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School lunch service has gone far beyond a student moving a tray through a food line.

Driven by necessity, the cafeterias of today serve food more akin to convenience store fare featuring a variety of a la carte options.

“You have to offer that diversity to get these kids to eat,” said Rick Vensel, business manager of the South Middleton School District.

“The new food standards are very stringent,” he added. “You have to make your cafeteria look more like a commercial operation.”

While the rising costs of benefits are the major reason why more school districts are outsourcing the management of their food service departments, changes in school lunch nutrition standards are adding to the strain placed on the bottom line.

The changing standards have driven up the cost of food and resulted in fewer students who participate in school lunch programs, said Valerie Nartowicz, president of the School Nutrition Association of Pennsylvania.

The combination of escalating costs and diminishing revenue often has resulted in operating deficits, requiring districts to either transfer money from its general fund or draw down money from reserves.

With fiscal pressure mounting on the general fund budget, that subsidy had to stop, Vensel said.

“We outsourced because we wanted to improve the program for the kids and to be able to match and meet the new nutrition standards,” he said.

When South Middleton first entered its contract with Aramark last spring, it had certain goals in mind, Vensel said. “We planned to break even this year, but we did not.”

Prior to 2013-2014, the annual operating deficit for the food service department was upward of $217,000, Vensel said. While the final numbers are not in on the current school year, it appears South Middleton was able to cut the deficit to an estimated $50,000.

“We are getting the machine turned around,” Vensel said of the deficit. “Aramark has done an excellent job with trending that around.”

Because Aramark had fallen short of the goal of breaking even, the company has waived its administrative and management fees of $47,000 for the year as per its contract with the district. The South Middleton School Board recently renewed its contract with Aramark for the 2014-2015 year with the goal of breaking even and a $10,000 profit.

“We are dependent on meal participation for a revenue source,” said Nartowicz, who is also the food services director of the Upper Perkiomen School District, 40 miles northwest of Philadelphia in Montgomery County.

“The meal participation rate really went down last year,” she added. “Throughout the U.S., 1 million less students were buying school lunch than the years before.”

One new standard sets a maximum of 850 calories for a high school meal, 700 calories for a middle school meal and 650 calories for an elementary school meal, Nartowicz said. She said this resulted in more high school athletes packing their own lunch because of the need for higher caloric intake to meet the rigors of their sport.

The new standards are also requiring each student to take one serving of either a fruit or a vegetable in order for the district to get full financial credit for that meal under the federal school lunch program, Nartowicz said. “They do not like to be forced to do anything.”

She added, to comply with federal standards, school districts have to purchase more whole-grain products and fresh fruit and vegetables, effectively doubling the costs of ingredients per meal.

Starting the 2014-2015 school year, changing nutrition standards further would limit the type of items school districts could sell through vending machines and a la carte lines, said Lori McCoy, incoming president of the School Nutrition Association of Pennsylvania. She said districts that rely on those items as a supplemental revenue stream would be struggling in coming years.

School districts with a high percentage of students receiving free or reduced lunches are less like to outsource the management of their food service departments, McCoy said.

Such districts are more likely to receive extra funding through grants and other subsidy programs offered through the state and federal government, Nartowicz said. She said school districts with free and reduced lunch populations of more than 60 percent are in the best position to receive benefits while those with populations ranging between 25 to 50 percent “are really struggling.”

Aramark has a wide variety of free and reduced levels across its partner school districts, said Karen Cutler, director of corporate communications. Partners range from clients who do not participate in the National School Lunch program to school districts considering Community Eligibility — where the percentage of free and reduced participation is so high the district can offer meals for free to all students.

“Regulations from the state and USDA are becoming increasingly complex,” Cutler added. “Districts look to professional companies to ensure that meals served are nutritious, attractive and meet federal nutrition requirements. They look to companies for their expertise and to maximize participation regardless of geography, topography or poverty levels.”

One advantage enjoyed by the outside contractors is the ability to leverage the marketing resources of an entire corporation towards making cafeteria food offerings more appealing to students in the hopes of increasing participation.

“We have processes that have been refined over multiple decades and hundreds of districts across the country in managing food costs, improving marketing and merchandising, improving menu and quality and employee training and engagement,” Cutler said.

Rachel Kuna is a spokeswoman for Chartwells School Dining Services, which has contracts with both the Carlisle Area and Big Spring school districts. By hiring Chartwells, each school district has a dedicated onsite food service director supported by a network of specialists in the fields of marketing, safety, human resources and culinary science, Kuna said.

She added not only does the contract shift purchasing responsibility and product monitoring to Chartwells, the buying power of the company can help hold down food costs. A division of the Compass Group based in Charlotte, N.C., Chartwells provides dining services to more than 550 public school districts and private schools nationwide, according to the company web site at www.chartwellsschools.com.

By contrast, food service directors in self-operated departments often have to wear a multitude of hats including that of a marketing expert if they have any hope of making the product line appealing to the modern student.

“You have to think outside of the box in trying to run specials,” Nartowicz said. “You are trying all of the same promotions that a restaurant uses but you cannot raise the lunch prices.”

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