Food and Beverage Operations Management - Essay Example

Programme: BTEC Higher National Diploma (HND) in Hospitality Management Unit Number and Food and Beverage Operations Management (Unit 5) Unit Level: L/601/1791 (Level 4) Module Tutor: Dr. Sam Hazra Distribution date: January 2013 Submission date: 25th March 2013 Return date: Usually within 4 weeks after submission Table of Contents 1.0 Executive summary……………………………………………………………………..3 2.0 Characteristics of food production and food & beverage service systems……………..3 3.0 Factors affecting recipes and menus……………………………………………………6 4.0 Cost and staffing implications………………………………………………………….8 5.0 Use of financial statements in food and beverage operations.........................................9 6.0 Use of cost and pricing processes..................................................................................10 7.0 Managing the cost of food............................................................................................10 8.0 Pricing...........................................................................................................................11 9.0 Factors Affecting Menu Pricing....................................................................................12 9.1 Service levels.....................................................................................................12 9.2 Guest type.........................................................................................................12 9.3 Ambiance..........................................................................................................14 9.4 Sales mix...........................................................................................................14 10.0 The purchasing process.................................................................................................14 11.0 Quality control..............................................................................................................14 12.0 Selecting suppliers........................................................................................................15 13.0 Menu options for a local community pub…………………………………………….16 14.0 Party Menu: Buffet Format…………………………………………………………...17 15.0 Organizing the menu………………………………………………………………….18 16.0 The event process..........................................................................................................18 17.0 Conclusion....................................................................................................................19 18.0 Bibliography..................................................................................................................20 1.0 Executive summary Hospitality industry is a large industry, food and beverage is a significant component of it. This paper discusses the various food and beverage systems, the methods of production and services, various menus and factors considered in developing them, staffing implications. The use of financial statements, cost and pricing techniques, and purchasing process are also among the subtopics analyzed in the essay. A food and beverage menu for an event of sixty guests is compiled within a budget of £840. Finally, food and beverage service is provided for the event and the level of service evaluated. 2.0 Characteristics of food production and food & beverage service systems Food production systems vary in methods of preparing, cooking and serving food to generate meals served to the customer. The methods differ in terms of the actual location where food production takes place, the total time from preparation to service, number of stuff required, quantity of food produced and the level of hygiene and control. The main considerations in food production include quality of raw materials, food hygiene, minimal wastage, proper food storage, suitable preparation of every food item, employees’ compliance with handling regulations and cooking foods to the proper temperature. Food production methods include centralized distribution, sous-vide, cook-freeze, cook-chill and conventional method. The conventional food production system is applied in the majority of kitchen establishments. The processes involved are bringing goods into the kitchen, storage (freezing, refrigeration or dry store), and preparation, taking order from customer, cooking and serving. During the cooking process foods can be cooked in a variety of methods. In the sous-vide production system, also known as vacuum cooking, goods are brought in, prepared, cooked and portioned into plastic pouches which are then vacuum packed. The foods are then chilled and refrigerated. When a customer orders meals, the sealed poaches are put into boiling water and re-heated, after which the pouch is cut open, food is arranged on plates and served. Cook-chill method is a catering system founded regular preparation and cooking of food and subsequent chilling and storage in monitored low temperature conditions. Food is then re-heated prior to consumption. The chilled food is rejuvenated in finishing kitchens that necessitate minimum staff and low capital investment. During the process goods are brought into the kitchen store, followed by preparation and cooking, portioning, packaging, blast chilling, re-heating and eventually consumption. In the central distribution system of food production, food is produced inn bulk off-site. This system is often adopted by large chains who are seeking to outsource part or all of their