Lecture Food and beverage cost control (5th Edition): Chapter 3 - Dopson, Hayes, Miller 

Chapter 3 - Purchasing and receiving. This chapter presents the following content: Forecasting food sales, forecasting beverage sales, importance of standardized recipes, purchasing food, purchasing beverages, purchase orders, receiving food and beverage products, technology tools.

Managing the Cost 

of Food

Figure 3.1 Menu Item Sales History

Figure 3.2 Forecasting Item Sales

Menu Item Guest Forecast Popularity Index

 Factors influencing number of guests:

 Competition, weather, special events in your 

area, facility occupancy, your own promotions, your competitor’s promotions, quality of 

service, and operational consistency

 Sales histories track only the general trends of an 

operation.  They are not precise

Figure 3.3 Standardized Recipe

Roast Chicken Special Instructions: Serve with Recipe Yield: 48 Crabapple Garnish (see Crabapple Garnish Portion Size: 1/4 chicken Standardized Recipe) Portion Cost: See cost sheet Serve on 10-in plate  

Chicken Quarters (twelve 3-3½-lb

chickens)

48 ea Step 1 Wash chicken; check for

pinfeathers; tray on 24 in x 20 in

baking pans

Butter (melted) 1 lb 4 oz Step 2 Clarify butter; brush liberally on

chicken quarters; combine all seasonings; mix well; sprinkle all over chicken quarters

Paprika 3 T Step 3 Roast at 325 o F in oven for 2 1/2

hours, to an internal temperature of at least 165 o F

Poultry Seasoning 2 t

Garlic Powder 1 T

Figure 3.4 Factor Method

Amount

Conversion Factor

Figure 3.5 Percentage Method

% of Total

New Recipe Amount

A 6 lb 8 oz 104

61.9% 300 oz

61.9% 185.7 oz

B 12 oz 12 7.1 300 oz 7.1 21.3 oz

C 1 lb 16 9.5 300 oz 9.5 28.5 oz

D 2 lb 4 oz 36 21.5 300 oz 21.5 64.5 oz

Total 10 lb 8 oz 168 100.0 300 oz 100.0 300.0 oz

 The cost to the vendor for frequent deliveries will be 

reflected in the cost of the goods to the operator

Figure 3.6 Shelf Life

Milk Refrigerator 5-7 days

Butter Refrigerator 14 days

Ground Beef Refrigerator 2-3 days

Steaks (fresh) Refrigerator 14 days

Bacon Refrigerator 30 days

Canned Vegetables Dry Storeroom 12 months

Flour Dry Storeroom 3 months

Sugar Dry Storeroom 3 months

Lettuce Refrigerator 3-5 days

Tomatoes Refrigerator 5-7 days

Potatoes Dry Storeroom 14-21 days

Figure 3.7: Recommended Refrigeration and Freezer Storage Period Maximums

Cold Storage Chart

These short, but safe, time limits will help keep refrigerated food from spoiling or  becoming dangerous to eat. Because freezing keeps food safe indefinitely, recommended  storage times are for quality only. 

(40 °F, 4.5 °C) Freezer (0 °F, -18 °C)

Eggs Fresh, in shell 3 to 5 weeks Do not freeze Raw yolks & whites 2 to 4 days 1 year

Hard cooked 1 week Does not freeze well Liquid pasteurized eggs, egg substitutes

Opened 3 days Does not freeze well Unopened 10 days 1 year

Mayonnaise Commercial, refrigerate after opening 2 months Do not freeze Frozen Dinners & Entrées

Keep frozen until ready to heat — 3 to 4 months Deli & vacuum-packed products

Store-prepared (or homemade) egg, chicken, ham, tuna, & macaroni salads

3 to 5 days Does not freeze well

Hot dogs & luncheon meats Hot dogs

Opened package 1 week 1 to 2 months Unopened package 2 weeks 1 to 2 months Luncheon meat

