Food Service Solvency What Can We Do Now?

1. Food Service Solvency What Can We Do Now? • Bill Lauff Food Service Director Avonworth School District • Pittsburgh Regional Food Service Directors (PRFSD) Proactive Committee Chair • Martin Lorenzo Food Service Director West Greene School District

2. “Mandates Without Funding” • Costs outpace funding • Possible obstacles • Potential solutions • Maintaining compliance with State & Federal Guidelines while satisfying our customers

3. All School Districts are Unique. • Student Markets • Demographics • Social & Economic Backgrounds • Labor Agreements • Facility Design • Building Size & Enrollment

4. 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.

5. 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”

6. 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.

7. 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

8. 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.

9. 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.

10. 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.

11. 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?

12. 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

13. 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

14. 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

15. 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.

16. 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

17. 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.

18. “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.

19. Spending $ = Saving $ • Incorporation of “brown box” items into menu cycle may require large investment. • Wise Words: “You must spend money to make money.” • Titus MacciusPlautis, 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…

20. QUESTIONS? THANK YOU!