Realizing the cost of providing free Associate Meals on Food Cost
This week I would like to review the significant impact that Associate Meals (non-revenue generating) have on Food Cost and ultimately PBO.
It seems that for many years there has been an assumption that because we work in the Foodservice industry, we can eat our meals for free. The logic had been that if we didn’t provide a meal that most associates would “snack” during their shift and ultimately cause bigger issues such as eating in the kitchen etc. Or morale would drop to such low levels that we couldn’t keep staff. It is difficult to understand how in today’s world that staff would not accept or stay at a job because of the “free meal” assumed hidden benefit.
This assumption is now at the forefront and is being challenged by all Foodservice operators around the country. National fast food chains have taken a hard stance on this “assumed benefit” for associates. We have all heard the saying, “there are no free lunches in life”, and that is now true in the Food Service industry. While offering food for associate consumption is not a bad practice, offering it for free can have staggering consequences. Having a policy that allows associates to eat a meal is great but it needs to have employee ownership on the other side. Most National operators offer deep discounts on food for associates who desire to eat a meal while at work.
Compass Group is no different than any other large national corporation. Each sector of Compass has specific associate meal programs that can be found in the Compass Owners Managers Suite of services under My CPM, Forms, and in our case, Morrison Community Living Associate Meal Programs. The Compass/Morrison programs allow for an associate to qualify for a meal through payroll deduction amounts based on hours worked. The program is spelled out very clearly on the form found in CPM. While the programs do not truly cover the cost of the meal, they offer reasonable solutions to the former “assumed benefit” of having a free meal provided for associates working in the operation.
The impact that providing a free meal to your associates has significant financial impacts and include;
· Employees preparing additional food to feed employees
· Employees cooking items for themselves that are not on the menu that day
· Employees eating both breakfast and lunch on premises
· Employees taking food from the building for consumption off site
· Non Budgeted Food Cost which impedes your ability to hit your Food Cost target
· Significant waste which also results in higher than budget Food Cost
Whether you are in a Fee account or a PL, have Morrison associates or client associates, employee meals have significant impact on your financials. It’s important to understand this and present the cost impact to your clients as their annual budget process begins. Many clients may allow you to budget for this expense which should be clearly identified as line item in your Food cost budget.
Recently, I conducted an audit of a specific RDO and there region. Below is a detail of my findings;
The region has 316 Morrison associates and operates with 90% PL accounts
Meal cost for the Region averages $2.60 and includes Soup or Salad, Entre, Starch and Vegetable, Dessert and Cold Beverage.
Assuming that 45% of the Morrison associates were allowed to have a meal working at least a six hour shift, the Region served 36,972 associate meals at a Food Cost of $2.60 per meal.
I assumed the operations to have cumulatively at least 260 service days each year (on the light side taking into consideration the true associate meal consumption by hourly schedules each week).
The impact to Region PBO for the year was a staggering $96,127.
Remember, there is no such thing as a “free lunch” take a moment to calculate your cost of having an associate free meal program.
Meals x cost x service days = impact on PBO.
Kevin J Mclaughlin | Regional Director of Operations