Opened package 3 to 5 days 1 to 2 months Unopened package 2 weeks 1 to 2 months

beef

1 to 2 days 1 to 2 months

Smoked breakfast links, patties 7 days 1 to 2 months Hard sausage—pepperoni, jerky sticks 2 to 3 weeks 1 to 2 months Summer sausage labeled “Keep Refrigerated”

Opened 3 weeks 1 to 2 months Unopened 3 months 1 to 2 months Ham, Corned Beef

Corned beef, in pouch with pickling juices 5 to 7 days Drained, 1 month Ham, canned labeled “Keep Refrigerated”

Opened 3 to 5 days 1 to 2 months Unopened 6 to 9 months Do not freeze Ham, fully cooked

vacuum sealed at plant, undated, unopened 2 weeks 1 to 2 months Ham, fully cooked vacuum sealed at plant,

dated, unopened

“Use-By” date

on package 1 to 2 months Ham, fully cooked

Whole 7 days 1 to 2 months Half 3 to 5 days 1 to 2 months Slices 3 to 4 days 1 to 2 months Hamburger, ground, & stew meat

Hamburger & stew meat 1 to 2 days 3 to 4 months

chitterlings

1 to 2 days 3 to 4 months

Pre-stuffed, uncooked pork chops, lamb chops,

or chicken breasts stuffed with dressing

1 day Does not freeze well Soups & stews

Vegetable or meat added 3 to 4 days 2 to 3 months Cooked meat leftovers

Cooked meat & meat casseroles 3 to 4 days 2 to 3 months Gravy & meat broth 1 to 2 days 2 to 3 months Fresh poultry

Chicken or turkey, whole 1 to 2 days 1 year Chicken or turkey, pieces 1 to 2 days 9 months Giblets 1 to 2 days 3 to 4 months Cooked poultry leftovers

Fried chicken 3 to 4 days 4 months Cooked poultry casseroles 3 to 4 days 4 to 6 months Pieces, plain 3 to 4 days 4 months Pieces covered with broth, gravy 1 to 2 days 6 months Chicken nuggets, patties 1 to 2 days 1 to 3 months Pizza, cooked 3 to 4 days 1 to 2 months Stuffing, cooked 3 to 4 days 1 month

 Value of Inventory Dollars

 Over­buy or “stockpile” inventory.  An 

opportunity cost is the cost of foregoing the next best alternative when making a decision

 A state institution that is given its entire annual 

budget may find it advantageous to use its purchasing power to acquire large amounts of inventory at very low prices­stockpiling

 Fiscal year is 12 months long but may not follow the calendar year

Figure 3.8 Product Specification

Pricing Unit: lb

Standard/Grade: Select No.1

Moderately thick slice

Oscar Mayer item 2040 or equal

Weight Range: 14 - 16 slices per pound

Packaging: 2/10 lb Cryovac packed

Container Size: Not to exceed 20 lb

Intended Use: Bacon, lettuce, and tomato sandwiches

Other Information: Flat packed on oven-proofed paper

Never frozen

Product Yield: 60% Yield

Figure 3.9 Selected Producer Container Net Weights

Items Purchased Container

Approximate Net Weight (lb.)

Apples Cartons, tray pack 40-45 Asparagus Pyramid crates, loose pack 32 Beets, bunched ½ crates, 2 dozen bunches 36-40 Cabbage, green Flat crates (1 ¾ bushels) 50-60 Cantaloupe ½ wirebound crates 38-41 Corn, sweet Cartons, packed 5 dozen ears 50 Cucumbers, field grown Bushel cartons 47-55 Grapefruit, FL 4/5 bushel cartons & wirebound crates 42 ½ Grapes, Table Lugs and cartons, plain pack 23-24 Lettuce, loose leaf 4/5-bushel crates 8-10 Limes Pony cartons 10 Onions, green 4/5-bushel crates (36 bunches) 11 Oranges, FL 4/5-bushel cartons 45 Parsley Cartons, wax treated, 5 dozen bunches 21 Peaches 2-layer cartons and lugs, tray pack 22 Shallots Bags 5 Squash 1-layer flats, place pack 16 Strawberries, CA 12 one-pint trays 11-14 Tangerines 4/5 -bushel cartons 47 ½ Tomatoes, pink and ripe 3-layer lugs and cartons, place pack 24-33

 Product yield is the amount of product that you will 

have remaining after cooking, trimming, portioning 

or cleaning

 What Is the Best Price to Pay?

