705 F&B POLICY Handbook 31p by orientalhospitality

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POLICY & PROCEDURE

Food & Beverage No. : FB01

21 November 2005

FOOD & BEVERAGE HOURS OF OPERATION Purpose To ensure that guests continue to receive Food & Beverage service in the Food & Beverage outlets for as long as permitted by local and legal regulations. Policy It is ………policy that all Food & Beverage outlets remain open in accordance to their published hours of operation or in accordance to local and legal regulations (whichever is later). Procedure 1. All Food & Beverage outlets are to remain “open” in accordance to their published hours of operation. If a guest should be patronizing an outlet; then the outlet should remain open beyond the hours of operation if local and legal regulations permit. Employees must attend to the guests and a flexible and courteous attitude must be presented when taking last orders for the bar or kitchen.

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POLICY & PROCEDURE

Food & Beverage No. : FB02

21 November 2005

FOOD & BEVERAGE OPERATIONS REPORT (FBOR) Purpose To ensure that the operating results of the Food & Beverage Operations in all ….. properties are reviewed and documented. Policy It is …… policy that a Food & Beverage Operations Report is completed on a monthly basis. Procedure 1. It is the responsibility of the F&B Manager to prepare and complete a Food & Beverage Operations Report (sample format attached) on a monthly basis. The Food & Beverage Operations Report (FBOR) should be completed within the first five days of the new month for the month past. A copy of the FBOR should be forwarded to the General Manager and Controller for their review and comments. The General Manager will arrange for a copy of the FBOR to be forwarded to GHM no later than the 15th of each month.

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POLICY & PROCEDURE

Food & Beverage No. : FB03

24 November 2005

FOOD & BEVERAGE COST Purpose To clarify the responsibility for the Food & Beverage Cost and to ensure effective and accurate F&B Cost control. Policy It is GHM policy that the Food & Beverage (F&B) Manager and the Executive Chef are jointly responsible for the Food & Beverage Cost. Generally the F&B Manager manages the Beverage Cost while the Executive Chef manages the Food Cost and the Employee Meal Cost. It is ….. policy that only the finest quality food and beverage products / ingredients are used in our properties. It is …… policy that the menu prices always reflect the quality of the food and beverage product, represent fair “value for money” to the consumer and ensure a profit for the property. Food and beverage products that become too expensive to sell should be taken off of the menu rather than to substitute the product (compromise the quality) or reduce the portion (compromise the quantity). It is …… policy that the General Manager approves all menus and menu prices. It is …. policy that the General Manager approves all Rebates, Officer / House Checks and Entertainment Checks. It is ….. policy that the Financial Controller and the Cost Controller are responsible for maintaining accurate and detailed records of food and beverage cost.

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Procedures INTRODUCTION All businesses require an adequate return on investment in order to succeed. To achieve it, a satisfactory level of sales must be maintained and costs must be controlled. To control costs one requires a good information system. Only with proper information about costs can management make the right decisions. The information provided by any control system should be limited to what is practical, useful, what should be acted upon when action is called for and should be communicated to all those involved. With good controls, performance and quality can be standardized, assets can be safeguarded, performance can be measured, and planning can be made easier. But controls do have limitations. They are not substitutes for management supervision or cures for problems; nor are they an end in themselves or a device for employee “policing”. Despite the fact that those involved in cost control are employees of the accounting department, they must work harmoniously with other employees and department heads in food and beverage production and service. The main duties and responsibilities of those involved in cost control are to implement procedures for the following major areas: sales, purchasing, receiving, storerooms, inventory and production. Finally, even though cost control is primarily an internal problem, one should always be aware of external factors that could have an effect on costs. 1. SALES The F&B Manager must ensure that all sales are captured and recorded and that all guest checks and house checks are duly signed. The F&B Manager must ensure that the following standard controls are maintained: 1.1 Guest Check (Docket) Controls The F&B Cashiers must ensure that the items posted on the Guest Checks match the items written on the Captain Orders. The Executive Chef and F&B Manager must ensure that the Captain Orders match the production inventories especially for expensive items (such as lobster, scallops, other seafood, steaks, lamb, etc.) The Executive Chef and F&B Manager should check the Captain Orders to Menu Item Sales Summary on a minimum weekly basis. The Cost Controller should verify (and indicate evidence of verification by using a rubber stamp) a minimum of five Captain Orders to the respective F&B dockets daily. The Cost Controller must ensure that docket continuity is done daily.

