1. ANALYZE THIS A Practical Approach to Food Service Costs

2. 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

3. 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

4. The Key to Effective Foodservice Financial / Cost Management is Having Accurate, Timely, and Consistent Information

5. Income for NSLP Paid Breakfast Reduced Breakfast Paid Lunch Reduced Lunch Ala Carte Sales Projected Reimbursements Catering or snacks Monthly / Period, Semester, Annual

6. Income NSLP Program Self Operated or contracted Paid Breakfasts 10,000 X 1.25 = $12,500 Reduced Breakfasts 1,000 X 0.30 = $300 Paid Lunches100,000 X 2.50 = $250,000 Reduced Lunches 5,000 X 0.40 = $2,000 Ala Carte Revenue $100,000 Reimbursements Paid Breakfast 10,000 X 0.26 = $2,600 Reduced Breakfast 1,000 X 1.18 = $1,180 Free Breakfast 20,000 X 1.48 = $29,600 Paid Lunch100,000 X 0.26 = $26,000 Reduced Lunch 5,000 X 2.32 = $11,600 Free Lunch120,000 X 2.72 = $326,400 Illinois Free256,000 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.

7. CostsNSLP Program - Contracted Breakfasts 31,000 X 1.19 = $33,970 Lunches225,000 X 2.35 = $528,750 Management Free256,000 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

8. Operating ExcessNSLP 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

9. 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

10. 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

11. 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

12. 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

13. 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

16. Primary Costs FoodVariable Cost Price to Purchase Minimize Waste Maximize Commodity Usage LaborFixed Cost Increase Participation (in NSLP to increase Commodities and Reimbursements) Know your percentage of participation

17. 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

18. Evaluating Prices NSLP 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

19. Costing a Recipe For Each Ingredient the Following is Needed –Description of ProductWhole Grain Brown Rice –Unit of Measure25# Case –Price per Unit of Measure$29.21 –Portions per Unit of Measure241 –Price per Portion.12 The Total of All Ingredient Items will be the Recipe Cost

20. Final Thought on Cost Timely, Accurate, Consistent Information Will provide the best opportunity to control costs through good management decisions