Served Digizine™- Money, Money, Money

Show Me the Money

Being purposeful about investing time in KPIs With anything in life and work, ensuring an effort provides a valuable ROI on your time is extremely important. There is so much data generated by a school nutrition operation, where do you start? The answer is simple. Start by asking yourself these two questions before spending any time tracking or calculating a KPI: Question 1: Am I going to change anything about my operation as a result of what I find out? Question 2: Will it provide enough details to tell me how to make that change? Let’s apply those two questions to our example KPIs:

Question

Student Meal Participation

Maybe. Staffing reductions are not necessarily the answer or possible. Meals Per Labor Hour

No. Does my planned COGS (the planned costs of my menu) match the actual COGS? Why? How do I know which school, menu day, or item is contributing to that cost? Maybe the item whose cost is high is also contributing significant revenue? Maybe. I want to be sure that our costs do not exceed our revenue (COGS) Cost of Goods Sold

Am I going to change anything about my operation as a result of what I find out?

Yes. I will try to increase participation

MenuLogic K12 Founder Lindsey Hill, RD, SNS

Not really. It’s a two-sided calculation (Labor Hours and Meal Equivalents). Which is causing the issue - too high of labor or too low of sales? Or maybe the issue isn’t the school’s at all because there are unavoidable conditions (low enrollment, labor for long meal periods etc).

IS THAT KPI REALLY YOUR “KEY” TO SUCCESS? (KPI = KEY PERFORMANCE INDICATOR!)

No. Where and why is meal participation low? Why is it an issue? Is it the menu, staffing, recipes,

Will it provide enough details to tell me how to make that change?

marketing, customer service, etc? Are my

customers buying at all or just not buying meals?

We’ve all heard about KPI’s, or “Key Performance Indicators” in courses or trainings. But what exactly does that mean and what should these be used for? Google / Oxford defines “Key Performance Indicator” as: “a quantifiable measure used to evaluate the success of an organization, employee, etc. in meeting objectives for performance.” KPI’s, more simply put, are measures of performance. Three of the most common KPIs that are usually associated with school nutrition or foodservice operations are “student meal participation,” “meals per labor hour,” and “cost of goods sold” (COGS).These KPIs are sometimes accompanied by a chart of some form that allows you to compare your calculated value to the “norm,” an expectation, or a set of standards applied to all school nutrition programs. Perhaps the idea that we can utilize these calculations to measure our district’s performance against a standard is an unrealistic and ineffective idea. Is the definition or the path to success the same across all school nutrition programs? No. Don’t get me wrong - there is a time and place for all three of these KPIs. It’s certainly better to know if your district’s own measure is within the realm of success as compared to others, than not knowing any information at all. But they most definitely are not the end-all, be-all and they can be a significant source of time-wasting trying to calculate something manually or via spreadsheets that isn’t all that useful.

Key Financial Concepts - Part 3 This article is part of a 4 part series from the blog “Our Founder’s Voice” by Lindsey HiIl, RD, SNS, creator of MenuLogic K12.

Understanding YOUR performance framework Measuring the performance of a business or a school nutrition program using quantitative and objective data can be incredibly valuable. This exercise can help in understanding the strengths,weaknesses,andopportunities you face in order to meet the goals and aspirations that you have for your program and your customers. Every district has its own unique challenges and also its own aspirations. It’s important for each program to identify it’s own goals and then use performance measures that help you directly achieve those goals. This can be described as your performance framework. Measuring performance does not have to mean measuring it against other districts or other businesses. It can mean measuring schools within a district against your district’s standards or measuring menu cycle days and menu items against your internal standards. The key to finding the “Key Performance Indicators” most useful and worth your time is first to identify what it is you are trying to accomplish and choosing measures that support that mission. Investing time in the right KPI Let’s take a closer look at one of the KPI examples already discussed: Meals per Labor Hour. What is the intent or

purpose? Meals Per Labor Hour gives a general look into productivity, and productivity is important for profitability. So what we are really trying to measure is how our labor costs affect profitability. But is this the right measure for the job? Let’s break this goal of program profitability down further. There are many different directions to measure performance toward program profitability. But once you determine that labor costs are in line with your goal or program profitability, what else can you do? If labor, food/ supply, and overhead represent all costs, perhaps a more effective approach might be to look at your menu and its impact on food/supply costs and total revenue. Performance measures provide varying levels of detail. Some might be a high-level or “birds-eye” view of the program as a whole. These can be useful in understanding overall performance, but if that performance is not what you want it to be, you need more granular information that will allow you to actually make decisions to change that overall performance. Overall performance is the sum of many individual performance measures.

Terms to Know:

Number of meals sold / Number of students present to be able to sell meals to. STUDENT MEAL PARTICIPATION: Number of meal equivalents sold (converting ala carte and breakfast to equivalent meals) / Number of labor hours used to produce MEALS PER LABOR HOUR: Starting inventory (food/supply) value + purchases - Ending inventory (food/supply) value = Cost of goods sold. COST OF GOODS SOLD (COGS)