CFGCONSULT.COM:                       The Cornyn Fasano Group Newsletter November 1, 2004

The Cornyn Fasano Group (CFG) is a food service management and operations consulting firm located in Portland, Oregon. For over 28 years, CFG has provided expert, objective assistance to college/universities, corporations, K-12 schools, health care, zoos, museums, concert halls as well as a variety of government entities. CFG is a client advocate; therefore, does not accept assignments from contract management companies, food processors or equipment manufacturers. CFG has decided to re-energize its effort to periodically communicate pertinent information to its clients and people we have met with an interest in food service. Our goal is to consolidate key pieces of information and communicate to you in an easy to read format. If you do not want to receive this newsletter or would prefer to receive it on line, simply email us at jocorner@cfgconsult.com and tell us to change you to our email list or remove your name and address.

INSIDER TIPS: Prime cost is more than just the price the high rollers spend to borrow money!

In the food service world, prime cost is combination of food and labor cost..and it does not have to be a mystery. Food is a raw product that in many instances needs to be manufactured or processed into the item to be served. The more the food is "processed" before you buy it the more it will cost BUT, it will take you less labor to prepare for service. So, if your food service operator buys mostly fresh, unprocessed items, their food cost will be less but their labor cost high. If you buy frozen lasagna, food cost will be higher but the labor cost lower. The combination of food and labor cost is known as "prime cost" in the food industry. What you really want to know is what is the targeted "prime cost" for your dining operation

What does this knowledge gain you as a non food service administrator responsible for food service (whether operated in house or by a contractor)?

Case Analysis number 1:

You have a labor contract that, with benefits, results in the food service employees being paid 1.5 or 2.0 times the normal street wage for equal work. To meet the targeted prime cost should your operator be buying frozen lasagna to keep labor costs down and attain the targeted prime cost?

Case Analysis number 2:

You have a profit and loss contract with your operator. The targeted prime cost in their original proposal was 68% of revenue. Suddenly the quality of the food seems to have declined in the cafe. The Nicose Style Red Potato Salad has suddenly been changed out for an American style potato salad that tastes very much like the pre-made potato salad sold in tubs at the discount market. You look at the next month's financial statement for your contractor and notice that food and labor cost are at 63%. The combination of lower cost labor and pre-made food items has allowed the operator to drop 5 percentage points to the bottom line...at the expense of quality.

TUNE IN NEXT ISSUE FOR MORE INSIDER TIPS

Eating in your car or at your desk. According to an article published in American Demographics more and more of us are eating lunch at our desks or behind the wheel of our car. 45.3% of Employees bring lunch from home at least once a week, 23.9% buy carry out and 18.3% eat in the office cafeteria. On college and university campuses, CFG principals are seeing more and more "food on the move." Are your operations trying to capture their share of the grab-and-go food market? If not, they are missing a large potential market segment. Ask your self these questions:

Do you merchandise a "box or sack lunch" with your logo? The customer picks up the sack, fills it with a fresh fruit cup, sandwich and beverage to take to the check out counter...at 7:30 am?

Since "freshness" and wholesomeness is critical, patrons might need a reminder to store their purchase in a refrigerator or insulated container.

Welcome to the NOW of the food industry. Make it look and taste good, make it fast and make it convenient. It is all about REAL TIME.

Sanitation at the desk: A client's employee once commented that she preferred to bring a lunch and eat it at her desk ...just did not trust the sanitation in the employee cafe. Imagine her reaction to learning that, according to researchers at the University of Arizona, there are 400 times more germs at a workplace desk than on a toilet seat. The study found that the telephone and desktop were consistently the most contaminated, followed by the keyboard and mouse.

Partnering with Integrity

There is a lot of talk today that businesses/institutions want to "partner" with their food vendor. It sounds good....but what does it mean? A real partnership requires that both parties work together to attain specified goals that represent a win/win result for both entities. This sometimes means making hard decisions on both sides of the partnership. The client cannot expect an operator to invest large sums of money in facilities with profit and loss agreement while the client reserves the right to deny price increases and increase operating hours at will.

There is a tendency for many to think that all are created equal. While that might be true of individuals, it is not true of institutions, businesses, cultural venues and other entities that hire food service contractors. In the eyes of a food contract provider a small commuter college with 200 board students is not equal to an institution with 5,000 students on a board plan. That does not mean that the contractor cannot give equal attention to providing the best possible food program that each of those two entities can support. In order to have a win/win partnership i.e, a partnership with integrity several guidelines must be in place.

1. Both the client and the contractor need to understand who the client is and what the clients individual market can support in the way of food operations.
2. The Client has to have a clear vision of the role that dining plays within its organization.

1. Some attorneys urge caution if using this term in legal documents. The intent is to establish a position, win:win working relationship.

The Contractor must have a combination of skills and experiences combined with an open, flexible willingness to develop a program that meets the client's realistic expectation.

CONTRACTOR	CLIENT

John Cornyn wrote a series of articles for Food Management Magazine on the topic of Financial Statement Gymnastics. If you would like reprints of these articles please feel free to contact Jo Corner at jocorner@cfgconsult and we will send you a complimentary set.

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