Foodservice costs

Question 1

How is the budget organized financially?

Answer 1

government -> hospital -> department where the department submits projected budget.

spread evenly according to fluctuations

Question 2

What does the department do if there is a budget cut?

Answer 2

they send in an impact statement

Question 3

What is a cost centre?

Answer 3

costs:
- responsible: department( manger +employee)
- not responsible: revenues or investment decisions
eg. hospital foodservice

Question 4

What is the concept of revenue generating?

Answer 4

a process where a product or service is sold to produce income
eg. hospital cafeteria

Question 5

What is auto financing?

Answer 5

to make enough profit to operate and invest in this operation
-without borrowing money or selling more shares

Question 6

What is the term out sourcing?

Answer 6

when a company employs another organisation to do work rather than using internal employees
-usually to get non-core expertise

Question 7

What is a contract fee?

Answer 7

the price, fee, rent or royalty payable in a contract

Question 8

What are purchased services?

Answer 8

outsourced services to an external supplier (to get non-core expertise)
-equipment repairs, duct cleaning etc.

Question 9

What are some terms relating to budget?

Answer 9

operating
development
capital
zero-based budgeting
impact statement

Question 10

What is the difference between purchasing and outsourcing

Answer 10

outsourcing: buy a service, part of a process
purchasing: buy to start the process

Question 11

What is the meaning of operating budget?

Answer 11

covers expenses required to deliver services (salaries, supplies, repairs, etc.)

Question 12

What is the development budget?

Answer 12

tool used to plant and track a specific project

Question 13

What is meant by capital?

Answer 13

used for long term investments like infrastructure and facilities
-paid off over time

Question 14

What is a zero-based budgeting?

Answer 14

a budgeting process that allocates funding based on program efficiency and necessity rather than budget history

• no items are automatically included in the next budget

Question 15

What is an impact statement?

Answer 15

summarized an organization’s initiatives

answers the why (put in place), who (benefits) and what (benefits expected for community)

Question 16

What is SFS?

Answer 16

shared foodservices: used to service different types of institutions
eg. nursing home, school, daycare)

Question 17

What is a commissary?

Answer 17

a central kitchen serving many units with similar mission statement

Question 18

What is a kitchenless hospital?

Answer 18

a central kitchen

Question 19

What is a collective agreement?

Answer 19

a contract between the employer and the union outlining terms and conditions for employee

Question 20

What are some solutions to budget cuts?

Answer 20

increased technology & revenue

decreased quality and services/programs

Question 21

What are the major foodservice cost areas?

Answer 21

labour %:

• hospitals” 62-68%
• private cafs and university residents: 35-48% (more even)

food%:

• hospitals: 25-27% (if proft and loss: 5%)
• private caf and Uni res: 28-30%

Other %: varies…
university residence: 35% (more well rounded_)

*major difference: between food% for fee for service and profit & loss for contracted hospital (profit&loss cut on food% much lower)

Question 22

What are the major effects on labour%?

Answer 22

• type of menu
• unionized/not
• variety in categories of worker

other:
- cook-chill vs. conventional system
- 7 day vs. 5 days production
- centralized vs. decentralized
- shift work vs. regular days
- amount of patient service
- economies of scale
- food and other costs

Question 23

What is meant by economies of scale?

Answer 23

savings proportionate to increased scale of production

Question 24

What are factors that influence food%?

Answer 24

• degree specialty (eg. kosher)
• proportion of food bought ready to serve (complete end of continuum)
• overall quality/variety of food
• amount of vending machine business
• labour and other costs

Question 25

What are some factors that affect other%?

Answer 25

- cleaning and sanitation supplies - paper products - disposable plates and utensils - printing and photocopying - laundry - travel, conferences..etc. can include: - lighting, heating, telephone - rent - contract fee - consultant services - self/auto financing payments - rental of office equipments - vending machine maintenance

Question 26

What is the trend for the changing ratios/

Answer 26

due to the change in price, food prices increased therefore, all three percentages (food%, labour% and other% have changed as well)

Question 27

What are the most and least food cost %?

Answer 27

least: vending machines 25% most: break-even establishments 51%

Question 28

What are the steps in the cost control cycle?

Answer 28

1. purchasing 2. receiving 3. storage 4. issuing 5. pre-prep 6. prep 7. portioning 8. transfer from kitchen to service 9. order taking 10. bank deposits 11. accounts payable

Question 29

What are 10 cost control tools?

Answer 29

1. food purchasing specs 2. supplier price comparison reports 3. standardised recipes 4. costing records 5. purchasing, receiving reports a) purchasing part b) receiving part 7. inventory records 8. sales mix analyses 9. forecasting 10. waste reports

Question 30

Identify what information is needed for the purchasing part of the purchasing as a cost control tool.

Answer 30

``` purchaser's name (ordered by..) date product units on hand units needed units ordered check mark to confirm items that were ordered ```

Question 31

Identify what information is needed for the receiving part of the purchasing as a cost control tool.

Answer 31

``` items received (check mark) quality and weight checked and problems indicated missing/sent back items indicated acknowledged by receiver and deliverer ```

Question 32

How are inventory records used to control food costs?

Answer 32

calculating food costs for the period determining consistency of usage from period to period comparing food costs between periods in dollars vs. percentages comparing actual and theoretical food costs determining product turnover

Question 33

How are sales mix analyses used to produce optimal foods, quantities and services?

Answer 33

``` tracking trends effective purchasing menu modifications/designs evaluating existing pricing policies evaluating service hours ``` date source: cash register report = popularity or poor performance of items

Question 34

What is forecasting for and how can we apply it?

Answer 34

to reduce and control costs via: accurate purchasing, production of food and effective staff use method: 1. previous week - calculate % difference between this year and last year 2. apply % difference to sales of upcoming week form last year 3. adjust according to new market factors, predicted weather, pay day, etc.

Question 35

How can waste reports be cost control tools?

Answer 35

decrease or prevent waste by: studying food usage documenting kitchen staff operations and decisions identification of problems with purchasing, production, distribution, training, equipment... include item, amount, reason and initials of responsible person

Question 36

Why are standard important?

Answer 36

set a minimum requirement/acceptance of performance integral to cost control programs

Question 37

What are the 5 steps related to standard?

Answer 37

1. establish standards of performance and results (individual and departments) eg. belt line waste documented at each meal = belt line waste will be no more than 5% 2. insist that all individuals follow standard to prevent waste and inefficiency 3. monitor adherence to standards as preventative control measure 4. compare actual performance against standards 5. take timely/appropriate action when deviated from standards are detected

Question 38

What are 7 limitations to cost control standards implementation?

Answer 38

1. manufacturing operation, processing raw materials and combining into end product 2. perishable product: stored for limited time 3. products have to be made on demand 4. variety of products have to be produced simultaneously on same production line 5. items production change many times daily 6. items produced, purchased and consumed at the same time 7. service is part of the product most of the quality control and cost control is don't close to product consumption

Question 39

What is the point to which cost control is limited to? (once it is maximized)

Answer 39

only a management task | if at max. only way to increase "bottom line" is through revenue generation

Question 40

How can you measure how well you are doing? SOFI

Answer 40

food cost per meal: food cost per period/ # meals per period labor cost per meal: labor cost per period/ # meals per period other cost per meal: other cost per period/ #meals per period total cost per meal: total cost per period/ #meals per period meals produces per hour: total meals per period/ total hours worked per period %participation rate: actual users/potential users *100

Question 41

State the cost per meals in $ ballpark figures.

Answer 41

for a regular self managed hospital foodservice: labour cost = 67% food cost = 27% other cost= 6% total=6.70-8.9