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Average Food & Beverage Check : This Month : __________ % Bev / Food : __________ Previous Month Explain Variance : : __________ % Bev / Food : __________

_____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ____________________________________________________________________ 2. Beverage Sales Actual Variance : : ___________ ___________ % Budget: : ____________ ____________

Explain Variance

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_____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ____________________________________________________________________ Comparison with previous month : Previous Month Sale : Variance to previous month : Explain Variance :

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_____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ____________________________________________________________________

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FOOD & BEVERAGE OPERATIONS REPORT Month Year Date Prepared by 1. Food Sales Actual Variance Explain Variance : ___________ :___________ % : Budget :____________ : ____________ : : : : _______________________________ _______________________________ _______________________________ _______________________________

_____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ____________________________________________________________________ Comparison with previous month : Previous Month Sales : Variance to previous month : Explain Variance :

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_____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ____________________________________________________________________

Total Number of Covers : This Month : Explain Variance :

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Previous Month :

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_____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ____________________________________________________________________

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1.2

Office Check / House Check All Employees must sign their respective checks. A penalty for any checks not signed should be considered. The F&B Cashier should prepare the Daily Summary of Officer Checks. The GM and FC should review and approve the Daily Summary of Officer Checks. The Cost Controller should prepare the Monthly Summary of Officer Checks, by employee. The Cost Controller should calculate the F&B cost based on the actual cost or the YTD Actual cost %. Point Of Sales (POS) System / Cash Register The F&B Manager and the General Manager (GM) should review the Menu Items and Menu Prices on a minimum quarterly (every three month) basis. F&B Menu Items and Prices must be reviewed on a more frequent basis in countries where the local currency is volatile and subject to frequent change. The GM must approve all Menu Items and Menu Prices New Menu Items / Prices should be distributed to all concerned at least two days in advance of the implementation. New Menu Items / Prices should be based on detailed recipes (provided by either the Executive Chef or the F&B Manager) and accurate costing (provided by the Cost Controller). Menu Prices must always reflect the quality of the food and beverage product, represent fair “value for money” to the consumer and ensure a profit for the property. Food and beverage products that become too expensive to sell should be taken off of the menu rather than to substitute the product (compromise the quality) or reduce the portion (compromise the quantity). Menu Items / Prices should be entered into POS system, in advance of the New Menu / Prices implementation, by the Cost Controller. All cash drawers must be secure and locks must be in working order. The transfer of floats should be documented and signed by the respective cashiers. The F&B Manager should approve all Void items on the guest checks. The F&B Manager and the Financial Controller (FC) should approve the Daily Void Item report. The F&B Manager and the FC should approve the Daily Open Food & Beverage Items report. The use of “Open Food & Beverage” should be avoided.

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3. General

Major highlights of your Food & Beverage operation : _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ____________________________________________________________________

New feature introduced during the month : _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ____________________________________________________________________

List problem areas and possible solutions : _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ____________________________________________________________________

Special events during the month : _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ____________________________________________________________________

In terms of result which outlets was the most successful and / or most disappointing and why : _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ ____________________________________________________________________

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1.4

Discounts All discounts should be made at the “Point Of Sale”. This will ensure the accurate recording of sales on a daily basis and avoid the timing differences and fluctuating sales figures associated with posting discounts using a Rebate Voucher at the Front Office. All F&B discounts must be posted on the Guest Check and signed accordingly. Discounts are normally granted for the following : o GHM employees, etc. (The F&B Cashier must ensure that the amount charged is subject to “discount at 50% or charge 20% over cost price whichever results in the higher selling price”. The amount of the discount depends on the cost of the item. The F&B Cashier must verify the cost price with the Cost Controller). o For other purpose as approved by the GM (Marketing / promotion/ Guest Complaints reasons). Rebates ( Front Office) The Front Office Personnel should inform F&B Manager of any rebates related to Food & Beverage. The F&B Manager should approve all F&B rebates prior to issue or immediately thereafter. The GM and FC should review and approve all rebates on a daily basis. Calculation and posting (allocation of revenues) of rebates should be done on daily basis to avoid timing differences and fluctuations of revenue on the daily and weekly reports. Unconsumed Breakfast Unconsumed Breakfast represents “Room Package including breakfast” but the guest does not consume the breakfast. The Breakfast Revenue, based on the Package Rate allocation OR the difference between the Menu Price and the Package Rate (dependent on what value is posted as Breakfast Revenue), should be recorded as F&B Other Revenue. For example: o Scenario A; “Based on Package Rate” – 10 single person packages at US$ 150 (exclusive of tax and service charge) and inclusive of buffet breakfast at a package rate of US$ 10 (exclusive of tax and service charge). The menu price for buffet breakfast is US$ 12 (exclusive of tax and service charge). Only seven of the 10 packages eat breakfast. Food (Breakfast) revenue = 7 x US$ 10 = US$ 70. F&B Other (Unconsumed Breakfast) revenue = 3 x US$ 10 = US$ 30. o Scenario B; “Based on Menu Price” – Food (Breakfast) revenue = 7 x US$ 12 = US$ 84. F&B Other (Unconsumed Breakfast) revenue = Total Package Breakfast Revenue of US$ 100 minus amount posted as Food Revenue of US$ 84 = US$ 16

