Pp Back To School 2009 Financial

SNS FINANCIAL REPORT

Action Plan 2009-10

04/10/23 2

HENRICO SNS 08-09 BUDGET

WE LOST A WHOPPING

$333,579.LAST YEAR…

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Not good news…

Our Paid Lunches were down 11.3% or 197,000 from last year resulting in $611,200 in lost revenue.

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Our ala carte sales were down $181,515.

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Our food expenses were up 7.4%, or $562,802.

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OUR TOTALLUNCHES WERE

DOWN1.2% = $50,387

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THIS YEAR WE HAVE TO PAY C&M UTILITIES AGAIN = approx.

$500,000.

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SO HOW ‘BOUT SOME GOOD NEWS?

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THERE AIN’T NONE!!!!

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JUST KIDDING!

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FREE AND REDUCED LUNCHES WERE UP 13.2%, RESULTING IN INCREASED REVENUE OF $601,097.

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FREE AND REDUCED BREAKFASTS WERE UP 27.1%, RESULTING IN INCREASED REVENUE OF $266,991.

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AND… PAID BREAKFASTS

WERE UP 3.6%, RESULTING IN INCREASED REVENUE OF $10,251.

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VENDING WAS UP 30.3% to $187,860.

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TOTAL REVENUE WAS UP AN AMAZING $1.6 MILLION !!!!

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SO WHAT THE HECK HAPPENED??

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OUR EXPENSES WERE HIGHER THAN OUR INCOME…

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DISCERNMENTDiscernment can be described as the ability to

find the root cause of the matter, and it relies on intuition as well as rational thought.

Discover the root cause to the issue

Problem solve

Evaluate your options

Multiply your options

FINALLY-- REFLECT

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SO WHAT WILL WE DO?

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Objective:

To define to all SNS employees that we have and are in the 2nd year of our multi-year strategy to return SNS to financial stability by:

1) reducing operational expenses

2) further increasing revenue

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Background Information

HCPS took the high schools off of the NSLP in 1981 due to major budget cuts by the Reagan administration.

Henrico’s free/reduced population was less than 20%.

HS were had been unprofitable. The HS quickly became very

profitable by adding sodas & french fries, ala carte pricing , and dropping vegetables/fruits.

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By 2006-07, the HCPS free/reduced population had grown to 40% due to a worsening economy, major increase of child obesity awareness, & the implementation of a new School Board wellness policy.

To better serve the needy child, the Superintendent recommended to the School Board to return our high schools to the NSLP for the 2007-08 school year.

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SNS estimated that this change would cost over 1 million dollars in lost sales and to implement:

a) the elimination of very profitable soda sales

b) reduced vending sales c) new costly and less popular nutrition

standards in the wellness policy d) higher food costs due to Type A lunch

requirements

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The point of sale system in the HS was different because it did not track Type A. The Elem and MS had a 10+ year-old cash register system making it necessary to change all cafeteria point of sale computers to one up-to-date system.

The upgrade cost almost $900,000.

NOTE: Other factors such as labor, equipment, etc did remain constant.

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FINANCIAL IMPACT

REVENUE (in 000s)

PRE-NSLP NSLP04-05 05-06 06-07 07-08 08-09$13,612. $14,220. $14,915. $15,272.

$16,937.

Going back on the NSLP clearly did not significantly increase SNS revenue (w/o factoring in student population growth or reimbursement rate increases).

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FINANCIAL IMPACT

VENDING PRE-NSLP NSLP03-04 04-05 05-06 06-07 07-08 08-09$610,495 $359,464 $343,842 $290,418 $144,194

$187,860

Note: Changing all vending machines to diet sodas in 03-04 resulted in a whopping $251,000 reduction in vending sales for the 04-05 school year!

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FINANCAL IMPACT

FOOD COSTS PRE-NSLP NSLP 04-05 05-06 06-07 07-08 08-09$5,162,330. $5,189,34. $5,892,896. $7,560,332.

$8,123,134.

Example: MILK COSTS PRE-NSLP NSLP 05-06 06-07 07-08 08-09 $623,603 $680,159 $946,859 $933,991

Total food costs increased significantly more over revenue since returning HS back to NSLP.

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Cost Analysis

Chart shows change in food costs & revenue for 2 years prior and 2 years after the HS implementation

07-08 food cost was also due to hyper-inflation of food, fuel costs and replacement of profitable soda sales w/higher cost beverage offerings.

08-09 (1st year of plan) revenue increased at a greater rate than food cost.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

'05-06 '06-07 '07-08 '08-09

foodcostrevenue

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FINANCAL CHANGE

So what’sthe fix?

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First- 0ur SNS Requirements:

To continue to provide quality and nutritious foods that kids will actually eat- free or paid!

Keep the cost of lunch as low as possible

To provide outstanding customer service for students and school staff.

Be 100% self-supporting

Financial Solvency

QualityNutrition

Value

CustomerService

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With Balancing Our Needs

Paid Child: Meal price, variety of choices, good ala carte offerings, & parents demanding nutrition.

Free/Reduced Child: Variety, short lines, nutrition, good ala carte offerings.

SNS: Lower food & labor costs while increasing revenue to offset HS NSLP implementation and become self-supportive.

Free/Reduced Meals

Vending

Time Constraints

Quality Food

Nutrition EdNutrition Requirements

Price of Lunch

Variety

Ala Carte

Labor

Food Costs

Expenses

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Budget Drivers:

INCOME 1. Paid Lunches 2. Federal Reimbursements 3. Outside Sales (Catering & Vending)4. Ala Carte Sales

EXPENSES1. Payroll/benefits 2. Food/Supplies 3. Direct/Indirect Costs

HIDDEN: USDA FOODS!