 The best price is more accurately stated as the 

lowest price that meets the long­term goals of both the foodservice operation and its vendor

 Make vs. Buy decisions

 Bid sheet – comparison shopping

 Price comparison sheet – after you have received 

bids from your suppliers, you can compare those bids

Figure 3.10 Bid Sheet

Vendor’s Address: Buyer’s Address:

Vendor’s Telephone #: Buyer’s Telephone #:

Vendor’s Fax #: Buyer’s Fax #:

Vendor’s E-Mail: Buyer’s E-Mail:

112A Ribeye Lip on 9-11#,Choice Pound

120 Brisket, 10-12# Deckle off, Choice Pound

164 Steamship Round, 60#, Square bottom, Choice Pound

168 Inside Round, 17-20#, Choice Pound

193 Flank Steak, 2# Avg., Choice Pound 1184b Top Butt Steak, 8 oz., Choice Pound 1190a Tenderloin Steak, 8 oz., Choice Pound

109 Rib, 19-22#, Certified Angus Beef, Choice Pound

Bid Prices Fixed From: to

Figure 3.11 Price Comparison Sheet

Vendors Category: Produce

A Bill’s Produce Date bid: 1/1/

Best Company

Last Price Paid Lettuce,

 Slow pay means high pay

 Vendors can be great source of information related 

to new products, cooking techniques, trends and alternative product usage

Figure 3.12 Daily Inventory Sheet

Item Description Unit Par

Value Hand On Special Order Amount Order

Babyback Ribs 2-2 ½ # Case 3 1.5 1 3 Sausage Links 96, 1 oz Case 5

Bologna 10 # avg Each 3 Beef Pastrami 10 # avg Each 4 Slice Pepperoni 10 # avg Each 6 All-Beef Franks 8/1, 10 # Case 7

Delivery Date Name of Person who  Placed Order

Name of Person who  Received Order

Delivery Instructions

Figure 3.13 Purchase Order

Extended Price

Figure 3.14 Purchase Order Vendor: Scooter’s Produce Purchase Order #: 56 Vendor’s Address: 123 Anywhere Delivery Date: 1/3 Vendor’s Telephone #: 999-0000

Vendor’s Fax #: 999-0001 Vendor’s E-Mail: scootersproduce@isp.org Item Purchased Spec # Quantity

Ordered Quoted Price Extended Price

1 Bananas 81 30 lb $ 0.24 lb $ 7.20

2 Parsley 107 4 bunches 0.80/bunch 3.20

3 Oranges 101 3 cases 31.50/case 94.50

4 Lemons 35 6 cases 29.20/case 175.20

5 Cabbages 85 2 bags 13.80/bag 27.60

Order Date: 1/1 Comments:

Ordered By: Joshua David Entered on 1/1 Received By: Transmitted by Joshua David

 One individual places the order, while another 

individual is responsible for verifying delivery and acceptance of the product

 Auditors are individuals responsible for reviewing 

and evaluating proper operational procedures.  They can determine the potential for fraud or theft

 The receiving area must be large enough to allow 

for checking products delivered against both the invoice and purchase order

 Accessibility to equipment required to move 

products to their proper storage area and to dispose 

of excess packaging is important.  Make sure the area stays free of trash and clutter, as these make it too easy to hide delivered food items

 Receiving clerks should have the following 

equipment:  scales, wheeled equipment, box cutter, thermometer, calculator and records area

 Refusal hours are the times that operators will not 

accept deliveries

 Receiving clerks should be trained to verify the 

following product characteristics:  weight, quantity, quality, and price

 The counting of boxes, cases, barrels, etc. should be 

routine.  The counting of individual items in a box, such as lemons should be done periodically

