Salient. Victoria University Student Newspaper. Volume 39, Number 18, July 26, 1976.
Food for Thought
Food for Thought
As you will know, if you went to last week's SRC the cafe has made a loss of $32 500 in the period to the end of June this year. With the losses from previous years this is an accumulated loss of $50,000.
|a)||An Attempt by the Catering Manager to Provide Low Cost, High Quality Food.|
|1.||Huge rises in the price of raw materials - 34% for food and 67% for electricity.|
|2.||Necessity of employing a large number of full time qualified staff who must be employed throughout the year; if you don't guarantee this they wouldn't work for you (nor should they be expected to). The large number of staff has meant that 70% of the takings has been going on wages. One third of the staff has already been laid off. Some people have been pressing for more, however its important that we consider the rights of those we employ. Staff cutbacks also obviously means cutbacks in service, with perhaps a return to having all food made off the premises.|
|3.||Capital outlay on repairs and new equipment. This amounted to $6000, $3000 of which has been included in the $32,500 loss.|
This means the true value of the food sold has not been determined, and therefore some food has been selling at a loss. The classic example is the chicken which was losing the cafe 47c per piece sold. A lot of the blame for this lies with Gerry Berens, however, it is not all his fault The large companies which supply the cafe don't send invoices until the end of the month, and as they aren't legally obliged to inform their clients of price rises, these aren't discovered until the invoices arrive. Until you know what things cost you, you can't do adequate costing. Somehow this has to be rectified; it means making sure the foods cost is ascertained when it is delivered.
This is tied up with the costing problem. Because there haven't been separate capital expenditure and trading accounts; and because of this, shop and cafe expenditure haven't been separated it has been impossible to find out where losses have been occuring. At the moment the University administers the accounts; we could get in an outside accountant, which would cost approx $8000 per year but it might be worth it.
Last year, private catering run by the cafeteria subsidized student meals to the tune of $1 2000.
At the end of May private catering had made a profit of $2703. This is not as much as could be expected on a turnover of $31,000 and is due to a very high labour content (50% of turnover). Staff employed on private catering have been reduced substantially and a through costing is done on each function. The standard of private catering this year has been excellent and the reputation of the Union Catering Service is very high thanks to the efforts of Mr Berens and his staff. The full benefits of this will probably not be reflected in extra turnover and profit until 1977.
What to Do?
This loss involves two problems; how to recover the $50,000 loss and how to ensure it doesn't happen again. It is very unlikely the cafe will be able to trade out of it, so it was decided at Executive to give the cafeteria a clean sheet as from July 1st.
It was felt this was important for the morale of the cafeteria, and will probably by a significant force in helping the cafe break even in the future. However the $50,000 has still be be repayed. The money is owed to the University (because they provide the cash-float for the cafeteria).
|(a)||A bank : The credit rating of the Association is such that a loan of this size could be arranged and repaid over 4-5 years. However this would restrict the ability of the Association to raise further loans in the near future as we do not have enough assets to offer as security.|
|(b)||The second building fund. At the last SGM next year's Stud Ass fees were increased to $37.50, $3 of which was to provide a second building fund. This fund basically was seen as providing a goods lift for the union building at the cost of $50,000. We could forget about the lift and pay the cafe loss out of this fund.|
|(c)||An increased studass fee. This would bring next year's fee to approx $40 - $41.|
However, an SGM will soon be called to discuss these questions.
Another prob'em is to stop the cafe losing money in the future. As I have already mentioned, one alternative is reducing services. Another is sub-letting the catering to an outside caterer. (At the moment the catering manager is an employee of the Student Union Subletting the catering would mean a private caterer would take all the profits except 10% which would go to the Student Union). In 1972 and 1973 this was done and in fact a profit was made, but don't forget the economic situation has changed drastically since then. Better accounting and costing will also help the position.
Price rises however will not help because as the Manager of the Union Building Nofo Falealili told me, the takings of the cafeteria have been relatively steady whatever the prices charged. This means students spend a specific amount of money no matter what they get for it.
The catering operation has been placed under strict scrutiny and control of a small committee consisting of reps from the Union and the Executive and the Catering Manager. The effects of the work of this Committee have already resulted in the reduction of the loss for June to $507, compared with $9000 per month for previous months. From July it is envisaged that a profit will be made every month by reducing the loss on student meals and increasing the profit on private functions. Any surplus at the end of the year will be carried forward and used to offset any losses that may occur in future years.
A Bad Service?
There have been several letters in Salient criticising the slowness of service and the irritating ticket system. I don't think these criticism are justified. It would be impossible to guarantee instant service in the lunchtime rush-hours. The ticket system was issued to prevent pilfering (which it has effectively done). It was also expected students would use their brains and buy tickets earlier in the day for use at lunch time. They haven't.
I think all those who ate in the cafe last year will tell you that the quality has improved immeasurably since then.
A letter in last week's Salient complained about the fact that there have been several price rises this year. They were made necessary by the poor costing and also by the many rises in the cost of food.
I did a comparison between the cost of food at the cafe and downtown.
From this it can be seen that the cafe's prepared meals - salads, hot meals and the restaurant's menu are substantially cheaper than downtown. So are coffee and tea. Cakes and sandwiches are certainly not cheaper, and nor I think is the quality better. We get fancier squiggles of cream on the top, but this doesn't really make them taste that much nicer. Thus I don't think the effort in making cakes, sandwiches and pies on the premises in really justified. However many of the shops I visited told me they were going to increase their prices shortly, so perhaps the situation may change.
One complaint I do have to make is about the overpricing of fruit in the cafeteria. Apples can be bought anywhere else for 6c each; in the cafe they are 15c. And oranges that cost 12c each are sold for 20c
In summary I don't think the cafe is generally too dear, although in some areas it is substantially cheaper.