Facing Annual Losses, Schools Pursue Food Service Options

school-cafeteriaTough financial times call for creative thinking in all aspects of the school system’s budget. School Superintendent, Dr. Michael Murphy wants to take a closer look at food services in the Clarke County School System.

Currently, all food preparation and management is handled entirely by school staff. The system has come under scrutiny because food services in Clarke cost more than they generate in revenue. In the 08-09 fiscal year food services lost $49K. This year the school budget has made provisions for it to lose another $40K. In addition, upkeep on aging equipment is also impacting the school budget through capital expenditures. Over the next two years the school system will need to invest $40K in kitchen equipment just to maintain the existing level of service. Faced with all of these financial challenges, Dr. Murphy wants to pursue the possibility of out-sourcing food services for the schools. The Superintendent made a brief presentation to the school board this week in the hope of gaining the board’s approval to create a Request For Proposal (RFP) to out-source food services.
“This is not about firing employees. It is simply about looking differently at one part of our organization,” said Murphy. Seeking to frame the effort the superintendent said, “This is about starting a conversation.” He added the RFP would allow the school system to see if any vendors are interested in providing solutions and that receiving proposals does not commit the schools to any course of action, but instead provides options.

The case for out-sourcing
Picture 4Based on previous experience with Sodexo, Dr. Murphy agreed to allow the food service management company to prepare a detailed assessment of Clarke County food services. The information he received was presented to the board and contained financial analysis of the cost centers and shortcomings of the current system. The budget numbers from the school system that were provided are below:

  • Student Body Enrollment of Clarke County Schools: 2,185
  • Total Meals Served: 214,593 – Breakfast 18,524 – Lunch 196,069
  • Total revenue $616,745
  • Expenditures on food:   $291,148
  • Management Expense: $46,117
  • Production Labor Expenses $279,653
  • Total Labor : $325,770
  • Other Expenses: $48,759
  • Total Expenses: $665,679
  • Cost per Meal: $3.10
  • Total Return or (Loss):   -$48,934

Sodexo’s comments after analyzing this data against their typical performance and national averages were presented to the board and were as follows:

  • Breakfast participation is at %5 which is very low.
  • Lunch participation is very low at %49. Average lunch participation is over %70 in Warren County (a neighboring county where Sodexo provides food services)
  • Revenue per student is currently at $1.54. Average revenue per student should be over $2.00
  • Increasing the number of entrees offered daily, along with improved marketing and packaging, would allow for increased revenue very quickly.
  • The meals per production labor hour is very low at 11.22. Sodexo averages 20-22 meals per labor hour. Revenue could be increased with a %20 reduction in labor.
  • The cost of labor is high at %45 of revenue against an anticipated norm of %38 for other Sodexo accounts
  • Labor force could be reduced through attrition.

After presenting the plan and the data to the board, the subject was opened to public comment and the response was swift. Focusing largely on the labor issues and the potential loss of jobs, school Nutrition Supervisor Tammie Braithwaite was the first to speak. She requested that the board consider allowing the existing staff to address these issues and be given a fair chance to correct shortcomings. She also pointed out data that required closer scrutiny and broader attention. Specifically, the low breakfast consumption could be traced back directly to bus scheduling. Braithwaite pointed out, “If students arrive 5 minutes before class they can’t buy breakfast.” In closing, she said that staff was willing to cut back hours and make other concessions to address the current shortfall and that she believed if the staff is given the time and resources to address the issues, she is confident that they can develop an efficient system that will deliver quality at a sustainable price.

Next to speak against the idea was Director of Business for the Clarke County School System, Mr. Edward Breslauer. His primary objection was he felt seeking an RFP was moving ahead without sufficient research. His appeal to the board was to research the idea of outsourcing and assess it on its merit. He pointed out that findings in an RFP by companies seeking to do business with the county would be skewed and could not constitute or replace actual research. Breslauer suggested the board interview school divisions who had previously contracted food service companies and have since elected to drop them noting, “no one provides bad references” when submitting an RFP.

