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An Interview with J.P. Dozier and Marc Zammit

An Interview with J.P. Dozier and Marc Zammit

An Interview with J.P. Dozier and Marc Zammit

Changing the Culture of Feeding Children

J. P. Dozier is the director of finance at Bon Appétit Management Company. He started his career at Bon Appétit working on their first education account and subsequently opened and operated several accounts prior to becoming a district manager in 1997 and then director of finance in 2002.

Marc Zammit is vice president for corporate sustainability initiatives and culinary at the Compass Group, the parent company of Bon Appétit. He owned a fine food and confectionery distribution business and served as general manager of a premier Silicon Valley catering company.  He served previously as director of culinary support and development at Bon Appétit, where his responsibilities included developing the company’s position on socially responsible issues related to food.


Center for Ecoliteracy: Many school districts would prefer to serve meals made from fresh, locally grown ingredients, but believe it would be too costly. How do you approach that problem?

J. P. Dozier: I’ve met with a number of school food service directors and, so far, I haven’t encountered many who have a plain old budgeting program — a tool that allows them to model their existing business, and then create various scenarios that will model changes they could make. We developed the Rethinking School Lunch Financial Calculator, an interactive financial spreadsheet, in the hope that it might be such a tool.

CEL: Does the farm-to-school model cost more to operate than a conventional program?

JPD: Labor costs will probably go up, and food costs will go down. Some directors will find that food savings will offset increased labor costs, while others will find that the net cost of a fresh food program is higher. It’s my sense that there’s a huge variance in the level of business assumptions made by food service directors. If a thaw-and-serve program is being run as efficiently as possible, I suspect that costs for fresh prep would be greater than savings, at least initially. If that were the case, it’s possible that costs could be offset by raising the participation level of full-paying students, thereby increasing revenues.

I want to stress that one of the best arguments for implementing this sort of program is that quite possibly there is money being left on the table right now. By increasing efficiencies, food service directors can bring costs of a fresh food model much closer to the level of the current program.

Down the road, the real potential for savings is in terms of healthier children, less absenteeism, better learning, and higher retention because the students are better nourished. I’d love to see a study that tracks these things over time.

CEL: In the short run, what are the major cost determinants?

JPD: A major cost is labor. Instead of bringing in a chicken burrito that’s already been assembled, food service staff are going to have to warm the tortillas, make the sauce, cook and pull the chicken, and assemble it.

Marc Zammit: A fresh prep approach will require workers with different skill levels at higher rates of pay. Instead of a production cook, it would be preferable to hire an executive chef who can write a menu and execute a recipe, someone who knows what to order and how to handle raw food safely.

JPD: And with a larger staff comes a need for more management.

CEL: Where can you realize the greatest savings without sacrificing quality?

MZ: The first place is by changing the culture and the approach to feeding children. If staff people are excited about doing the right thing for the kids, it leads to a different level of efficiency. Our experience, by the way, is that changing the culture starts at the top.

Another way to increase efficiency is with strong management. Take a very close look at the skills of your staff, and make an initial investment in management and training based on that assessment. The greatest efficiency is achieved with the right staff, who have the right skills and the right motivation. Usually, one staff element becomes very excited because they want to make a difference, while another element is signaling that it is never going to make the transition.

CEL: What happens if you have the wrong mix of employees?

JPD: You try to retrain them.

MZ: We have found that it takes awhile, but that it is doable.

JPD: And doable on a grand scale; probably 75 to 80 percent can make that transition with adequate professional development. When you invest money in someone, and send that person to a class to acquire new skills, they normally appreciate it.

CEL: What other efficiencies can you suggest?

MZ: A really strong accounting system allows you to do a weekly inventory and weekly profit and loss statements, giving you real-time information for managing. If the cost per meal last week was higher than budgeted, adjust the menu. If you come in below budget, let it go a little bit. The point is that you’ve got information to react to and can make decisions on a regular basis.

JPD: Efficiency also results from implementing cost controls, schedules and work assignments, and compartmentalizing duties, especially in a central kitchen. For instance, one person can slice all the tomatoes for all the different meals. I’ve also seen schools make good use of a few student employees. They’re not paid, but they understand that it’s a privilege to participate. They learn about the effort and care that go into preparing meals, and they become advocates of the food program with other students.

CEL: What about the costs of food? Can you save money by buying fresh food locally?

MZ: The cost of fresh food varies according to location and season, but savings could be in the range of as much as 50 percent. With fresh food, you’re not paying the processor’s labor costs, and you’re saving on shipping and packaging, which is where most of the food cost is; I’ve seen stats that show that packaging alone can represent 50 percent of the food cost. Then you save a second time by not having to dispose of all that packaging. Between more composting and less trash, you’d probably lower your trash pickup costs.

JPD: There’s also a potential for savings from districts buying cooperatively. Let’s say that an average budget for a district food service is a million dollars a year and that there are 14 districts in a county. That’s a total of $14 million. If those districts’ food costs are 50 percent of their budgets, they’re spending a total of $7 million on food purchases. Spending that $7 million cooperatively would let them speak a lot louder than each district purchasing individually.

MZ: They might be able to bargain with farms or dairy cooperatives, especially if the producer can drop off at 14 central kitchens, as opposed to 150 individual schools. We discovered that once we hired a purchasing director, we were able to realize significant savings. A district’s investment in a purchasing director — or several districts sharing the costs — might more than pay for itself.

