The AOP Key Price Drivers is a new content offering created in partnership with ProcurementIQ that looks at the direction of the primary price drivers of a product or service and how they combine to influence buying decisions.
Today we are cafeteria management services.
The Numbers
As companies start to reopen and COVID restrictions are lifted, office cafeterias are returning. Whether you are right-sizing your services for a reduced number of in-office workers or simply negotiating a new agreement, you will need to understand these cost drivers. Note: this information does not cover catering services or food safety consulting services.
The key pricing drivers for this category are predominantly moving in a direction not favorable to negotiators and buyers. Inflation is driving up the cost of food, and historically low unemployment may lead to increased turnover. In fact wages (36.4%) and (38.9%) account for over 75% of this service’s costs.
How to Use this Information
Cafeteria management services are a very low margin service, with profits at approximately 3%. Procurement should keep in mind that too much pressure on the cost of the service may affect the quality of the dining experience, food, and consumable supplies. When evaluating service providers, determine their ability to creatively keep costs at the desired price point without negatively impacting demand. In addition, ask questions about their employee retention and new employee training regimens as a means of understanding cost effectiveness.
Dig Deeper
We have partnered with ProcurementIQ to dig into their treasure trove of over 1,000 indirect category intelligence reports, with new insights every Friday. To dig deeper into the cafeteria management services category, click here.
