chapter 9
Receiving,
Storage, and
Issuing Control
Class Name
Instructor Name
Date, Semester
Foundations of Cost Control
Daniel Traster
Opening Questions
• Describe a foodservice receiving area that you have
seen.
• What goes on there (specifically)?
• What equipment is present and used there?
2
Required Resources for Receiving
Well-trained Employee
Cleaning Supplies
Space to receive
Pens, Paper
Scales
Clipboards
Thermometer
Calculators
Knife
Desk
Ruler
Computer
Hand Truck
File Cabinets
Dollies
3
Needed from Purchaser
• Order Sheets
• Bid Sheets
• Product Specifications
• Daily List of Deliveries
4
Checking Products and Invoices
Confirm Product Quality matches Chef’s Standards
Confirm Product Quantity matches Invoice
Confirm Price and Quantity (including pack size) on Invoice match
Order and Bid Sheets
Check math on extensions
5
Invoice Adjustments and Approvals
For poor quality or quantity:
• notify driver
• request credit memo
• make note on invoice
• have driver initial
For incorrect pricing:
• notify purchaser to speak with the purveyor
• do not sign invoice until issue is resolved
For shorted items:
• notify purchaser and chef
6
Approving the Invoice
Once invoice is accurate, receiver signs it
One copy for receiver, one for driver
May use invoice stamp to confirm invoice checked,
extensions checked, and invoice paid
7
Receiving Clerk’s Daily Report
• List of all items received on a given day
• Includes quantities and prices
• Sorts items as
― Directs (go to kitchen)
― Stores (go to storeroom)
― Sundries (non-food or –drink)
• Easier to track daily food and beverage costs
• Send with invoices and credit memos to accounting
8
Food Storage
• Done quickly after receiving to prevent spoilage and
theft
• Store frozen and refrigerated products first
9
Coolers
Keep shelving
6 inches from
wall and floor
Should
have
locking
capability
Guidelines
Fridge at
33-40 F,
freezer
below 0 F
Do not
place
anything in
front of the
fan
Storecooked
food
above raw
10
Dry Storage
Shelving 6
inches
from floor
and walls
Guidelines
Should
have
lockable
doors
Keep 60 –
70 F and
low
humidity
11
Chemical and Cleaning Supplies
Store after
foods are
stored
Guidelines
Store in
original, welllabeled
containers
Keep separate
from food to
avoid crosscontamination
12
Storage Guidelines
• Rotate stock using FIFO to reduce the risk of product
spoilage in storage; place new products behind old
ones.
• Keep identical products in the same location.
• Organize inventory sheets to align with product
location on shelves.
• Spoilage Report – lists products that spoiled in storage.
13
Requisitions and Issuing
Open Storeroom
• employees gather products themselves
Closed Storeroom
• employees make written request for products; request
filled by storeroom clerk or manager
Requisition
• the written request (on paper or electronically) for
products from storeroom
Issuing
• the process of releasing requested products from
storage to an employee
14
Closed vs. Open Storerooms
Closed Storerooms
Pro: More control
Con: More costly,
requiring high labor
costs for a storeroom
manager or clerk.
Open Storerooms
vs.
Pro: Less costly
Con: Less secure
15
Storeroom Controls
Open Storeroom controls:
• Keep storeroom open only briefly and watch
employees closely during that time.
• Only managers access storeroom when not actively
open.
• Keep expensive products locked up; only manager
can access them.
General Controls:
• Conduct regular inventories to catch high food cost
problems early.
• Install security cameras.
16
Requisition and Issuing Process
Employee writes requisition; manager signs.
Storeroom clerk fills requisition orders.
Clerk records per unit and extended costs, date, and department
on requisition
Employee picks up filled order and signs requisition
Physical inventory is conducted periodically and reconciled against
prior inventory, deliveries, and requisitions
17
Transfers
A transfer is issuing or receiving food from another
department or business unit.
• Transfer form looks like requisition form but lists
departments issuing and receiving
• Sent to cost control manager with requisitions
18
Conducting Inventory
• 1 person counts and 1 person records
• Use blank sheets or printed inventory lists
• Can use handheld scanners
• Completed sheet includes name, quantity, unit, and
extended price for each item
• Do when restaurant is closed and no deliveries are
scheduled
19
Valuing Inventory
Extension
Number
of Units
Price per
Unit
NOTE: Price per unit is not always obvious, since
prices may change with each order.
20
Valuing Inventory
FIFO
Most
Recent
Price
LIFO
Techniques
to Value
Inventory
Actual
Cost
Weighted
Average
21
FIFO (First In, First Out) Method
Assumes cost is based on most recent invoice and
only progresses back in time if there is more
inventory than can be accounted for with the latest
invoice.
22
Example 9a
• A restaurant has 140# of flour in inventory on Aug. 20th.
