OH 5-1

Controlling Food Costs in Purchasing

and Receiving
Controlling Foodservice Costs
5
OH 5-1
OH 5-2
Chapter Learning Objectives
Explain how a specification becomes a control in the
purchasing function.
Explain the parts of a purchase specification and a
purchase order.
Explain various purchasing methods and their effect on
the price of goods.
Calculate a yield test that identifies the difference
between as purchased (AP) price and
edible portion (EP) cost.
Identify factors that affect the purchase price of goods.
OH 5-3
Chapter Learning Objectives continued
Distinguish between perishable and nonperishable
goods and their relationship to the purchasing cycle.
Calculate the par stock amount of an item to order.
Calculate the amount to purchase, using EP amount and
yield percent.
Calculate the amount of goods to purchase for
catered events.
Calculate a butcher test, or meat yield test.
Describe proper procedures for receiving goods.
OH 5-4
Who Purchases?
Purchasing agent
Manager
Chef
Head cook
Trusted staff member
The buyer maintains quality standards!
OH 5-5
Who Purchases? continued
The buyer is responsible for ensuring that quality standards
are met during the purchasing and delivery process.
OH 5-6
The Food Specification
Is a control device
Lists the products
name
Lists its intended use
Identifies the desired
brand and grade
Identifies the desired
size
Identifies the desired
variety
Identifies packing
requirements
Details delivery
requirements
Explains payment
terms
OH 5-7
The Food Specification continued
Specifications should
describe exactly what
buyers want to buy.
OH 5-8
Purchase Orders
The official written record of the items the buyer
wants to purchase
OH 5-9
Purchase Order Information
A unique
identification number
The name and
address of the
restaurant
Date of the order
Signature of the
buyer
The suppliers
contact information
Date of delivery
The name, quantity,
and delivery unit of
each item ordered
Total (extended) cost
of the order
OH 5-10
Purchase Methods
Competitive quotes
Standing order
One-stop shop
Cost-plus
Sealed bids
Commissary
OH 5-11
What to Buy
Avoid buying the cheapest.
Use purchase specifications.
Buy at the best cost from sellers who meet or
exceed the purchase specifications.
Consider both AP price and EP cost.
OH 5-12
Two Kinds of Costs
As purchased (AP)the cost of food as
delivered to the restaurant
Edible portion (EP)the cost of food as served
to the guest
OH 5-13
AP vs. EP Form
Items, such as fresh whole fish, will weigh much
less in their EP form than in their AP form.
OH 5-14
Calculating EP Cost
Two steps
Step 1 Calculate products yield percentage.
Edible portion
(EP) weight

As purchased
(AP) weight
= EP percentage

8.00 9.5

=

0.842 or 84.2%
OH 5-15
Calculating EP Cost continued
Step 2 Calculate EP cost.
Examplethe EP cost of one pound of onions
As purchased
(AP) price

Edible portion
(EP) percentage
=
Edible portion
(EP) cost

$0.39/lb AP 0.842

=

$0.46/lb EP
OH 5-16
Other Factors Affecting Purchasing
Management
complacency
Payment history
Gift acceptance
policies
OH 5-17
When to Buy
Purchase perishable items daily or every few
days.
Purchase nonperishable items weekly or
monthly.
OH 5-18
Perishable Product Purchases
1. Determine the amount of product that will be
used between deliveries.
2. Count what is on hand.
3. Subtract the amount on hand from the amount
that will be used.
4. The result is the amount to purchase.
(Note: Some managers purchase a small extra or cushion
amount in case sales levels exceed forecasts.)
OH 5-19
Nonperishable Quantity to Purchase
Most common method is par stock method.
Steps
1. Determine quantity (par stock) that must be on
hand between orders for each item.
2. Before ordering, take inventory.
3. Subtract on hand quantity from par stock
quantity.
4. Difference is quantity to order
OH 5-20
Calculating How Much to Buy
Need ten pounds of onions.
Yield percentage of onions is 84.2%.
How many pounds will you buy?
EP amount
needed

Yield
percentage
= AP amount to purchase

10 0.842

=

11.87, or 11.9
OH 5-21
Catering Purchases
Step 1 Determine the servings per purchasing
unit (SPU).
Purchasing
unit
Portion size =
Servings per
purchasing unit (SPU)
OH 5-22
Catering Purchases continued
Step 2 Determine the purchase factor.
Recall the formula for EP percentage.
SPU x
EP
percentage
= Purchase factor (PF)
Edible portion
(EP) weight

As purchased
(AP) weight
=
EP
percentage
OH 5-23
Catering Purchases continued
Step 3 Determine the amount to purchase.
Number of guests
to serve

Purchase factor
(PF)
=
Amount to
purchase
OH 5-24
Butcher Test
Also known as yield
test
Used to determine
EP meat costs
Results vary, based
upon the AP quality
of meat purchased
Measures losses from
Fat removal
Bone removal
Trim and packaging
removal
Portioning
OH 5-25
Steps for Receiving
Step 1 Delivery person brings products to
receiving area.
Step 2 Check products against the purchase
order.
Step 3 Check products against purchase
specifications.
Step 4 Check delivery quantity against the
invoice and the purchase order.
OH 5-26
Steps for Receiving continued
Step 5 Match invoice prices to purchase order
prices.
Step 6 If everything matches correctly, sign
the invoice.
Step 7 Put delivered products in proper
storage areas.
Step 8 Process paperwork in keeping with the
operations standard operating policies
and procedures.
OH 5-27
How Would You Answer
the Following Questions?
1. A purchase order is best prepared by the (buyer/
seller) of the items to be purchased.
2. With effective purchasing techniques in place, a
restaurant's EP costs can often be lower than its AP
costs. (True/False)
3. EP weight divided by AP weight results in
A. AP percentage
B. AP cost
C. EP cost
D. EP percentage
4. A butchers test is a test of (yield/quality).
OH 5-28
Key Term Review
As served (AS)
Butcher test
Buyer
Commissary
Competitive quotes
Cost plus
Invoice
OH 5-29
Key Term Review continued
Market quotation
sheet
Nonperishable goods
One-stop shop
Par stock

Perishable goods
Purchase order
Quotes
OH 5-30
Key Term Review continued
Sealed bid
Specification
Standing order

Yield chart
Yield percentage
Yield test
OH 5-31
Chapter Learning Objectives
What Did You Learn?
Explain how a specification becomes a control in
the purchasing function.
Explain the parts of a purchase specification and
of a purchase order.
Explain various purchasing methods and their
effect on the price of goods.
Calculate a yield test that identifies the
difference between AP price and EP cost.
OH 5-32
Chapter Learning Objectives
What Did You Learn? continued
Identify factors that affect the purchase price of
goods.
Distinguish between perishable and
nonperishable goods and their relationship to
the purchasing cycle.
Calculate the par stock amount of an item to
order.
Calculate the amount to purchase, using EP
amount and yield percent.
OH 5-33
Calculate the amount of goods to purchase for
catered events.
Calculate a butcher test, or meat yield test.
Describe the proper procedures for receiving
goods.
Chapter Learning Objectives
What Did You Learn? continued