04/08/23 1

SNS FINANCIAL PERFORMANCE ACTION PLAN 2009-10

Henrico School Nutrition ServicesAugust 2009

04/08/23 2

Objective:

To define the 2nd year of a multi-year strategy to return SNS to financial stability (after returning the high schools back to the NSLP) by:

1) reducing operational expenses2) continue increasing revenue

04/08/23 3

Background Information:

• HCPS took its 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 previously unprofitable. • The HS quickly became very profitable

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

04/08/23 4

Background Information:

• 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 needy children, the Superintendent, with input from the Student Congress, recommended to the School Board to return the high schools back to the NSLP in the 2007-08 school year.

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Background Information:

• SNS estimated losses of over a million dollars in revenues/expenses as a result of the changeover:

a) the elimination of profitable soda sales

b) a major reduction in vending sales c) the implementation of new nutrition

standards in the wellness policy which are more costly

d) additional food costs due to Type A lunch requirements

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Background Information:

• The HS point of sale system had to be updated as those registers did not track Type A lunches. ES & MS had 10+ year old computers & software. All cafeterias were then upgraded. The replacement cost was almost $900,000.

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

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FINANCIAL IMPACT ON SNS:

• 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 when factoring out student population growth & federal reimbursement increases.

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FINANCIAL IMPACT ON SNS:

• VENDING PRE-NSLP NSLP03-04 04-05 05-06 06-07 07-08 08-

09$610,496 $359,464 $343,842 $290,418 $144,194

$187,860

Note: Just changing vending to all diet sodas in 04-05 resulted in a whopping $251,000 reduction in vending revenue in 8 HS & 174 school days!!!

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FINANCIAL IMPACT ON SNS:• INCREASED FOOD COST PRE-NSLP NSLP 04-05 05-06 06-07 07-08 08-09$5,162,330 $5,189,340 $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

All Food Costs increased significantly more than revenue in returning the HS back to NSLP.

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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 & school staff.

• Be 100% self-supporting

Financial Solvency

QualityNutrition

Value

CustomerService

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Balancing All Needs

• Paid Child: Low meal price, variety of choices, ala carte offerings, & higher USDA nutrition requirements.

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

• SNS: Lower food & labor costs while increasing revenue to offset the HS NSLP implementation and remain 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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Cost Analysis

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

• NOTE: 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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THE NEXT STEP:

2009-10 School Year Action Plan:

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

04/08/23 14

THE NEXT STEP:

2009-10 School Year Action Plan:

Labor

a) Reduce PPT labor hours by 5%.b) Not fill SNS Office positions: Dietitian

& Assistant Catering Manager. c) Reduce 5 Manager Trainee Positions. d) Revise Free Lunch Application

Process to 3 days.

04/08/23 15

THE NEXT STEP:

2009-10 School Year Action Plan:

Food

a.) Revamp menus. b.) Increase ala carte prices.c.) Apply stricter management control

on inventories/food costs in cafeterias.

d.) Re-bid staple food contract to offset last year’s 14.3% price increase.

04/08/23 16

THE NEXT STEP:

2009-10 School Year Action Plan:

Administration

a.) Suspend the 5 Star Program. b.) Suspend two Employee Incentives: Perfect Attendance & Job Referral. c.) Start monthly P&L financial

meetings. d.) Shift USDA food processing payment system.

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THE NEXT STEP:

2009-10 School Year Action Plan:

Operations

a.) Reduce SNS travel. b.) Reduce issued uniforms. c.) Suspend equipment replacement. d.) Expand USDA Programs: After

School Snacks and Summer Feeding.