The annual cost of feeding America's school children has increased by 300 per cent.
Representatives for hundreds of districts and their food-buying groups around the country told NBC News that the food suppliers that many of the country’s public school children rely on for lunches are increasingly demanding more than administrators can afford.
They are passing on increasing expenses for everything from milk to aluminium foil through their longtime partners, a variety of manufacturers, distributors, and suppliers, who are also raising prices unexpectedly, delaying delivery, or pulling their operations out of the K-12 market.
As a result, many administrators are considering where to make budget cuts as they have fewer and more expensive food options available to them. Hundreds of school nutrition specialists will travel to Washington, D.C., the following week to lobby on behalf of the School Nutrition Association, a national advocacy group, for increased support in reducing cafeteria costs.
Despite a slowing rate of inflation, food costs at elementary and secondary schools rose by more than 300% in January compared to the same month last year, according to federal data. This figure comprises pressures on the economy as a whole that have increased food, energy, labour, and delivery expenses over the past year for both businesses and consumers. It also reflects the expiration of pandemic-era subsidies to schools.
The president of the Idaho School Nutrition Association, Anji Branch, stated that “substitutions, cancellations, and delays” are “the new normal for us,” and she is not the only one to say this.
Food suppliers used to send Paula De Lucca, the nutrition director for Wake County Public Schools in North Carolina, a “force majeure” letter on average once a year.
Nevertheless, she added, those alerts, which forewarn of price rises over a contractually agreed amount due to variables beyond a provider’s control, had already identified increases for 200 of the roughly 700 products the district’s buying group had ordered for the current school year. Any size of food distributor or manufacturer may experience price rises due to force majeure, passing along increased expenses for everything from labour to fuel to raw materials that they incur from their suppliers. We don’t want to lower our standards. Positions are the only other choice, of course.
One or two major corporations dominate the restaurant service sector. According to Technomic, just three companies—Sysco, Performance Food Group, and US Foods—took roughly 40% of total distributor revenues as of 2021, up from about 30% in 2018.
The same three businesses accounted for 67% of sales among the 50 largest broad-line distributors that provide huge quantities of food to institutions ranging from hospitals and catering companies to universities and public schools, according to Technomic. Because of the pandemic, the food service industry hasn’t expanded much over the past few years, but Sysco, Performance, and US Foods have boosted their combined market share in part through acquisitions, according to Fenner. The K–12 market is little change for big food service firms.
K-12 schools aren’t the most lucrative clients due to their stringent restrictions on what they may offer, budgets dependent on government dollars, and small scale (even a coalition of dozens of districts lacks the purchasing power of a big hospital system). Datassential, a food and beverage analysis firm, estimates that they only make up 4% of operator purchases.
Pietro Satriano, CEO of US Foods, stated to investors in May 2021 that K–12 is one of the “segments which are less strategic to us.” Executives “anticipate growing below the market there,” according to CFO Dirk Locascio, who also highlighted “increased complexity” as one of the reasons K-12 customers “tend to not be as profitable” in a February 2022 earnings call. We’re biting our nails in anticipation of finding a distributor who will work with our team.
