Compare Delivery Invoice and
Purchase Order
Step 1:
Purchase Unit
Price
Product Quantity
(weight or count)
Step 2:
Confirm Product Quality
Sign Delivery Invoice
Step 3:
Issue Credit
Memo (if
necessary)
Step 4:
Move
Product to Storage
Complete
Receiving Report
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



Competent Personnel
Proper Receiving
Equipment
Proper Receiving
Facilities
Appropriate Receiving
Hours
Available copies of all
specifications
Available copies of
purchase orders


Request a credit memo
because the driver has
no authority to alter the
delivery.
When a product differs
slightly form the
standard it should NOT
be rejected for 2
reasons:
 1. Suppliers do not want to
do business with people
who dwell on small details.
 2. It leaves the receiver
short.


Look at the products on each slide.
Circle or underline if each product is
“acceptable” or “unacceptable”. If
“Unacceptable”, identify the problem and
estimate the cost of the product.
What does the picture
suggest?
Determine the Unit Cost:
Case: $28.90/12 qts
What is the Unit Cost?
Unit Cost: $2.41

An entire case of
apples arrives. ¼ of
the case contains #1
quality apples that
appear in the picture.
Determine the Unit Cost:
Case: $22.95/20-22
What is the Unit Cost?
Unit Cost: $1.15 ea
Delivery ticket has a
list of regular items
because of regular
payment.
 Watch for shrinkage of
products as they are
delivered.
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Odd Hours Receiving
Drop Shipment
Mailed Deliveries
COD Deliveries
Unintentional Error
The dishonest
supplier – honest
delivery agent.
3. Honest supplier with
dishonest delivery
agent.
4. Dishonest on both
sides.
1.
2.
Item
Purchase Unit
No. of Units In
Kitchen Storage(a)
Purchase Price
Total Cost
Green Beans
Case
2
$31.50
$63.00
Total
(a)Note:
$503.00
ideally items are stored in the same containers in which they were purchased. This can reduce doublehandling and provide a convenient container for marking information about the date of receipt and product
costs. It is also, for example, easier, faster and, probably, more accurate to count one case of six #10 cans of
fruits or vegetables than it is to count six individual cans of each product.
Item:
Date
Strip Steaks (6 oz.)
No. of Purchase Units
In
Balance
Out
37
9/10/xx
-----
25
12
9/11/xx
35
20
27
Is the cost to your restaurant of the food and beverage products your restaurant sells.
Since your goods pertain to your food and beverage inventory, COGS is determined with the following equation:
Beginning Inventory + Purchases - Ending Inventory = COGS.

Beginning inventory means the amount of product that you have in your kitchen and storage
rooms at the beginning of a period, usually the beginning of the week. For instance, if Monday is
the start of your business week, and you have $5,000 worth of food and beverages on your
shelves, $5,000 is your beginning inventory.

Purchases means the amount of inventory you purchase in food and beverage orders in that
period of time. If an order of another $3,000 worth of inventory arrives on Friday, this would be
considered the purchase.

Ending inventory, then, is the amount of food product you have left when the work week is over.
Although you purchased product during the week, but you will have less inventory at the end of
the week since you sold the food to your customers. For example, at the end of the work week,
you have $4,000 worth of inventory remaining.

Example: $5,000
+ $3,000 - $4,000 = $4,000 COGS




Cost of food inventory at beginning of month
Cost of food purchases during month
Cost of food inventory at end of month
Food cost (cost of goods sold) during month
= $29,500
= $76,000
= $27,500
= $78,000
Food Cost (Cost of Goods Sold)
[Beginning Food Inventory  Ending Food Inventory]  2
$78,000
[$29,500  $27,500]  2
$78,000
$28,500
= 2.74 turns

Purchase unit – The standard size of the product package.

Product usage rate – The number of purchase units used during a
typical order period.

Order period – The time for which an order is normally placed.

Lead time usage – The number of purchase units used between order
placement and delivery.

Safety level – The minimum number of purchase units that must
always remain in inventory.

Order point – The ideal number of purchase units in inventory when an
order is placed.

One of the most important numbers restaurant managers and owners
look at is food cost percentage.

In food service, this % represents the portion of sales ($) spent on food.
Since you reap sales from the inventory you use, you can determine the
food cost % by money you spent on food sales (COGS) by your total food
sales.
The following equation may help clarify the process:

So, let's say the sales for the week were $12,750.
Your new equation would look like this:

In this case, about 31% of sales were spent on food and supplies. This is a fairly typical food cost for a restaurant
.


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It is very helpful to break down your food cost into all the types of foods
and beverages your purchase.
For instance, a 31% food cost may be broken down into the following
food categories:
If food cost is high, categorizing like this will help determine where the money is being
over-spent. Operators can keep a much better tab on food cost when they know
exactly what percentage of the total cost they are spending on each category of food.

The COGS equations are essential for figuring the
restaurant's gross profit:

Gross profit is calculated by deducting money you spend on
food and beverages from your total revenue.

Using the ongoing example, you would subtract your COGS ($4,000),
from your total sales ($12,750) in order to find your gross profit.
Although gross profits
may be included in your
Profit and Loss (P&L)
statement, the
important number to
look for is the net profit.
Net profit, or actual
profit, is the gross profit
minus all operating costs
such as labor, rent,
repairs, and marketing
costs, to name a few.
This is your restaurant's
true profit after all is
said and done.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Keep an eye on your profits and losses (P&L).
Conduct inventory consistently.
Price menu items properly.
Portion food correctly.
Handle food properly.
Rethink the garnish.
Keep a record of all food waste.
Be consistent with food purchases.
Train employees to care.

Making profits is the

#1

restaurant's
goal.
In order to do this, the
manager needs to
simultaneously bring in
revenue and control
costs in the restaurant.
This is one of the biggest
challenges, but also one
of the manager's most
important responsibilities.


Maintain a steady,
profitable food cost by
adhering to all recipes
Assessing purchasing
procedures
Properly conducting
inventory in your
restaurant.