Ways to Produce Growth in School Cafeteria Revenue and Participation

Written by Milt Miller – As in people’s lives, school food programs are sometimes in need of help. Many of these programs are drowning in their problems, but fail to recognize they need help. I find this very hard to understand as well as very frustrating. When I was running a school food program, I was always looking for fresh ideas and better ways of doing things. I always reached out to people who knew something I didn’t and picked their brains for new concepts. Sometimes it cost some money but the revenue generated by the results far outweighed the costs. Many times when I speak with school food directors and administrators all they fix on is the cost, not the revenue it will generate. Every business, at one time or another, has to spend some money to make some money.

Another issue I find, is getting directors to admit they have a problem at all. I spoke to one administrator whose program was losing in excess of $100,000 per year, and he told me that wasn’t really an issue because they had budgeted for the loss. Thought processes like that one just make no sense to me. Another told me participation was down, but the kids would get used to the food and start liking it by next year. Really? They don’t like the products now, but they will learn to like them because it is all they are going to get?

I once had a problem with dining room monitors. Students were avoiding the lunch room because the ladies were too rigid and unwelcoming. Many parents were complaining also. So okay, I admitted I had a problem, hired a child behavioral psychologist to come in and train them, on how to handle student issues more effectively. Did it cost money? Yes it did, but the results achieved more than covered the cost and turnover at that position also dropped, which was cost saving too. Over the years I have invested a great deal of money in my staff. Not just on safe food handling skills and nutrition education, but on the fundamentals of cooking, child psychology, knife skills, and refabricating unsold products into new products to lower waste. I always focused on upgrading their knowledge in every way possible, especially the ways that would eliminate waste and increase revenue.

Directors that only provide training on politically hot topics each year, are missing the boat on what really makes revenues and participation go up. Teaching your staff how to avoid throwing food away or how to better utilize unsold products through proper food handling techniques, makes your program more money than teaching them when it is correct to throw food away. Granted, they need to know when it should not be served, but it is more important to stress how to avoid that. The more you invest in improving your program the more you reap in increased sales, participation, and increased revenues. You also have a happier more talented staff.

More times than not, the question you should be asking isn’t “Can I afford to?”, but rather, “Can I afford not to?”. School food decision makers need to look at what training and investment in their programs will provide the greatest return and growth. This development is not always just courses on safe food handling. You may be able handle food safer than anyone else, but if you aren’t selling it because you don’t know how to market what you are doing, or your staff doesn’t understand customer service or how to prepare the food to suit your customers, you still have a losing situation. Training and development shouldn’t always be the same thing every year or it stops producing growth. Many times basic staff needs are overlooked to review some hot topic that really doesn’t produce growth in the staff or the program but it is politically correct. You may receive grant money or get this training free from your state department of education, but when it is all said and done what has really been achieved in the growth of participation or revenue? I always wanted my staff to understand what it took to be compliant. I reviewed rule changes and procedures with them every day as well as twice a year at policy meetings. I did, however provide them with the knowledge necessary to produce program growth and personal growth as well. I brought in experts in marketing, customer service, food handling, produce, protein, baking, behavioral psychology, and how to effectively use student focus groups. All of this provided them with personal growth and growth to my program. The cost of all of these programs was more than offset by the return in growth for my operations.

Some successful directors are already doing this and know what I am speaking about. Sadly, too many appear to be in denial and don’t see they have a problem in their program. Many also are too focused on initial cost instead of the return on their investment. Using experts in the field to grow your program accomplishes an array of different values, knowledge, confidence, enrichment, and program growth, to mention just a few. If we focus solely on the initial cost and not the end return, we many times turn away what is most needed as not wanted.

Milt Miller is VP of K-12 Operations at Food Service Solutions, Inc. Throughout his 32 years in the food service industry he has managed, operated and assisted food service programs to become successful. For more information on this and other topics, contact Milt at www.foodserve.com/school-food-program-assessment.html.

Please Don’t Come through the Lunch Line, You Are Costing Us Money

Sadly, worrying about meal equity, participation, compliance, food cost, labor cost, meal reimbursements, and the myriad of other school lunch issues, has resulted in some school food operators feeling this way. Many operations we have assessed this year have this problem and don’t even realize what is happening. They know all of their important numbers, labor cost, cost of goods (food cost), participation percentage, plate cost, and required price increase, but fail to realize what is their “Optimum Per Student Spend”.

Optimum Per Student Spend (OPSS) is what must be received daily from every student for the operation to break even. This information is obtained by adding labor cost per day, with benefits, and total food cost per day and dividing the sum by enrollment. This is the total amount needed per student per day to cover costs of operations. Knowing this number breaks total operational costs and needs down to a more immediate level of understanding. I call this “the hundred penny theory of operations.” The theory goes, if food and labor per student per day cost one hundred pennies, then spend per student per day must equal one hundred pennies to achieve breakeven. Knowing all other numbers but this one many times leaves operators wondering why they are losing so much money by the end of a week, month, or year.

Several areas that affect OPSS are participation, cost of goods, and impulse purchases. Lower costs of goods or improved pricing strategies proportionally lower OPSS. Costing at 40% instead of 50% will lower OPSS by 10%. Many operators lose sight of best practice pricing strategies and set food costs above the national average of 40-42%. This causes higher breakeven points and lowers chances for program self-sustainability. Add on buys or impulse purchases increase student spend and facilitate breakeven. Too many times this strategy, of increasing ala carte’ sales, takes away from meals participation by making meals look less desirable. True add on buys are second entrees or ala carte items purchased with a reimbursable meal. These are purchases that add to student spend without detracting from it in anyway. When setting meal and ala carte pricing operators should set prices to encourage reimbursable meal sales and provide accessory items, with perceived value, that add on to the meal purchase. A few operators chafe at the thought of enticing students to spend more, but let’s face it, this is a business and if they don’t spend it with you they’ll spend it on less healthy items at the local convenience store.

Increased participation hides a multitude of sins. It also lowers OPSS rates. Once you have costs in line and OPSS is equal to or greater than cost/student/day, target students who currently are not dining with you and bring them into the fold. Participation insures sustainability. Keep this in the front of your mind at all times. It may never reach 100%, but it should always be in the upper 80%’s.

Breaking operations down to the hundred penny theory and understanding that daily student spend rates must be equal to or greater than daily cost/student rates, is crucial to maintaining a successful school food operation. Not knowing what your OPSS is and efficiently managing it, can lead to catastrophic losses to your program. Without knowing these numbers, it could be you saying, “Please don’t come through my lunch line, you are costing us money.”

Milt Miller is VP of K-12 Operations at Food Service Solutions, Inc. Throughout his 32 years in the food service industry he has managed, operated and assisted food service programs to become successful. For more information on this and other topics, contact Milt at www.foodserve.com/school-food-program-assessment.html.