Food Service Solvency What Can We Do Now?

Bill LauffFood Service DirectorAvonworth School District

Pittsburgh Regional Food Service Directors (PRFSD) Proactive Committee Chair

Martin LorenzoFood Service DirectorWest Greene School District

“Mandates Without Funding”

Costs outpace funding Possible obstacles Potential solutions Maintaining compliance

with State & Federal Guidelines while satisfying our customers

All School Districts are Unique.

Student Markets• Demographics• Social & Economic

Backgrounds Labor Agreements Facility Design Building Size & Enrollment

Demographic Factor Rural Students

• Used to “home cooking” Affluent Suburban Students

• May be accustomed to convenience meals from restaurants or freezer @ home

Impoverished Students• School meals may represent

only meals of the day.

Economic Factor Dictates how schools funded Free & Reduced Eligibility %

has a significant impact on meal programs• Eligible students are most likely to

eat school provided meals• “Full pay” students faced with

daily decision to buy or not to buy. Translation:

• Participation for said eligible patrons is much higher than “paid”

Meals Per Labor Hour (MPLH) High participation results in

greater MPLH.• Translates to lower labor costs as %

of revenue• More lunches served = more

commodity allocations Increasing participation is not

always solution to financial solvency.• If revenue per meal is less than cost

per meal = financial loss Meaning: the more meals you serve,

the more $ your operation will loose.

Analysis. Analysis. Analysis. How do you know what’s

best for you?• Analysis. Analysis. Analysis.

Know your operation• What may be best practice

for our unique district? “Cookie Cutter” approach

• Often does not apply in our world of school food service

Reauthorization Adds many mandates that

are perceived as being good• Some are however quite costly.

Meal price increase provision• It requires an increase in the

price for “paid” meals so that they are slowly moving toward the reimbursement cost figure.

• We cannot yet be certain if this is a blessing or a curse

• Keep a close eye on your figures.

Tiered Menu Pricing Ideal if you have a low Free &

Reduced (F&R) population Often requires no added labor Recommend to all districts with

F&R less than 25% When number approaches 30%,

financial benefit may become less evident, but student satisfaction with added food offerings results in higher participation & a healthier bottom line.

Purchasing Cooperative Opens the door for significant

savings. PRFSD is currently 151 school

districts + strong in Western PA Buying power created extends

to all members regardless of district size

Other regions encouraged to network as well in own coop.PRFSD has already done it. Therefore, the wheel does not

need to be reinvented.

Pouring Contracts Review contracts with major soft

drink bottlers to determine financial impact on district’s food service operations

Compare competitive pricing of items in agreement with other sources such as primary vendor.

Determine financial impact of competitive sales in vending

If contract expiring, understand assoc. costs before resigning.• Current contract- Maybe buy out?

Menuing / Participation & Costs How we write menus can

affect participation.• Although done with students first

in mind, can be costly if don’t also reflect perceived value for parents- “catch 22”

Menus also affect costs.• We must monitor market

fluctuations in price.• Provided handout w/ USDA

Inflation Forecasts for 2011 -help one adjust menu cycles

Labor Costs Typically exceed Food Costs

• Many schools have labor agreements that have been renegotiated upwards over years

Possible remedies include:• Negotiate new tier of lower

labor wages for new hires.• Seek agreement that allows for

part-time labor to meet staffing needs during meal service times

• Consider satellite meal service• Explore shared services

HOT TOPICS School Consultant Quote,

“As we have our federal and state governments imposing new mandates at an unprecedented rate and at same time intergrating food service as …”

Chapter 12

Chapter 12 Food Service Directors lobbied

against the school food component understanding the potential consequences.

How will it financially impact our districts?Proposed regulations significantly

limit district’s a la carte revenue potential

Has potential to reduce revenue between 5 & 15%

Districts with low F&R Populations will suffer greater negative impact.

USDA Commodity Foods Can provide financial relief

in school meal programs Consider Several Factors:

• Process, ship direct, or do both?• Adequate storage available?• Proper equipment in place?• Staff have necessary skills?• Strong HACCP Program in place?• Appropriate daily hours available

to handle additional labor involved with handling such food items

More Commodity Foods Analyze your program to

determine what best for you All things equal, “brown box”

is more cost efficient for $• Processing or the manufacturer’s

convert of raw bulk commodity can add significant fees to the product’s food cost.

• This added step can mean an item’s final expense may not be a whole lot more than buying directly from wholesale vendor.

“Whole Foods” are the Future Healthy, Hunger-Free Kids Act

will inevitably push schools from sodium-rich processed foods in exchange for more “whole foods.”

USDA Commodity Subsidy is a great place to start…• Versatile items such as cut-up

chicken can easily become Oven-Baked Honey Dijon Chicken or Savory Sicilian Chicken Cacciatore. Pork roasts become Texas-smoked BBQ Pork Wraps or Creamed Pork.

Spending $ = Saving $ Incorporation of “brown box”

items into menu cycle may require large investment.

Wise Words: “You must spend money to make money.”• Titus Maccius Plautis, Roman Philosopher

In other words, “You must spend money to save money."

Initial investment in equipment, training, etc. will pay dividends to operation’s bottom line for many years to come…

QUESTIONS?

THANK YOU!