Principles of Food, Beverage, and Labor Cost
Controls, Ninth Edition
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All foods can be categorized as either
directs or stores in food control, the total
costs for these two are the two basic
components of the daily food cost.
As discussed earlier, directs are charged to
food cost as received. Therefore, to
determine food cost for any given day, one
must know the total of directs received on
that day. This figure is readily available if
the Receiving Clerk's Daily Report or a
similar form is completed each day.
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Stores purchases are added to inventory and
charged to the food cost when issued.
One must determine the value of stores issued
on a given day, each day, to obtain the second
principal component of food cost for that day.
If all foods issued from inventory are listed on
requisitions, the determination is not difficult.
One merely prices and extends each requisition
for foods issued on that day and then adds the
totals for all requisitions to obtain the total
cost of stores issued.
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In operations where transfers are made
(promotion expense, employees’ meals, and
steward sales, for example), values for these
should be determined daily and taken into
account as well. One would determine their
value and then credit the daily food cost for
that amount.
The value of any alcoholic beverages
transferred from the bar to the kitchen for use
in food preparation should be charged to food
cost.
Many establishments credit daily food cost for
the value of employees’ meals.
Opening inventory is the dollar value of all food
on hand at the beginning of the accounting period.
Purchases are the sum cost of all food purchased
during the accounting period.
Total Available is the sum of the beginning
inventory and purchases.
Closing inventory refers to the dollar value of all
food on hand at the end of the accounting period.
Cost of food consumed is the actual dollar value
of all food used, or consumed, by the operation.
Employee meal cost is a labor-related, not foodrelated cost. Free or reduced-cost employee meals
are a benefit much in the same manner as medical
insurance or paid vacation.
It is important to note that ending inventory for one
accounting period becomes the beginning inventory
figure for the next period.
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Cost of food sold is the
dollar amount of all
food actually sold,
thrown away, wasted
or stolen. It is
computed as follows:

Opening Inventory
PLUS

Purchases

= Total Available
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LESS
Closing Inventory
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= Cost of Food Issued
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PLUS / MINUS
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Adjustments
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= Cost of Food Consumed
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LESS
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Employee Meals
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= Cost of Food Sold
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Cost of directs (from the receiving clerk's daily
report)
+ Cost of stores (from requisitions)
+ Adjustments that increase daily cost
(transfers from bar to kitchen; transfers from
other units)
– Adjustments that decrease daily cost
(transfers from the kitchen to the bar: food to
bar (directs), gratis to bar, steward sales,
promotion expense)
= Cost of food consumed
– Cost of employee meals
= Daily cost of food sold
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By itself, the daily food cost percent for any
one day may not be a very accurate figure.
Many restaurants purchase directs every
other day, and this will affect daily food
cost, making it artificially higher on the days
when directs are received and charged to
food cost and correspondingly lower on the
other days.
To help overcome the problem of artificially
high food cost percent one day and low food
cost percent the next, most operations also
calculate food cost percent to date.
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Food cost percent to date is defined as the
cumulative food cost percent for a period. It
takes into account all food costs and all food
sales for all days so far in the period.
To determine this cumulative food cost
percent (food cost percent to date), one
divides cost to date by sales to date.
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1. Shows food cost, food sales, and food cost
percent for any one specific day and for all
the days to date in the period, and
2. Compares these figures to those for a
similar period.
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Some foodservice operators also determine
what the value of the closing inventory
should be, based on records indicating
purchases and issues. This is defined as
book inventory. Those who determine a
book inventory value normally do so to
compare it with the actual inventory value.
A method of establishing the value of the
book inventory is readily available to those
who maintain daily food cost figures. This
form provides a means for maintaining
cumulative book inventory figures for a
period.
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Opening inventory (closing inventory for the
preceding month)
+ Purchases (total stores purchases for the
period, as listed on
receiving reports)
= Total available (total value of the stores
available for use during the period)
– Issues (total stores issues for the period,
as listed on requisitions)
= Closing book value of the stores
inventory
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Acceptable reasons are
an occasional human
error in costing out
requisitions, the use of
the most recent
purchase price rather
than actual purchase
price in valuing the
physical inventory, and
the mismarking of
actual purchase prices
on items when that
method is used.
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Reasons that are
never acceptable
include issuing
stores without
requisitions,
allowing meats to
age to the extent
that they become
unusable and must
be discarded, and
the theft of food.
© John Wiley & Sons, Inc. 2009