Managing Profitable Food and Beverage Operations

As business is becoming more and more competitive in food and beverage operations, many top managers are increasingly recognized that purchasing and supply chain management is the key business drivers in this operation. And again it appears that buyers and supply managers can contribute significantly to the company’s bottom line. The business context of many companies has radically changed nowadays and most changes are not only trends but also the result of large, unruly forces that will have a lasting effect on the world economy (Van Weele, 2005). And also many people are now realizing that only with the suitable purchasing and supply chain management and a proactive approach of cost control, forecast and performance measurement can a food and beverage operation gain the competitive advantages in such a difficult trading environment and make money.

The role of purchasing and supply chain management is very important in food and beverage operations. As purchasing can be defined as a function that concerned with search, selection, purchase, receipt, storage and the final use of a commodity in accordance with the catering policy of the company, it suggests that the person employed to purchase foods and beverages for an company will be responsible not only for the purchasing but also receiving, storage and issuing of all the commodities as well as being involved with the purpose of which items are purchased and the final use right of them, in many organizations this job role may come under the heading of procurement and be a function of the finance department because if managed inefficiently it will create problems that often result in an unsatisfactory level of both costs and profit of the restaurant and also the dissatisfied customers. With no specifications of the commodities there would be neither quality nor quantity standards resulting in over-ordering or under-ordering, as yields for items would be indeterminable because of the receiving department can only be able to check on the quantity but not the quality of it, so the work in stores and preparation departments would be difficult with the quality of produces varying greatly. Finally, it would be difficult to measure the satisfactorily performance of departments if they are continually being provided with non-standardized commodity items. And in some large companies the purchasing and supply chain management function may be responsible for a wide range of non-food items which include small equipment, cleaning materials, linen etc. (Davis et al., 2008). The challenge of purchasing and supply chain management in future is to balance the requirements of reliable and prompt customer delivery with manufacturing and inventory costs. Supply chain modeling enable managers to evaluate which options will provide the greatest improvement in customer satisfaction as well as at a reasonable cost, the supply chain is modeled as a network that captures the relationships between asset cost (i.e., inventory and capital equipment) and the time domain characteristics of customer service (i.e., responsiveness and reliability in customer delivery) (Fitzsimmons, J. A. and Fitzsimmons, M. J, 2008).

Profit is what remains when subtract expenses from revenue. As economist Joseph A. Schumpeter once said: “profit is the expression of value that the entrepreneurs contribute to the production.” In order to improve the profit, or sometimes can be called the bottom line, the management work of maximize the revenue and minimize the expenses is really important. Expenses are including food costs, labor costs, rent or mortgage payments, utilities, insurance, license fees, advertising, repairs and maintenance, administrative and other general expenses, hence the company must create and act upon a detailed action plan for each of these expenses (Ojugo, 2010).

A potential cost is the expectation of what the food cost should be when complying with all the cost control procedures. In other words, it is the standard by which people measure the food cost efficiency of their operations. Using menu recipes people can easily calculate what each item should cost by adding the costs of each recipe ingredient, but the difficulty of forecasting the potential cost is that it does not take into account of those possible wastes, spoilage or cooking errors, it is only the cost of the menu items if nothing is burned, misused, spoiled or wasted. And the actual cost is a fairly self-explanatory term, it is how much people actually spend on their foods, it is the amount that will show up on the restaurant’s profit and loss statement. Since we know that there will have many expenses when doing a business, some are controllable while some are not, but the actual food cost is the most controllable and flexible one, it consists of cost of food sold to customers; cost of food lost through poor purchasing practices (this includes incorrect items ordered or incorrect orders due to poor quality, inappropriate quantity or other incorrect purchase specification); cost of food lost in receiving and storage (this contains spoilage, theft from the receiving dock, theft from storage, short shipments and improper receiving procedures); cost of food lost in production (this includes inaccurate yield tests, inaccurate recipes, over portioning, overproduction and waste) and cost of food lost by the front of the house (this contains incorrect orders, spills and broken orders) (Ojugo, 2010).

Davis et al (2008) states that successful forecasting is one of the important management tools for food and beverage control, good performance of the staffs will also help to identify how well a business is doing when comparing to customers’ expectations and competitions and a success business also depends directly on the wise staff planning because labor costs in an industry typically range from 30 to 40 percent of the food and beverage revenue. In conjunction with food cost, labor cost is often referred to as the prime cost because it constitutes the vast majority of expenses in most operations. Therefore staff planning must balance the needs of three groups: management, to minimize costs; employees, for improved hours and pay and also customers, for improved service. In a word, controlling costs involves an amalgam of techniques that minimize the food expenses. Managers need to look for overspending in the purchasing department where incorrect ordering and inaccurate yield testing may cost the restaurant money while receiving and storage personals must be trained to keep their area free of waste and loss (Ojugo, 2010).

Food and beverage management is the management of all the stages within the catering cycle. It is systematic and organic; quantitative and qualitative; academic and pragmatic also serious and fun (Cousins et al., 2002). Nowadays food and beverage operation is in a high-speed development stage, but with so many competitors it is not easy to be outstanding than others. Meanwhile, the hospitality industry has been facing a series of difficult trading conditions due to the erosion of consumer confidence, rising costs and an extended period of economic slowdown. These have led to add pressures for food and beverage sectors to cut costs while attempting to maintain profitability and customer satisfaction as well as to gain the competitive advantages.

【作者簡(jiǎn)介】Zhou Mo， Guilin Tourism University。