Multi-level BOM for Central Kitchen: Example of Material and Semi-Finished Product Structure

Imagine a restaurant business with five outlets selling chicken rice bowls with sauce. All outlets use the same sauce recipe.

However, the sauce is made in the central kitchen, packaged, and then sent to each branch.

In the central kitchen, sauces are also made from several raw ingredients that go through a production process before finally being used as menu components.

In situations like this, regular recipe record-keeping becomes inadequate. You need to know what ingredients are used, how much each batch produces, and how the cost of each component contributes to the menu's cost.

This is where a multi-level BOM becomes useful. It helps F&B businesses trace the relationships between raw ingredients, semi-finished products, and finished menu items.

Multi-Level BOM Overview: More Than a Recipe List

A Bill of Materials (BOM) is a structure that lists the materials or components used to produce a product. In a multi-level structure, a single product may have components made from several other materials.

For example, a chicken sauce dish uses seasoned chicken. This component requires raw chicken and a base sauce. Meanwhile, the base sauce has its own recipe, consisting of tomatoes, onions, oil, and spices.

This means that businesses can't simply record the direct ingredients for a single menu item. The relationships between products also need to be visible so that production requirements, inventory, and costs can be traced back to the starting ingredients.

To make it easier to understand, we will use an example of a central kitchen operation that supplies several outlets.

Production Structure Example: From Raw Ingredients to Final Menu

For example, a restaurant sells rice bowls with chicken sauce. The central kitchen is responsible for making the base sauce and chicken sauce in large quantities.

The outlet receives these two components, then prepares the rice and completes the serving according to the order. The production flow can be illustrated as follows:

Raw ingredients → Base sauce → Sauced chicken → Chicken rice bowl with sauce

In practice, rice can be produced at an outlet or central kitchen, depending on operational policies. For this simulation, cooked rice is prepared as a separate component to maintain clarity regarding ingredients and costs.

This example shows that a single final menu can depend on several components. Each component has its own recipe, ingredient requirements, production yield, and cost.

Level 0, Level 1, and Level 2 Structures

To make product relationships easier to track, a BOM can be organized into several levels. Level 0 represents the final product sold.

Level 1 contains components or semi-finished products directly used to make the final product. Level 2 shows the materials used to produce these components. Here's an example of a BOM structure for a chicken rice bowl with sauce:

From this structure, you can trace ingredient requirements down to the most basic level. When an outlet requests additional chicken in sauce, the central kitchen can also estimate the raw chicken and base sauce requirements.

However, this structure only describes the relationship between materials. To be accurate, you also need to consider the production yield of each batch.

Batch Production and Yield: Incoming Materials Do Not Necessarily Equal Output

In central kitchen production, the amount of ingredients used is not necessarily the same as the amount of finished product.

Trimming, cleaning, cooking, and evaporation can reduce the final weight. For example, a central kitchen prepares a base sauce using these ingredients:

After the tomatoes were cleaned and the sauce was cooked to the desired consistency, the final yield was only 9 kg.

This leaves a 2.7 kg difference between the total input weight and finished output. Record this as part of production yield rather than treating it as unexplained missing inventory.

The yield formula is: Yield = Actual output ÷ Total input materials × 100%. In this example: 9 kg ÷ 11.7 kg × 100% = 76.92%.

This yield is illustrative. Actual results should be measured against the restaurant's own recipes and production processes.

Yield recording helps the central kitchen estimate the amount of ingredients to prepare when an outlet requires a certain amount of sauce.

Check Unit Conversions Between BOM Levels

Another common problem is differences in units between BOM levels. Raw materials might be listed in kilograms, while recipes use grams.

Semi-finished products can be calculated in kilograms, while menu requirements use grams per serving.

For example, one serving of rice bowl requires 30 grams of base sauce. If the central kitchen produces 9 kg of sauce, that amount is equivalent to 9,000 grams.

So, the sauce capacity for the menu is: 9,000 grams ÷ 30 grams = 300 servings. The conversion also needs to take into account changes in the shape of the ingredients.

Five kilograms of raw rice, for example, can produce about 12.5 kg of cooked rice in a simulation with a yield ratio of 2.5 times.

These figures should be tested using the restaurant's own cooking process as the type of rice and water used can affect the results.

Make sure each component has consistent base units. Don't let the system interpret 30 grams as 30 kilograms just because the units in the recipe and the stock are different.

Read also: Central Kitchen Production Planning: From Forecast to Work Orders and Distribution

Calculating Cost Roll-up from Raw Materials to Final Menu

Once the quantity of ingredients and yields are recorded, the next step is to calculate the costs in stages, or cost roll-up. This means that the costs of raw materials are aggregated into the costs of semi-finished products, which are then transferred to the final menu cost. Use the following ingredient cost assumptions:

The base sauce yield is 9 kg, so its cost per kilogram is: Rp236,000 ÷ 9 kg = Rp26,222/kg. Next, the central kitchen makes chicken sauce using 12 kg of raw chicken at a cost of Rp38,000 per kilogram.

