Balancing the Books

1. Balancing the Books for Better School Food Service Management

2. Financial Aspects of School Food Service • A Budget is a financial management plan. It is based on the prior year’s information and takes into account planned changes. • Financial reports calculated monthly, such as Profit & Loss Statements, help the administration and you, the food service manager, determine how well your program is on target toward meeting it’s goals.

3. Balancing the books: Income sources: Federal reimbursement for free, reduced and paid meals Children’s meal payments Adult meal payments Catering A la carte sales Matching funds Expenses: Labor expenses Food expenses Cleaning supplies Paper supplies Decorating Large Equipment Small wares Paper printing, computers, office equipment, etc.

4. INCOME The proportion of each of our sources of income Federal Reim .37.5% Meal Sales… .55.5% State Match… .2.5% Commodity… .3.0% Other income…1.5%

5. Percentage of total expenses Expenditures This pie chart shows the proportion of each of our expenses. Food is 40%. Labor is 50% and 10% covers other expenses. The emergency fund can be a cushion and transferred forward to start next year’s program.

6. Food Expenses How much do you spend on these food items?

7. Control your plate cost From your bid and billings determine the plate cost of each -main dish -type of milk -a 3/4c serving on salad bar -rice, bread, pasta serving Post these on the wall where you do menu planning and food ordering for quick reference.

8. Best ways to conserve on purchasing costs… • Check your order against the billing and report damages, overages, shorts, substitutions, any foods held out of safe temperatures. • Check quality and refuse items that are inferior in any way.

9. Ways to save on food costs: • Buy with other programs to increase total cases and thereby reduce price per case. • Keep a weekly inventory (start with frozen products if doing all inventory is too much) • Use a short menu cycle. (Besides saving food costs it will facilitate an accurate inventory) • Use all of your commodity allocation and ALWAYS do your February preorder

10. BUY QUALITY FOOD If you want to increase participation, buy quality food • Insist on freshness • Post a copy of product descriptions and check labels on delivered merchandise against them • Hold foods at the right temperature. • Cook just before serving for maximum quality.

11. Think with the Heart of the Consumer • Before serving the next meal, walk to the front of the serving area and LOOK at how the scene impacts you. • Do you want to eat here? • Is the food presented attractively? • Have you and your staff made a kid-friendly atmosphere?

12. Presentation The purchase of some small garnish items to make a serving line attractive is worth a year’s worth of participation! Apple slices Browned bread crumbs Parsley A sprinkle of cheese Onion flower Red sweet pepper strips Orange rings

13. Resources to help you: See the “Meal Appeal” section of Fruits & Vegetables Galore Click on Book

14. Labor as an expense in your budget Labor expenses include wages, federal insurance taxes, worker’s compensation, health insurance, life insurance, unemployment taxes, retirement plans, vacations, holidays, sick leave, meals, training, uniforms. Labor as a part of expenses has exceeded the cost of food. Working as a team in the kitchen is essential to maximizing your labor dollars.

15. Labor is measured as Meals per Labor Hour • Meals per Labor Hour (MPLH) is determined by dividing the total food service employee hours by the number of meals served. • Determine meal equivalents first: 3 breakfasts = 1 lunch $3.00 sales = 1 lunch • As a rule, a school using a convenience system where the majority of their food comes in prepared the meals per labor should be between 25 and 30 (MPLH).

16. An example of determining the number of labor hours needed each day in a school. • A school manager would like to know how many hours of labor he/she needs at a middle school. • The school averages serving 332 breakfasts each day, $60.00 in a la carte sales and 679 lunches daily. The manager expects 27 meals per labor hour with a convenience food preparation system . • The meal equivalents and lunches equal 810. We divide this number by 27 and get 30 labor hours. It would then be up to management to decide how to distribute these hours between their employees.

17. Labor Hours must be used effectively;they are the treasure chest of a program • Menu planning • Food/supply ordering • Food receiving • Monitoring/inventory • Food preparation • Record keeping • Cleaning • Transporting • Staff training

18. Know your per plate cost Divide your total expenses for your program in the previous year --------by the--------- total number of lunches + meal equivalents served in that same year. This = a per lunch plate cost

19. Know what it costs to operate: Don’t undervalue your services… • To price adult meals • To set the price for a paid meal • To determine a vendor contract price • To sell a la carte • To cater • To price a banquet

20. Reports to Aid in knowing how your program is doing financially: Statement of Profit & Loss Budget A statement that can tell you income and expenses month to month and assist in staying on a budget. A forecasting tool based on previous financial performance and a “swag” or “best guess” for determining future growth and unplanned expenses. Usually done in January

21. Use the Budget Report & the Profit & Loss Statement: • To determine how to best use your staff and their skills • How to distribute labor hours • What to spend on a nutritious lunch • How to market the foodservice program • Identify your program weaknesses • How to obtain competitive prices • How much to increase revenue or meal prices • What equipment or repairs can be afforded

22. Increasing income • Sold baked rolls and cookies for special occasions, • Catered meetings and special school banquets, • Had vended contracts with Head Start, preschool programs, private schools and other local groups, • Run vending machines, • Had a concession stand, • Sold sack lunches for field trips, • Sold a la carte snacks and arranged birthday parties, • Sold sheet pans and other kitchen utensils

23. And you know what? It is allowable to use food service funds for: • Professional training • Attendance at the State Conference • Membership in the School Nutrition Association

24. What is a participating student worth? If a student participates 170 days in lunch and the lunch reimbursement is $2.68, what is the school’s yearly income from one student? Multiple this number times the number of students you serve each day. What would be the increase in income if you gained 20 students near the beginning of the year and they continued to participate throughout the year?

25. Pricing meals • If a student participates 170 days in breakfast and the breakfast price is $1.25, what is the yearly income? • What is the yearly income if this same student is charged $1.70? • Compare the two. It is important to keep the paid breakfast price current with the reimbursement for a free student.

26. The Value of Adults Eating Lunch Multiply the adult meal price of $3.00 times the number of administrators and teachers in your school. Take this times 100 to represent days. How many teachers and administrators participate in your program? This too is an important source of revenue. Their time is very valuable. How can you provide an appealing and healthy meal for their allotted lunch period?

27. Know where to look for money? • Ask your staff . They see opportunities in their work environment. • Keep good records and use them for analysis. • Watch and prevent waste!

28. Thank you! For more information please see the ODE CNP Financial Management Webpage at: http://www.ode.state.or.us/search/page/?id=2002

29. Financial Management