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Oriental Hospitality Consultants – OrientalHospitality.com The F&B Manager must ensure that Package Breakfast Capture statistics are maintained so that the Exclusive Chef can plan food production accordingly.

Training activities carried out during the month: _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________ Staff level: Administration : Preparation : Service : Stewarding : Total ; Productivity level in $ to total revenue :

__________ __________ __________ __________ __________ __________

Major staff changes and turnover: _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________ New menus and prices introduced during the month: _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________ Media articles: Please attach any media articles related to your Food & Beverage operation published this month. 1.7 Special Events Special Events includes any function / event other than normal hotel restaurant and bar business. This includes and is not limited to: o Banquets and catering (on property and off property) being paid by individuals or company. o Hotel sponsored banquets and catering (excluding normal entertainment of travel agents / familiarization “FAM” trips). The F&B Manager must prepare an Event Sales and Cost Details (P&L) for the GM’s review and approval. The GM must approve all

Oriental Hospitality Consultants – OrientalHospitality.com event P&Ls prior to event confirmation. The approved event P&L will be considered as the “Budget P&L” for the event. The F&B Manager must ensure that the event Budget P&L includes (and is not limited to) the following (if applicable): o Food recipes as provided by the Executive Chef. o Beverage recipes as provided by the F&B Manager. o Recipe costs as provided by the Cost Controller. o Costs / expenses for all other items:  Advertising / Promotion  Decorations  Giveaways  Guest Supplies  Music and Entertainment  Photography  Miscellaneous Following the event the Financial Controller should prepare an Event Financial Statement comparing the event Actual Results to the event Budget P&L. The Event Financial Statement should be distributed to the General Manager, F&B Manager and Executive Chef.

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Entertainment The Guest Check must be signed by the Department Head and must include the name of the guest, the guest’s company name, and the purpose of entertainment (guest complaint, sales & marketing, promotion, business relations, etc.). The F&B Cashier should prepare the Daily Summary of Entertainment Charges. The GM and FC should review and approve the Daily Summary of Entertainment Charges. The Cost Controller should prepare the Monthly Summary of Entertainment Charges, by person. The Cost Controller should calculate the F&B cost based on the actual cost or the YTD actual Cost %

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Private / Personal Entertainment Private or Personal Entertainment generally applies to Department Heads and Executives only. The F&B Cashier must ensure that the amount charged is subject to “discount at 50% or charge 20% over cost price-whichever results in the higher selling price”. The amount of discount depends on the cost of the item. The F&B Cashier must verify the cost price with the Cost Controller. All guest checks should be settled in cash. Subject to approval from the GM and FC, Charges can be posted on a personal account in Front Office. Settlement, of the Front Office accounts, should be made in cash prior to the end of each month.

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2.

PURCHASING

The Financial Controller must ensure that the Purchasing Department personnel maintain the following standard controls: 2.1 Purchasing -

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Purchasing specifications should be on file. Only the finest quality food and beverage products / ingredients are to be used in GHM properties. The Financial Controller should arrange for a list of personnel (and their specimen signature) authorized to sign Market Lists and Purchase Requests. A copy of the specimen signature list should be on file in the Purchasing Department. A Market List should be used for all food purchases and must be signed by the Executive Chef or delegate. Weekly or Monthly Quotation Sheets, from the suppliers, should be on file for all food purchases. Quotations are required from at least two suppliers for all products. A minimum of two quotations is required for all non-F&B purchases.