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THE NEXT STEP:

2009-10 School Year Action Plan

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THE NEXT STEP:


The following actions will decrease operational costs by over $500,000:

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THE NEXT STEP:


Labor:Reduce PPT hours by 5% 1. NO LAYOFFS. 2. New Labor Allotment Chart w/5%

reduction. 3. Monitor monthly for labor hours. 4. Encourage cafes to increase counts for

more labor hours. 5. No Overtime (except catering). 6. Saves approx. $150,000+.

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THE NEXT STEP:


Labor:Not fill Dietitian-SNS Office position 1. Nutrition Ed program be reassigned

to Marketing Manager: CHO counts, Menu Ingredients and Food Explorers Programs. 2. Not fill Asst. Catering Manager. 3. Saves approx. $76,000.

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THE NEXT STEP:


Labor:Reduce Manager Trainee Positions 1. With lower café turnover rate, not as many manager trainees are needed. 2. Vending manager will help cover schools. 3. Saves approx. $38,000, eventually over

$90,000.

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THE NEXT STEP:


Labor:Revise Free Lunch Application Process 1. Change processing time of applications

from 2 to 3 days thus reducing overtime. 2. Schedule retirees to work with applications at the start of year. 3. Saves approx. $2,000.

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Next Steps


Food:Revamp menus1. Revamp menus to lower food cost without

sacrificing service or menu quality. 2. Adjust menus to accommodate new labor.3. Eliminate higher costing specialty Fruit

66/Slushies on fruit trays.

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Next Steps


Food:Slightly Increase Ala Carte prices1. All food items to be sold at a

minimum of 40% food cost or more.

2. Only approved ala carte items will be allowed to be sold in schools.

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Next Steps


Food:Stricter management of food inventories1. Managers with high inventories/food

cost will do a perpetual inventory until in acceptable range.

2. New, easier to read P & L’s for manager. 3. Additional inventory audits in cafeterias.

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Next Steps


Food:Re-bid Stable Food Bid 1. Counter the 14.3% increase in

food cost last school year. 2. Market is soft and expected to

lower food costs by over 5%! 3. Should save approx. $184,000!

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Next Steps


Administration:

Suspend the 5 Star Program1. Reassign 5 Star supervisor to schools reducing

number of schools per supervisor to 16 to better serve you.

2. Revise # of Administrative Reviews & include evaluation items from 5 Star.

3. Increased unannounced visits from SNS: Oh no, Meal reviews from Tim, Shirley, Roni, and Bryan!

4. Will save over $51,000.

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Next Steps


Administration: Suspend Employee Incentives

1. Suspend Savings Bonds for Perfect Attendance.

2. Suspend Employee Recruitment Program.

3. Will save a total of $23,000.

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Next Steps


Administration: Start SNS Financial Oversight

Committee

1. Includes managers on committee. 2. Reviews and determines inventory levels/food costs for all schools. 3. Reviews new food items and prices.

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Next Steps


Administration: Shift USDA Payments

1. Purchase USDA foods on an “as needed” and not pre-ordered system saving storage fees.

2. Shift more USDA commodities (such as

cheese) to processors with rebates.

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Next Steps


Operations Reduce Travel: 1. No SNS employee will go to conferences unless necessary for recertification. 2. Employees can attend if pay own expenses. SNS will provide work related leave. 3. DOES NOT AFFECT EMPLOYEE TRAVEL/MILEAGE REIMBURSEMENT. 4. Should save approx. $7,000.

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Next Steps


Operations: Reduce Uniforms for this year: 1. Only one uniform shirt/slacks will be issued this year. 2. Only two uniforms for new employees. 3. Uniforms at our cost will be available for

purchase. 4. Reducing uniforms should save $15,000.

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Next Steps


Operations: No Equipment Replacement this year 1. No replacement of large equipment

unless needed for operation of cafeteria. 2. No small equipment unless approved

by field supervisor. 3. Limited PM on any equipment. 4. Saves approx. $28,500.

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Next Steps


Operations: Expand USDA Programs

1. Increase number of After School Feeding sites. 2. Expand the Summer Feeding Program which will increase revenue during the summer. 3. Continue trial of selling USDA lunches to outside organizations in Summer

Feeding.

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Why We Will Succeed!

BECAUSE OF US- WE ARE AN INCREDIBLE CAFETERIA

TEAM!

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Commitment Separates “Doers” From The “Dreamers”

Commitment starts in the heart Commitment is tested by action Commitment opens the door to achievement

Four Types of People 1. Cop-outs 2. Holdouts 3. Dropouts

4. All-outs

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1. NO PAY RAISES SAVED US OVER $500,000 ON OUR BUDGET!

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2. Free and Reduced Counts are up: Direct Certification increased this year from 6463 to 8511

students, a whopping 32% increase. This does NOT include any students who have to fill out applications.

3. Federal Reimbursement rates increased 10 cents: Based on last year’s participation, revenue will increase

by at least $260,000 dollars.

4. Paying Child: For every NEW customer who participates every day for

lunch our overall yearly revenue will increase by over $400!

5. Incredible SNS Cafeteria Teams:With everyone working together, this can and will

happen. Remember, all little efforts adds up!!!!

Documents

Pp Back To School 2009 Financial