Food Services Organization and Operations Improvement . by

1. Food Services Organization and Operations Improvement .by Prof. S. O. Duffuaa on behalf of The committee on Food Services

2. Presentation Outline • Committee charges. • Approach • Overview of current food services operations and organization. • Diagnosis of the situation • Meal Cost • Profitability of snack bars and faculty restaurant

3. Presentation Outline • Internal control • Outsourcing • Options: Advantages and disadvantages • Recommendations

4. Committee Members • Prof. Salih O. Duffuaa (Chairman) • Mr. Saeed Samer. • Mr. Abdul Shaheed Salem. • Mr. Abdullah Al-Oufi. • Mr. Salem Ba-Tarfi. • Mr. Iftikhar Nadeem. • Mr. Mohammed Elhassan Seliaman.

5. Charges • Review document and improve current processes to facilitate efficiency effectiveness and improve quality. • Improve Food services internal control on material and cash flow. • Review current organization structure to improve control. • Assess the profitability of the snack bars and faculty restaurant. • Evaluate the alternatives of outsourcing part or all of the Food Services activities.

6. Approach • The committee has met eighteen (18) times and visited four (4) organizations that are outsourcing food services in its efforts to come with concrete recommendations. The organizations visited are: • Institute of Public Affairs • Technical College at Dammam • University of Bahrain • Saudi Aramco

7. Approach • Review and evaluate current processes. • Collect as much as possible reliable data. • Tap on experience of organization in food services business. • Perform cost benefit analysis .

8. Food Service Responsibilities • Providing three meals (breakfast, lunch and dinner) to students in three dining halls. They provide approximately between 1500-1800 meals per day. • Providing lunch meal at the faculty restaurant. • Operating 15 snack bars on campus. • Operating a bakery to supply the restaurant and snack bars by needed items. • Preparing meals for university guests, public parties and workshops and conferences. • Providing services (parties etc) to community on campus at charge.

9. Food Services Manpower

10. Current Organization

11. Diagnosis of the Current Situation • Data on material consumed and number of meals sold are not recorded properly. • The food services department is serving between 1500-2000 meals per day at the students dining halls. Now may be less. • Almost all data recording is handled manually. • Department organization structure needs improvement to enhance efficiency and control. • Internal control needs improvement to control flow of material and cash flow in order to match income with cost.

12. Diagnosis of the Current Situation • The Food Services is focusing on quality of food through the emphasis on fresh material and workers health. • The department is not cost conscious. • The average cost of the meal runs between 25-30 SR. This is a rough estimate it could be more. • The faculty resultant is operating at 50% losses. • The total monetary losses per year for the faculty restaurant and the snack bars range between 1,375,000 and 1.750,000 SR.

13. Estimation of Meal Cost

14. Estimation of Meal Cost

15. Profitability of Bakery and Snack Bars Data collected for the study: • Items produced at the bakery and sold at snack bars. • Typical quantities produced of each item • Sale price of each item • Amount of raw material used for each item • Manpower at the bakery and their monthly salaries • Sales personnel at the snack bars and their monthly salaries. • Maintenance and gas costs at the bakery • Estimated electricity cost at the bakery • Estimated water cost • Estimate administration over head cost • Transportation and cleaning costs.

16. Profitability of Bakery and Snack Bars • The daily revenue for the snack bars and the bakery is estimated to be on the average 9081 SR.. • The cost of the operation including the costs items mentioned above is estimated to be 11500 SR if all the elements of the costs are included. • The loss from snack bars is around 25%. The details of the calculations are attached in appendix C.

17. Profitability of Bakery and Snack Bars • We note that in our calculation in appendix C other costs such medical, higher administration overhead; other support services were not included. • The daily monetary loss at the snack bars ranges between 2500-3000 SR. This totals to 625,000 – 750,000 SR per year based on 250 working days.

18. Profitability of Faculty Restaurant • A one week data for number of meal sold and income was obtained from the faculty restaurant. • The number of meals sold per day at the Faculty Restaurant range between192 - 250 with an average of 220. • The number of meals includes prepaid meals and the income of those meals is not reflected in the daily cash collected. • The average income per meal is 10.46 SR

19. New Organization Structure

20. Outsourcing The following vendors contacted: • Algosaibi Services Company • Arabian Food Supplies Company • Saudi Catering Services Company • Nesma Contracting Company The following two vendors submitted their proposals: • Arabian Food Supplies Company (AFS) • Nesma Contracting Company (Nesma)

21. Outsourcing

22. Scenarios for Subsidies

23. Scenarios for Subsidies

24. Options • Option 1: Keep the in house food services and improve its operations, processes, manpower, capabilities, internal control, management skills and develop a culture that seeks efficiency and effectiveness. This will be accomplished through professional help from an established company in the area of food services. • Option II: Keep the in house food services and improve its operations, processes, manpower, capabilities, internal control, management skills and develop a culture that seeks efficiency and effectiveness. This will be accomplished by the food services department with some help from KFUPM expertise.

25. Options • Option III: Internal outsourcing: Converting food services to a company owned by the current food services employees and operated by them. • Option IV: External outsourcing: Requesting outside companies to provide food services for KFUPM. • (a) Outsourcing all food services • (b) Outsourcing bakery and snack bars. • (c) Outsourcing faculty restaurant.

26. Options EvaluationAdvantages and disadvantages of each option

27. Options Evaluation

28. Recommendations • Keep the in house food services and improve its operations, processes, manpower, and internal control and management capabilities through professional help from a company in this field. • Improve food services internally by using university/department existing expertise in the following manner: • Restructure organization. • Appoint one person to be responsible for material and income generated on daily basis . • Revisit the menu • Increase income from selling products outside ( better marketing)

29. Recommendations • Rent one of the students dinning halls. • Down size manpower and improve processes. • Outsource the food services department, if recommendations 1 and 2 did not achieve the desired results within a year.

30. Questions & Comments Thank You