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Market Lists The Executive Chef must ensure that the Market List form is used whenever ordering fresh or frozen food products (with some exception for storeroom items). The Market List Form should include all food items used in the property. The food items food be categorized under the following (minimum) headings. o Dairy (includes eggs, milk and milk products, cheeses, etc.) o Fruits (includes fresh and frozen) o Vegetables (includes fresh and frozen) o Herbs & Spices o Seafood (includes fish, shellfish and related products, etc.) o Poultry (includes chicken, pigeon, duck, goose, turkey and related products, etc.) o Meat (includes beef, pork, lamb, veal and related products, etc.)-can be further sub-categorized if necessary.

Oriental Hospitality Consultants – OrientalHospitality.com The Market List Form should be a minimum three-ply form. The original (top copy) for the Purchasing Department and a copy for both the Receiving Department and the Executive Chef. The Market List Form should have columns for: o Supplier, Quantity required / ordered, Quantity received The Market List Form can, if necessary, have additional columns for: o Inventory On Hand, On Order, Unit Price The Market List must be approved by Executive Chef or delegate and acknowledge by the Purchasing Manager.

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Out of Stock Items Out of Stock Items are those items that the property has “run out of” due to various reasons which include: o Unusually high demand of an item from guests o Not enough product in the kitchen, bar or storeroom o Supplier shortage of stock The F&B Manager and Executive Chef should ensure that“Out Of Stock Items” are avoided as any Out Of Stock Item presents an unfavorable image to the guest and represents a potential lost sale. In most cases Out Of Stock Items can be avoided by using Minimum & Maximum Par Levels (with consideration for High and Low Seasons). The F&B Manager should advise all personnel concerned of any Out Of Stock item by using whiteboards in the kitchen, bar and storeroom. RECEIVING The financial Controller must ensure that the Receiving Department personnel maintain the following standard controls:

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Receiving The weigh scale must be accurate and operational. The weigh scale should be able to accept weights to a minimum 100 kilograms. A copy of all market lists, purchase requests and purchase orders pending delivery should be on file. Invoices (for good received) must be checked and signed by the Receiving personnel. The Executive Chef or delegate should acknowledge all Direct Food issues. Debit memos (for good received) should be used if invoices are not available upon delivery. Credit memos (for good returned) should be used if Credit Notes/ Invoices are not available upon the return of goods. The company representative (receiving the returned goods) and the Receiving Department personnel should both sign the Credit Memo.

Oriental Hospitality Consultants – OrientalHospitality.com All liquor and wine bottles should be marked with hotel sticker or hotel stamp immediately following delivery. The Receiving Department personnel should prepare a daily F&B Receiving Report. All food and beverage invoices, credit notes, debit memos and credit memos must be listed. The Receiving Department personnel should prepare a Receiving Report for all non-F&B items. 4. STOREROOMS AND INVENTORY The Financial Controller must ensure that the Cost Controller and the Storekeepers maintain the following standard controls:

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Storeroom The storerooms must be secure and have adequate locks. The storerooms must be clean and be temperature and humidity controlled. Storeroom hours, receiving hours and issuing hours should be posted on the outside of the Storeroom(s). Food & Beverage Storeroom hours of operations should be: Storeroom Hours – 08.00 to 17.00 Monday through Friday and 08.00 to 13.00 Saturday.  Receiving Hours – 08.00 to 14.00 Monday through Friday and 08.00 to 12.00 Saturday.  Issuing Hours – 09.00 to 11.00 Monday through Saturday. Emergency issue procedures should be posted. The Duty Manager or Security officer must accompany the Executive Chef or F&B Manager for any after hour issues. The Storekeeper should prepare perpetual inventory / bin cards for all storeroom items. 

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Par Stock (Minimum and Maximum Level) Establishing par stocks in all areas will ensure sufficient stock for operations and avoid the chances of any Out Of Stock Items. An effective par stock system will ensure that only the required (minimum) amount of stock is kept on the property thereby minimizing the amount of cash tied up in inventory. The F&B Manager should establish a par stock for all bars. The Executive Chef should establish a par stock for any Kitchen Dry Storage areas. The Storekeeper, F&B Manager and Executive Chef should jointly establish a par stock for all storerooms. The Cost Controller should have a copy of all par stocks. The Cost Controller should compile an overall hotel par stock list. Issuing Storeroom requisitions should be used for all items requested from the storeroom.