The board discussed the matter and all agreed that labor was a key issue. Dr. Murphy pointed out the school could dictate that management positions for a food service contract be filled from current staff, and that in any contract agreement the school has the ability to add terms as they see fit

The board agreed to allow the development of an RFP while concurrently pursuing independent research on the feasibility of out-sourcing.

Comments

  1. Time4Change says:

    I believe a change has been necessary in food service in our schools for a long time. Everyday the entree plate has matching sides–they’re always the same color! I do not agree that we should move to a buffet style service. That leads to children taking what they want, not knowing what is included in their “meal,” and parents continually paying for “extras.” That happens particularly at elementary levels. As things currently stand, if a child chooses a vegetarian entree they aren’t even permitted the rest of the sides that are provided with the meat entree. I’m glad someone is talking about fixing the lunch program.

  2. The labour cost may be high for a number of reasons; lack of proper food equipment, lack of participation, lack of skilled labour, style of service. In the first instance, I believe the school will be better of finding why the meal participation is low at breakfast and lunch. The fact is that most school canteens prepare food that is tasteless and lacks presentation. Whether or not the school outsources its food services, they should look at hiring a professional chef and give the students the kind of meals that they want to come back for more. Secondly, the school should audit the way food is prepared. Some foods are more labour intensive to produce than others and If you don’t have the right equipment, it could easily add a few hours to your labour cost.
    Once the participation issue is resolved, it will offset the high labour cost.
    Any ageing equipment with high repair bills should be replaced with a new one.

    • Lonnie Bishop says:

      A professional chef at each school? Really?!? In a school division that’s cut nearly $2.5 million over the last 3 years? Right…

      You seem to be assuming that such considerations (which foods to offer based on what equipment is there – or working, etc.) are not already being looked at and taken into account. Mostly, you just state teh obvious yet offer nothing of practical substance to advance the issue.

  3. Fergie Doering says:

    I hope we do get new foodservice at our schools. There’s some reason that more kids eat lunch at Warren County. Must be better food. Ours is not so good.

  4. Jack Johnson says:

    This is bad news for employees. All sodexho is going to do is come in and rehire fewer employees at lower wages. They will spruce up the kitchens and the food, but the bottom line is when cafeterias are losing money, its usually labor. The current Director should be given a chance to restructure before they outsource it.

  5. Tony Parrott says:

    As a parent of four we usually pack because it’s less expensive.
    I think looking into this and going through the motions is good but I would caution the board at making wholesale changes. Anything that looks too good to be true usually is.

  6. Jim Gibson says:

    This is an interesting area of discussion. Food quality? I would venture that it depends on the individual taster. Price? An adult meal for $2.80 is not too costly, compared with typical fare at the downtown eateries.

    Yet, when one looks at what is actually served (several servings of carbohydrates, ketchup as a fruit, etc.), one must wonder at the federal school lunch guidelines that are followed.

    Staff costs are high because most of our schools have a veteran staff, and thus earn more; if you actually look at what they earn, though, I doubt it would qualify as a living wage.

    It stands to reason, though, that if student participation can be increased, then the program becomes more self-supporting. I agree that independent research is a good thing, but to not consider the RFP or the option simply because there’s no “research” on hand is too dismissive.

  7. Doug Landry says:

    The way I see it, breakfast is a nice offering, but not a requirement. True, some kids come to school without eating a good breakfast, but is the Cafeteria Supervisor suggesting that CCPS run a “breakfast bus” to each school? Making breakfast more available involves more than just rerouting buses; wouldn’t it also involve school start times and such?

    I see the ones who spoke up are the ones who oversee the current setup, the “status quo.” The employees currently have had how long to “address these issues and be given a fair chance to correct the shortcomings”? Kudos to Dr. Murphy – someone obviously not tied to the “same old same old.”

