In recent years, the Food Service Management Company (FSMC) has become an integral part of Child Nutrition Programs particularly the School Lunch and Breakfast Programs operating in many states. Some administrators see management company involvement as a positive factor, while others see it as a negative. I have had the unique opportunity to experience the FSMC from several different perspectives. That is as a State Child Nutrition Program Administrator, as a member of the Senior Management Team of a Food Service Management Company, as a Consultant, and as a trainer and educator. I am often asked and often debate the questions, “Are Management Companies good for School Food Service”, “Do they Really Belong?”, and "What is the difference between them and a self-op?"
It seems nowhere in the food service profession is the term “Food Service Management Company” received with such mixed reaction then it is at the elementary and secondary level of the school community. To the school’s food service manager, the FSMC is a threat and perhaps the ultimate evaluation (of sorts) of his/her managerial ability. To the food service worker, a FSMC is perceived as a direct threat to his/her employment and/or the level of fringe benefits they receive. To the school’s Business Administrator, the FSMC is often considered as the only remedy he/she has to a program experiencing declining revenues, loss of participation, and a bottom line that is showing “red”. However all to often, once the program’s operation is contracted out, the Business Official seems to take a “sabbatical” from the food service operation, trusting the FSMC to “do all the work”. In these instances the Business Official forgets that it is the responsibility of the School Food Authority (SFA) to ensure that the program conforms to regulations and the requirements of the FSMC contract. It is the school, not the FSMC that is responsible for meal prices, the quality of the food served, and monitoring the program (including the annual self-review).
The question remains, “are management companies good or bad for Child Nutrition?” The answer actually depends on the company, and the philosophy of those who make the critical operational decisions for that company and to a certain extent to the School’s Business Office.
I know that most Management Companies is creditable and I also know that some are not. I can however assure you that all FSMCs are “in it for the money”. If there were no money to be made, the management company would not be interested in operating a school’s cafeteria. So why do schools contract out the operation of their cafeteria if there is money “to be made”? And more importantly, once they decide to contract out the program, how can a school prevent a FSMC from “taking all the money”?
I spent four years working as a member of the Senior Management Team of a small regional food service management company operating in New York State. That company was extremely creditable and went to extremes to recruit me specifically because of my background, and because they were commitment to ensuring their creditability by protecting the financial and nutritional integrity of the school lunch and breakfast programs they operated. Initially my primary function was to ensure that everything from purchasing to menu planning was done according to regulations and with the student in mind. My role eventually changed to be one of training, administration and policy development. My philosophy and that of the owner of that company was that if we were honest and creditable in the school community, word of our honesty and integrity would spread thereby dispelling some of the negatives associated with a management company. That would provide us the opportunity to bid on and win more contracts. And of course, it was our hope that success would follow. Well, each of these things did occur, word of our creditability spread, and the company was successful. In fact it doubled in size during the four years that I was associated with the company. So successful was our effort that one of the largest food service companies in the world decided that they wanted to own our company and (as the saying goes) made an offer that could not be refused.
Why Would A Food Service Management Company
Want to Operate Your School’s Cafeteria?
The answer is easy. Money. School Lunch and Breakfast Programs are big business. Many school cafeterias (even unsuccessful ones) generate Millions of Dollars in Revenue each year. You don’t have to be a financial genius to know that when any business venture has the ability to generate considerable revenue, there is a profit to be made and someone will attempt to capitalize on that. Moreover, most State Agencies either do not have an adequate “bid process” established or they lack staff who are adequately trained and do not know how these companies really make their money in school cafeteria bids. When I worked for New York State’ Office of Child Nutrition (which was a very progressive State Agency, with a model FSMC contract process), I thought we knew it all and that I was as competent an auditor as I could be. Wow was I ever wrong. As I look back at that time, I really did not “have a clue”. The same holds true for the Staff of many State Agencies today (with respect to Management Companies), they simply don’t have a clue. Having worked on both sides of the fence I know first hand that even in a very large progressive State Agency like New York the staff will never fully audit a FSMC school district with respect to anything other than the requirements of CRE (Coordinated Review Effort). Why?
§ Their experience is normally from outside school food service.
§ Few of them have ever worked for a FSMC
§ They do not have the time to spend on an in depth audit of a FSMC’s billings
§ They believe it is the school’s responsibility to audit the company’s billings.
§ They really do not know where to look or how to find the way some of these companies make their money.
As I said earlier, the company I worked for was honest and creditable and we did everything “by the book”, I made sure of that. However the “book” allows a great deal of latitude and flexibility in the contract process. It is up to the School to know what restrictions to place on the FSMC, where to place them, and how to ensure compliance. But most of them rely on the State Agency for direction, advice, and training. Unfortunately and not to be redundant but most State Agency staff just do not have the “hands on” experience necessary to provide this sort of direction.
When it comes to larger school districts, those with multiple buildings and growing enrollments, a FSMC can and often does guarantee a return to the school. Often this can be a substantial amount of money ranging from a few thousand dollars to tens of thousands. And despite this “guaranteed return”, the FSMC will still make an extremely large profit.
As for small one building schools or non-public schools, the company I worked for would always submit a bid to operate the program even when other companies were not interested. Why, because, once again, there was money to be made and making less on a small account is not so bad when (because of the lack of competition) you can bid much higher, and “get it all” - that is all the program revenue generated each month. And although they were making a lesser amount on each school, if you have 8 or 10 small schools under contract, in a year’s time that lesser amount can easily equate to a hundred thousand dollars or more.
All rights reserved. Content of this post may not be used, or copied, or redistributed in any manner without written permission from Frank Rinaldi
No comments:
Post a Comment