Lowering food costs

€ 115,000 per year saving on food costs with retention of quality at an elderly care institution.

We usually assume that we need to choose between quality and costs. In practice it turns out that there are many cost posts, which do not contribute anything to or even reduce the quality of the meal, but still increase the price. With Lean Six Sigma you can make these wastes visible and implement a fitting solution. This way this care provider has been able to save € 115,000 in food costs on a yearly basis and the quality is just as good if not better.

Problem

With ever decreasing care budgets, the whole scale of expenses must be critically examined, including food costs. This care group has its own kitchen, where hot meals are prepared for the clients on a daily basis. The costs of these meals kept rising, but a clear insight into these costs was lacking.

Analysis

An analysis indicated what the biggest cost drivers were, namely labour costs (59%) and ingredients (35%). The labour costs were strongly influenced by the way the process was composed. For example, cooking was going on for 7 days a week and the irregularity bonuses were a substantial cost item. It also turned out that the workload in the kitchen varied strongly from day to day, due to all kind of other tasks besides the hot meals. To be able to cope with the variation of demand, you need more personnel.
Regarding the costs of ingredients it appeared there was still a lot of room for improvement through clarifying agreements with the suppliers and investigating various order-possibilities. What increased both costs was the waste: cooked meals that weren’t consumed, but still caused costs. This form of cause-analysis formed the basis of the improvement plan.

Result

By changing the process of ordering and serving the meals, wage costs could be reduced. No one is working in the kitchen now during the week-ends. In the new process there is less waste as well: less than 5% per day which is far below the sector average, estimated between 30 to 50% (source: Food and Biobased Research, Wageningen UR). Finally, new agreements were made with suppliers. What has this finally resulted in? A saving of around € 180,000 on a yearly basis (after subtracting needed investments). What may be even nicer is that the new process is qualitatively sound. As a catering employee worded: ”We have more contact with our clients and are able to respond to their demands immediately. The meal is now more of an experience”

For privacy reasons the name of the institution is not mentioned.

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