Which Meal Plan System is best for your community?

by Gary McMullen
January 2005

In each of the communities we serve there is an ongoing discussion about “which meal plan should we consider?” or “is our meal plan the best it can be?”

The discussion is driven by resident committees, (which I might add, appear to have a disproportionately large amount of time to discuss this issue) which are striving for the ultimate value in their dining plan and greater menu selections and flexibility.

As administrators your challenge is to address these value issues while also accounting for labor, overhead, food cost, equipment repairs, nutrition, your “Life Care Contract” and many additional operational factors.

Meal Plans:

Many communities opt for the simple “Meal Plan” which delivers a fixed number of meals over the course of each calendar month, and in most cases provide one meal per day with additional “Meal Plan” Options for two or three meals per day.

This type of meal delivery is adopted for two reasons:

  1. It’s simple for “Food Service Personnel” to manage with “pen and paper” and

  2. for accounting purposes, it’s easy to budget, administer and bill each month

From the resident’s perspective, the fixed meal plan may be perceived as “expensive” since the portion size of each individuals meal may vary by resident. (eg.1/2 portion of an entrée and no dessert compared to the next residents meal of a full entrée portion, a huge salad and two desserts).

Meal delivery is further complicated with this meal plan type as new dining venues are introduced such as Cafés, Buffets, Breakfast Bars and so on. Administration operates with lower labor costs, however residents perceive only a “decreased value”.

The final blow arrives at the end of the month, when the residents line up at the food service or accounting office inquiring about the meal balance remaining on their accounts, which in most cases robs the community of initial labor savings achieved through self serve food service venues.

Finally, food service staff are never aware of the point in time when a resident’s “Meals On Plan” are used, and chargeable meals begin.

Points Plans:

The points plan concept has been around in senior living environments for ages and is now all but extinct as communities begin to offer Flexible Dining Dollar plans instead. The Points Plan is usually considered in an attempt to remove the relationship between Dollars and Meal Plan Cost, with a false assumption that residents will be more likely to perceive their value as fair. This system typically operates as follows:

The Resident is allocated a fixed number of points each month to use in exchange for meals.

A points “Exchange” value is assigned to each available meal as follows:

Breakfast = 1 Point
Lunch =2 Points
Dinner = 3 Points

In theory, and on paper, this process looks great. The community no longer informs residents that Breakfast equivalency value is $4.00, Lunch equivalency value is $6.00, and Dinner equivalency value is $12.00.

There is an inherent problem with this plan type: it constantly connects the points value back to the dollar value by posting the price for additional meals, and by stating the dollar cost for Adult and Child guest meals. You then completely eliminate the argument (or stated reasons) for adopting a points plan initially.  Points plans also create administrative challenges when it comes to calculating sales tax for those organizations that are required to collect sales tax on their resident meals.

One must also consider a resident that arrives for dinner on or near the last day of the month, and has one or two points left, and wants to receive a “3 Point Meal”. What would you do? Where is the flexibility to ensure you deliver the highest level of service to that resident.

Flex Dollar Plans: The Ultimate Resident Value.

This plan type allocates a fixed quantity of “Spending Dollars” to each resident each month to spend as they chose in any food service venue. Typically, unused flex dollars are removed from the resident’s account at the end of each month, as the new allocation is granted (we are beginning to see a trend to allow some carry over allowance in some communities).

The big value proposition here is that residents pay only for what they consume, on an a la carte pricing basis. Therefore if dessert is not consumed, it is not paid for. If the resident chooses a sandwich for lunch, instead of a hot entrée, they pay less.

This option also allows you to meet or exceed your contractual obligation to your residents, while introducing additional “choice” and service levels to them.  If you currently offer one meal per day as part of the “rent” a wise resident may receive 35 to 40 smaller meals per month by choosing alternate dining venues, or skipping dessert on occasion.

Delivering this level of value and flexibility may require not only new technology, but perhaps a “Town Hall” meeting to explain the rationale behind the decision, what’s in it for them and what changes will be required to make it happen .

Points to consider include:

  • Cost of labor services to deliver prepared food in each dining venue.

  • Table service charge in the formal dining room, instead of a fixed meal , all-inclusive price. (Alternately, include the labor charge in the item prices, but sell everything a la carte)

  • Charge a “Table Service Fee” in self-serve venues if the resident is unable to carry their tray of food. (Realistically, you can’t offer the same level of service in a self-serve venue as you would in your formal dining room without compensation.)

  • Café self serve venues where salad , sandwich, take-away self serve bars are available, MUST begin to sell items by weight. “Take all you want, but pay for what you take.” (Under this “sold by weight scenario, take out containers should be provided so that a consistent “tare weight” or container weight can be established.

You cannot deliver value equally to all residents, if one resident receives a one pound salad at the same price as another residents ½ pound salad. Plate size does not equal portion size.

  • Charge an additional “Adult/Child Guest Fee” in table service environments instead of increased food prices (or all inclusive meal price)

  • Eliminate grocery items from the selection. Meal Plans, regardless of their design are not intended to supply non-prepared food. Items such as Cartons of Milk/Juice, Pounds of Butter, Bread etc. should be provided for convenience, but not on your meal plan. Consider moving the sale of these items to the gift shop, but permit the resident to charge them to separate retail account. In some applications such as CARDWATCH, these items can be automatically set as non-meal plan and thus chargeable items.

Combo Plans (Fixed Meals and Flex Dollars): The Compromise.

Some communities, in an effort to balance value/choice and tradition, provide or are moving to combo plans which provide a fixed quantity of meals plus a fixed amount of “Flex Dollars”. This plan type balances the needs of residents and accounting and offers a degree of flexibility to residents in terms of dining venue choices and items purchased. As an example, a resident may choose “Toast and Coffee” for breakfast at $1.50 (Flex Dollars) instead of a “Breakfast Meal Click” worth $4.00. Value is obtained by the resident and their traditional meal click is saved for the “Dinner Meal” with a posted value of $10 – $12.

Meal and Spending Management Application such as CARDWATCH, enable “Meal Swapping” automatically so that the resident is charged for the lowest price meal of the day, and the most expensive meal is taken as a “meal on the plan”.

Executing Meal Plan Changes in Your Community.

Implementing change can be a daunting task at the best of times, however, change is necessary especially as senior living communities evolve and newer generations demand more value and choice.

Each of your residents spent many years preparing meals at home with little or no consideration of the labor or overhead requirements to do so. They totally understand the raw food prices, however they have no concept of the other costs required to prepare and deliver their meal to the 200 or more residents in the community; with food cost perhaps as the smallest portion.

My suggestion is to help them understand the process. Provide kitchen tours and explain to them what goes into preparing a meal in your community. In a Master Chef style, invite them to help prepare meals (or at least observe) so that they thoroughly understand what goes on behind those swinging doors. Lastly, be sure that you know exactly what costs make up a meal, otherwise it will be very difficult to convince others of what you don’t fully know yourself. Try out our Meal Cost Calculator tool.

If you are successful at executing these simple steps, you may find that change becomes a welcomed special event in your community!

Gary McMullen is the President and Founder of Retail Systems Group (parent company of CARDWATCH Inc).
CARDWATCH  has been delivering software solutions for POS and Meal Plan
Administration since 1990 to the Healthcare and Senior Living markets.