    • Tony Parrott says:

      I believe LOOKING at other options is a good thing. You always should be looking for ways to improve. I also have some level of confidence on how the decision will be made. I was at the School Board meeting (imagine that) where I heard the request from Dr. Murphy and responses from some of the staff; as long as the decision is in the best interest of the kids I’m all for it.
      As for the taste and nutritional value I’ve recently had lunch with one of my kids and I don’t think the menu has changed from when I was a there age. It may be hard to achieve with the USDA guidelines but food that’s not overly processed and good for them would be perfect if you could hold the line on cost.

  8. I would be very interested in knowing just how long the school system’s food service department has been operating at a deficit. Are we talking just 2009 and the projected shortfall in 2010, or has this been an ongoing issue?

    Seems that if it’s been operating as such for several years, then the food service admin staff has had an opportunity to rectify the situation and has not succeeded in doing so.

    Is the food service department supposed to function as a profit center, or is “break even” the goal?

    $49k goes a long way towards school supplies.

    • P. H. Cocles says:

      It’s a good point, finishing in the red or black. It seems to me that they finished in the black the year before last by about $15,000.

      They can’t be making much money this year between swine flu and all the snow days.

      Since the kitchens were all built for smaller numbers of students than they have now, it doesn’t seem that they would be adequately equipped. And there was the piece in the paper about all the old equipment that can’t be kept working. That’s got to have something to do with it, shouldn’t it?

      I don’t think food service should be a profit center, because if it is, then it’s making money off of students instead of putting the money back into the students.

      • I’ll respectfully disagree on your last sentence. Operating with a profit in mind accomplishes 2 things:

        1.) It provides a rainy-day fund for replacement of equipment, which I have to assume at this time falls under an expense that is taken from a general fund.
        2.) Profit can also be allocated to materials, programs, and dare I say salaries for instructional staff.

        Both would be examples of putting the money back into the students.

  9. Christina Price says:

    As a parent of children in the elementry and middle school, I am horrified that there’s a place for sticky buns on the school menu!!! I have spent many lunch hours at the elementary level with my kids and soon realized that my kids were not going to eat that processed food. Spice cake and cookies?? Do our children really need this? All the while complaining about childhood obesity? I have never seen a real piece of fruit on the tray. It has always been something processed from a can. Or a cup of yogurt. I know they are following the USDA approved meal plans but let’s face it, we’re the fattest country on the planet so I don’t think that’s working for us. It’s time for a change, it’s time to get our kids healthy and I’m all for that no matter who heads it up.

    • Doug Landry says:

      I was at my nephew’s elementary school (Boyce) yesterday, and I can tell you that they did indeed have actual fruit – a half of a red pear (pretty fresh and tasty, too). So, perhaps your overreaction is a bit over the top.

      I agree that the lunches could be improved. But, in speaking with the lunch ladies, they don’t receive any funding (except for coverage of overages) from the county; the bulk of their revenue comes from meals sales. If meals purchases have dropped, then so has their revenu, and thus their ability to purchase better or different food items, perhaps. I think it’s great they provide local apples whenever possible, but they follow the guidelines.

  10. As a student at the high school, I can say that the school food service seems to be only progressing more and more downhill. As Doug Landry stated, the lack of funding and low meal purchases has caused the food quality to only further deteriorate. If the quality is bad, students don’t want to buy school lunch and bring food from home or don’t eat at all. It’s just a downward spiral.
    However, there is almost always a choice of fruit, even if it’s not necessarily a good one. They really do try when they can to provide us with adequate food options (apples from Mackintosh farm on occasion, which a lot of students loved), but the circumstances are tough. In my opinion, the main problem with the food itself that is provided is that it’s not always substantial enough to keep one going for the rest of the day, or options like “deli turkey sub” that is just a slice of turkey on some bread. I’ve also started buying breakfast on occasion but, honestly, the options downright scare me sometimes and it doesn’t surprise me that students don’t buy it.
    I believe that our county just really needs to think about where funding really needs to go.

  11. Doug Landry says:

    Well said, Abby.