Chapter 5 - Purchase prices: How do i get the best deal? This chapter’s objectives are to: Describe the concept of value and its dimensions, understand the relationship among AP price, EP cost and value, cost out standardized recipes. | Value Revisited Reducing Costs Describe the concept of value and its dimensions. Understand the relationship among AP price, EP cost and value. Cost out standardized recipes. Compare the AP prices and EP costs from multiple vendors. Ability to suggest a variety of methods to increase overall value. Ability to create a variety of ways to reduce AP prices. Introduction (cont.) Also true of Supplier Services: focus on what you have to have Vendors may not give you all of the services or price breaks you want Introduction (cont.) To increase overall value and reduce AP prices Know what you need Keep a good head for numbers Don’t be influenced by sales pressures Specifications Revisited: Here’s where you determine what it is that you need! Standard Recipes Revisited Just as critical as specifications Highlights expensive ingredients Recipes should be written with AP amount for each ingredient Calculating and adding AP prices for all ingredients and dividing by number of servings the recipe | Value Revisited Reducing Costs Describe the concept of value and its dimensions. Understand the relationship among AP price, EP cost and value. Cost out standardized recipes. Compare the AP prices and EP costs from multiple vendors. Ability to suggest a variety of methods to increase overall value. Ability to create a variety of ways to reduce AP prices. Introduction (cont.) Also true of Supplier Services: focus on what you have to have Vendors may not give you all of the services or price breaks you want Introduction (cont.) To increase overall value and reduce AP prices Know what you need Keep a good head for numbers Don’t be influenced by sales pressures Specifications Revisited: Here’s where you determine what it is that you need! Standard Recipes Revisited Just as critical as specifications Highlights expensive ingredients Recipes should be written with AP amount for each ingredient Calculating and adding AP prices for all ingredients and dividing by number of servings the recipe makes gives the cost for one portion Standard Recipes Revisited You must cost out as many recipes as there are potential vendors for the items in that recipe The yield percentages may be different for different vendors Different grades of product from the same vendor may give different yield percentages Standardized Recipes Revisited When you find an AP price variation, order from the vendor who is truly less expensive Don’t want to do the tests on all ingredients? Track the most expensive ingredients – check AP prices and convert to EP costs for vendor comparisons Average restaurant kitchen has 600 to 800 ingredients in stock but only 20 to 25 account for almost 80 percent of total food purchases Standard Recipes Revisited Example – Three vendors sell brisket by the pound Vendor A: $; 75% yield percentage Vendor B: $; 90% yield percentage Vendor C: $; 82% yield percentage (everything else is similar: delivery schedule, bill-paying procedures, etc.) .
