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Labor Cost Reviews Add Up to Savings

Regularly tracking and comparing data can reveal staffing efficiencies that benefit your budget.  

K-12 dining rooms are not like commercial restaurants, competing for customers up and down the popular restaurant strip and offering vastly different menus at every stop. However, K-12 and commercial managers are both like one another in the way labor expenses affect profitability. Of a school foodservice operator’s three main budgets—food, equipment and labor—staffing costs can be a real wild card. It’s only by conducting labor audits on a regular basis that you can find ways to streamline work, keep in line with your budget and find ways to allocate money to other needs.

Labor costs vary dramatically depending on a worker’s responsibilities, experience or negotiated pay scale. Whether you’re running a commercial kitchen or a school cafeteria, breaking even is not a path to success, says Maureen Pisanick, President and Chief Nutrition Officer of Pisanick Partners near Cleveland, Ohio. In order to afford new equipment or make menu upgrades, two things that happen regularly, something has to give. And, since food and equipment costs are generally stable, reducing labor costs is essential.

“People remember when school foodservice was run like a kitchen and not a business,” Pisanick says. “But it is a business and should be run like one.”

Pisanick and Kymm Mutch, MS, RDN, CD, Vice President of Products and Services for Food Service Management Solutions in Milwaukee, Wisconsin, recommend several best practices, including regular labor audits, to measure and understand your costs.

It pays to know the true cost of each meal

Labor costs go up as school districts feel pressure from parents, the community and government regulations to serve healthier foods, scratch-made items and options like salad bars. It takes a lot of kitchen labor-intensive prep work to make food from scratch or operate a salad bar, Mutch says. This makes knowing labor costs essential.

The gold standard in determining labor costs is knowing how many meals your kitchen produces per labor hour, Mutch says. This starts with identifying a per meal cost. Adding up the costs that go into each meal—food products, paper goods, equipment usage, labor and benefit expenses, etc.—will reveal the meal costs and the data needed to measure your labor cost percentage.

Once you know your per-meal costs, Pisanick recommends shooting for a range of 18 to 24 meals per labor hour. The reason for a range is because there are always some variables you cannot control, such as changes in the lunch hour schedule, field trips, class pizza parties or testing days. Any of these can alter lunch service, meaning the foodservice director must adjust labor efficiencies to remain on budget.

“If you can monetize various parts of the menu, you can make adjustments with labor to get the best possible food,” Pisanick says.

Timing is everything when monitoring costs

The frequency of your analysis can vary, Mutch says. With data storage and retrieval capabilities, it’s possible to track food costs daily, weekly, monthly or any interval that makes sense.

“Most schools already track a lot of numbers every day, so weekly or monthly evaluations often are the best benchmarks for developing strategy or correcting course,” Mutch says. “Making an evaluation midyear may be too late, given the usual decline in meals served after the winter break.”

Pisanick says she favors monthly (September to September) or building to building comparisons as a way to look for savings. “Linear analysis is very effective. If you have three elementary schools of about the same size with the same meal plan, you can look at the differences in staffing models at each school and determine which program efficiencies are most profitable and why.”

Schools generally are not able to pay workers a minimum wage, she says. “Whether wages are negotiated through a labor contract or set by the district, it’s critical to analyze costs and create operational efficiencies.”

Use your data on changes that make a difference

Two of the most effective paths to operational efficiency are found by using collected data to adjust training and scheduling. Pisanick recommends a daily workflow analysis to help make your foodservice machine work smarter, not harder.

“Document the day in 15 to 30 minute increments, looking at what employees are doing over time,” she says. “The same way a dieter keeps a journal of food intake, you keep a log of all activity over a period of time.”

“You may discover a worker who makes six trips to the cooler when just three trips—or even one—could have accomplished the work needed. When you see this, you can rewrite the workflow.” 

Training also reduces costs by making your team more efficient, Mutch says. Because the caliber of new hires tends to be pretty raw, entry-level training and regular follow-up builds a knowledge base that helps reduce waste, improves speed and creates a level of perceived professionalism.

“School foodservice is a real job,” she says, “Training helps workers know their value and improves your labor costs.”

There are some labor costs you can’t escape, especially those associated with a union contract—paying double-time for catering work or guaranteeing four hours of pay to the person who comes in early to accept deliveries. Pisanick recommends looking for ways to adjust the schedule so lower-paid workers perform these roles.

“Scheduling changes can cut costs and training—especially cross-training—helps reduce costs when a worker quits or retires,” Pisanick says. “Ultimately, it’s a succession plan for retired cooks or scheduling changes that increase productivity and get you closer to that 18 to 24 meals per labor hour.”

Resources that pave the way to success

Managing labor costs is a big job, and Mutch says foodservice directors don’t have to go it alone. She recommends three resources for those in need of advice:

1. “The Cost Control for School Foodservice Directors and Administrators.” This book, by Dorothy Pannell-Martin, is an owner’s manual for school foodservice directors. It helps the foodservice director and the business manager with which financial reports are needed, interpretation of the reports and how to take corrective action when costs are higher than desirable.

2. The Institute for Child Nutrition website has worksheets for labor analysis.

3. The Council of the Great City Schools offers tips on controlling labor costs.