S pecia l Report
Cheques/ Cash
To go any further we
must explain how
Chartwells
operate at
Whitgift:
Money from tills
Chartwells
To the right is
a basic circular
flow diagram
of how the current
contract works. On the 4th
October I had a meeting
with the Head of Chartwells
at Whitgift (Mrs Harvey)
who explained to me how
Chartwells operate. The
contract is currently renewed
every 8 years and works as
follows…
Wages
Food
Equipment
Contract (if targets are hits and
goods and services are provided)
Catering Services (e.g. Chefs)
Management Fee and Budget
can cut the management fee
by up to 50%). Any additional
demands from Whitift not
originally agreed are paid for
by Whitgift as an additional
sum which covers Chartwells’
costs for that particular
occasion. This is because the
contract works on what is
known as a Cost + basis. The
Whitgift pay Chartwells
+ part being extra profit for
a management fee and a
Chartwells.
budget.
How Whitgift make a profit:
The budget pays for all of
Chartwells costs. The value All the money and cheques
that are paid in at the till
of the budget is agreed
go to Chartwells. Chartwells
at the start of the year.
then in turn give all this
It covers the purchase of
money to Whitigft. Each
food, equipment and the
payment of Chartwells staff. year Whitgift agrees with
Chartwells how much money
Chartwells also get paid
they want Chartwells to turn
a management fee; this
over at the tills. Chartwells
fee is profit for Chartwells.
then sets the prices of the
Simple!
However, if Chartwell’s costs food and chooses what food
exceed the budget, they lose to sell with Whitgift’s profit
target in mind. Although
money and are forced to
Chartwells do set the prices,
soak up the loss (Whitgift
How Chartwells make a
profit:
Whitgift
Profi
port to
te
Profit (From
management
fee and any
cost + extras)
Prepared Food
they must make enough to
Whitgift are paid by
hit Whitgift’s profit target or Chartwells, and Chartwells
they risk not being paid the get the profit from the sale
full management fee. Should of goods.
Chartwells exceed the profit
target, the extra money goes There are many reasons
to Whitgift but Chartwells do why Whitgift choose to
not benefit. Whether Whitgift operate in the way that
make a profit or not depends they do. Whitgift want to
on whether Chartwells hit
avoid Chartwells becoming
their target, and whether the a monopoly in the school
money made covers the cost as this might lead to higher
of the management fee and prices and poorer service for
the budget. This business
Whitgift pupils. The PED of
relationship is typical of the Chartwells food in Whitgift
way that Chartwells operate is very demand inelastic
in other schools around the (food is a necessity good
country (such as Millfield and and the only real substitutes
Rugby School). However, it is are pack lunches and going
very different to how a high into Croydon [only in the
street shop might operate.
sixth form]). Chartwells
A circular flow diagram of
could raise the price of food
how Whitgift and Chartwells whilst only seeing minimal
might operate if they acted
like a high street café
(Chartwells) and a landlord
Profit (if r
(Whitgift) is shown
Revenue from
Food Sales
below.
The main
difference
Lease for right t
in this
Whitg
model
Facilities + right t
is that
Wages
schoo
instead
Food
of
Whitgift
paying
Chartwells, and
Whitgift getting the profit
from the sale of goods,
Chartwells