Q1) Restaurant Operation: Choose One Topic about the Restaurant Operations You’re Interested and Explore More Information about It

          Purchasing is one of the most important part in the restaurant operations. It directly related to the operating cost and customer expectation of the restaurant. If the restaurant staff fails purchase the right quantity for different ingredients, the restaurant will face a shortage of ingredients and wastage of excess ingredients.  With insufficient ingredient, the restaurant will not be able to provide dishes stated on menu which disappoints their customers. For purchasing excess ingredients which are perishable, it leads to food wastage and increase in operating cost which lowers the restaurant’s profit.
        Just like what have mentioned in class, several staff should be assigned with different roles in purchasing and standard should be set to make procurement process an efficient one. However, what are the concrete steps for starting the purchasing procedure? Here are they:

Step 1: Determine a purchasing person or department
       The purchasing person or department is responsible for requesting quotation, making order, receiving, storing and issuing. There may be several people for buying all ingredients needed for a restaurant, but there should only be one person, the buyer who is responsible for doing the actual purchasing for ingredients. The buyer should have balanced communication skills (find out the need of different stakeholders in restaurant), good with math skills, computers skill (use software like SAP for recording every details in purchasing process) and product knowledge (choose the best ingredients and equipment for restaurant). Larger restaurant or organization will usually include a purchasing agent or team for handling the procurement issue while manager or chef will take this responsibility in a small restaurant.

Step 2: Determine the product specifications
          For the buyer to check whether the things they purchased match with what is needed by the restaurant, the product specification should be determined. As what have been mentioned in the lecture, product specification is about establishing standard for each product and also the method for payment and delivery which is very important for both the food supplier and the buyer to communicate the buyers’ purchase requirement. The buyers should consider different food characteristics such as grade, size, colour, origin, preservation method, intended use, etc. when they purchase various ingredients in order to produce up-to-standard dishes on menus. There is one specification called acceptable substitutions, which allows to vendor to provide alternative ingredients if the supplier do not have enough in stock. This allows the restaurant to have less risk even if the required food is not able to be provided. For clearly stating how to deliver food and how payment is done, the restaurant can better manage their supply chain and work with the food suppliers. Therefore, product specifications acts as a control in the purchasing and delivery process to make sure the ingredients with required and consistent quality are delivered in the right time.

Step 3: Estimate the quantity and frequency for each replenishment
                To understand which food suppliers provided with the best price, a restaurant usually send out request for proposal for suppliers to do bidding. It is just the same as the bidding what we have done in normal, the one provided the items with the best price will be chosen as supplier of the restaurant. However, the role of restaurant and suppliers may switch in a bidding process if the food supplier is hold some ingredients which is very special or rare (like the king tuna fish sold in Japan as what have mentioned in class).
         With the selected food supplier, the restaurant has to estimate the quantity and frequency for each replenishment by considering the demand, different ingredients perishability, the storage cost. With more shipments, the food freshness could be guaranteed and the cost for storing ingredients will be lowered. However, the transportation cost also increase. With less shipment, the situation will be vice versa. For ingredients which are non-perishable like sauces, oil, seasoning, etc., the purchase will be less frequent then fresh ingredients which are usually consumed each day.
          The restaurant always keep safety stock as replenishment needs time. Restaurant usually calculate the order amount by adding 5% to the additional required amount for a certain ingredient. Par stock level method is usually adopted to determine the replenishment quantity for the nonperishables.  It is an effective method for restaurant which has a cyclical menu to manage their purchasing. Par level means the stock level must be on hand at all times before the next order is delivered. As inventory are store outside the kitchen working area in the restaurant, there is an internal process call requisition for issuing ingredients to restaurant from store room. A par sheet is considered by storeroom manager to determine the amount of purchase for each item according to current stock level (original inventory-requisitioned amount) and par level. The staff may subtract the inventory in hand from the par level to check how much they should order.  This is called perpetual inventory generally.

              The above is an example of par sheet. The column ‘Do’ is the amount for replenishment. Take portioned fries as an example, there are 9 units of them in the inventory but the par level for that item is 25 unites. Therefore, 18 more units should be purchased in order to fulfill the operating need of the restaurant. However, as par level is only an estimation, the store manager usually adjust the purchase amount calculated from par sheet by considering the actual demand for particular items.
               If the ingredients are too much that it may be complicated and easy to make mistake if it is manually managed. Therefore, large restaurant usually make use of software like point-of-sales (POS) system to assist purchasing staff or department to check the amount of item used and stock level in the storeroom. The software may even automatically generate a purchase order for replenishment if they find out the inventory amount is lower than the safety stock level set in the software. Nevertheless, if alternatives replace part of the ingredient in the original dishes, or some ingredient is added and removed from the original recipe due to customization, the staff has to state the special changes in the POS system. If not, there will be a wrong calculation for inventory level of different items. Below is a sample interface for the POS system.
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Step 4: Select the suitable method for purchasing based on needs
          Three needs of the restaurant has to be clarified, which are level of service needs, quality specifications needs and prime vendor relationship needs, before method for purchasing is determined. There are several types of common methods used by different restaurants in practicing their purchasing.
1.       Competitive quotes: the restaurant pick the food supplier who provide them with qualified input with lowest price under detailed specifications. It is usually adopted by small and independent restaurants.
2.       Standard order: there is regular replenishment for different item according to the use of par sheet. Restaurant use this method for bakery, coffee and diary product.
3.       Prime vendor:  this method refers to use a single food supplier to support majority of the restaurant input, which is mostly adopted by restaurants.
4.       Cost-plus: the restaurant source particular type of ingredients from a specific food supplier. Chain operations often use this practice.
5.       Sealed bids: The restaurant sign contract with a food supplier that the supplier has to provide ingredients at its price stated in contract even if the market price of ingredients fluctuate.
6.       Commissary: Consolidated quantity is purchased from a chosen food supplier. Chained and franchised restaurant always use this method.

Step 5: Find and select a vendor
         Finally, we come to the step of finding and selecting a vendor. The restaurant should list the potential vendor which can provide the required ingredients with different specified product characteristic and meet organization needs. Restaurant can evaluate different aspects (like Consistency in quality, delivery time, and labeling) of the food suppliers and rank them according to the priority that the restaurant would purchase ingredients from. One very special and important consideration is that managers should consider using Hazard Analysis Critical Control Point (HACCP) which is a system used to control risks and hazards when choosing food supplier. Only HACCP-approved food suppliers can share liability when the customers are sick or poisoned after consuming dishes produce from the ingredients supplied. After choosing the vendor, it is also very important to maintain good relationship with the selected supplier as well as monitoring the quality of ingredients supplied consistently. If the restaurant is able to choose a good partners in supplying food, the costs would probably be reduced, quality would be maintained customer expectation would be met.
       
Evaluation: 

         The key point of purchasing is covered in the lecture and here is just some more explanation and examples on what are the preparation and starting steps for doing the purchasing. After doing the research, I found that details that have to be determined and considered for purchasing is far more than I have expected. Through doing this research, I have more in-depth understanding on the purchasing of the restaurant operations. 

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