Practical Funding for Schools Article

The school canteen may be the last thing on your mind when you are trying to raise money, but one company is helping schools earn thousands by taking control of their canteens. We explain how the scheme works and talk to some schools who have tried it out successfully.

Schools may find that they have a limited choice when it comes to food provision - they must either use a local direct service organisation, a contractor, or provide the service themselves. A new company, Eatdot, was founded on the belief that schools are being overcharged by their contractors and not seeing the return they deserve. Eatdot offers a way for schools to take their food service in-house and run it themselves. Not only can this save money, it can actually earn the school a profit. This has been demonstrated in some of the 52 schools that are currently using the Eatdot scheme.

Ed Bevan, marketing director for Eatdot, believes that schools come under pressure to stick with a food service that is not giving them value for money - ‘Pay us this much or there’ll be no meals next term’. Contractors may offer to invest in the school’s facilities in return for the contract, but what appears to be a good deal turns into a long-term contract that ties the school to a poor value service. Schools may also believe that they are required by law to use an outside contractor, or that this is the only way to prove ‘best value’, but this is not the case: schools do not have to tender all their services.

The decision can be made, says Ed Bevan, in a single governors’ meeting: ‘If school governors decide they want to go in-house they just make a decision to do it, like for any other in-house service such as cleaning or gardening. If it doesn’t work, they can go out to tender again.’ If parents, pupils or staff are unhappy with the canteen service they can call an Eatdot helpline.

Licensed or managed
There are two ways for a school to use Eatdot. The company either provides an entirely managed scheme, where an area manager takes full responsibility for the school’s food service, or a licence for schools to take their food service in-house using the Eatdot ‘brand’ - their wall signs, menus, uniforms, advisors, promotional materials and helplines. For schools that are looking to make money the licence is perhaps the way to go, as it is cheaper and gives the school more control. It costs Ł6,000 to Ł8,000 a year to buy a licence - the exact fee will depend on the size of the school. This is not paid up front - instead, schools pay a monthly fee from their returns.

Once a school has signed up for an Eatdot licence, the next step is a transformation of the canteen. How far schools wish to go is up to them, but all schools receive free hanging signs, a menu holder and 3-d wall sign designed in the Eatdot style and colour scheme. The resulting canteen can be more pupil-friendly and ‘cool’ than the old service, and this accounts for increased custom for some schools. A scheme for offering free school meals also takes this into account - the e-meal scheme aims to provide free meals to pupils with no stigma attached.

Menus are provided on a four-week cycle, and are aligned with Government guidelines and endorsed by a nutritionist. Each one is developed in conjunction with the school catering manager, and schools are free to alter the menu if they wish. Eatdot also provide promotions to encourage pupils to choose the healthy options rather than pizza and chips. Vegetarians meals are also available.

Support
Each school receives a password for a secure area of the Eatdot website. This allows them to view all menus and prices for their own set-up, as well as giving them access to promotional materials and recipes. And, as with everything, its success depends on the commitment of the staff. Ed Bevan, marketing director for Eatdot, says: ‘It’s not right for every school. It does rely quite a lot on the catering manager running it as a business.’

In return for your fee you will receive five or six visits from an advisor when the canteen is being set up, and then two or three visits per term after that. Advisors will help the school to establish and monitor the canteen’s annual budget, advise on health and safety matters and the necessary paperwork, and advise on due diligence. If schools have chosen the licenced option, it is important to remember that they are still responsible for the kitchens: ‘We provide all the due diligence frameworks for HSE and food safety, but the responsibility still lies with the school. We do recommend they look into their insurance policies.’

Profit
Many of the schools running an Eatdot canteen have made a profit - one school we talked to made Ł35,000 in one year - but not all schools will benefit from the scheme. Larger schools are more likely to make money simply because they have more customers, although Eatdot claim that it is possible for a school with only 600 pupils to make money if the canteen is run properly. The financial return will always be greater on the licensed scheme than the fully managed option. So how soon should you expect to make a profit? ‘It could take a term to really bed in,’ says Ed Bevan, ‘and then from terms two to three schools should really be getting a return.’

Case Studies

The Salesian School, Surrey
Mike Riedlinger’s background in banking meant that he knew a bad deal when he saw one. The Salesian school, a mixed state school for 11- to 18-year-olds, was employing a catering contractor who used school kitchens, equipment and the school’s large customer base to earn a profit, but then asked for a fee on top. ‘It seemed strange to me,’ says Mike Riedlinger, the school bursar, ‘and in recent years it’s become a cost to the school.’ So he looked around for an alternative and found the Eatdot scheme: ‘We haven’t looked back since,’ he says.

