Food-Services Firm Serves Up Deficit to R.I. Districts
A group of Rhode Island school districts that hired a private contractor to save money on school-lunch programs is having to swallow more than it bargained for.
"Our overall deficit, in the worst-case scenario, is about $160,000," said Superintendent Ralph Malafronte of Barrington, one of the eight districts in the East Bay area. "This was intended to be either a break-even or a profit."
The districts together hired Aramark School Nutrition Services in 1993 to improve their lunch programs and cut expenses, beginning this school year.
The company has passed the first test with flying colors--both food and service are much better, district officials said. But it has also missed most of its cost projections, putting the schools in the red.
In the Barrington district, for example, the schools are expected to bring in about $330,000. But its expenses will exceed $500,000, Mr. Malafronte said.
But officials of the company, which has contracts with more than 300 districts nationwide, said they are certain they will turn things around.
"Some of the first-year programs have a bumpy start," said Peter Babbitt, the New England regional manager for the company, a division of the Philadelphia-based Aramark Corporation, formerly ARA Services. "But they will be successful in the long run."
Mr. Malafronte and officials in the other districts are hoping so. At this point, they have little choice but to try to make the deal work.
The state announced recently that it will not administer a school-lunch program after this school year. All of Rhode Island's school districts will have to seek outside providers.
"We thought we were wise getting out early and giving ourselves a chance to get started," said Roger Gaspar, the director of administration for the Bristol Warren schools, another collaborating district.
Quality and Quantity
The company is also expecting losses in the other districts, which together serve about 24,000 students.
Under its agreement, Aramark bills the schools for operating expenses and a management fee, Mr. Babbitt, the company official, said.
This year, the company underestimated its labor costs and overestimated how many children would participate in the lunch program, said Superintendent Malafronte. Officials said the company probably missed the mark because its projections were made more than a year before it began operations.
Despite the losses, participation among students has risen dramatically in Barrington, probably as a result of the quality and variety of the food, Mr. Malafronte said. For instance, elementary school students now have four lunch choices instead of one.
"The kids do like it," the superintendent said. "And that's a pretty major factor in all of this."
Officials in the districts said they likely will wait out the shortfall. Adjustments in pricing and in food and labor costs could put them back in the black.
"We're all concerned with the finances, and we're working with the districts on a month-to-month basis to bring those costs down," added Mr. Babbitt, whose company works with a total of a dozen districts in Rhode Island.
"There's no reason this can't work," Mr. Gaspar agreed. "We've seen it work other places."