Key Performance Indicators (KPIs):
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1 Key Performance Indicators (KPIs): Practical Applications
2 Presenters: Keith Rushing, PhD, RD Research Scientist ICN, ARD Hattiesburg, MS Gay Anderson SNS Child Nutrition Director Brandon Valley Schools Brandon, SD Julie Boettger, PhD, RD Director, Food & Nutr Services School City of Hammond Hammond, IN
3 Topics: National Survey Results - how KPIs are utilized by School Nutrition (SN) Directors Real Life Examples Successful Utilization of KPIs for Decision Making & Program Evaluation. Per meal costs Calculating MEQs Days Inventory On-Hand Inventory Turnover Rate Basic Revenues & Expenses Cost as a Percent of Revenue Meals Per Labor Hour Absenteeism Rate Breakeven point
4 Learning Objectives: Participants will: Understand how most SN professionals utilize KPIs Be able to apply KPIs for decision making Be able to utilize KPIs for program evaluation
5 Part I Speaker: Keith Rushing How Most School Nutrition Professionals Utilize Key Performance Indicators
6 2014 National Survey Explore SN Professionals Usage & Perceptions of KPIs 105 Multiple Choice Questions Development Assisted by SN professionals: Expert Panel (8) Review Panel (21)
7 2014 National Survey cont. Random Sample: 700 SN directors Stratified by USDA Region Response Rate: 29% (N=205)
8 Sample: USDA Region (n = 189) % Southeast 23 Southwest 18 Mountain Plains 16 Mid-Atlantic 14 Mid-West 13 West 10 Northeast 6
9 Sample: Student Enrollment (n=203) % < 1, ,000-29, > 30,000 or greater 7
10 Sample: Position Title (n=197) % SN Director 78 District-Level SN Supervisor 17 School-Level SN Manager 5
11 Sample: Education level (n=189) % High School / GED 25 Associate s Degree 15 Bachelor s Degree 32 Master s Degree 23 Doctorate Degree 5
12 Sample: Years in Current Position (n=194) % 1 to 5 years 34 6 to 10 years to 15 years to 20 years 9 Greater than 20 years 15
13 11 Survey KPIs: 1. Average Daily Participation 2. Cost Per Meal 3. Cost as a Percent of Revenue 4. Revenue Per Meal 5. Breakeven Point 6. Meals Per Labor Hour
14 11 Survey KPIs cont. 7. Absenteeism Rate 8. Staff Turnover Rate 9. Inventory Turnover Rate 10. Days Inventory On-Hand 11. Percent Over-Production
15 Level of Understanding of KPIs (n varies from ) Adequate Partial No Average Daily Participation 96% 3% 1% Meals per Labor Hour 88% 10% 2% Cost Per Meal 85% 13% 2% Revenue Per Meal 77% 22% 1% Staff Turnover Rate 73% 21% 6% Absenteeism Rate 73% 23% 4%
16 Level of Understanding of KPIs continued (n varies from ) Adequate Partial No Cost as a Percent of Revenue 71% 24% 5% Breakeven Point 70% 24% 6% Days of Inventory On-Hand 65% 28% 7% Inventory Turnover Rate 61% 31% 8% Percent Over-Production 45% 36% 19%
17 Use of KPIs for Decision Making (n varies from ) Yes Average Daily Participation 91% Cost Per Meal 89% Meals Per Labor Hour 82% Revenue Per Meal 64% Cost as a Percent of Revenue 61% Breakeven Point 53%
18 Use of KPIs for Decision Making continued (n varies from ) Yes Days of Inventory On-Hand 44% Absenteeism Rate 42% Inventory Turnover Rate 36% Percent Over-Production 33% Staff Turnover Rate 30%
19 Other SN Professionals in District that Use KPIs (n varies from ) Yes No? District Level Supervisors 57% 30% 13% School Level Managers 43% 57% 10% Cooks 15% 79% 6%
20 Other SN Professionals in District That Receive KPI Training (n varies from ) Yes No %? District Level Supervisors 47% 39% 14 School Level Managers 40% 50% 10 Cooks 9% 84% 7
21 Agreement with KPI Statements (n varies from ) Agree / Strongly Agree KPIs are useful for decision making 98% KPIs are valuable tools for evaluating a school nutrition program 96% KPIs are time consuming to calculate 76%
22 Agreement with KPI Statements continued (n varies from ) Agree / Strongly Agree KPIs are easy to calculate 72% KPIs are difficult to interpret 39% School nutrition professions receive adequate training on KPIs 13%
23 Conclusions Understanding of most KPIs is good, but room for improvement The majority of SN professionals do not use 6 of the KPIs for decision making Other than directors, most SN professionals receive no KPI training, yet 65% of Supervisors and 43% of Managers use KPIs
24 Conclusions KPIs are: Useful for decision making Valuable for program evaluation Time consuming to calculate Easy to calculate and interpret