The school runs two kitchens on different school sites to cater for their 1,201 pupils. They decided to employ decorators to professionally transform the canteens into the Eatdot style. This cost them Ł4,000, but it was worth it: they recouped that amount in profit within the first six weeks of trading.

The school chose the licenced route, meaning that they retain control over their own food service: ‘We pay Ł500 a month as a licence to use the Eatdot brand, buying power, guidance and website. The rest of it is our business and it’s up to us how we use it - they’re not there telling us what to do.’ While the control is welcome, it does mean that the school has to take on extra responsibilities. Contracts for the kitchen staff had to be organised, but this was not too much trouble as the school already employed in-house cleaning staff. The administrative staff took on a few more hours work processing invoices, and then the remainder of the work fell to Mike Riedlinger: ‘The additional work is on me, but the financial benefit far outweighs that.’ In one way the workload has actually decreased. The catering manager, who used to have to fill in numerous forms for the outside contractors, now has paperwork kept to a minimum by the school.

In financial terms the change-over has been a clear success. Having opened the new canteen in September 2000, the school budgeted for a profit of Ł21,000 over the first year, after fees to Eatdot and salaries had been extracted. In fact the school made a total profit of Ł35,000. This compares to the previous year when they had paid Ł10,000 to contractors. Some of the profit goes back into improvements for the kitchen, but most goes directly to the school. Their success has continued into the following years, with thousands of pounds made from the canteen every year.

So where is all this money coming from? Mike Riedlinger says it is the result of a more efficient, better quality service: ‘It’s because we can get the food cheaper, can get better ingredients. We haven’t put prices up because the quality’s better.’ A brighter, more attractive canteen and more exciting food also attracts more business - even the staff are more enthusiastic about using the canteen now.

If you do decide to run an in-house service, Mike Riedlinger would advise you to make sure that the right staff are in place: ‘One of the keys to success is having a good catering manager.’ He is also well aware that schools may be afraid to commit themselves to such a major project, but he believes that the risk will pay off: ‘Be brave. Some schools are conservative about making the leap, don’t want to worry about contracting arrangements - but this has proved so valuable to the school in all respects - it shows what can be done. I’d gladly recommend it.’

Verulam School, St Albans
Verulam School decided to look for a new way to run their canteen because they were unhappy that an outside contractor was reaping all the rewards. ‘We felt we were not getting a reasonable return,’ says Chris Giles, bursar at the school. The caterers were taking around Ł100,000 a year but the school itself was not benefiting. They were also unhappy with the way they were being charged. For example, one year there was an apparent excess profit of Ł8,000 which should have come to the school, but that year they were required to pay a management fee of Ł8,000.

Therefore, from April 2001 the school decided to switch to the Eatdot licence scheme. This costs them around Ł5,000 per year, but has proved very successful: ‘We are much happier with this scenario,’ says Chris Giles. As well as setting up the Eatdot style canteen, the school introduced a smartcard system which operates as a kind of mini bank. Parents pay money into their child’s account, and the child then buys food with a swipecard. Parents can specify a daily spending limit, and they can also make it known if their child has any allergies or is not allowed to eat certain foods. This system means that parents can be supplied with a detailed breakdown of all the items bought by their children, and it also means that the canteen staff can keep track of the bestselling items and stock levels.

The school has budgeted for a profit of Ł20,000 and staff are confident of achieving that, as the take-up rate for the canteen has increased significantly. As Chris Giles says, a big advantage of running a school canteen business is that there is no problem finding customers: ‘We have a captive audience - they have to spend the money in school.’ The school can now buy food at better prices, as they are no longer forced to accept whatever suppliers the contractor wishes to use. They source all fresh fruit and vegetables locally: ‘We literally use the guy down the road,’ says Chris Giles. None of the canteen prices have been raised to boost the profits; instead the extra money comes from the additional customers and savings on the original ingredients. Staff who had previously worked in the kitchens have been made employees of the school.

All of this has not come without effort. There was considerable disruption to the school during the ‘makeover’ period: ‘The first week or two was a bit of a nightmare,’ says Chris Giles, especially as they had to cope with the new smartcard system as well as the new canteen. ‘It was a little bit hairy but we came out the other side.’

Chris Giles stresses the importance of good quality canteen staff, particularly the canteen manager: ‘It’s important you have the right personnel - you need someone who’s confident and capable,’ says Chris Giles. These additional responsibilities also extend to the other school staff. Chris Giles now organises the employment contracts and payment structures for the kitchen staff, who are employed under the same system as the admin staff.