Meals per Labor Hour

When labor costs exceed fifty to fifty-five percent of revenue (the normal recommendation), not enough money is left for food, supplies, and equipment.  As a result, the School Lunch Manager/Director is often caught between high food costs and high labor costs.  He/she may then feel the need to compromise on menu offerings and quality to save money.  This is occurring at many school districts, today.  Food and labor costs are high and increasing yearly.  According to the P&L, of a recent district that I visited, the cost of labor to the program accounts for 75% of the program’s revenue.  Neither their food cost (40%), nor their labor (75%) costs are in line with that which I recommend for attaining self-supporting status. 

With that said, there is a direct correlation between the number of meals served, the type of menu, and the number of labor hours needed to produce and serve the meal.  When we assess labor costs in the food service arena, we base our recommendations on a simple calculation termed “Meals per Labor Hour (MPLH)”.  For me, the calculation is simple but the result can be very revealing.  However, every time I read someone's recommendation for calculating MPLH, I find a difference.  Some methods will justify more labor, while others justify less. 

My method, which is realistic and results in a very attainable number of MPLH is:

18–20 MPLH in a program that uses a combination of convenience foods and on-site production 

  10-15 MPLH in a program that is primarily full production

  20-22 MPLH in a program using convenience foods

  25-40 MPLH in Satellite Programs and for breakfast

 Sample Calculation:

Total Hours	Bkfst ADP	Lunch ADP	Total Meals	MPLH
60	279	356	635	10.6

In the above calculation I have combined breakfast and lunch to determine the MPLH on a district wide basis.  Normally, I might calculate breakfast and lunch separately, but breakfast offerings (unless a simple cold breakfast is offered) are becoming more sophisticated, especially at the secondary level.  Therefore, its cost is not far from that of lunch, so I consider them equally.  I will say that this depends on the breakfast offerings, and may not apply to everyone, but if breakfast is simple and basic, and participation is low, then I would say, that is another problem that requires attention.

Although reducing labor is often a consideration when I conduct a program evaluation, it remains one, which I rarely recommend.   I would prefer to put any excess labor to work enhancing menus, with the hope of increasing participation and thereby increasing program revenue.  However, when a program's rate of participation, is high, (let's say 60% or more), the options to increase participation further, which can justify excess labor, may be  limited.

My recommendation is for most districts to attain 18 MPLH.  Accordingly, serving an average of 635 meals per day (my sample district) would require only 35.2 total labor hours per day (635/18), and suggest an excess of 25 hours per day.  However, in this example, my district also serves ala Carte, and snack items, at the high school.  The sale of these items requires a certain amount of labor and must be included in any MPLH calculation.  Therefore, I use a “conversion factor” to convert ala Carte sales into equivalent meals for use when calculating MPLH.  The conversion factor that I use ($3.00) is that which I recommend that districts under contract with a Food Service Management Company, use for them to calculate equivalent meals for contract billing purposes.  However, in my opinion, any conversion factor used should not be less than the total Federal and State reimbursement for a free lunch.

 

My sample district had $33,141.00 in ala Carte sales, which converts to 11,047 equivalent meals per year, or approximately 63 per day, district wide ($33,141.00/$3.00/175 days).  The addition of 63 equivalent ala Carte meals to the calculation, means that the program essentially served 698 total breakfasts, lunches, and equivalent meals.  Accordingly, the service of 698 reimbursable and equivalent meals now calculates to an average of 11.6 MPLH and justifies 39 hours per day.  Note, a management company will attain 20 -22 MPLH with an enhanced menu.  Based on this calculation, and considering that (in this example), participation is high and may not be increased further, labor hours must be reduced.

Several points of information must be made here to fully bring this calculation into perspective:

1.    The total hours used includes the School Lunch Manager’s time, since his/her salary is a direct cost to the program, and he/she is available daily to “help out” as might be needed. 

2.      Recommendations that I may, make elsewhere in a report, to expand the menu offerings in the district to offer more “school prepared” foods, and a more sophisticated secondary breakfast, will require more staff time to prepare.   But every district is not the same, and for me I really need to see a program in operation, before I stray from the calculated MPLH recommendation.

3.      It is imperative that every School Lunch Manager closely monitor meals and ala Carte sales monthly.   If efforts to increase student participation in the program are not successful, and/or ala Carte sales revenues decline (because of wellness), the district may have to bring labor hours in line with MPLH recommendations through attrition, or direct reductions in the number of hours employed.  In many districts the previous year's ala Carte sales revenue might have been higher, and therefore justified more hours of labor per day.  This is one reason why I strongly recommend that a line of healthy snacks, and ice cream be offered for sale, every day at all levels, that vending machines are added to the cafeteria, and that a more “relaxed” wellness policy is considered.  Without increasing these extra sales, the current level of staff hours, in many districts, cannot be justified, and district subsidies become necessary.

I know that the above statement will meet with resistance with some.   Nonetheless, if your Administration and Board want your program to operate on a self-supporting basis, and generate the amount of revenue for which it is capable, a paradigm switch may be needed.  I often discuss Food Service Management Companies, but at this point suffice it to say, the “playing field is not level”.  The company will not be bound by local philosophy, you either want them to run the program, or you do not.  With that said, they must, abide by the same policy, and law as the district.  However, they have “tactics” that they use that are unknown to most district personnel, and there always remains their “threat” to “walk out” leaving the district without a food service operator, if they do not “get their way”.