25 Conclusions Most SN professionals agree that the KPI training received is inadequate.
26 Take Home Message: More KPI training and resources are needed for SN professionals, especially those that have the potential to become program directors.
27 Part II Application of KPIs for Decision Making and Program Evaluation Speaker: Gay Anderson Per meal costs Calculating MEQs Days Inventory On-Hand Inventory Turnover Rate
28 Per Meal Costs Objective: Share the importance in knowing and understanding daily meal costs. Understanding how to calculate meal costs What to do with this information once you have it available
29 What is an acceptable standard for a daily meal cost? There are not any solid figures to use as we all have unique variables in each district and schools that are factored in. Are you a full service kitchen? Do you satellite food to other locations? What quality levels of food do you purchase or expected to purchase? What is your past average? Where do you want your % s or costs to be? Setting Goals for your program
30 Per Meal Costs You are the one to determine the standard that is right for your operation How to get started? Calculate your Meal Equivalents (MEQ s) What is your revenue for your operation? MEQ s will vary from school to school
31 Calculating MEQ S Standard conversions 1 Lunch = 1 MEQ 3 Breakfasts *.67 = 2 MEQ s 1 Dinner = 1 MEQ 3 Snacks = 1 MEQ Ala Carte Sales / Total Federal Reimbursement
32 MEQ s Example 100 Breakfasts X.67 = 67 MEQ s 455 Lunches = 455 MEQ s 70 Snacks X.33 = 23 MEQ s Nonprogram Foods $ / (3.42) = 126 MEQ s Total MEQ s for day = 671
33 MEAL COSTS & MEQ s Total Expenses for the day are? Total Food Costs Total Labor Total Other Can Demonstrate individually or as a total Expenses were $ / MEQ s 671 = 2.94 Where do you need to see yourself
34 MEAL COSTS & MEQ s I prefer to take food out and look at this separately Total Food Costs / Total MEQ s provides a clean picture of the day to day meal costs and you are better able to compare menus and days you have Peaks in Cost and days you have your Lower Costs Total Food Cost = $ / 671 MEQ s PER MEAL COST = $1.58
35 Understanding Meal Costs Note: One other significant factor in completing this process is in planning the menu and setting a target for you daily meal costs. Strongly suggest calculating out what an average per meal cost is when writing the menu based on planning. This will assist as you monitor multiple locations and compare variances along with what took place on the specific day.
36 Day Inventory On-Hand Begin by finding out what you need based on deliveries Money on the shelf is costly How many times should inventory be turned each month and why? 3-4 times per month System controls Money on the shelf Quality factors Prevents or lessens the opportunity of theft
37 Days Inventory On-Hand How to calculate # of inventory turns. Need to know total cost of food for previous month Beginning Inventory + Purchases Ending inventory = Cost of Food Used Cost of Food Used / by two = Average Inventory Cost of Food Used /by Average Inventory = Inventory turns
38 Understanding Inventory Turnover Rate Objectives How to calculate an inventory turn Understand why one needs to know and monitor inventory turns Suggestions for improving turns
39 INVENTORY Turnover Rate EXAMPLE January ending inventory $10,000. PLUS February purchases $50,000 = $60,000 February ending inventory $ 8,000 - Total cost of food $52,000 / 2 Average Inventory $26,000 Total cost of food/average inventory = 2 turns
40 How To Change Inventory Turnover Rate Reduce number of SKUS Find ways to use items in multiple ways. Cycle menus Set pars for what managers can keep on hand When possible share between sites.
41 CONCLUSION Understand you are running a business Sound business practices in inventory controls and monitoring food costs are imperative in making your program successful.