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Oriental Hospitality Consultants – OrientalHospitality.com A list of personnel authorized to sign storeroom requisitions should be prepared by the Financial Controller and should be on file in the Storeroom. The list of authorized personnel normally includes all Executive, Department Heads and Assistant Department Heads. The storekeeper should issue all liquor and wine on an “empty bottle for full bottle” basis. All empty liquor and wine bottle should be “crossed” on the hotel stamp or hotel sticker using a thick black marker. The storekeeper should store and issue all items on a First In First Out(FIFO) basis. 4.4 Physical Inventory Count The Cost Controller should coordinate a monthly inventory (stock take) count of all food and beverage items. The Monthly Inventory schedule must detail date, time, location and participants. The Monthly Inventory schedule must include gift shop and spa (if applicable). All items in all storerooms must be counted. If necessary a mid-month inventory must be conducted and the results must be completed within 24 hours. Food and Beverage production inventory must be taken after closing of the last day (of the month) and before opening of the first day (of the month). Mini Bar inventory must be taken following replenishment of bars on the last day (of the month) and before replenishment of bars on the first day (of the month). The Executive Chef or Executive Sous Chef must participate in Food production inventory. The F&B Manager or Beverage Manager must participate in bar production inventory. The Accounting Office personnel should witness the inventory of the Storerooms. The inventory of General Stores should be conducted monthly. The inventory count sheet should have the date, time and signature of all participants. The Cost Controller should complete the inventory valuation within 48 hours. The valuation of the inventory should be based on FIFO. The Executive Chef should receive a copy of the kitchen inventory. The F&B Manager should receive a copy of the bar inventory. The Executive Housekeeper should receive a copy of the mini bar inventory. The Housekeeping personnel should inventory the linen on a minimum quarterly basis. The F&B personnel should inventory the china, glass and cutlery on a minimum quarterly basis. Food Inventory Valuation The Financial Controller must ensure that there is a Food Inventory valuation recorded on the Balance Sheet as an Asset. The Food Inventory supporting documents should be categorized as, at a minimum, (1) Storeroom and (2) Kitchen The Kitchen inventory should be further categorized as (a) Food in Production and (b) Food in Process Food in Production represents food in it’s natural and untouched state.

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Oriental Hospitality Consultants – OrientalHospitality.com Food in Process represents food that has been processed of in an altered state (i.e. soups, stocks and sauces) 4.6 Stock Turnover The stock turnover figures are necessary to ensure that the inventory levels are maintained at an efficient and low level. The Cost Controller should calculate the stock turnover levels on a monthly basis: o Average Inventory = Opening Inventory plus Closing Inventory divided by two. o Inventory Turnover = Consumption divided by Average Inventory. o Days in Inventory = Number days in Month divided by Inventory Turnover. The F&B Manager and the Executive Chef should ensure that Inventory Turnover goals and Days in Inventory goals are achieved as follows: o Food Production inventory turnover should be more than 6 times (or less than 5 days in Inventory). o Food Storeroom inventory turnover should be more than 1 time (or less than 30 days in Inventory). o Combined Food inventory turnover should be more than 2.5 times (or less than 12 days in Inventory). o Beverage inventory turnover should be more than 0.5 times (or less than 60 days in Inventory). Slow Moving / Dead Stock Slow Moving or Dead Stock represents those items that are past their expiration date or that have “not moved” within three months. The F&B Manager and Executive Chef should ensure that there is no slow moving or dead stock. Any Slow Moving or Dead Stock should, if possible, be returned to the supplier or sold to other hotels. Any Slow Moving Item, that is not past its’ expiration date, should be used in daily F&B promotions or used for Employee Meals. The Cost Controller should prepare a monthly Slow Moving / Dead Stock Items report. The disposal of any slow moving or dead stock item is considered as food or beverage cost. FOOD & BEVERAGE PRODUCTION The Executive Chef must ensure that only the finest quality food products / ingredients are used in food production. The F&B Manager must ensure that only the finest quality beverage products / ingredients are used. Both the F&B Manager and the Executive Chef must ensure that the following standard controls are maintained: 5.1 Recipes and Recipe Costs The Executive Chef must prepare and submit all food recipes to the Cost Controller at least two weeks in advance of implementation. The F&B Manager must prepare and submit all beverage recipes to the Cost Controller at least two weeks in advance of implementation. All recipes must be prepared and submitted in the standard format: o Recipe Item / Portion Size o Ingredients / Units / Quantity

