Calculating the True Cost of a Meal:

A Planning and Analysis Tool for Nutrition Programs

Linda Netterville, MA, RD, LDContractor, Nutrition Program, DADS

Objectives

Identify why it is important to know the meal cost

Identify the key components of meal costing.

Identify steps to keep meal cost within the budget.

Clarify audience questions and wrap-up

Calculating the True Cost of a Meal

Why is it important?

What are the key components of meal costing?

How can you control meal costs?

Definitions

Cost = price paid to acquire, produce, accomplish or maintain anything

Price = the sum in money or goods for which anything is or may be bought or sold

Rate = a fixed charge per unit of quantity

Definitions

Expenditure = Outlays/payments made by the SUA and/or AAA’s using OAA federal funds to provide an allowable service

Total Service Expenditure = OAA expenditures plus all other funds administered by the SUA and/or AAA’s on behalf of elderly individuals and caregivers for services meeting the definition of OAA services

Why is It Important?

Program Operations

Program Accountability

Program Sustainability

Changing ResourcesGovernment/Public Funding

Older Americans ActTitle III (C1, C2, NSIP), V, VI

Other Federal Social services or community service block grants

State-Vary by Sate

Changing Resources

Competition for limited dollars› Grants› Fundraising

Decline in client contributionsCompetition with for profit companies

Program Operations

Meet the demand for meals Maintain quality Manage costs against revenues

Program Accountability

Demonstrates impact of program to funders

Performance measurement Demonstrates efficiency Demonstrates effectiveness

Program Sustainability

Optimizes costs relative to revenue Potential to provide meals and services

for additional revenue Understand bid prices if purchasing

meals from a caterer

Program SustainabilitySocial Entrepreneurship• Catering• Expanded Nutrition

Services• Other Programs-USDA

Child Nutrition• For Pay Options

Program SustainabilityLong Term Care Services and Support (LTSS)• Transition Care• Managed Care

What are the Key Components of Meal Costing?

Food/Supplies

Equipment

Personnel

Occupancy/Fixed Costs

Transportation/Travel

Administrative/General

Calculating Food Cost

To find the food cost per meal:

Beginning Inventory

+Purchases (from invoices)________

=Total Food Available for the Period

- Ending Inventory__________________

=Raw Food Cost

Calculating Food Cost

To find the raw food cost per meal:

Raw Food Cost Number of Meals Served= Raw Food Cost per Meal

Calculating Food Cost

Group ActivityWorksheet Activity #1

18

Calculating Labor CostsEmployee Wage Rate Hours

WorkedTotal Salary

or WagesTax Match

(SSI & Medicare)

Benefit Contribution

Total Monthly

Labor Cost

Person AN/A N/A $1,200.00 $91.80 $350.00 $1641.80

Person B$12.00 40 $480.00 $36.72 $200.00 $716.72

Person C$8.00 18 $144.00 $11.02 N/A $155.02

TotalN/A N/A $1,824.00 $139.54 $550.00 $2,513.54

Calculating Total Meal Costs

Group ActivityWorksheet Activity #2

How Can You Control Meal Costs?

Menu Planning

Purchasing/Storage

Food Preparation/Service

Labor

Compare Actual Costs to Budget

Menu Planning

Utilize a cycle menu Cook from scratch vs. convenience Food availability Consider season variations Buy food of the quality most suitable Consider the cost of labor Consider the equipment Consider the service container

Purchasing

Purchasing› Compare price and quality› Purchase according to the menu› Consider what is on hand› Consider delivery and storage› Buying methods

Open Market Sealed or Fixed Bid Cost-Plus Co-op/Group Purchasing

Receiving and Storage

Food on hand represents $$$ Check all deliveries for:

› Pricing› Quantity› Quality

Maintain proper storage: › Dry› Refrigerated› Frozen

Rotate stock

Food Preparation

Standardized Recipes› Consistent quality› Predictable yield› Customer satisfaction› Consistent nutrient content› Food cost control› Efficient purchasing› Labor control

Food Service

Maintain proper temperatures of food› Cold food below 410

› Hot food above 1350

Accurate forecasting and preparation Portion control

Labor

Efficient scheduling Availability of volunteers Labor should be in relationship to the

amount of work› Meals per man hour

Poor menu planning Careless purchasing and receiving

practices Failure to use standardized recipes Inaccurate forecasting Careless food storage Waste in food preparation Portion control not followed

Possible Causes of Meal Costs

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Compare Actual Costs to Budgeted

Monitor expenditures/revenues on a regular basis

Analysis of cost/meal Raw food cost per meal Total cost per meal

Identify areas under or over budget Take action to control

Compare Actual Costs to Budgeted

Group ActivityWorksheet Activity #3

Questions?