Food & Beverage Control Chapter 1

Chapter 1: Introduction to F&B Control

Introduction

Ever-increasing competition in all industries demands that more and more attention is paid to the
control of costs to ensure the survival of each business unit. In the long run a business will not
survive unless it earns an adequate amount of profit in relation to its capital. It must be an extension
of the financial and catering policies as laid down by the top management. In order to evolve a
realistic scheme of food & Beverage control, it is essential to determine appropriate cost and profit
target for all departments of a business. A Food & Beverage control system in itself will not cure or
prevent problems occurring. An effective system is dependent upon correct up-to-date policies and
operational procedures. But the system should identify problems and trends in the business. A food
& Beverage control system will need management action to evaluate the information produced and
to act upon it.

F & B Control

Food and beverage department in a hotel, restaurant, or any catering establishment consists of
closely linked system: the kitchen, restaurant, bar etc. In a hotel there may exist number of systems,
all of these are reading together with the food and beverage facilities to form the total hotel system.
The main aim of costing in a food and beverage establishment is to satisfy both the customers’
requirements and the financial requirements. To achieve this objective a suitable food and beverage
control system need to be developed which must avoid excessive costs without sacrificing the
quality, quantity and competitive price of the varied product being marketed. Since in most of the
food and beverage establishment the raw material and payroll costs, are the largest proportion of
costs, the cost system aims to control these two costs effectively, at the same time meet the
prescribed standards of profit and quality. A series of built-in checks covering entire catering cycles
are required to have a proper control over the operating activities. The amount of control is basically
related to the size of operation. In a large sized operation, with many selling outlets, employing a
large number of staff and producing a large turnover would require sophisticated control system
giving precise, detailed, up-to-date information as well as daily, weekly and periodic reports. A small
unit operating by a sole proprietor could require a simple system to personally control each and
every activity of the operation. All the departmental managers and staff as well as manager of the
hotel must be well conversant with the system. A system should have provision for cost and price
percentage analysis of each item, group of items and sales outlet. It is much more enlightening and

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important to achieve a comparison of the actual food and beverage cost with the potential food
costs. The potential revenue and actual revenue should be identical but this is not so in reality. Any
differences show a lack of control and needs through investigation to find and rectify any loopholes.

Introduction of F & B Control

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Food and beverage control can be defined as the guidance and regulations of the cost and revenue
for operating catering activities in hotels, restaurants, and other catering establishments. The main
purpose of any business is to make profit. Profit not only is earned by sales, but also can be achieved
by cost control, and whenever money is saved, money is earned. According to James Keiser, “Control
works best when it is used with other management process, such as planning, organizing, directing,
and evaluating”. According to him, there are two basic approaches:
1. Behaviouristic Approach
2. Traditional Approach
The traditional approach has two main aspects. One is directing personnel, or keeping an eye on
things or by walking around to see whether he or she can correct what is not right or what is cost
control break-downs. The other aspect of traditional approach is measurement of performance with
that desired or deemed attainable. This is the comparison aspect of the management scheme which
is usually considered to have four parts:
 Establishing Standards or goals: It can be expressed in different ways, for instance, a budget
figure, a percentage figure, and a performance figure, such as meals served per server per
hour.
 Measurement of Performance: It means measuring performance, and it is usually a
quantitative figure, such as amount and percentage figure.
 Comparison and Analysis: Once the standard or goal has been established and actual
performance is determined, it is possible to compare the two and a manager can find out
the variance.
 Corrective Action: Once a significant variance is determined, the manager must take
corrective action. Such action must involve more observation, personnel changes, and
different methods of operation among many others, or perhaps the standard is unrealistic
and needs to be changed.
Control is a process used by managers to direct, regulate, and restrain the actions of people so that
the established goals of an enterprise may be achieved.

Objectives of F & B Control

The objectives of a food & beverage control are as follows:
 Analysis of income and expenditure: The analysis is solely concerned with the income and
expenditure related to food & 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

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customers served. The analysis of cost 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 net margin and the net profit.
 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.
The management would have set SOPs (Standard Operational Procedures) which should be
readily available to all staff for reference. 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.
 Pricing: Pricing is important to determine food menu and beverage list prices in the light of
accurate food and beverage costs and other main establishment costs; as the average
customer spending power, the prices charged by competitors and the prices that the market
will accept.
 Prevention of waste: In order to achieve performance standards for an establishment,
targets and 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.
 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 item
served and stealing of food, drink or cash.
 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.

Problems in F & B Control

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Food and beverage control tends to be more difficult than the control of materials in many other
industries. The main reasons for this are:
 Perishability of the product: Food, whether raw or cooked, is a perishable commodity and
has a limited life. The caterer, therefore, has to ensure that she buys produce in the correct
quality and quantity in relation to estimated demand, and that it is correctly stored and
processed.
 Business Volume Unpredictability: 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.
 Menu mix unpredictability: In order to be competitive and satisfy a particular market,
caterers must often offer a wide choice of menu items to the customers. Predicting menu
items preference on top of customer volume can be challenge. Effective forecasting as part
of the total food and beverage control system is therefore necessary.
 Food and beverage operation short cycle: 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 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 basis. Perishable items cannot be brought 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.
 Departmentalization: Many food and beverage operations 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.

