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What to consider before bringing your catering service back in house

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Many schools and academies who outsource their catering provision have contracts in place that are nil cost or that include profit sharing arrangements.  However, the impact of Covid-19 on the daily sales figures of school meals has meant many institutions are undertaking contractual negotiations with catering providers on future costs of the service.  This has led some institutions to question whether they should be bringing their catering provision inhouse. 

There are many matters to evaluate when deciding whether to ‘back source’ a contract and in this article we discuss three of the key considerations specific to school and academy catering services to help you if you are considering providing this service inhouse. 

Conducting a financial viability analysis 

There are many component costs to running a catering service and it is important to identify as many of these as accurately as possible.  Conduct some key financial analysis which includes the cost of buying food and research how much you would need to budget each month. Consider how these products would be procured as you will not get the best prices as a standalone buyer.  You can access preferential pricing when joining purchasing consortia such as TUCO who specialise in creating deals on food products for education institutions.  Buying your food via a consortium will also ensure compliance with UK procurement regulations as food spend could well exceed the procurement spend threshold. 

There could be a need for you to invest capital to replace equipment that your catering contractor owns such as serving equipment, ovens, plates and cutlery.  Dining facilities may need to be rebranded which will incur costs for signage and design.  Conduct a condition survey of all outlets and agree an equipment and asset schedule. 

Costs associated with the employment of catering staff should also be evaluated.  These could include costs associated with the development and training of staff.  Your institution would be responsible for providing staff with access to learning opportunities to ensure the catering service remains fresh, meets your sales targets and is compliant with relevant legislation such as food poisoning, food hazards, allergen awareness, temperature control and food handling. 

Other staffing costs to evaluate could relate to uniforms, DBS checks, recruitment costs and costs associated with Local Authority Pension Schemes that the catering staff may become entitled to join if now employed by your institution.  Some institutions opt for creating a separate trading company as a subsidiary of your organisation so the catering service can be managed as an arms-length entity with separate terms and conditions of employment.  Staffing is one of the largest costs after food purchases. 

Workforce requirements 

Your institution will generally be required by law to offer employment to the existing catering staff on the same terms and conditions of employment that they are currently on due to the Transfer of Undertaking (Protection of Employment) Regulations (more widely known as TUPE).  This could include any outstanding employment related liabilities depending on the provisions of your contract with your catering provider.  Conversely some of the existing catering staff may chose to remain in the employment of the catering provider, resulting in the need for you to recruit.  It is essential to include your HR teams in any back-sourcing preparations so the impact of transferring these staff to your employment can be assessed.  Amongst other requirements your HR teams would need to be involved in the staff consultation process, joint consultation with the incumbent caterer and individual one to ones with staff eligible for transfer. 

How and who will manage the service internally will also need careful consideration and whilst the daily onsite catering staff are likely to transfer, those responsible for the management of the contract may not.  You may need to recruit for this position depending on whether your institution has existing employees with expertise in catering or the capacity to manage the contract. 

Knowledge management 

Consider the knowledge and resources needed to run a successful catering service without the expertise of a catering provider.  Your existing food safety policy and due diligence arrangements would need updating.  You will also need to look at software to help manage recipe development, nutrition and school food standards adherence as well as allergen management and new labelling requirements coming in 2021 because of Natasha’s Law.  Menus will need to be designed and tariffs agreed along with a marketing strategy to drive sales and attract students and staff to use your catering service.  Typical promotions include health for life, street food on tour, limited time offers and star buys.  A website and/or apps would need to be developed to promote the catering service to parents as well as staff and students.   

The three areas highlighted are not a definite list of considerations but are designed to aid the thought process on whether to move away from an existing outsourced catering service to an inhouse delivery.  

Alternative outsourcing options 

Bringing your catering resource inhouse may be the best route for your organisation but it is also worth considering an alternative outsourced supplier if your contract is due to be renewed.  The CPC Outsourced Catering Services Framework Agreement, is designed to save you time and money whilst giving you access to fully-vetted suppliers who will be able to run the catering service for you based on your new requirements. 

Catering is one of the most complicated areas of procurement, so if you do not have the catering procurement experience inhouse, Tenet Education Services can run the process for you. Tenet Education Services catering consultants have extensive experience in the sector, they know the marketplace and will be able to run a process which is compliant with the Public Procurement Contracts Regulations, either through framework agreement or in an advertised tender process. 

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