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
27
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?
Top Related