ANALYZE THIS
A Practical Approach to
Food Service Costs
Types of Programs
• NSLP
• A la Carte
Types of Operations
• Self Operated
• Contracted
Each 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 Key
to Effective Foodservice
Financial / Cost Management
is
Having Accurate, Timely, and
Consistent Information
Income for NSLP
Paid Breakfast
Reduced Breakfast
Paid Lunch
Reduced Lunch
Ala Carte Sales
Projected Reimbursements
Catering or snacks
Monthly / Period, Semester, Annual
Income
NSLP Program
Paid Breakfasts
Reduced Breakfasts
Paid Lunches
Reduced Lunches
Ala Carte Revenue
Reimbursements
Paid Breakfast
Reduced Breakfast
Free Breakfast
Paid Lunch
Reduced Lunch
Free Lunch
Illinois Free
(breakfast and lunch)
Self Operated or contracted
10,000 X 1.25 = $12,500
1,000 X 0.30 =
$300
100,000 X 2.50 = $250,000
5,000 X 0.40 = $2,000
$100,000
10,000 X 0.26 = $2,600
1,000 X 1.18 = $1,180
20,000 X 1.48 = $29,600
100,000 X 0.26 = $26,000
5,000 X 2.32 = $11,600
120,000 X 2.72 = $326,400
256,000 X 0.10 = $25,600
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
Lunches
Management Free
Ala Carte Equivalents @ 3.0025
Ala Carte Management Fee
31,000 X 1.19 = $33,970
225,000 X 2.35 = $528,750
256,000 X 0.05 = $12,800
33,056 X 2.35 = $77,682
$5,000
(less commodity credit) estimated
Total Contractor Billing
($50,000)
$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/SEAFOOD
GROCERIES
PRODUCE
BAKERY
DAIRY
BEVERAGE
SNACKS
PURCHASED BASIS OR CONSUMED INVENTORY BASIS
CONSISTENCY 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 Cost
Price 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 Prices
Using 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 Prices
NSLP MEAL
Selling Price
$2.50
Food Cost
$1.10
Reimbursement
Commodity Value
Actual Cost
$0.26
$0.2275
$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
Unit of Measure
Price per Unit of Measure
Portions per Unit of Measure
Price per Portion
Whole Grain Brown Rice
25# Case
$29.21
241
.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