42 Part III Application of KPIs for Decision Making and Program Evaluation Speaker: Julie Boettger Basic Revenues & Expenses Cost as a Percent of Revenue Meals Per Labor Hour Absenteeism Rate Breakeven point
43 School City of Hammond 22 schools in greater Chicago area, 14,000 students 140 employees with benefit days/year Wages in $ Wages in $ (14-15% increase) CEP in elementary schools 80% free/reduced in secondary schools All on-site preparation 7 At-Risk Supper sites After School Snacks 6 Fresh Fruit and Vegetable Program sites Summer Food Program
44 Revenues and Expenses Revenue (Income) Federal Reimbursements $ 7,432,520 Cash from meals, adults 951,053 FFVP 218,912 State Matching 16,040 Other Revenue 31,224 Total Revenue $8,649,749 Expenses Food Used (-rebates) $3,340,044 Labor (including benefits) 2,988,906 Other direct 1,525,739 Other indirect 0 Total Expenses $7,854,689 Profit (Loss) $795,060
45 Cost as a % of Revenue Divide each cost by total revenue Example labor and benefits total revenue $ 2,988,906 $ 8,649,749 = labor cost is 35% of revenue
46 Cost as a % of Revenue Revenue (Income) % of Revenue Federal Reimbursements $ 7,432,520 86% Cash from meals, adults 951,053 11% FFVP 218,912 3% State Matching 16,040 0% Other Revenue 31,224 0% Total Revenue $8,649, % Expenses Food Used (-rebates) $3,340,044 38% Labor (including benefits) 2,988,906 35% Other direct 1,525,739 18% Other indirect 0 0% Total Expenses $7,854,689 91% Profit (Loss) $795,060 9%
47 Projected Effect of Raise on Labor Cost $2,988,906 x 1.15 = $3,437,241 $3,437,241 $ 8,649,749 = 39.7% Labor Cost
48 Meals Per Labor Hour (MPLH) Measure of productivity Meal equivalents (MEQ) labor hours Labor hours includes site based labor: Manager Kitchen staff Substitutes Labor does not include Personal illness, vacation, holiday pay Supervision of students Compare site productivity against industry standard for similar type of production, service, and size of operation
49 Determine Meals Per Labor Hour Edison Elementary Meals MEQ 411 Breakfast Lunch Supper After School Snacks 4 14 _ $15 A la carte 3 5 Total MEQ 731 Labor Hours 36
50 On-Site Staffing Guidelines MPLH MPLH Conventional Convenience Number MEQ Low High Low High Example: 731 MEQ 20 MPLH = 36.5 Labor Hours
51 Hammond MPLH Target MPLH Actual Range is MPLH High schools tend to be below target Middle tend to be above target
52 Total Labor Costs in Hammond Total labor costs affected by Productivity Labor rates Cost of benefits Absenteeism (paying twice for same labor hour) Turnover rate (17.7%) Vacancy rate (9.9 % of positions are not filled)
53 Absenteeism Rate The rate at which employee miss work due to illness, personal business or other reasons. ((# hours lost for the period) ((number of days in the period x average # of hours worked for the period)x (average # employees during the period))) x 100 = absenteeism rate Step 1 - (number of days in the period x average # of hours worked for the period)x (average # employees during the period) THEN Step 2 - (# hours lost for the period) the calculation above Step 3 - The calculation above x 100 = absenteeism rate
54 Hammond Absenteeism 6.21 average hours/day; 156 days in year, average number of employees, 5, total days absent YTD (5, (120.5 x (156 x 6.21))) x 100 = 4.86 Range for personal absenteeism 25% - 0% Policy is more than 5% (9 days for the year) absenteeism is considered excessive If employee uses all benefits days they can be terminated If their attendance is poor they are eliminated from summer food program assignments
55 Breakeven Point (BEP) Point at which revenues = expenditures Used for determining whether a program/project can be profitable or self-sustaining Fixed costs (FC) in dollars 1- (variable costs [VC] revenue) OR Fixed costs (FC) in dollars 1- (variable costs as % of revenue)
56 BEP Case Study Saturday Success Camp Proposed Revenue Item Revenue FC VC VC% Breakfast $1.99 Snacks $.84 $ $ Food Cost $ % Labor Cost $17.63 x 4 hrs $ Supplies $ % Totals $ $ BEP $ = $128.22
57 Actual Revenue for Saturday Success Camp Item Revenue Fixed Cost Variable Cost VC % Breakfast $1.99 Snacks $.84 $ $ Food $ % Labor $17.63 x 4 hrs $ Supplies $ % Totals $ $63.58 BEP $ = $128.22
58 Questions?
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