Compare Delivery Invoice and Purchase Order Product Quantity (weight or count) Purchase Unit Price Confirm Product Quality Sign Delivery Invoice Issue.

Receiving Practices

Steps for Effective Receiving

Compare Delivery Invoice and Purchase Order

Product Quantity (weight or count)

Purchase Unit Price

Confirm Product Quality

Sign Delivery Invoice

Issue Credit Memo (if necessary)

Move Product to Storage

Complete Receiving Report

Step 1:

Step 2:

Step 3:

Step 4:

Essentials for Good Receiving Competent

Personnel Proper Receiving

Equipment Proper Receiving

Facilities Appropriate

Receiving Hours Available copies of

all specifications Available copies of

purchase orders

Rejection of Delivery

Request a credit memo because the driver has no authority to alter the delivery.

When a product differs slightly form the standard it should NOT be rejected for 2 reasons: 1. Suppliers do not want to

do business with people who dwell on small details.

2. It leaves the receiver short.

Your are receiving food . . .

Look at the products on each slide. Circle or underline if each product is

“acceptable” or “unacceptable”. If “Unacceptable”, identify the problem and estimate the cost of the product.

Acceptable or Unacceptable

What does the picture suggest?

Determine the Unit Cost:

Case: $28.90/12 qts

What is the Unit Cost?

Unit Cost: $2.41

Acceptable or Unacceptable An entire case of

apples arrives. ¼ of the case contains #1 quality apples that appear in the picture.

Determine the Unit Cost:

Case: $22.95/20-22

What is the Unit Cost?Unit Cost: $1.15 ea

Standing Orders

Delivery ticket has a list of regular items because of regular payment.

Watch for shrinkage of products as they are delivered. 1

23

Other Receiving Methods Odd Hours

Receiving Drop Shipment Mailed Deliveries COD Deliveries

4 Ways to Get Stung

1. Unintentional Error

2. The dishonest supplier – honest delivery agent.

3. Honest supplier with dishonest delivery agent.

4. Dishonest on both sides.

Inventory Methods

Physical Inventory Form for Small Food Service Operation

Item Purchase Unit No. of Units In

Kitchen Storage(a)

Purchase Price Total Cost

Green Beans Case 2 $31.50 $63.00

Total $503.00(a)Note: ideally items are stored in the same containers in which they were purchased. This can reduce double-handling and provide a convenient container for marking information about the date of receipt and product costs. It is also, for example, easier, faster and, probably, more accurate to count one case of six #10 cans of fruits or vegetables than it is to count six individual cans of each product.

Perpetual Inventory Form

Item: Strip Steaks (6 oz.)

Date No. of Purchase Units Balance

In Out

37

9/10/xx ----- 25 12

9/11/xx 35 20 27

Cost of Goods Sold (COGS)

Is the cost to your restaurant of the food and beverage products your restaurant sells.

Since your goods pertain to your food and beverage inventory, COGS is determined with the following equation:

Beginning Inventory + Purchases - Ending Inventory = COGS.

Beginning inventory means the amount of product that you have in your kitchen and storage rooms at the beginning of a period, usually the beginning of the week. For instance, if Monday is the start of your business week, and you have $5,000 worth of food and beverages on your shelves, $5,000 is your beginning inventory.

Purchases means the amount of inventory you purchase in food and beverage orders in that period of time. If an order of another $3,000 worth of inventory arrives on Friday, this would be considered the purchase.

Ending inventory, then, is the amount of food product you have left when the work week is over. Although you purchased product during the week, but you will have less inventory at the end of the week since you sold the food to your customers. For example, at the end of the work week, you have $4,000 worth of inventory remaining.

Example: $5,000 + $3,000 - $4,000 = $4,000 COGS

How To Calculate Inventory Turnover Rate

2 Inventory] Food Ending Inventory Food [Beginning

Sold) Goods of(Cost Cost Food

2 $27,500] 500,29[$

000,78$

$28,5000

000,78$

Cost of food inventory at beginning of month = $29,500 Cost of food purchases during month = $76,000 Cost of food inventory at end of month =

$27,500 Food cost (cost of goods sold) during month = $78,000

= 2.74 turns

The Minimum-Maximum Inventory System

Purchase unit – The standard size of the product package.

Product usage rate – The number of purchase units used during a typical order period.

Order period – The time for which an order is normally placed.

Lead time usage – The number of purchase units used between order placement and delivery.

Safety level – The minimum number of purchase units that must always remain in inventory.

Order point – The ideal number of purchase units in

inventory when an order is placed.

Food Cost Percentage

One of the most important numbers restaurant managers and owners look at is food cost percentage.

In food service, this % represents the portion of sales ($) spent on food. Since you reap sales from the inventory you use, you can determine the food cost % by money you spent on food sales (COGS) by your total food sales.

The following equation may help clarify the process:

Example:

So, let's say the sales for the week were $12,750. Your new equation would look like this:

In this case, about 31% of sales were spent on food and supplies. This is a fairly typical food cost for a

restaurant.

Categorize the Cost

It is very helpful to break down your food cost into all the types of foods and beverages your purchase.

For instance, a 31% food cost may be broken down into the following food categories:

If food cost is high, categorizing like this will help determine where the money is being over-spent. Operators can keep a much better tab on food cost when they know exactly what percentage of the total cost they are spending on each category of food.

Determining Gross Profit

The COGS equations are essential for figuring the restaurant's gross profit:

Gross profit is calculated by deducting money you spend on food and beverages from your total revenue.

Gross Profit Example:

Using the ongoing example, you would subtract your COGS ($4,000), from your total sales ($12,750) in order to find your gross profit.

Although gross profits may be included in your Profit and Loss (P&L) statement, the important number to look for is the net profit. Net profit, or actual profit, is the gross profit minus all operating costs such as labor, rent, repairs, and marketing costs, to name a few. This is your restaurant's true profit after all is said and done.

Making Profit

Making profits is the

restaurant's # 1 goal. In order to do this, the manager needs to simultaneously bring in revenue and control costs in the restaurant.

This is one of the biggest challenges, but also one of the manager's most important responsibilities.

Maintain a steady, profitable food cost by adhering to all recipes

Assessing purchasing procedures

Properly conducting inventory in your restaurant.

Invoice Costs to Determine Unit Price

Case of Pears: Invoice cost: 38$/

24 lbs = per lb $ $38.00/ 24 = ? Lbs $1.583 = $1.58/lb This becomes your

price per unit Unit Price =

$1.58/lb