food production. The cook-freeze system of production entails taking goods into the kitchen, preparing and cooking, blast freezing, blast thawing, re-heating and serving when customer orders food. Food and beverage service was customarily viewed as a delivery system. However, the system comprises two separate systems operating simultaneously. These include: a) The service sequence- this is the system that is chiefly deals with the delivery of food and beverages to customers. b) The customer process- this system deals with the customers’ experience or process. The systems of service include table service (Russian service, English service, French service and American service), buffet service, cafeteria service etc. French service varies from the others given that food is served from the guerdon- a rolling cart of height equal to the guest’s table that is covered with cloth and placed side-by-side with the table. The guerdon is furnished with a small alcohol stove which is used to keep the food warm for the preparation of crepes Suzette, sauces and other distinctive dishes. The food is partly prepared in the kitchen and finished by the chef in direct sight of the customer. This system of service is supremely elegant and elaborate. It requires technical proficiency on food production and high-quality showmanship. The chef undertakes particular tasks like preparing flambe, carving meats etc with flair and showmanship. Russian system of service is similar to French service, but the food is wholly prepared and pre-cut in the kitchen and then tidily arranged on silver platters by the chef. The waiter then shows this platter to the guest as a courteous gesture and serves the food to each of the guests’ plates using service cutleries. American service or “plate service” as the food is previously placed in place in the kitchen ready to be served to the customer. This system of service is utilized in coffee shops that necessitate effortless and quick service. In the English service also known as “family style”, the soup tureen is put in front of the host alongside with preheated soup plates and given to the waiter pointing out the customer to be served. A similar process is pursued with the main entree. The partially filled dinner plate is handed to the hostess who serves it from large serving dishes in front of her. The waiter places the plate before the guests. The system of service is often used in family restaurants, counter service and coffee shops. Buffet service is used in some restaurants and banquet. Food is smartly arranged on a long table according to the proper sequence from appetizers to desserts. Equipment like dinner plates and saucers are put on the buffet table while the soup is placed on soup tureen to keep them warm. The guests go to the buffet table to take plates and other items and serve themselves their own choice of food instead of the waiter serving them. For cafeteria service, guests move through serving queues choosing their food (Barrows el at 2009, pg 57) 3.0 Factors affecting recipes and menus Menu is a statement of the food and beverage items available or offered by restaurants fundamentally based on consumer demand and intended to achieve specific purposes. The menu is integral to a food and beverage operation. It communicates everything about the type of operation, dictates staffing, production, organization and service methods. The menu is the foremost ‘sales tool’ for products and drives the concept, image, theme, quality and the overall mission. An efficient menu relies on precise combination of food items, prepared perfectly to the satisfaction of the guests. For this particular event, the items that are offered for the guests to select from are simplified into various categories. The factors considered when planning a menu for the event include: a) Consumers – the guests expect a good variety of dishes on the menu, descriptions to accompany the main dish headings, all the menu items to be available and served as advertised and details of specific ingredients that may cause allergic reactions such as nuts. Therefore, food and beverage operators are obligated to provide excellent quality ingredients inform guests promptly when items are not available and be sincere to what is advertised on the menu. b) Food needs- vegetarianism and healthier options are trends to be considered since the guests comprise vegetarians and diabetic. Vegetarians would not eat poultry, meat and fish. Menus comprising primarily vegetables, fruits and pulses should be created. c) Operational and business considerations- the cost, preparation and production of the food items chosen should blend in with the budget of £840 to guarantee that margins are maintained. Cost considerations in the planning and creating menus include the cost of ingredients, the quality of food for each portion, food production methods adopted and food wastage during production. The chefs need to take into consideration the availability of ingredients when compiling the menus. For example, if a portion is composed of a specific type of vegetable it should be checked that it is available and at what cost. d) Equipment needs- certain foods such as pizzas and fresh pasta need unique equipment. e) Flexibility – the menus should be adaptive and flexible. Both internal and external factors can affect the dishes offered at the event. Food frights such as mad cow disease and bird flu should be considered and replaced or removed from the menu. Ingredient prices