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Chapter 2: Control Cycle

Methodology of F & B Control

The Methodology of food and beverage control may broadly be envisaged under there phases:
 Phase 1: Planning phase
 Phase 2: Operational Phase
 Phase 3: Post-Operational Phase (Management Control after the events)
The catering cycle is a model, which represents all the food and beverage activities performed by an
organization and provides necessary directives to the owner of the catering establishments to follow
the basics of food and beverage operations. The cost control cycle is a sequential flow diagram of
the various issues of the food and beverage operations and management and is illustrated in
Figure1.1. The planning phase of the cost control cycle deals with financial, marketing and catering
policies of the establishment. Policies are predetermined guidelines set by senior management
according to the goals of the catering establishment to achieve the service excellence, quality
control, highest level of profitability, and delighting the guests for repeated business. Financial
policies deal with all the decisions to be taken related with the finance such as the budget. The
budget has been linked to a road map which gives an accurate route to be followed and serves as a

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guide to the travellers. The marketing policy defines the market to be catered for and develops
marketing mix to satisfy the needs and wants of the target customers. It outlines the following:
 Identify the target market the operation is intended to serve.
 Identity the market segments to be exploited for achieving the desired market share.
 Developing the marketing mix (4 Ps-Product, Price, Place, and Promotion) to satisfy the
needs and wants of the target customers.
 Designing the promotion mix (advertising, merchandising, sales promotion, public relations,
and direct marketing) to facilitate marketing communication.
 Building the corporate image by meeting customer’s expectations.
The Catering policy defines the main objective of operating food and beverage faculties and the
methods by which such objectives are to be achieved. It outlines the following:
 Outlet profile: Types of outlet, operating status, hours, décor, ambience, layout plan, covers,
service, staffing etc.
 Clientele Profile: Age group, sex, food habits, average spending, frequency of visit, etc.
 Menu Profile: Types of menu, meals, cuisine etc.
The operational phase deals with establishing standards and standard procedures to exercise control
in relation to the five main stages of the control cycle:
1. Purchasing
2. Receiving
3. Storing and Issuing
4. Preparing
5. Selling

Post operation management control phase base on comparing and correcting the activities held in
operations. Need to observe the measurement of performances, preparation and comparison of
various reports and statement, and need to provide information to HODS for further improvement.
This phase give chance to take corrective actions on the basis of feedback, further forecasting and
future planning.
1. Purchasing: Purchasing can be defined as a function concerned with the search, selection,
purchase, receipt, storage and final use of a commodity in accordance with the catering
policy of the establishment. 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. Coordinating with production departments to

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standardize commodities and therefore reduce stock levels. Purchasing is not a separate
activity. What how and when you buy must always reflect the overall goals of your
establishment. Purchase the right product, right quality, right price, right time and from the
right source.
2. Receiving: In large hotels, receiving is a specialized job. While receiving the food or beverage
items check delivery note to see if the products delivered agree with it. Inspect products/
raw materials to determine if they are in agreement with the purchase order and
specification. List all items received on the daily receiving report. Accept the products by
signing the delivery note and returning the copy to the delivery driver. Deliver goods to the
correct place.
3. Storing and Issuing: The main function of this department is to store and issue food and
beverages items that pertain to food and beverages operations of the hotel. Raw material
should be stored correctly under the right conditions and temperature. A method of pricing
the materials must be decided and adopted for charging the food to the various
departments. The cost of items does not remain fixed over a period of time; over a period of
one year a stores item may well have several prices. The establishment must decide method
of pricing (actual purchase price, simple average weight and weighted average price) as per
their convenience.
4. Preparing: A production system needs to be organized to produce the right quantity of food
at correct standards, for the required number of people, on time, making best possible use
of staff, equipment and material available. A method of predicting the number of Customers
using the catering facilities on a specific day, and also of predicting as accurately as possible
what items they will eat and drink. A method of controlling food and beverage costs in
advance of the preparation and service stages. It is done by preparing and using standard
recipes for all food and beverage items and also by using portion control equipment.
5. Selling: After the selling price is fixed, the price is verified with the cost price and the
reconciliation statement generated. It is necessary to ensure that all items sold have been
paid for and that the money is received or credit has been authorized. 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. The sales control is done with KOT and BOT for
kitchen and bar, respectively, and tailed with the sales.

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Post-operational phase of food and beverage control is concerned with three main points:
1. Food and beverage cost reporting: Providing accurate and up-to-date data for the
preparation of periodical reports on current operations.
2. Measurement of Performance: Monitoring performance and comparing actual
performances with established standards.
3. Corrective Action: Taking the appropriate action to correct deviations from standards, where
necessary. Proper feedback of information to management, future forecasting and future
planning whenever required.