Case1 - Transition to Incentive Based Fees

Case Study 1
Transition to Incentive Based Fees

The Operator’s organizational structure, as well as the composition of the management team, were insufficient to support the Owner’s requirements.

Although the Operator was purchasing food and supplies at 1% below "market," effective purchasing management would yield additional savings of 6 - 7%.

Following the submission of an action plan outlined to achieve the Owner’s objectives, a "Request for Proposal" (RFP) for foodservice management was carefully tailored by Clevenger Frable LaVallee, Inc.

The RFP included, among other items, an incentive based compensation structure directly related to the Owner’s operating subsidy as well as detailed standards of performance, to be used as a basis of measurement for future performance.

We conducted an operational analysis at a large, multiunit, contract managed account where the Owner had concerns about receiving full value of cash expenditures for both the operating subsidy and the management fee. Some of our general findings included the following:

A long-standing foodservice management contract that compensated the Operator as a percentage of total operating costs. The greater the operating subsidy, the greater the Operator’s compensation.

The fundamental operating systems necessary for effective management of the account on a daily basis were not being executed. As a result, the Owner’s food service resources were not fully utilized.

Case Study 2: At The Owner's Expense
Case Study 3: False Comfort Level
Case Study 4: Spot Audit of Food Production Management System Reveals Operator Weakness
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