• It purchased:
―50# on Aug. 3rd for $23/50#
―50# on Aug 10th for $24/50#
―100# on Aug. 17th at $23.50/50#.
Using the FIFO Method, What is the value
of the flour in inventory?
23
Example 9a (cont.)
100# @ $23.50/50# = 100 X 23.50 ÷ 50
= $47
40# @ $24/50# = 40 X 24 ÷ 50
= $19.20
Total for 140# = $47 + $19.20
= $66.20
24
LIFO (Last In, First Out) Method
Cost based on the first invoice for the period and
only progresses forward once the entire inventory
for that invoice has been accounted for.
25
Example 9b
From data in example 9a, calculate the value of
140# of flour using the LIFO method.
50# @ $23/50# = 50 X 23 ÷ 50 = $23
50# @ $24/50# = 50 X 24 ÷ 50 = $24
40# @ $23.50/50# = 40 X 23.50 ÷ 50 = $18.80
Total for 140# = $23 + $24 + $18.80 = $65.80
26
Weighted Average Method
total amount spent on an
ingredient over the
inventory period
Price per unit
=
total number of units of that
ingredient purchased
during the same period
27
Example 9c
From data in Example 9a, calculate value of 140#
of flour using Weighted Average.
50# X $23/50# = $23
50# X $24/50# = $24
100# X $23.50/50# = $47
Total Flour expense = $23 + $24 + $47 = $94
Total weight = 50# + 50# + 100# = 200#
Price per unit = $94 ÷ 200# = $0.47/#
Value of 140# = 140# X $0.47/# = $65.80
28
Actual Cost Method
The Actual Cost Method uses the price written on
each unit at the time of storage.
• Inventory sheet must have multiple lines per
product as identical products with different unit
costs must be counted separately
• If inventory is properly rotated, this method is the
same as the FIFO method
29
Most Recent Price Method
• Uses the most recent invoice price as the price per
unit for all units of that item in inventory.
• Referring to example 9a, all 140# of flour would be
valued at $23.50/50# for this method.
30
Total Inventory Value
The inventory value is both the closing inventory
value for the prior period and the opening
inventory value for the upcoming period.
Total inventory value = sum of all inventory item extensions
31
Preventing Inventory Theft
People
• only put honest, trustworthy people in positions of power
Locks and Cameras
• lock up expensive items; only give keys to managers.
• use security cameras
Paper
• create a paper trail with employee signed requisitions
Inventory Quantity
• minimize amount of inventory kept on hand
32
Inventory Turnover Rate Formula
Average Inventory
Opening Inv + Closing Inv
=
2
Inventory Turnover
Cost of Food Sold
=
Average Inventory
33
Inventory Turnover Rate
• Ideal rate is for inventory to turnover every 1-2 weeks.
• To convert monthly inventory turnover rate to days to
turnover the inventory…
Days to turnover
inventory
# of days in the month
=
Inventory turnover
34
Example 9d
For January, cost of food sold in restaurant is
$37,500. Opening inventory for January is $12,300
and closing inventory is $12,900. How often (in
number of days) does this restaurant’s inventory
turnover?
35
Example 9d (cont.)
Average Inv. = (Opening + Closing) ÷ 2
= ($12,300 + $12,900) ÷ 2
= $12,600
Inv. Turnover = Cost of Food Sold ÷ Avg. Inv.
= $37,500 ÷ $12,600
= 2.98
Days to Turnover = Days in Mo. ÷ Inv. Turnover
= 31 ÷ 2.98
= 10.4 days
36
Benefits of Quick Turnover
Helps control
theft, as
stolen items
are noticed
quickly
Ties up less
money in
inventory
Reduces
chance of
spoilage
Reduces
space
needed to
house
inventory
37
Special Concerns for Beverages: Receiving
• Alcohol picked up at ABC store checked by person
picking it up and checked again by someone else at
the business
• Never leave delivered alcohol unattended until it is
secured in storage
• Schedule alcohol deliveries when no other deliveries
are scheduled
• Check labels and fill levels carefully
38
Special Concerns for Beverages: Storage
• Lock up alcohol and limit the number of managers
with key access.
• Store each type of bottle in its own bin.
• Use bin numbers and order bins numerically for easy
location.
39
Special Concerns for Beverages: Storage
Storing Wine
• low light
• controlled
humidity
• 55 degrees for red
• 45 degrees for
white
Storing Beer
• in original cases
• once chilled,
keep refrigerated
• store kegs at 40 –
50 degrees
40
Special Concerns for Beverages: Issuing
• Use a bottle exchange program.
• Use written requisitions (even if storeroom is otherwise
open).
• Ideally, only one manager has the key and the right
to issue alcohol.
• Managers must check paperwork against inventories
and verify control procedures are being implemented
properly.
41