vary due to economic and political factors therefore menu prices need to be amended. Ingredients that may be available due to supplier problems can be removed from the menu. f) Terminology- the menu is a critical communication tool and difficult terminology should be shunned where possible. If the guests fail to comprehend the menu it may prevent them from picking some items. It is noteworthy that the service staff explains meaning to guests. g) Food – standard recipes should be created for every menu item to facilitate consistency of dishes. The standard recipes consist of ingredients, weightings, preparation and cooking temperatures, serving temperatures, cooking times, equipment, health and safety, costing and a photograph of the final presentation. h) The portion sizes; are chosen through deliberation of the kind of cuisine, time for the event, the type of guests, target food margin and menu type. They are built into the standard recipe. The portion sizes are managed using food production equipment like mixers, ladles, crockery, and glassware and cooking trays. i) Color balance/textures- it is significant to consider the color mixture of each dish. A well balanced combination of colors on the plate will be very appealing to guests. A range of textures is also required in dishes: smooth, coarse, hard and crunchy. These can be created through using a variety of cooking methods, ingredients, preparation and cutting techniques. j) Wording –the dishes on the menu should sound exciting and fully communicate and explain the outstanding features of the dish generating a visual image in the mind of the guests. k) Ingredient balance- the general menu and dishes should apply a splendid variety of various ingredients to include vegetables, red meats, white meats, fruits, fish, herbs, pulses and spices. l) Suppliers- the capability of suppliers to deliver the menu items, consistently meet food specifications, and availability of a back-up supplier should be considered m) Nutritional balance- it is critical to make sure that dishes are produced nutritionally with a balance of carbohydrate, protein and vitamins throughout the menu. The various nutrients offer varying functions of the body therefore it is vital to provide a variety to satisfy the needs of different consumers and diets. 4.0 Cost and staffing implications All the monies paid to staff to operate the business represent the labor costs. Labor costs are calculated using labour cost percentage method. This is the relationship between sales and labor costs. Total labour cost/total sales = LC% The staff payroll is calculated based on salary or hourly wage plus overtime from which deductions are withheld. A break-even analysis is used to analyze the quantity of sales revenue required to cover the costs of the business. This is frequently utilized when considering the business expansion or capital investment (Dopson & Hayes, 2011, Pg 29). 5.0 Use of financial statements in food and beverage operations Four main financial statements are used to control and manage finances in food and beverage operations. They include: balance sheets, income statements, operating budgets and cash flow statements. An income statement or profit and loss statement offer detailed listing of expenses and revenue over an accounting period. The general formula for the income statement is: Income = revenue – expenses + gains – losses the statement is divided into three sections: gross profit section includes sales, cost of sales and gross profit), operating expense (includes operating expenses and operating income) and non-operating expenses (includes interest and income taxes) A balance sheet indicates the assets and liabilities of a company. The shareholder equity is computed as: Net worth = assets – liabilities Balance sheets are set up for loan officers or shareholders to show the financial situation of the business. Cash flow is the comparison of cash available at hand to the bills due in the future. The accounts payable are finances due to the business while accounts receivable is the money the business owes others or debts.  Operating budgets predict expenses a business has to incur in order to accomplish intentioned sales revenues. They include income statements planed for a prospective date. Sales are the business’ revenue while prime costs are labour and food expenses. For example, most restaurants maintain prime costs between 60-69 % of sales. Fixed costs or overhead costs stay put regardless of the number of guests served whereas variable or controllable costs vary depending on the number of guests served. Common costs include costs shared that are not easily allocated and conversion costs are direct labour plus business overhead (Ojugo, C. (2010, Pg 12). 6.0 Use of cost and pricing processes  Food and beverage costs usually comprise the largest single expenditure and the most volatile expenditure in many independent restaurants. Although taking care of the guests and staff would be the most beneficial things to do during the event, proper controls are necessary when dealing with food and beverage to meet the budget requirements.  7.0 Managing the cost of food A standardized recipe can be used to manage both the quantity and quality of food produced, hence the overall cost of food. This recipe contains the procedures to be used in preparation and service of each item on the menu. A standardized menu ensures that every time a guest places an order for an item on the menu, he or she gets the exact product intended.  