CEL: What would be the difference between the district’s having an employee who went to all the farms versus the farmers delivering to all the schools? Would the farmers lower their prices?

MZ: Probably. Delivery is the one thing that most farmers don’t like doing. And since most farmers specialize in two or three things, if schools want a big variety of produce, it quickly becomes a large number of farmers. There might be an advantage to finding someone who’s interested in doing that pickup.

MZ: We had a similar issue in our company. We didn’t want our chefs to order from 10 different farmers, and then have to process 10 different invoices. We found someone who shares our commitment to fresh, flavorful, organic food and human- scale agriculture. He was willing to act as a broker for us. We order through him, and get one invoice, and he takes care of all the insurance, liability issues, and all that. He also works with the farmers to create harvest charts — harvest plans to help them supply us. That’s another thing. Some farmers don’t have the concept of how much a school will really need. We’re starting to realize that when it comes to organic produce, it’s on average 17 percent less costly to work through a broker than to buy directly from our regular producers.

CEL: Can you make up some of the costs by increasing the number of full-pay students?

JPD: It depends on what the competition is, but a 10-percent increase in participation would make a huge difference to most programs. In a high school where students have the option to go off campus, which means they’re carrying five bucks in their pocket for lunch, if you can capture that five bucks, you’d be all right. In an elementary school, you might be competing with lunch brought from home. That suggests another staff skill set — a general manager or district director with marketing skills who can do what’s necessary to attract students and parents to the new menus.

MZ: That increase probably wouldn’t happen the first year. It certainly wouldn’t happen the first three months. You’d have to build participation over time.

CEL: How can school food services eliminate the stigma associated with the free and reduced lunch program?

MZ: The subsidized lunch is associated with not-very-good food. If you changed the perception about how good the food is, it might be fine to eat there.

CEL: Tell us about the Rethinking School Lunch Financial Calculator that you developed.

JPD: It’s adapted from tools that we use in our business. I revised it after meeting with the Food Service Directors’ Roundtable, which the Center for Ecoliteracy convened, and listening to their needs. Then, I tried out the revised version with Miguel Villarreal, the food service director of Novato Unified School District, and revised it again from his input. The numbers in the completed sample are indicative of a typical mid-sized school district.

CEL: How do you see food service directors using the Calculator?

JPD: I’d suggest that they start by filling it in with their current numbers, and using the totals that it calculates as a baseline. That way they’ll know if they trust the model and know that whatever they change later, they’re going to be comparing apples to apples.

In order to calculate the total revenue that the school is going to receive for a meal, the spreadsheet adds the federal and state reimbursements from the assumptions page, then adds the cash, if any, that students are paying. The Calculator does a separate calculation for fully subsidized, partially subsidized, and full-paying students. That tells us how much we are actually receiving for serving that meal to each type of student, which can help us price appropriately. It’s an annualized summary, so the food service director can see where their revenues are coming from on an annual basis.

CEL: Is it your experience that a lot of directors don’t know that?

JPD: I don’t think they think of it that way, no. I don’t think they stop to consider what their total revenue is, by group or individual school.

I also encourage users to think on the basis of expenses as a percentage of total revenue, and participation as a percentage of total enrollment and/or campus population. That helps them to understand, for instance, "Oh, my God, I only have 15 percent of my total population participating. I have a huge opportunity here." Or "This elementary school is netting a 10 percent ‘profit,’ while this other school is spending 10 percent more than its revenues. What can I learn and change because of this knowledge?"

CEL: What if they do want to consider the switch to fresh food?

JPD: Once they have a baseline — what they’re currently doing — they can take the model and try various changes: "Here’s what my labor costs would be if we continued with the present delivery setup. Here’s what they would be with a central kitchen. Here’s what food costs would be under a variety of procurement options. Here’s what would happen if we raised the price we charge, but made the food so good it could attract 12 percent more participation." Then they can look at the bottom line. Does it compare with what they’re currently doing? Is it more? Is it less? Is it realistic to imagine this change?

I would save the spreadsheets in different versions. Scenario Base would become my current case. Then I would compare Scenario 1, Scenario 2, Scenario 3, etc., with each other and with Scenario Base. In Scenario 1, I might play with increasing what I charge. Can I justify this to the consumer, and get him to pay it? In Scenario 2, I might see what happens if labor costs increase 20 percent and food costs decrease 35 percent. And so on.

CEL: Can using the Rethinking School Lunch Financial Calculator have results that might not be immediately apparent?

JPD: I can think of a couple. To begin with, the food service director will need to work closely with the district business manager in order to develop the data they’ll need to fill in the spreadsheet. For the most part, this working together should benefit everyone. The quality of the relationship between the business manager and the food service director is critical to the success of the analytical process. Making information flow two-ways can be the start of much more fruitful relationships.

I also think that concrete numbers will help administrators and school boards realize the impact of government reimbursement programs. Schools that receive certain federal grants are required to offer meals for poor children, but the size of the reimbursement that they receive sometimes forces them to choose between poor food for poor children and balancing the budget on the backs of the paying students, or selling junk food to increase profits. Seeing this dynamic demonstrated graphically might motivate administrators and boards to become active in arguing for increased funding and higher nutritional standards for their meal programs.

Planning tools like this spreadsheet can shine light into corners that haven’t seen the light of day for a while. I believe completely in serving fresh food, but these tools can help a district identify changes that might increase revenues or reduce expenses even if it isn’t ready to adopt a fresh food program.

 

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