Standard Procedures For Kitchen Operations
The standard procedures are those methods, routines, and techniques of day-to-day operation,
which include ordering, purchasing, and issuing. These were explained in earlier chapters.
Training Employees
Other than establishing standards, it is also necessary that the employees are made
aware of them. It is the procedure wherein the managers or chefs teach employees
how the work is done considering the standards and the standard procedure established.
Records and Reports
A manager of an organization cannot bein all places at all times to observe how all
the staff members are performing. The observation is usually made by the records
and reports, which are scrutinized on a daily, weekly, or monthly basis to understand the goals set by the organization and the fulfilment of the same.
Preparing and Following Budgets
The best technique for controlling business operation is to follow the budget for the year. A budget is actually a financial plan and is described as a realistic expression of management goals and objectives in financial terms.
The following factors should be considered while fixing the selling price:
• It should cover all costs.
• It should be reasonable to guests in terms of value for money.
• It should generate a reasonable amount of profit.
Methods of Calculating Selling Price of Food
The various methods used to determine the selling price of food are broadly classified into two—cost
approach and market approach.
Cost Approach
The following methods are used under the cost approach:
Cost plus In this process, first the food cost (FC) is determined and multiplied with either two and half times or 250% of the food cost, or
Selling price = food cost × 2.5 or
Selling price = food cost × 250%
For example, the food cost of vegetable biryani is I35. Hence, the selling price of biryani would be
= 35 × 2.5
Selling price = I87.5 or rounded to I90
Gross profit method Selling price = Fixed cost + Gross profit
(Gross profit = Labour cost + Overhead cost + Net profit)
First, the food cost is calculated, followed by gross profit. The average food cost of a dish should be between 30% and 40% and the gross profit would be between 60% and 70%. For example, the food cost of a portion of laal maas is I85 which is 30% of the cost. Considering the gross profit to be about I198, the selling price of the dish will be as follows:
Selling price = 85 + 198
= I283 which could be rounded to I285
Return on investment The total investment is calculated and the mark-up is decided upon. For example, 20% of the investment amount and the mark-up the pricing is done in a way that the amount can be brought back/recovered in a specific time period. For example, there is an investment of I5,00,000 and 20% mark-up. This means I1,00,000 and the total amount on which the return on investment would be calculated will be I6,00,000.
Market Approach
The following methods are used in this approach:
Copying competitors’ price In this process, the competitors’ rates are checked and similar rates are quoted which are in the same grade as that of the competitors. Going rate/customary rate It is the process of pricing by the commodity as it is priced in the market and the same changes when the market rate changes.
Various Pricing Policies
The following are the various pricing policies generally used by the companies:
Psychological Pricing
This method involves pricing the commodity at the price at which the guest feels he or she has paid less than the actual price. Some of the prices of dishes are I445 or I595, which takes the guest feel that it is less than the round number.
Loss Leader
There are items or dishes that are sold at the cost price or below the cost price to attract customers towards them and additional items or dishes other than the planned one that are bought are added up.
Calculating the Sale Price of a Drink
The various points to be considered while calculating the price of a single drink are as follows:
• Size and price of the bottle • Individual drink size
To cost a bottle (litre) of Teachers’ whisky, if a litre of bottle priced at I1,850 is used and the drink size is 60 ml which would be the measure size to be served to the guests, the total number of drinks is
Bottle size/Drink size = Number of drinks
Thus, 1000/60 x16.67
Therefore, the number of drinks would be around 16 if we round the fraction to the nearest lower whole number as it is simply not possible to divide the drink or add extra to it. To determine the cost of 16 drinks, the formula is as follows:
Cost of the bottle/Number of drinks = Cost per drink
Rs1850/16= Rs115.62 or Rs116 (rounded to the nearest amount)
Price Multiplier Method
If the same example is used to determine a minimum selling price per drink, divide 30 by 100 which will give a multiplier of 3.33. Therefore, if we take the cost of a drink and multiply it with 3.33 to determine a minimum selling price and cost being I116, the selling price would be as follows:
Rs116 × 3.33 = Rs386.2 or rounded to the nearest number which is Rs387
We can establish the price of each drink by making adjustments considering the clientele and the demand. The pricing could be changed depending on the percentage profit is targeted though in an average, 30% to approximately 40% is considered.
Cocktail Pricing
Pricing of individual drinks was mentioned earlier. A method to price cocktail is to take the prime ingredients, especially the spirit and use it as a base and then add ingredients so that total cost is obtained.
Matching Cost with Sales
Reconciliation of food cost is a summary of food cost to sales made after monthly closing. The same
is sent to the management as reports. The format of reconciliation statement is given in Fig. 6.4.
This helps an establishment know or compare the sales made in a restaurant to the cost incurred in
buying raw materials on a monthly basis.
ABC HOTELS
Monthly Cost Reconciliation
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