5.5 Specific management issues

Specific management issues

Number of suppliers and range of goods

The number of suppliers of goods and the range of brands of similar goods vary among canteens. Where canteens restrict the number of suppliers and the range of supplies, they generally return higher gross profits than canteens stocking a wider range of goods. The restriction of the range of supplies reduces the need to stock a number of slow turnover items, thus reducing spoilage. There is also advantage in dealing with a limited number of suppliers, in that it is possible to develop management rapport with suppliers. This helps gain concessions such as discounts and call-back facilities when shortages occur. A narrow range of goods allows canteens to use employees or volunteers with less training. However, it is important that canteens attempt to provide the widest range of nutritious foods, particularly fruit and vegetables. More variety can also be provided by having more frequent ‘special days’.

Purchasing

Bulk purchasing. Canteen operations are generally of a small, individual nature and it has been shown that cost and service benefits can be obtained through close liaison between canteen management and local suppliers. The cost advantages of bulk purchasing goods may well be outweighed by the extra service and distribution costs and the increased risk of spoilage of bulk-stock holdings in an individual canteen.

Private purchasing. Staff or canteen helpers must not be permitted to make private purchases of goods from suppliers through the canteen facilities or pay for them through the canteen account. Private arrangements may be made with suppliers if they are either cash transactions or paid through personal banking accounts.

Hours of operation

To be a school-based decision determined by school needs.  

Insurance

Adequate cover to include workers compensation and public liability must be carried by the canteen operator. (This does not apply to management option 3.) 

Profitability

Canteens need not operate for profit. Among the reasons for this are:

• the need for a service to students and the general school community
• to reduce costs to parents
• to provide more nutritious foods which would otherwise be more expensive
• to promote a school food and nutrition program
• implementation of a life skills program.

Schools that choose to accept a lower profit, or subsidise a loss, will need to note the effect of this on their budgets. There are two ways to budget and account for this:

• In all cases allow for the reduced profit, or loss, as a restraint on the year’s expenditure capacity.
• Optionally, record the subsidy as an expense under the appropriate account. To do this, transfer expenditure from the canteen account to an education programs account.

An efficient canteen should aim to receive a gross profit of at least 25 per cent of sales. The net profit is the gross profit less wages and all other non-capital costs. The ability to engage paid staff in the canteen can be assessed after preparation of a budget which calculates the projected gross profit for a period, and taking into account general running costs.

Pricing arrangements

A fair price for make-up items such as sandwiches, rolls and ‘open’ sandwiches, etc., should take into account the cost of the ingredients and the cost of paid labour plus, if possible, a mark-up of approximately 25 per cent.

Manufactured items (e.g. yoghurt, pasta dishes, milk shakes, pasties, fruit juices etc.) provide a proportion of canteen sales and canteens should charge the recommended price for these items. The mark-up on these items ranges from 20 per cent to 40 per cent, most items being 30 per cent or more.

Cross subsidising can also be applied. Some canteens opt to increase the price of their unhealthier items to help subsidise and therefore reduce the prices of their healthier items.

Trading statements

Trading statements give a clear indication of turnover, gross and net profits which helps ensure proper control of canteen operations.

A canteen trading statement should be prepared at least twice a year, i.e. end of financial year and end of calendar year, so that canteen profitability can be effectively monitored. Regular statements enable management to be made aware of any variation of canteen operation and appropriate action can then take place.

Purchase, replacement and maintenance of equipment

The purchase of additional equipment and repairs to equipment in school canteens must be funded from profits. In the half yearly trading statements, some provision should be made for the purchase or replacement of equipment.

The possibility of hiring equipment should not be overlooked, and an adequate system should be in place to ensure that all equipment is properly recorded, with clear indication of ownership.

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