Calculating Costs (With Answers) Page 23
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28Making Changes to Meet the
Break-Even Point
If the program is not meeting the break-even point, steps should be taken to bring it in
line. Food and labor costs account for about 80-85 percent of the total program costs;
however, the cost of operating the breakfast program is relatively lower than lunch. But
it is logical that these two areas might be considered when attempting to reduce costs.
Remember not to sacrifice quality when cutting expenses.
Another area to consider is revenue. By incorporating or expanding on some revenue
producing ideas, the program could bring in enough money to cover the expenses to
meet the break-even point. Supplemented by the Federal reimbursement, the revenue
generated from breakfast sales in most cases covers the expenses.
It may be necessary to take a closer look at the problem areas. If the program is poorly
run or inefficient, simply increasing participation to increase revenue may compound the
problem.
Decrease Food Cost
Food cost is one of the first areas to examine when expenses are higher than revenue.
There are several ways to reduce variable cost to help achieve the break-even point.
The following pages include a section titled, “Tips for Decreasing Food Cost” on page
24.
Decrease Labor Cost
One of the most difficult challenges is decreasing labor cost. Long-term employees
require higher wages. With the increased use of prepared items and disposable dishes,
it may be possible to reduce the amount of labor needed. Using available labor more
efficiently may be the answer. Existing labor may be used to implement or expand
additional programs such as the School Breakfast Program.
Increase Revenue
The first area to consider for expansion may be the breakfast program. There is often
room for expansion in participation whereas lunch participation may be at the maximum.
Another option may be to increase revenue in all Child Nutrition Programs. If that is the
case, refer to the section in the following pages titled, “Tips for Increasing Revenue” on
page 26.
Calculating Costs - 23
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