Important factors in a standardized recipe like cooking times and serving times are checked and retested to ensure they remain constant. This menu is critical to consistency of menu items and eventual success of the operational process. Recipes can be adjusted for quantity using the percentage method or factor method. From the knowledge of what items the guests are likely to purchase and a concrete idea of the ingredients required producing these items, the best choices regarding desired inventory levels can be made. The factors determining inventory levels include item perishability, storage capacity, vendor delivery schedule and relative significance of stock outages. The inventory items consist of purchases, goods available for sale. Food costs include the cost of food consumed, cost of employee meals, and cost of food sold. The daily cost of food sold can be estimated using the basic formulae: Day cost % = purchase today/sales today and Cost purchase to date = purchase to date/sales to date Food and beverage costs are calculated based on food cost percentage, i.e. the ratio of food cost to sales. The cost can be minimised using adjust pricing strategies, offering correct training on reducing wastes, lowering product quality, managing portion sizes, linking staff pay to food cost percentage, using trade-out, creating budgets and purchase order systems and seeking discounts 8.0 Pricing Pricing is related to cost control by the basic formula: Revenue – expense = profit It is significant to note that revenue refers to the amount spent by all guests, whereas price means the amount charged to one guest. Therefore, total revenue is computed using the formula: Number of items sold * price = total revenue It is evident that this formula includes two components of total revenue i.e. price and the number of items sold, representing the guests served. The number of items sold principally decrease as price increases, thus prices must be assessed based on the effect the have on total revenue and not just price. When making a purchase, guests demand a proper price/value relationship; therefore increasing the price without adding value can result in higher value but often reduced revenue due to decreased guest count. The price/value relationship essentially reveals guests’ analysis of the value they receive for the prices that they are paying. 9.0 Factors Affecting Menu Pricing 9.1 Service levels Service levels affect menu prices, guests expect to pay higher prices for the similar product when the level of service is higher. For instance, a bottle of soda served by a human being is generally more expensive than one sold from a vending machine. Similarly, most pizza chains charge a higher price for a large pizza delivered to the guests’ door than for the same pizza picked up by the guest. Price levels increase as the personal level of service increases. The personal service may range from delivery of items, to basically increasing the number of staff in a dining room and therefore reducing the number of guests each should serve. Guests display a willingness to pay more for increased levels of service, but this increased price should also offer extra profit. 9.2 Guest type Some guests are generally more price sensitive compared to others, but all guests require value for their money. Variation exists in the issue of what value represents depending on the type of clientele. This is clearly apparent in the pricing choices of various convenience stores across the US. In these establishments, food items such as drinks, fruits, sandwiches, cookies, and such items are sold at comparatively high prices. The guests served by these stores however value convenience and speed above everything else. The guests are willing to pay a premium price for this convenience and a variety of products as compared to the ones available at most quick-service restaurants. Similarly, guests at a high price steakhouse restaurant are less likely to be bothered about small variations in the prices of drinks as compared to guests at a corner tavern. A proper analysis of the type of guests and what they value most is decisive to the successful operation of food and beverage. 9.3 Portion size Portion size plays a vital role in deciding the menu pricing. It relates to presenting food in a visually appealing manner. Portion size is a function of both the quantity of food and the manner in which it is presented. It is the reason why successful cafeteria chains apply smaller dishes in plating their food. The representation of price to value appears clear to their guests. The correct dish size is just as beneficial as the proper ladle or scoop when serving the food. The higher the portion sizes the higher costs. One easy way to find out if the portion sizes are too large is to watch the dishwashing area and check the quantity of food that comes back uneaten. The dish room operator thus becomes an integral part of the cost control team. The portion sizes for vegetables and fruits could be increased at a fairly low cost increase since most of the present day consumers prefer lighter foods. Concurrently, average beverage quantities and side items like French fries are increasing while their costs are lower. The food and beverage operator can increase the prices of such items to sufficiently cover the larger portion sizes. Each menu item should be scrutinized to determine if the quantity being served is proper. 