After cooking, the chicken yields 9 kg of cooked chicken. This component is then mixed with 2.25 kg of base sauce. The calculation is as follows:

• Cost of raw chicken: 12 kg × Rp38,000 = Rp456,000.
• Base sauce cost: 2.25 kg × Rp26,222 = approximately Rp59,000.
• Total cost of a batch of chicken sauce: Rp515,000.
• Total output: 9 kg cooked chicken + 2.25 kg sauce = 11.25 kg chicken sauce.

The cost of sauced chicken per kilogram is therefore approximately Rp45,778. If one serving requires 150 grams of chicken sauce, the cost is approximately Rp6,867.

For rice, the simulation used 5 kg of rice at a price of Rp15,000 per kilogram. The total cost of the rice was Rp75,000.

If the yield is 12.5 kg of cooked rice, the cost per kilogram of rice is Rp6,000. If you need 180 grams of rice per serving, the cost is Rp1,080.

Assuming a 10 gram garnish costs Rp300 per serving, the total direct ingredient cost for one rice bowl is:

This calculation simulates direct material costs. Labor, energy, packaging, and other production costs need to be added if a business wants a more comprehensive calculation of production costs.

Central Kitchen Produces, Outlets Use

Once the semi-finished product is finished, the central kitchen needs to record the amount of output ready for distribution.

For example, 11.25 kg of chicken sauce is packed into several containers according to weight standards and outlet needs.

When the outlet receives the shipment, the stock of chicken sauce must be entered as semi-finished product inventory or ready-to-use components.

When used for customer orders, the amount of use reduces the component stock.

This flow is important because central kitchen production and outlet consumption occur in different locations.

Without connected records, businesses can have difficulty knowing whether stock discrepancies occurred during production, shipping, receiving, or usage.

Read also: How Does POS and Inventory Integration Reduce Inventory Discrepancies?

Changes to Intermediate Recipes Can Change Final Costs

One thing that often gets overlooked is recipe changes in semi-finished products. For example, the central kitchen might decide to add more tomatoes or change the type of oil in a base sauce.

These changes may seem small, but the base sauce is used to prepare sauced chicken, which can be an ingredient in several menu items.

This means that changes in the cost of the base sauce will affect the cost of all menu items that use it. Therefore, each recipe revision needs a version number and an effective date.

Record any changes in ingredients, quantities used, new yields, and their impact on costs. This way, the costing team doesn't mix up old and new recipe calculations.

Common Mistakes in BOM Management

There are several mistakes to avoid when preparing a multi-level BOM. First, a circular BOM, which occurs when a product directly or indirectly uses itself as a component.

This structure makes production calculations difficult. Second, the use of incorrect units. The difference between grams and kilograms can result in stock requirements that are far from the actual level.

Third, yield is left blank so the system considers all input materials to be output.

Fourth, recipe versions are not controlled so that outlets and central kitchens can use different standards.

These errors can spread to cost calculations, purchasing requirements, and inventory reports.

BOM Audit Checklist Before Use

Before the structure is applied to production, inventory, and costing, perform the following checks:

• Each final menu has clear components.
• Semi-finished products have their own recipes and material structures.
• Each ingredient has a consistent base unit.
• Yield is recorded based on actual production results.
• Conversion of raw materials to finished products has been tested.
• Material costs follow the applicable purchase price.
• There are no circular BOM dependencies.
• The recipe version and its effective date are recorded.
• The use and distribution of components to outlets can be traced.
• Actual production results and stocks are checked periodically.

This checklist helps ensure that the structure created is in line with the work process in the field, not just looks neat in the document.

FAQs About Multi-Level Restaurant BOMs

1. What is the difference between a regular BOM and a multi-level BOM?

A standard BOM lists the direct materials used to manufacture a product. A multilevel BOM also lists the materials used to make each component or semi-finished product.

2. Why does a central kitchen need a multi-level BOM?

Because the central kitchen processes raw materials into several components before shipping them to the outlets, the tiered structure helps track material requirements, production yields, and the cost of each component.

3. Should yield be recorded for all semi-finished products?

It is recommended that you do, especially for products that undergo cutting, cleaning, cooking, or other processes that change the weight and quantity of output.

4. What impact does changing the recipe have on intermediate items?

Changes in ingredients or measurements can affect the cost of the component and the entire menu that uses it. Therefore, recipe revisions need to be recorded and recalculated.

Conclusion

A central kitchen requires more structured ingredient management than a kitchen that only prepares the menu directly.

There are raw materials that are processed into sauces, components that are mixed into semi-finished products, then the results are distributed to outlets to be served to customers.

A multi-level BOM records how these ingredients and components relate to each other.

Businesses can track ingredient needs, calculate yield, convert units, and calculate costs from raw ingredients to finished items.

However, the BOM structure will be more useful when connected to the production, inventory, and costing processes.

To support these workflows, consider ESB Core for BOM, inventory, and F&B production management. Contact the ESB team for a consultation.