ingredients is usually measured in: