CHAPTER ONE

Operating Controls
in the Foodservice
Industry
 Learning Objectives:
 Define Control.
 Identify the internal environments in a foodservice operation and the
external environments that affect all foodservice organizations.
 Recognize the interrelationship between front-of-the-house operations
and back-of-the-house operations.
 Identify the steps of a basic management control system.
 Relate the steps in the basic management control system to the steps
in the Operating Cycle of Control.
 Use the Operating Cycle of Control to trace the coordinated
procedures involved to manage a foodservice operation.
 Identify the variety of sources of information required to manage a
foodservice operation.
 Be familiar with the elements of the restaurant profile designed for
this text.
Why control is important
 Maximize food and beverage sales
 Control expenses
 Manage employees
 Maximize profits
Cost control mean the following
 Control over all items of income
 Control over all items of expenses
 Control over the flow of products and

services
Internal environment
Front-of-house functions
Back-of-house functions
Management functions
 External Environment

Media
Government
Front of- Back of-House
Regulations
House Functions
Functions •Menu planning
•Seating •Purchasing
New •Sales •Inventory
Technology •Serving management
•Busing •Food production
eemela
•payment •Dish-room operations Local
Internal environment Market
conditions
Management function
Supplier • Planning
Relations • Organizing
• Influencing
• controlling Labor-Force
National Demographics
Economic
conditions
The Need for Control Processes and
Procedures
 Perspectivefor Control
 Causes of Excess Cost in Foodservice Operations

Having clear, precise standards in place eliminates:

◦ Inefficiency
◦ Fraud
◦ Errors
◦ Waste
The four greatest causes of excess cost in the foodservice
operation
 Employer and Employees have a vital interest in
ensuring that control system is reliable and
effective

◦ Managers use cost-control systems to help pinpoint

responsibility for inefficiency, fraud, errors, and waste.
◦ Employees should be aware that control systems can
protect them and reward them for good performance .
 The Purpose of Control
 CostControl system for foodservice
industry are designed for three primary
purposes:
◦ To establish an efficient operation
◦ To prevent fraud or theft by employees or guests
◦ To ensure that the operation functions in a
manner that compiles with the goals of
management
The Basic Management Control Procedure
Step 1
Set standards Recycle
through
the
process

Step 4 Step 2
Take corrective Measure
action performance

Step 3
Have standards been
met?
The Operating Cycle of Control OCC
 The Operating Cycle of Control is
defined as
◦ A control cycle that divides any food and
beverage operation into a series of
coordinated procedures that are necessary to
profitably and efficiently supply food and
beverage products and services to guests,
given an accepted volume of business.
The menu Pre-Purchased
Functions
Guest Check
Standardized recipe
Guests Recipe Cost Cards

Specifications
FOH Functions
Par Stock
Requisition
Kitchen Production
Shopping Lists
Product Issuing
Purchase Orders
Storage Practices &
Inventory Management & Issuing
BOH Functions
Invoice Management

Receiving Activities
 Manager’s Role
 Control and Labor Costs and Technology
 Service and Labor
 Prime Cost

Food Cost: the cost of food products to generate

sales.
Beverage Cost: the cost of the alcoholic beverage
products used to generate alcoholic beverage sales.
Labor Cost: the cost of payroll and benefits needed
to generate sales.
 New Technology
 New technology affects Costs and operating
efficiencies:
Old Paradigm
• The customer’s order is taken by a server and
transmitted either verbally or on a handwritten guest
check to the kitchen staff.
New Paradigm
 Servers utilize a handheld touch-screen
 Or fixed-position point-of-sale (POS) terminal with a
touch-screen
 The new technology that has changed “DOING”
in the food service business:
1. Point-of-sales systems.
2. Touch screens for server ordering.
3. Customer and server pager ordering.
4. Automated kitchen systems.
5. Internet Web sites for restaurants, suppliers, and other
related businesses.
The value of information
 Information available to managers must help
them to do several things:
1. Set goals
2. Plan strategies
3. Implement procedures
4. Evaluate results
 The following are some specific subject areas of
information that are relevant to foodservice
operation:
1. Menu concept
2. Food cost
3. Beverage cost
4. Labor cost
5. Other operating cost
6. Revenue
 Menu Concept
 The menu provides the customer with essential
information for making a choice. Its is designed to
reflect the foodservice concept.

 Examples of Foodservice Concepts:

Seafood restaurant
Mexican theme restaurant
Asian cuisine
Steak house
Food cost
 Therecipe determines the ingredients needed to
produce meals.

 Food ingredients are all the food product items

used to produce meals.

 The information needed to control food

purchasing, receiving, storage, and preparation
cost may be presented manually or
electronically.
Typesof Food-Cost Reports
Food cost percentage reports
Inventory forms
Invoice payment schedules
Recipe-cost charts
Standardized recipes
 Beverage cost
 Beverage costs must be controlled. Many of the
techniques used for controlling beverages costs
are the same as for controlling food costs.
 Techniques for ordering, paying for, transferring,
and requisitioning beverage.
 Types of Beverage-Cost Reports
 Alcohol use reports
 Beverage recipes
 Beverage-cost reports
 Bar-and inventory-control reports
 Labor cost
 All foodservice establishments must use labor and
facilities to accomplish their service goals.
 Labor and productivity information can be

collected and evaluated using the following

forms:
Job descriptions
Daily work sheets
Productivity charts
Work schedules
Kitchen production charts
Workers’ compensation reports
 Revenue (Sales)
 Information related to the sale and service of menu items to
customers is referred to as sales information.

 This information also relates to collecting money and

measuring how satisfied customers are with their
experience.
 Sales
information is collected and
monitored using several types of reports:
Guest checks
Cashier’s reports
Daily, monthly and annual reports
Server shift reports
Guest check daily report
Marketing program analysis