The UK Value for Money Steering Group

Catering management in higher education

National Report

Executive summary

Introduction

This report identifies the key management issues for senior managers and heads of catering services in developing and reviewing catering services, to support continuous improvement and provide value for money. Catering in HEIs generates an income of more than £320 million a year, with consumable purchases of £132 million, and salaries and labour costs of £153 million. Catering services provide significant employment in most communities.

This report is based on a study carried out with the involvement of 76 universities and colleges. Evidence was drawn from questionnaires covering the Excellence Model’s nine criteria, an Expert Working Group (EWG), and examples of good practice from other institutions.

Key issues and recommendations

Catering services, in conjunction with other services, support the provision of a stimulating and supportive environment for students, staff, visitors and business and community partners.

The existence of such an environment is important to the delivery of the institution’s total student experience. This assists retention levels and can deliver a financial benefit to the institution, allowing re-investment and improvement by adopting best management practices and value for money objectives.

Throughout the study the EWG has drawn together the issues that could most readily be addressed and which would improve the total student experience. It considers that the following key issues identified by the sector will offer direct and indirect efficiencies to institutions. It recommends that the institution’s Audit Committee considers this report and makes recommendations to senior officers in relevant departments such as catering, finance, estates, personnel, and IT.

Issue 1: ‘There is a lack of direction from the institution with regard to what is wanted from the catering service’

With a lack of clear direction from the institution’s strategic plan, most catering services inevitably become reactive. Therefore they cannot plan for change, thus losing opportunities for improved service delivery and greater efficiencies.

Recommendation
Heads of catering services should be consulted during the early stages of the institution's planning process. A catering strategy should form part of the overall institution's strategy that looks at what is needed and how best it can be delivered. Catering plays an important part in the provision of the total student experience and should therefore feature in the institution's overall plan.

Issue 2: ‘Are we providing a service or a commercial operation?’

The majority of institutions are unclear about this. Caterers are often operating services at a loss, to support academic activity, despite being asked to recover all costs.

Recommendation
Institutions should identify such services and cost them accordingly, and be proactive in making the decision to subsidise such services. HEFCE funding guidelines allow for this as long as the true cost of the service can be identified.

Issue 3: ‘There is a lack of capital investment’

Catering services are often under-funded for refurbishment and new build. This results in a poor student experience and loss of potential revenue, which has a detrimental effect on the institution’s image and ability to retain students.

Recommendation
Agree a plan for refurbishment and investment that is realistic and based on a business case. Investment in well-researched refurbishment projects routinely shows revenue increases of between 30% and 50% on previous income levels, with no detriment to existing catering operations.

Issue 4: ‘Rates of pay do not reflect those of our competitors’

Pay rates for craft, skilled and management grades are low when compared with the industry average. There is an increasing skills shortage within the hospitality industry; it is estimated that by 2020 there will be some 250,000 unfilled vacancies for chefs. The headline pay rates make it increasingly difficult to recruit and retain skilled staff.

Recommendation
Pay must reflect local market rates in order to recruit and retain staff. Staff turnover is expensive; the biggest causes are poor rates of pay, and the inability to operate reward schemes for good performance. A strategy needs to be developed and supported to overcome anticipated skills shortages. This may involve a review of services and capital investment.

Issue 5: ‘Terms and conditions of employment are generally better than those in the private sector’

Heads of catering are rarely consulted on such matters. Substantial overtime and enhancement payments, in conjunction with a lack of flexibility, make it increasingly difficult to provide cost-effective services. The generous sick pay provision combined with the lack of performance management in the HE sector increases costs unnecessarily.

Recommendation
There needs to be a robust approach to managing performance and addressing obvious abuse of generous institutional terms and conditions. Heads of catering must be involved in the development of terms and conditions for service staff, which should reflect the different market environment in which they operate.

Issue 6: ‘Control of purchasing is good, with strong evidence of active membership and use of purchasing consortia, supplier assessments and vendor ratings. None of these are evident when buying internal services such as estates, finance, personnel and IT’

Most catering services are required to recover all costs. This is achieved by proactive income generation and cost control. External purchasing is well controlled, with strategies for addressing non-compliance by suppliers.

Internal suppliers are not so well controlled, with little or no sanction for non-compliance. Costs charged are frequently ‘non-negotiable’ and there are no alternative options. The perception is that there is little cost transparency, working partnerships or mutual understanding between internal suppliers. When such large areas of cost are out of the caterer’s control, value for money cannot be demonstrated, financial targets cannot be achieved, and service quality targets cannot be met.

Recommendation
Catering services should endeavour to operate as business units, understanding the concept of service quality and profitability. Each internal supplier should have a dedicated individual who knows the needs of the catering service, to ensure the correct service levels are provided and understood. It is recommended that other university service providers should adopt a more customer-focused approach to the way they operate.

Issue 7: ‘Over 90% of catering services operate in-house’

Professionally operated and resourced catering services contribute greatly to the ‘total student experience’. Where an institution defines the expectations it has of the catering service, it improves the efficiency of that service. Outsourcing is not necessarily the solution to an ill defined and badly operated service.

Recommendation
The institution’s senior management, in consultation with the head of catering, must clearly define the strategic objectives of the service provision, in order to ensure value for money. It is therefore better to retain the business in-house as monies can be re-invested within the institution, maintaining a greater degree of ownership and flexibility.

Issue 8: ‘Catering services operate in a customer focused environment and demonstrate good people skills’

The study highlighted that excellent people skills and customer relations are in place. The use of external benchmarks such as IiP and Hospitality Assured supports this. Poor customer experiences anywhere within the institution reflect badly on its external image, and its ability to attract students and other sources of income. Investment in improving standards within catering services is diminished when other support services are unable to provide similar standards.

Recommendation
Valuable lessons could be learned from the customer-focused approach and investment in staff demonstrated by catering services. This needs to be built upon to ensure that the experience of students and visitors is consistent and implemented institution-wide. The objective is to provide a seamless service.

Issue 9: ‘How can we, as caterers, contribute to the local community?’

‘Town and Gown’ relations are important. There is a conflict between the extensive employment opportunities available and the growth in student numbers, with their consequential social and environmental impacts.

Recommendation
Hourly-paid staff can be strong local ambassadors for the institution. This is particularly important where there is community tension in relation to increasing student numbers. Environmental impact needs greater recognition in day to day operations and long-term planning.

Structure of the report

This report is designed to be accessible for all levels of management within HE institutions.

Section 1 contains recommendations to support continuous improvement for catering services that will be of interest to senior and operational managers. There are recommendations for review that will require the attention of directors of estates, finance, personnel and IT.

Section 2 provides an overview of the arrangements for catering services, as well as focusing on important management issues for the delivery of catering services. For example, it examines business planning, and the factors and key decision-makers influencing and determining changes in the delivery of catering services. It also measures the sources of income for catering services and the ranges for different levels of annual turnover.

To support the findings and recommendations identified in this national report, additional information and resources are provided in the Catering Toolchest on the HEFCE web-site. It contains self-assessment checklists and cameos, providing practical guidance and examples of solutions to management issues.