 Checking for quality means checking the entire 

shipment for conformance to specifications

 In cases when the vendor is out of the spec item, 

clerks must know whether it is management’s 

preference to accept a product of higher quality, lower quality, or no product as a substitute

 A credit memo is simply a formal way of notifying 

the vendor that an item listed on the original invoice 

is missing, and thus the value of that item should be deducted from the invoice total

Figure 3.17 Credit Memo

CREDIT MEMO Unit Name:

Vendor: Delivery Date:

Invoice #: Credit Memo #:

Correction Item Quantity Short Refused Price

Credit Amount

Total

Original Invoice Total:

Less: Credit Memo Total:

Adjusted Invoice Total:

 Never assume extensions are correct because a 

computer did them!

 If a supplier consistently shorts your operation, that supplier is suspect both in terms of honesty and lack 

of concern for your operation’s long­term success

 Training your receiving clerk to assess and evaluate quality products is a continuous process. 

Figure 3.18 Hotel Pennycuff

Receiving Report Date: 1/1

Supplier Invoice # Item Unit

Price

# of Units

Total Cost

Distribution

A B C D E Dairy O T-16841 ½ pt

milk $ 0 24 800 $ 192.00 75 600 125 - Tom's

Rice 12785 Rice (bags) 12.00 3 36.00 - 1 - 2 - - Barry's

Bread J-165 Rye 0.62 25 15.50 - 25 - - - -

Wheat 0.51 40 20.40 20 - 20 -

White 0.48 90 43.20 40 10 - 40 -

-

Total units

958 135 636 145 42 0 Total cost $307.10

Distribution Key: Comments:

 FIFO (first in, first out) means that the operator 

intends to rotate stock in such a way that product already on hand is sold prior to the sale of more 

recently delivered products

 FIFO is the preferred storage technique for most 

perishable and non­perishable items.  Failure to use FIFO can result in excessive product loss due to 

spoilage, shrinkage, and deterioration of quality

Figure 3.19 FIFO and LIFO Storage Systems

Figure 3.20 FIFO Stocking System

in which the product should be pulled from storage, thawed, or even discarded. 

DATE HOUR PULL

 Products are generally placed in one of three major 

storage areas:  dry storage, refrigerated storage, or frozen storage

 Shelving must be at least six inches off the floor and 

slotted to allow for good air circulation

 Storage areas are excellent breeding grounds for 

insects, some bacteria, and also rodents, so insist on regular cleaning of all storage areas

 As a general rule, if storerooms are to be locked, 

only one individual should have access during any shift

 Valuing, or establishing a dollar value for your 

entire inventory is achieved by using the following inventory value formula:

 Item amount may be determined by counting the 

item, as in the case of cans, or by weighing items, as 

in the case of meats

Item Amount x Item Value = Item Inventory Value

 If inventory amounts are overstated, or padded 

inventory, costs will appear artificially low until the proper inventory values are determined

 Either the LIFO or FIFO method determines item 

value

 When the LIFO method is used, the item’s value is 

said to be the price paid for the least recent (oldest) addition to item amount

Figure 3.22 Inventory Valuation Sheet

Unit Name: Inventory Date:

Counted By: Extended By:

Item Unit Item Amount Item Value Inventory Value

 It is recommended that one person takes the actual 

physical inventory, and a different person extends the value of that inventory

 A physical inventory, one in which the food 

products are actually counted, must be taken to 

determine your actual food usage

 Cost of food sold is the dollar amount of all food 

actually sold, thrown away, wasted or stolen.  It is computed as follows:

Figure 3.23 Formula for Cost of Food Sold

Beginning Inventory Plus

Figure 3.24 Recap Sheet 

Cost of Food Sold

Accounting Period: to

Unit Name:

Beginning Inventory $ PLUS

 Food or beverage products may be transferred from 

one food service unit to another – kitchen to bar and vice versa

 Transfers out of the kitchen are subtracted from the 

cost of food sold and transfers into the kitchen are added to the cost of food sold