9.3 Ambiance Menu prices can be increased if the operator provides an attractive ambiance. Outstanding product quality with excellent service will satisfy the guests. 9.4 Sales mix Sales mix heavily influences the menu pricing choices in the same manner guest purchase decisions influence total cost of the product. Sales mix refers to the particular menu items selected by guests. Food and beverage operators can respond to this situation by utilizing a concept known as price blending. Price blending is the practice of pricing items with remarkably diverse individual cost percentages, into categories with the aim of achieving a positive overall cost situation. The capacity to expertly bled prices is a handy skill and one that is worth mastering. Various techniques are used to assign menu prices, most of which are based on product cost percentage or product contribution margin. 10.0 The purchasing process The purchasing process involves: Liaising with departmental managers and suppliers, gaining approval, getting quotes for more expensive items, sending orders, keeping records and conducting market surveys on food prices. It is a cycle which begins from purchasing, receiving, storing and eventually issuing of stocks. The stocks come in the form of food, beverage, supplies and equipment. This process is affecting the organization budget, standard of operation, time of the year, availability of storage space, the geographic location of operation, business levels and organization size and type. 11.0 Quality control The fundamental step in attaining control in the purchasing of food and beverages is to build a product specification. This specification clearly indicates the standard required for each product, exact requirements, provides and guides the supplier, and acts as a checking instrument on delivery. It helps to minimise discrepancies on delivery and when bidding for contracts. 12.0 Selecting suppliers The supplier selected should be reputable, certified, consistent and able to add value to the overall intended product. They should be able to supply the required items at the desired quality and volume, and competitive price. Lastly, it is significant to check that their payment terms meet the criteria of the accounts department of the particular establishment, the local community pub. Before purchasing, it is crucial to check market prices to make sure that supplier are quoting competitive prices to obtain the best deals. Changes in product cost that occur due to quantities ordered, seasonal availability or differences in the external environment should also be taken into account when purchasing. The items are purchased by identifying what stock is required to meet business demands, checking stock available and ordering the difference, comparing the purchase order then ordering the goods. At the receiving bay, the receiver needs trolleys, scales, calculator, thermometer and thermo pin, scissors and box cutter. Product checks are then conducted to ensure the delivery note matches the purchasing order; products match food specifications, correct weights, prices, expiry dates and temperatures. The boxes or containers are opened and checked for any damaged items or breakages. Delivery temperatures are checked to ensure the refrigerated items are at a temperature of 410F or below. Frozen products should be received frozen while dry goods are received at room temperature in good condition packaged intact. The receiving clerk signs to confirm that the order is accurate and stamps it. Any meat products are also checked for excess blood seepage and to make sure there’s no contamination and all meats are packed separately. Frozen meats should remain unthawed, poultry should not have any strong smell, and chicken meat should be golden yellow in colour and not white. The beverages are examined to ensure that seals are unbroken, there are no breakages, the labels are in perfect condition, and the vintages are proper. At the receiving area, safety and health tips like washing hands frequently, regular sweeping and mopping, removing rubbish and debris and lifting or stacking items correctly are adhered to. After products are checked-in, they are relocated into the proper storage facilities and records are updated. Various kinds of goods are kept under different temperature requirements: frozen products are stored at -18 it -240C, refrigerated products at 0-50C and dry goods at room temperature. The storage requirements depend on each kind of food items perishability. The goods are then issued, and records kept (National Restaurant Association, 2012, pg 34). 13.0 Menu options for a local community pub The types of menus include a la carte menu and table d’hôte menu. An a la carte menu is a multiple selection menu in which each dish is separately priced. The menu is offered to a guest wishing to place an order from which one can select what item to eat. All the items in the menu including the sauces made with cream, wine or mustard are cooked to order. The cooking time in this menu varies based on the dish selected by guests. It is vital to notify about the time it would take for preparation. This type of menu is impressive but involves a lot of mise-en-place. For this specific event, a table d’hôte menu would be most appropriate for the guests. This is a fixed menu which includes multi-course meals with restricted choices at a fixed price. It comprises three to five courses meal with the cutlery set on the table for all courses. The first course cutlery is set on the outside, working in to the plate as the courses advance. The menu has a wide range of choices ranging from soup to dessert and offers a choice of diabetic menu, vegetarian, and non- vegetarian choices from which guests can make their selection. Since the guests do not have the chance to plan their own meal, the meal prepared should be appealing with no similarity in the taste or color of the courses. Well presented, delicious and palatable meals are made available to satisfy the guests. The first course is made lighter to act as an appetizer for the subsequent courses; the main course is made heavy, and dishes which are heavy and hard to digest are avoided. The varieties of ingredients used, color, are garnishes are made different for each course. 