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101 Ways to Deal with Food Cost - Part 4 - Purchasing and Receiving


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By Ian Said

November 29, 2011


Part 4 in our series “101 Ways to Deal with Food Cost” deals with Purchasing and Receiving, providing useful tips in dealing with food cost problems in these areas.


Purchasing Tips:

The goal of purchasing is to obtain wholesome, safe foods to meet your menu requirements. The operation must have food to serve customers when needed. The food needs to be the right quality consistent with the operation’s standards and purchased at the lowest possible cost.

Inventory Levels

The first step in computing what item to order and how much you need is to determine the inventory level, or the amount needed on hand at all times. This is a simple amount you need to order, you must first know the amount you have in inventory. Walk through the storage areas and mark in the “ On Hand” column the amounts that are there. To determine the “Build to Amount” you will need to know when regularly scheduled deliveries between deliveries. Add on about 15% to the average amount used; this will cover unexpected usage, a late need to order is the difference between the ‘Build to Amount’ and the amount “On Hand”. Experience and food demand will reveal the amount an average order should contain. By purchasing too little, the restaurant may run out of suppliers before the next delivery. Ordering too much will result in tying up money and putting a drain on the restaurant’s cash flow. Buying up items in large amounts can save money, but you must consider the cash flow costs.

Purchasing and Ordering


What exactly is the difference? Purchasing is setting the policy on which suppliers, brands, grades and varieties of products will be ordered. These are your standardized purchase specifications; the specifics of how items are delivered, paid for and returned. These specifications are negotiated between management and distributors. Basically, purchasing is what you order and from whom. Ordering, then, is simply the act of contacting the suppliers and notifying them of the quantity you require.

Purchasing Specifications

By creating purchasing specifications, you can control which items you purchase and you can maintain which items you purchase consistency. This information is extremely important if you have more than one person that does ordering in your operation.

Purchasing and Inventory Software

Purchasing and Inventory Software is readily available to restaurant operators. Many larger organizations are using inventory control software that saves a significant amount of time and money. Most managers are used to the monthly grind, standing in walk-ins counting eggs, butter pats and frozen chickens. With inventory control software, mangers can use a laser scanner, similar to the ones used in grocery stores, to scan bar codes. The software can also be linked to your distributors and you can place your orders electronically based on the inventory.

Inventory, Storage and Accounts Payable

Ordering effectively is impossible unless you are completely familiar with the inventory items. Prior to orders being placed with vendors, counts of stock need to be established. Software programs are able to determine order quantities based upon par balances and sales figures.

Perpetual Inventory

Perpetual Inventory is a check on the daily usage of your main entrée items from freezers and walk-ins. This is for tracking expensive items, such as meat, seafood, chicken, cans of caviar, etc. When completed, the perpetual inventory will ensure that no bulk products have been pilfered from the freezer or walk-ins.

Purchasing Kickbacks and Gifts


Unfortunately, the food service industry is notorious for kickbacks. It is even more unfortunate that these kickbacks or gifts are essentially paid for by you in the form of higher prices. You need to ensure different employees receive and purchase stock as well as check prices regularly.

Here are some ideas to help keep kickbacks out of your store by ensuring different employees receive and purchase stock as well as check prices regularly.


Receiving Tips:

Plan ahead


Plan ahead for deliveries to ensure sufficient refrigerator and freezer space.

Mark all items for storage

Mark all items for storage with the date of arrival or the ‘use by’ date.

Delivery Truck

When Delivery truck arrives, make sure it looks and smells clean and is equipped with the proper food storage equipment. Then inspect foods immediately.

Reject food that has been thawed and refrozen

Look for signs of thawing and refreezing, such as large crystals, solid areas of ice or excessive ice in containers.

Content damage

Look for content damage and insect infestations.

Invoice accuracy

Check the accuracy of the invoice with regard to the purchase order, specifically price, damage, quality, quantity, brands, grades and variety. Items that are not correct need to be noted and returned before the driver leaves and the driver must sign the form. The vendor’s invoice also should be checked against the actual purchase order.

Check temperature

Check temperature of refrigerated and frozen foods, especially eggs and dairy products, fresh meat and fish and poultry products.

Keep all flooring clean

Keep all flooring clean of food particles and debris.

Calibration

Calibration makes sure all scales and thermometers are in place and calibrated.

Remove empty containers


Remove empty containers and packing materials immediately to separate trash area.


For more info on Ideal Software’s Stock Control system for monitoring your Food Cost IdealStockControl

To view Part 1 in our series “101 Ways to deal with Food Cost” 33 Possible Food Cost Problem Areas

To view Part 2 in our series “101 Ways to deal with Food Cost” Back to Basics

To view Part 3 in our series “101 Ways to deal with Food Cost” The Menu, Pricing and Standardized Recipes


Ian Said
Owner, idealsoftware.co.za




Ian Said, entrepreneur and founder of Ideal Software, a software development company specializing in Inventory Control and POS software for restaurant / hospitality industries.



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Posted by Brian Carrick on 12/10/11 at 9:49 AM EST

Excellent like all the rest of your posts, thank you so much for your informative posts, they are a must-read for all foodservice professionals. Money is lost in enough ways that to not do one's best to control it is to go out of business rather quickly. Chef Brian Carrick @ http://elementalnewsoftheday.blogspot.com/2011/12/special-menus-index-pt-xxvii-christmas.html. Thank you!
Posted by Ian Said on 1/2/12 at 2:24 AM EST

Thanks Brian, much appreciated!





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