SNP Non-Program Revenue
Non-program food revenue is the overall category for items that are priced and sold separately from a reimbursable meal.
A La Carte Pricing
A la carte items are defined as items that are not part of a reimbursable meal and are sold separately from that meal. A la carte items provide non-program revenue. School nutrition program operations must establish appropriate selling prices for a la carte food and beverage items. Several factors that may influence prices charged for a la carte items include:
- Demand
- Perception of value
- Relationship between sales prices and volume
- Total costs to prepare the item
- Promotional activities (e.g., pricing foods with high nutritional value, such as fruit, at a lower cost in order to encourage higher sales)
- What the market will bear
There are several methods used in the foodservice industry to price food items that are sold individually. Each method helps ensure that, in addition to costs, the customer’s perception of value for price and the organization’s financial goals are considered when setting the selling price. While school nutrition administrators must decide on a method that best fits their district, multiplying the cost paid for an item by two and one-half provides a reasonable sales price.
Illustration of Two and One-Half Times Cost Method:
The school nutrition administrators should determine the cost paid for the item and multiply that cost by two and one-half.
Cost paid for one unit of pizza = $1.00
Multiply by 2.5 = $2.50
Selling price = $2.50
If the school nutrition administrator decides that the price of $2.50 is too high to charge students wishing to purchase an extra pizza on the line, other factors such as demand and volume may be considered to adjust that price.
A La Carte Prices vs. Reimbursable Meal:
When deciding on the a la carte item cost, it is critical that the school nutrition administrator considers the pricing of individual items and the charge for a reimbursable meal. The a la carte items must be priced so that any combination of individual items does not result in a customer being able to purchase items a la carte at a lower cost. The reimbursable meal must always be the better value. To illustrate this point:
Reimbursable meal full price = $2.50
Therefore, any combination of items must be more than $2.50
Milk = $.50
Salad = $.75
Pizza = $1.50
Total = $2.75
This pricing structure ensures that the three items together would cost more a la carte than they could be purchased as a reimbursable meal. All combinations must be evaluated as a la carte pricing is determined.
The operator may choose to lower the price of some healthy options sold a la carte as an incentive for the customer to purchase those items. If that is the case, the less healthy options should carry higher prices in order to ensure that the total cost is more than a reimbursable meal.
Catering
Catering is defined as additional food and services provided by the school nutrition program for schools, groups, or organizations, which are not directly related to programs provided by the school nutrition program. All food, labor, and supply costs associated with catering must be recouped by the school nutrition program. There must be a written contract that specifies all charges billed to the customer to cover these costs.
Special School Functions
The school nutrition program may provide special meals or refreshments to other school departments for special school functions or events. The selling price of these items must cover all costs associated with producing the special meals or refreshments.