14.0 Party Menu: Buffet Format A Buffet format for 60 guests with delegated sit down dining adjoining the bar is prepared. The food is arranged in a buffet and restocked as required for £14 per person for two hours. An “Our Kids Menu” is provided for the kids to choose from, and charged according to the regular menu price for food and beverage. Hot and cold menu items are suitable for vegetarian and non-vegetarian guests including: This menu accommodates gluten-free and sugar free items on specification. Beverages can be served in a variety of methods: £2.95 per person hourly which includes wines, beer, spirits (vodka/gin, cocktails made with those ingredients) and non-alcoholic beverages (soda, iced tea, coffee, juice) £3.95 per person hourly including house and import beer, non-alcoholic beverages, well and top shelf spirits, wine and cocktails made with those ingredients. Drink tickets indicating the amounts of beverages consumed. Cash bar £3.95 for wine, house beer and well liquor. £1.75-for non-alcoholic beverages. 15.0 Organizing the menu The meals are categorized such that appetizers, soups, main courses and seafood are put in separate groups. Warm and cold dishes are listed discretely, with lighter dishes listed before the richer ones in ones. Salads in the menu are highlighted, and number of calories and sugar content for an item on the menu indicated to offer the diabetic guests something to choose from. Each dish in the menu is described clearly, simply and in an appetizing way without including too many flowery details. The dessert selection is listed on a different attractive card whose availability is indicated on the menu. A broad menu featuring wines, beers, spirits, liqueurs, soft beverages and cocktails should be used. These can be put on separate menus for different class of models Bar snacks-light snacks eaten to accompany the drinks can be served. These can be in the form of platters to share, salads, sandwiches and finger food. 16.0 The event process The meals and drinks are given through table service where guests are served drinks listed on the menu at a table. After the pub is set up for the event, the service staff welcomes guests and takes them through the event program for the day. All staffs at the pub are also briefed on the requirements and details such as type of event, chronology of event, allocation of tables, menu information, any VIPs and host, any individual requests and standards. The event commences as planned, food and beverage is served, and guest requests are taken. The service staffs follow event instructions and orders from the supervisor, clean tables and monitor equipment. A satisfaction check is conducted throughout the event until it ends and any feedback from guests is noted, and communication sent to staff involved and service. The staffs then breakdown the event by clearing tables, polishing cutlery, collapsing furniture and cleaning. A workshop room set-up is made at the pub and separate tables allocated for the kids. After the event has taken place, a guest evaluation is carried out and the feedback received is communicated to the persons involved and used for planning future events. Consistency and efficiency in delivery of service requires standard procedures for the serves to follow. A detailed order of service is developed to be followed from the time the guest arrives to his or her time of departure. The standard performance involves the server making preparations to approach the guest, approaching the host, taking orders, and finishing by thanking them courteously. The staff must communicate effectively using pleasant tone, right volume, speed and clarity. 17.0 Conclusion The management options available to food and beverage operators include self-operated, outsourcing, management contracting and franchise agreement. The industry is faced by challenges which can be addressed effectively to improve quality of service. Some of these include intangibility, difficulty in maintaining consistency due to the intangible element and perishability of products. Food and beverage operations may also be affected by external factors like technological, social, environmental and legal change. 18.0 Bibliography BARROWS, C. W., POWERS, T. F., & POWERS, T. F. (2009). Introduction to management in the hospitality industry. Hoboken, N.J., John Wiley & Sons. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=225552. DOPSON, L. R., & HAYES, D. K. (2011). Food and beverage cost control. Hoboken, N.J., John Wiley & Sons. Top of Form OJUGO, C. (2010). Practical food & beverage cost control. Clifton Park, NY, Delmar, Cengage Learning. NATIONAL RESTAURANT ASSOCIATION. (2012). Management of Food and Beverage Operations (Ahlei). Pearson College Div. Bottom of Form Read More