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Oriental Hospitality Consultants – OrientalHospitality.com o Space for three test costs and dates The F&B Manager and the Cost Controller must keep a copy of all recipes on file. Recipe costs should be done on a minimum quarterly basis. 5.2 Portion Controls The Executive Chef must ensure that standard portion sizes are indicated on the recipes form. The Executive Chef must ensure that all food production is prepared according to the standard portion sizes. The F&B Manager must ensure that all beverage production is prepared according to the standard portion sizes. Food and Beverage Menu Item Testing In general food and beverage products are either sold to guests or used for employee’s meals. In some instances food and beverage products are offered complimentary either in guest rooms or as snacks in the outlets. The food and beverage products used for Menu Item Testing (for example new menu items) should be prepared and served to employees. The cost food and beverage are considered as Employee Meal Cost. Any food and beverage products used for Menu Item Testing that is not served to employees or not written on a House Check / Officer Check are considered as Food or Beverage Cost. Expenses related to Competitor Survey (outside food and beverage testing) are considered as F&B Miscellaneous Expenses.

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Employee Meals / Staff Canteen The Executive Chef is responsible for the Employee Meal cost A Staff Canteen menu should be established. The Staff Canteen Hours of operation should be posted.

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Wastage Wastage represents trimmings (for example outer lettuce leaves) and excess food in production (for example over production on a buffet). The Executive Chef and the F&B Manager must ensure that wastage is minimized. All wastage is considered as food or beverage cost

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Spoilage There are to types of spoilage as follows: o Uncontrollable spoilage (such as due to chiller failure) can be recorded as F&B miscellaneous expense. The Executive Chef and F&B Manager must prepare a report or voucher for the approval of GM and FC. o Controllable spoilage (such as over-ordering or expired product) is considered food or beverage cost. Interdepartmental Transfer The Executive Chef and the F&B Manager should ensure that Transfer Forms are used for the following: o Transfers between F&B and Other Departments.

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Oriental Hospitality Consultants – OrientalHospitality.com o Transfers between Kitchen and Bars. o Transfers between Kitchen/Bars and Staff Canteen. The F&B Manager should prepare a specimen signature list of all personnel authorized to sign and approve a Transfer Form. The Cost Controller should cost the Transfer Forms on a daily basis.

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Competitor / Market Survey The F&B Manager and/ or the Executive Chef and/ or the General Manager should survey the competition on a minimum semi-annually basis. Any related expenses should be recorded as F&B Miscellaneous Expense.

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FOOD & BEVERAGE COST The Cost Controller must ensure that the following standard controls are maintained:

6.1

Credits to F&B Costs All F&B Cost credits must be recorded (memorandum, transfer form, etc.) and should be approval by either the Executive Chef or F&B Manager. The Cost Controller should cost F&B credits on a daily basis. Acceptable F&B Credits include and are not limited to: o Fruit Baskets (debit to Room Amenities) o Turndown amenities service (debit to Room Amenities) o Welcome Drink/Fruit (debit to Room Amenities) o Afternoon Tea and snacks (debit to Room Amenities) o Drinking Water in Rooms (debit to Room Amenities) o Beverage to Food (debit to Food Cost) o Food to Beverage (debit to Beverage Cost) o Interdepartmental transfers o House Check-Employee Meals (debit to Employee Meals at Cost) o House Checks-Other Persons such as Auditors, Suppliers, etc. (debit to Department Miscellaneous Expense) o Entertainment Checks (debit to Department Expense at Cost or YTD Actual cost %) o Guest Complaints / Complimentary (debit to Departmental Miscellaneous Expense at Cost or YTD Actual cost %) o Employee Birthday cakes (debit to P&T Employee Relations) o Bar Snacks (debit to F&B Guest Supplies) o Food Testing  Food Testing served to Employees (debit to Employee Meals)  Food Testing otherwise = Food Cost o Food Display / Decoration

