The School Canteen Price Squeeze
A NSW high school canteen serves 600 students daily. Its current menu prices a chicken-and-salad wrap at $4.50, a meat pie at $3.80 and a flavoured milk at $2.50. The canteen manager has been told to meet the NSW Healthy School Canteen Strategy, which requires 'Everyday' drinks to be water or plain milk and limits 'Occasional' items to no more than 25% of the menu. Sales data show the pie outsells the wrap three to one, and the flavoured milk accounts for 40% of drink sales. The canteen runs at a 6% surplus, which funds a breakfast program for 40 students. The principal wants the canteen to remain profitable while improving compliance. A supplier offers a wholemeal wrap at $0.20 more per unit and a reduced-sugar flavoured milk at the same cost.
1. Identify the competing constraints the canteen manager must balance, and explain which single change is most likely to improve compliance without threatening the breakfast program.
Read the worked answer
Competing constraints:
- Compliance - the strategy requires water/plain milk as Everyday drinks and caps Occasional items at 25% of the menu.
- Profitability - the 6% surplus funds a breakfast program for 40 students; removing high-margin items risks that program.
- Student acceptance - the pie outsells the wrap 3:1, so swapping it may reduce total sales.
- Cost - the wholemeal wrap costs $0.20 more per unit.
Best single change: Replace the flavoured milk with plain milk and water, and offer the reduced-sugar flavoured milk only as an Occasional item. Flavoured milk is 40% of drink sales but drinks are typically lower-margin and the reduced-sugar version costs the same, so the margin impact is small. Removing it from Everyday status directly satisfies the drink rule while preserving a familiar product.
Why not the wrap first: The wrap costs more and competes against a 3:1 favourite, so a forced swap risks a larger revenue fall than the drink change. The drink change is lower-risk and higher-compliance yield.
2. Explain how the manager could use the 25% Occasional cap to keep the pie on the menu while still meeting the strategy.
Read the worked answer
The cap applies to the proportion of the menu, not sales volume. If the menu has 20 items, at most 5 can be Occasional. The manager can:
- Count current items and classify each as Everyday or Occasional.
- Keep the pie as one Occasional item, provided the total Occasional count stays at or below 25%.
- Add Everyday items (salads, fruit, wholegrain sandwiches) to increase the denominator, which mathematically allows more Occasional slots without removing the pie.
Judgement point: Adding Everyday items is only legitimate if they actually sell; a menu padded with unsold items does not improve student nutrition. The manager should track sales of new items and remove non-sellers. The pie stays, compliance is met, and the menu reflects real demand.