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Catering for Change

15 September 2005

Managing a catering facility can require a significant investment of time and resources. Mark Sephton analyses the real costs and considers an alternative approach to managing catering equipment in the commercial kitchen

CATERING FACILITIES WITHIN MANY ORGANISATIONS represent an important interface between the FM department and its internal customers. In-house facilities such as staff canteens exert a significant influence on staff morale and when catering is part of the core business it is essential to maintain a high level of service to external customers.

As a result, catering management often accounts for a large portion of an FM department’s resources – much of which comes from managing the procurement and maintenance of equipment - as well as staff training and compliance with legislation. By extending the principle of outsourcing to the area of catering equipment management, however, it’s possible to improve facilities, free up capital and eliminate service costs.

In order to appreciate the potential of outsourcing this function, it is necessary to take a closer look at both the direct and indirect costs associated with catering.

The direct costs are pretty obvious, comprising the cost of new equipment and associated maintenance contracts. However, there are many indirect costs that often go unnoticed because they come out of revenue budgets rather than capital budgets. At the heart of the outsourcing approach is the ability to package all procurement and management issues together for a fixed monthly fee. It avoids the need for capital outlay in fitting out a new kitchen or for upgrading existing equipment, and the monthly fee can be met from revenue budgets.

A major benefit of outsourcing is that equipment can be procured as and when it is needed rather than having to wait for funds to become available. A financial comparison of these direct costs will depend on economic conditions, interest rates etc. but will not cost more than traditional procurement methods. In fact, in most cases, it will reduce direct costs over the term of the contract – but that’s only part of the picture.

On top of these direct cost issues is their impact on the indirect costs many of which are viewed as ‘just part of the job’, but when they are considered in more depth it’s clear they combine to take up a lot of time and resources. There are also additional costs resulting from downtime, administration time, loss of productivity and the risk of providing a reduced service to customers (internal or external). In a typical catering operation, dealing with these issues alone can account for 50 hours of management time per annum.

Whenever there’s a breakdown you need to contact the maintenance company responsible for that item of equipment. Many kitchens have multiple service contracts with different suppliers, making this an onerous chore that generates mountains of paperwork. Furthermore, the way that many maintenance contracts are structured does not provide real value for money. Most contracts offer very little service cover, and are then supplemented with additional charges for call-outs and spare parts. There also seems to be a strong incentive for the engineer to spend as much time as possible on site as the maintenance company makes more money that way.

In contrast, outsourcing equipment procurement management to one specialist supplier means just one call to hand the problem over to someone else. And, as there are no call out charges, that supplier has a strong incentive to get the equipment up and running in the quickest possible time.

Stocking of frequently-used spares on site, backed by almost immediate availability of replacement equipment when needed, ensures that disruption and downtime are minimised.

Similarly, if you want to refresh your menus and need different equipment to do it, the outsourcing contract should provide the facility to upgrade individual items within the scope of the contract - at no extra charge.

Staff training is another area that impinges on management time, not least because the turnover of catering staff tends to be higher than most other industries (around 40 per cent). Every new member of staff requires some induction training, which will include the initial tranche of health and safety training, as well as specifics relating to the kitchen they will be working in.

For example, in a kitchen with 20 employees and a staff turnover of 40 per cent, eight new staff will be employed in a year. If each requires two days (16 hours) of induction training per annum, and management time is costed at £20 per hour, then this amounts to £320 per annum for each member of staff – or £2,560 for all eight new staff.

In addition, all staff need to be kept up to date with new environmental and health and safety legislation, new additions to the menu and any new equipment that has been installed. As a minimum it is reasonable to assume a further one day’s training per year for each of the 20 staff – again at a management cost of £20 per hour, adding a further £3,200 to the training bill. Of course, these costs could be even higher if it’s necessary to employ translators for non-English speaking staff.

In using interactive, multi-lingual, training systems, tailored to your kitchen and the equipment it uses, much of this basic training can be provided without direct management input. Where an outsourced contract includes this training facility there is more time available for one-to-one specialist training, or time to devote to other management issues. Improved health and safety training will also reduce the incidence of reportable accidents, the level of absenteeism and the associated health and safety paperwork.

According to the Chartered Institute of Personnel and Development, lack of training is a principal cause of high staff turnover, so better training can also be expected to reduce turnover. And with an average recruitment cost of £1,100 per head, this is certainly a saving worth having.

A fundamental concept of outsourcing to specialists is to farm out the day to day distractions and free more time for focusing on the strategic management of the core business. Managing kitchen equipment is secondary to the principal purpose of feeding people, so it makes perfect sense to take a fresh look at the real cost of catering procurement.

● Mark Sephton is sales director of KitchenFM

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