Oriental Hospitality Consultants – OrientalHospitality.com  Altered Food/Carved Fruit (debit to Decoration Expense)  Natural/Whole Fruit & Vegetables = Food Cost o Uncontrolled spoilage (debit to F&B Misc. Expense)

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Daily Food & Beverage Report The Cost Controller should prepare a Daily Food & Beverage Report and should show revenues and covers by department, by meal period and average spends. The report should also show the Flash Food Cost and Flash Beverage Cost. o The principle of the Daily Flash Food Cost / Beverage Cost is that the production / operations Par Stocks are maintained on a daily basis and (in particular) at month end. Therefore, if the Opening Inventory and the Closing Inventory are almost the same then the Flash Costs should be the same as the Actual Month-end Financial Report Costs.  For example:  Opening Inventory & Closing Inventory are the same: o Food Sales = $ 10,000 o Direct & Storeroom Issues less Credits = $4,000 o Flash Food Cost = 40% o Opening Kitchen Inventory = $12,000 o Closing Kitchen Inventory = $12,000 o Purchases = $ 4,000 o Month-end Food Cost (Kitchen) = $ 4,000 o Month-end Food Cost = 40 %  Opening Inventory & Closing Inventory are different o Food Sales = $ 10,000 o Direct & Storeroom Issues less Credits = $ 4,000 o Flash Food Cost = 40% o Opening Kitchen Inventory = $ 12,000 o Closing Kitchen Inventory = $ 13,000 o Purchases = $ 4,000 o Month-end Food Cost (Kitchen) = $ 3,000 o Month-end Food Cost = 30% o This is principle applies to all areas of Food & Beverage Inventory (outlets, storerooms and overall). Par Stocks must be maintained to ensure a reasonably accurate Flash Cost figure.  The Flash Food & Beverage Cost Formula must include:

Oriental Hospitality Consultants – OrientalHospitality.com  Direct Purchases / Issues  Storeroom Issues / Requisitions  Transfers; Food to Beverage / Beverage to Food  All acceptable credits (same as monthly) The report should also show the Flash Daily Employee Meal Cost as a total cost and as a cost per employee. 6.3 Potentials The calculation of “potentials” is used to answer the question “what should the Cost or Sales or Inventory” be? The Cost Controller should calculate the potential cost, sales and inventory on a minimum quarterly basis as a method of analyzing the food and beverage cost. The Potential Cost is calculated as follows: o Number and mix of menu items sold multiplied by the recipe cost. o The Potential Cost should be the same as the Actual Cost. The Potential Sales (particularly for Mini Bar) is calculated as follows: o Consumption of items multiplied by sales price. The Potential Inventory is calculated as follows: o Opening Inventory plus Daily Purchases minus Daily Requisitions. 6.4 Market Basket Survey The Market Basket Survey will provide and indication of any change in the cost price of goods. The Cost Controller should prepare a Market Basket Survey on a minimum quarterly basis as a method of analyzing the food and beverage cost. The Market Basket Survey requires: o List of about 20 high volume (not high priced) items that are purchased regularly through any given month. o The 20 items should be a mix of all food categories and may include such items as chicken, rice, potatoes, prawns, canned tomatoes, milk, eggs, ground beef, etc. o The average volume of purchases for these 20 selected items to provide a “weighting” mechanism. o The average price paid, per item, this month and the previous month. o Multiply the average volume per item by the average price paid this month to determine this month’s Market Basket value. o Multiply the average volume per item by the average price paid “the previous month” to determine last month’s Market Basket value. o Compare the Market Basket Value between the months to determine if there is any change in the “general” cost of goods. F&B Cost Controller Report The Cost Controller must prepare a monthly Cost Controller report that should include, at minimum, the following: o Food Cost and Beverage Cost Reconciliation o Inventory Turnover o Food and Beverage Spoilage List o Officer Check Summary &Entertainment Check Summary o Employee Meal Costs Report

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Oriental Hospitality Consultants – OrientalHospitality.com o Tobacco Inventory o Other Supplies Inventory o Slow Moving / Dead Stock List o Mini Bar Consumption Analysis Distribution of the Monthly Cost Controller report should include the GM, F&B Manager, Executive Chef and FC. Distribution to Corporate Office will be on an “as required basis”.


								
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