Chapter 8 – Purchasing and Receiving

Pop-up gamble: in the absence of historic sales, how does one effectively forecast food and beverage purchases for the pop-up restaurant?

—Pauline Milwood

Chapter Warm-Up

Prechapter Reading Materials

• “Managing Inventory Control and Procurement” (Egan n.d.)
• Food and Beverage Cost Control (Dopson and Hayes 2019, 70–86)

Prechapter Exercise

• In chapter 1, the concept of “locality” was discussed as a key characteristic of pop-up restaurants. How can popupreneurs introduce and support locality through food and beverage purchase management?

Chapter Outline

• Forecasting Food and Beverage Sales
• Product Specification for Food and Beverages
• Vendor Selection
• Penn State University Policy BS14
• Purchasing Ethics
• Scheduling and Receiving Food and Beverages

Forecasting food and beverage sales

The purchasing-management function begins with forecasting food and beverage sales. The proper amount of menu items produced minimizes the chances of running out of an item before a meal period is over, and it minimizes the chances of having excessive amounts unsold when the meal period is completed. A key component of this process involves setting portion size standards (see chapter 7) for production teams. Sales histories and menu popularity indexes may be used to predict quantities for food production. Sales histories provide quantities of food and beverage items previously ordered from a menu by guests. A popularity index is defined as the percentage of total guests choosing a given menu item from a list of alternatives. The predicted number to be sold is the quantity of a specific menu item likely to be sold given an estimate of the total number of guests expected.

The following factors influence the number of guests to be served and the amount of product to be purchased:

• Competition
• Weather
• Special events in the area
• Holidays
• Facility occupancy
• Advertising and promotions
• Competitor advertising
• Quality of service
• Changes in operating hours
• Operational consistency

A similar process is used to determine the order quantities of alcoholic and nonalcoholic beverages. This process is referred to as purchasing, the process of determining what is to be ordered, the quantities of the items, and the best price to pay for the items.

Product specification for food and beverages

Vendor selection

Pop-up restaurants may not have the benefit of long-standing relationships with vendors owing to the new and temporary nature of their pop-up business model. This presents several challenges in selecting the best vendor for the pop-up event. These include limitations related to an inability to negotiate favorable rates, uncertainty surrounding consistent quality standards of food ingredients, and risks associated with the reliability of vendor services. Several steps do exist for how popupreneurs might overcome these challenges. These include the following:

Leveraging local networks. Pop-ups possess the advantage of being proximate (“close to”) to the local community. Taking advantage of relationships among local chefs, restaurateurs, and food vendors can provide contacts to facilitate short-term vendor relationships.

Engaging in sponsorship opportunities. Sponsorship opportunities provide an avenue for vendor selection for pop-ups. Featuring locally themed inputs as part of the event design can lead to the incorporation of locally known vendor products and services.

Building locality into menu design. This is especially relevant with themed pop-up restaurants that seek to feature art, wineries, and ingredients endemic to the local region.

Early product specification decisions. The earlier decisions are made regarding pop-up design elements, the greater the lead time between development and implementation. This lead time can allow for more favorable negotiations with suppliers.

Penn State University Policy BS14

Penn State University has specific restrictions on purchases of goods and services with a university purchasing card (“p-card”) issued to select employees. These restrictions include specific inclusions and exclusions of goods and services that may be purchased using the p-card and are stated in the policy document as “conditional” or “prohibited” uses. For a list of the conditional and prohibited uses of the p-card, please see Policy BS14 Penn State Purchasing Card—Specific Restrictions of Goods and Services.

Purchasing Ethics

Ethics have been defined as the moral choices of appropriate conduct made by an individual in their relationships with others. Ethical questions to guide purchasing decisions include the following:

• Is it legal?​
• Does it hurt anyone?​
• Am I being honest?​
• Would I care if it happened to me?​
• Would I publicize my action?​

Scheduling and receiving food and beverages

KEY TERMS

• Auditors
• MOVE (Menu_Orders_Vendors_Extras) Form
• Penn State University Policy BS14
• Pre-production Support Guide
• Purchase specification
• Purchase order
• Purchase requisition
• Purchasing ethics

REVIEW Questions

1. What are some of the factors that affect forecasting food and beverage purchases? Identify and briefly explain at least three (3) factors.
2. What role does a product-specification sheet play in purchasing food and beverage items for a pop-up restaurant?
3. Your team member shares that they can get significant quantity discounts from the local produce vendor if the team agrees to purchase produce needed for the pop-up from the vendor. In exchange, the vendor requests four complementary dinners for him and his family. What might be some of the ethical considerations the team should make before deciding on a produce vendor?

Review Activities

1. Review Policy BS14 using the link provided. Is the purchase of goods via Amazon.com a conditional or prohibited use of a p-card?
2. Review Policy BS14 using the link provided. Is the purchase of wearable technology a conditional of prohibited use of a p-card?
3. Review Policy BS14 using the link provided. Under “Meals—Catered” in the conditional-use table, what may the p-card be used for? What may the p-card not be used for?