Reviewing A Workplace Catering Service & Contract

Reviewing a workplace catering or employee dining contract – Part 2

To see the start of this article series click this link. Following on from our first article focussing on how to review a workplace catering service and contract we set out some of the specifics to be considered.

Objectives & Policies:

• What is the organisation’s reason for providing a staff restaurant or workplace catering service? This should be revaluated and understood in terms of reviewing the catering operation and determining if it is still achieving this goal.
• Are the catering policies still relevant for employee dining and hospitality? Review them and consider if they are still relevant, if not change them.

Market Research for Workplace Catering

Customer research with employees as well as undertaking focus groups can provide a wealth of information about your existing staff restaurant and employee dining provision as well as offering information as to how the future catering service should be reconfigured. In addition to asking your staff, workforce and occupants about their workplace catering needs, take an independent view as to future requirements. Specifically:

• Who are the customers who will be using the staff restaurant in the future?
• How many are there in the workforce and how does this impact on our foodservice strategy and requirement?
• What are their motivations and interests that should be considered when planning how the catering service should adjust?

External Environment Considerations

As well as the above it is important to consider the external environment when undertaking a catering operational and financial review.

This is much more than just the external competition.External factors affecting it now or in the future could be short-term issues that could have a limited minor impact or something as extreme as Covid-19.

Use PEST analysis to consider key external environmental aspects, which may impact on your staff restaurant and wider employee catering provision.

• Political
• Economic (& environmental)
• Social (& community)
• Technological (& trends)

And depending on how you see it fitting in the above, also consider the competition – what is the extent of external competition to your employee dining and workplace catering and what are the implications and considerations?

Staff Restaurant & Hospitality Quality Performance Audit

The catering operational review, in tandem with the financial and contractual review, is one of the key components of a workplace catering operational and financial review. While reviewing the catering service level agreement (SLA) against the operation may seem like the obvious starting point it is important to understand if the SLA is still relevant and, more importantly, understand what employees and the organisation want from their workplace catering. Although that’s not to say that the operation shouldn’t be reviewed against the SLA.

The workplace catering operational review covers a great number of areas, often interrelated and requires specific catering and foodservice expertise if it is to be successful. Some of the areas to question and consider include:

• Does the food service menu and broader offer in the staff restaurant and hospitality areas meet the detail set out in the catering service level agreement?
• Does the food offer available in the staff restaurant meet requirements in terms of range, quality and price? How does the actual food offer relate to the details in the catering service level agreement as well as employees’ needs and similar offers available in competitor and peer organisations?
• Is the food appropriately presented in the staff restaurant?
• What is the extent of healthy choices available in the staff restaurant and across the wider workplace hospitality provision?
• How appropriate is the service in the staff restaurant? How is the speed of service and friendliness? If it’s slow what is causing the issues and how could they be addressed?
• Is the level of staffing within the staff restaurant and across the workplace-catering offer appropriate? Are the catering staff efficient and being well supported and directed?
• How clean is the operation and are staff following appropriate health, safety and food hygiene guidelines?
• How is the staff restaurant and employee dining promoted and marketed, is it still relevant and how could it be improved?

The above are just a few examples and areas to consider when undertaking an operational review of a staff restaurant and wider employee dining catering service.

Workplace Catering Financial & Contractual Review

The other key elements of the workplace catering operational and financial review is, of course, the financial and contractual review. So you may well be asking, what should we be looking at in the catering financial and contractual review? Here are the key areas that should be reviewed and considered in a workplace catering financial and contractual review.

• Are the sales from our staff restaurant and hospitality appropriate and comparable with peer organisations?
• What should our average transaction spend be in our staff restaurant?
• What gross margin should our employee dining and hospitality provision be achieving?
• What does the sales mix in our staff restaurant tell us?
• For those on Cost Plus and Fixed Price contracts, are we paying the correct purchase price for food, drink and other materials across our workplace catering service?
• Have we got the correct staffing structure in our staff restaurant and is the labour cost appropriate? How does our staffing cost in our staff restaurant compare with peer organisations, the sector and what do the benchmarks look like. Are staffing being used efficiently across the catering service?
• What operating overheads should be included in our staff restaurant, hospitality and vending costs and are they appropriate?
• What is the correct level of management fee that our contract caterer should be charging for managing our staff catering service?
• Should we have a subsidy from our staff restaurant and hospitality service and what should it be?
• What risks should the caterer be taking in terms of the catering profit and loss account/ financials?
• Should the catering company provide the capital for equipment or should we?
• What type of contract should we have for our workplace catering, Cost Plus, Fixed Price, Guaranteed Performance, Nil Cost, Concession?
• What management information should our caterer be providing us with and how often?

For further details as to how to review your workplace catering contract, in part 3 we will be detailing how to involve your caterer along with the frequency to undertake a catering operational and financial review.

Posted on May 14th, 2020