ANALYZE THIS

A Practical Approach to

Food Service Costs

Types of Programs

• NSLP

• A la Carte

Types of Operations

• Self Operated

• ContractedEach of these programs and operations will have a different

type of financial cost analysis

Basic Premise of Food Service Finance

• Costs will Rise over Time

• Can offset in three ways• Raise Prices• Increase Participation• Control and Reduce Costs

Prices charged will be reflective of costs

The Keyto Effective Foodservice

Financial / Cost Management is

Having Accurate, Timely, and Consistent Information

Income for NSLPPaid Breakfast

Reduced Breakfast

Paid Lunch

Reduced Lunch

Ala Carte Sales

Projected Reimbursements

Catering or snacks

Monthly / Period, Semester, Annual

Income NSLP Program Self Operated or contracted

Paid Breakfasts 10,000 X 1.25 = $12,500Reduced Breakfasts 1,000 X 0.30 = $300Paid Lunches 100,000 X 2.50 = $250,000Reduced Lunches 5,000 X 0.40 = $2,000Ala Carte Revenue $100,000Reimbursements

Paid Breakfast 10,000 X 0.26 = $2,600Reduced Breakfast 1,000 X 1.18 = $1,180Free Breakfast 20,000 X 1.48 = $29,600Paid Lunch 100,000 X 0.26 = $26,000Reduced Lunch 5,000 X 2.32 = $11,600Free Lunch 120,000 X 2.72 = $326,400

Illinois Free 256,000 X 0.10 = $25,600(breakfast and lunch)

TOTAL INCOME $787,780

Notes: Reimbursements used are for less than 60% free lunches and non-severe need breakfast Other income may include catering, snacks, special milk, dinners, etc.

Costs NSLP Program - Contracted

Breakfasts 31,000 X 1.19 = $33,970

Lunches 225,000 X 2.35 = $528,750

Management Free 256,000 X 0.05 = $12,800

Ala Carte Equivalents @ 3.0025 33,056 X 2.35 = $77,682

Ala Carte Management Fee $5,000

(less commodity credit) estimated ($50,000)

Total Contractor Billing $608,202

Operating Excess NSLP

TOTAL INCOME $787,780

TOTAL Contractor Billing $608,202

OPERATING EXCESS $179,578

NOT PROFIT -- CONTRIBUTION TO OVERHEAD

THERE ARE MANY OTHER COSTS THAT THE DISTRICT MUST CONSIDER

ADDITONAL COST CONSIDERATIONS

LUNCH ROOM MONITORS

CUSTODIANS / JANITORS

WITH PAYROLL TAXES AND FRINGE BENFITS

TRASH REMOVAL

PEST CONTROL

UTILITIES: GAS, ELECTRIC, WATER

ADMINISTRATIVE COSTS

SUPPLIES: CLEANING, JANITORIAL

VEHICLE / DRIVER

CAPITAL EQUIPMENT

SMALL EQUIPMENT

SMALLWARES: POTS, PANS, UTENSITLS, TRAYS, ETC.

PRINTING

LICENSES, PERMITS

NSLP PROGRAM Self Operated or A la Carte

FOOD COSTS

MAY BREAK DOWN BY CATEGORY

MEAT/SEAFOODGROCERIESPRODUCEBAKERYDAIRYBEVERAGESNACKS

PURCHASED BASIS OR CONSUMED INVENTORY BASISCONSISTENCY IS KEY

NSLP PROGRAM Self Operated or A la Carte

LABOR COSTS

MANAGEMENT WAGES

HOURLY WAGES

PAYROLL TAXES

FRINGE BENEFITS

WORKERS COMP

IMRF

HOLIDAY, SICK, VACATION

MAY BE DONE ON A DAILY OR WEEKLY COST BASIS

OR ON AN ACCRUAL BASIS

NSLP PROGRAM Self Operated or A la Carte

DIRECT COSTS

DISPOSABLES

LAUNDRY, LINEN, UNIFORMS

CLEANING/JANITORIAL SUPPLIES

EQUIPMENT, SMALLWARES, SUPPLIES

LIABILITY INSURANCE

MAY BE DONE ON A CURRENT COST PER PERIOD OR

ANNUALIZED AND SPREAD OVER THE YEAR

NSLP PROGRAM Self Operated or A la Carte

OTHER COSTS

LUNCH ROOM MONITORS

CUSTODIANS / JANITORS

WITH PAYROLL TAXES AND FRINGE BENFITS

TRASH REMOVAL

PEST CONTROL

UTILITIES: GAS, ELECTRIC, WATER

ADMINISTRATIVE COSTS

SUPPLIES: CLEANING, JANITORIAL

VEHICLE / DRIVER

CAPITAL EQUIPMENT

SMALL EQUIPMENT

SMALLWARES: POTS, PANS, UTENSITLS, TRAYS, ETC.

PRINTING

LICENSES, PERMITS

Primary Costs

• Food Variable CostPrice to Purchase

Minimize Waste

Maximize Commodity Usage

• Labor Fixed Cost Increase Participation (in NSLP to increase Commodities and Reimbursements)

Know your percentage of participation

Evaluating PricesUsing a food cost of 44%

Divide the product cost by 44% to determine the minimum selling price

Examples:

Product cost .50 / .44 = $1.136 minimum

Meal cost 1.50 / .44 = $3.409 minimum

Or Meal Price 2.50 X .44= $1.10 food cost target

Evaluating PricesNSLP MEAL

Selling Price $2.50

Food Cost $1.10

Reimbursement $0.26

Commodity Value $0.2275

Actual Cost $0.6125 divided by 2.50 = 24.5% food cost

NSLP Meal cost will be different than a la carte meal or product

Costing a Recipe

• For Each Ingredient the Following is Needed

– Description of Product Whole Grain Brown Rice– Unit of Measure 25# Case– Price per Unit of Measure $29.21– Portions per Unit of Measure 241– Price per Portion .12

The Total of All Ingredient Items will be the Recipe Cost

Final Thought on Cost

Timely, Accurate, Consistent Information

Will provide the best opportunity to control costs through good management decisions