Facing a Steep Canteen Price Hike: How Can We Manage This Cost Increase?

Dear All,

Due to cost-cutting measures, a decision has been made to increase the canteen charges. Previously, it was 3 Rs. a day, and now it is proposed to be 21 Rs. a day. The implementation of this task is a significant question. Please suggest solutions.

Kind regards,
Prajakta

Hi Praj,

There should be a marginal increase in food prices, from 3 Rs to 21 Rs. Obviously, there would be some issues arising from this change.

1. Is the food intended for white-collar workers or for the laborers?
2. What type of food do you provide - meals, variety rice, etc.?
3. Is there a limit to the amount of food available, or is it unlimited?

Hi Arjun,

Thank you for your quick response.

The food is for all staff and workers. It includes lunch, breakfast, and tea two times a day, unlimited.

The issue is that up until now, it has been subsidized by 90%, costing 3 Rs. a day. Now the company wants to make it 50% subsidized. What should we do?

Dear Prajktaa,

First and foremost, you have chosen a very beautiful logo that supports your name!

Instead of making a flat rate for everybody, consider implementing staggered rates. The lower the designation, the higher the subsidy.

I suggest keeping the existing rate at Rs 3.00 for office boys, housekeeping boys, security guards, etc. Raise the rates for supervisors, then executives, then Assistant Managers, and so on. You may set the rate at Rs 30.00 for managers and above. Ensure that these coupons are non-transferable; otherwise, managers may start producing coupons worth Rs 3.00!

Communicate this message well before implementing this change. One way is to post a circular on the notice board. However, before doing so, it is advisable to convene a meeting of all HODs, explain some economics behind this subsidized meal scheme, and how the company intends to reduce the subsidy now. HODs must relay this information to their subordinates.

Conduct a sample survey to gauge who is willing to accept these new rates. Otherwise, employees may make their own food arrangements. If a few employees prefer to bring their own meals, the company should accommodate that. In that case, you won't need to issue meal coupons to them.

Best regards,
Dinesh V Divekar

Hi Arjun,

Thank you for the quick response.

The food is for all staff and workers, including lunch, breakfast, and tea twice a day, unlimited.

The situation is that until now, it has been subsidized by 90%, hence Rs. 3 a day. Now the company wants to make it 50% subsidized. What should be done?

Kind regards,
Prajaktaa Deshmukh

Dear Prajakta,

I feel that management should share at least 75% of the share at this stage, and any future hike in rates should take effect step by step. Hikes in rates should be marginal and affordable to the employees always. I slightly agree with Mr. Divekar because the food will be the same for all staff, so why is there a difference in rates for workers, supervisors, executives, managers, etc.? Everybody will eat the same food of the same quality.

Secondly, as rightly suggested by Mr. Divekar, you should issue a circular and call for feedback first from everyone so that you can get an idea from everybody, and only then can you reach your destination.

All the best.

Manoj Pallod

Dear Manoj,

My reply to your contention "I slightly agree with Mr. Divekar because the food will be the same for all staff then why there is a difference of rates for worker, supervisor, executives, managers etc., Everybody will eat the same food of the same quality" is as below:

It is customary to extend benefits concerning the designation. The higher the designation, the higher the benefits. But, dear Manoj, here lies the catch. While availing of the benefits with respect to the designation, they do not spend anything. But while consuming food, even though it is equal for all, the coupons are purchased. While distributing coupons, we need to take into account the purchasing power of employees also. Since there is variation, we cannot place them on equal footing.

Equal may not be Equitable: The classic example is the Government of India. Throughout history, petroleum products have been subsidized. Subsidies were aimed at the poor who can buy kerosene at an affordable price, and secondly, petrol/diesel was subsidized to keep public transport fares at a reasonable level. Another view was to keep inflation in check.

There is nothing wrong with subsidizing, but since the subsidies were universal with uniform pricing, who benefited the most from the subsidy? The owners of four-wheelers! Why would you need subsidized petrol to serve the needs of the rich? Though the Government of India did not do this intentionally, the flawed policy of uniform subsidy favored the rich. If India had adopted dual or multiple-layered pricing, our oil companies would not be in the predicament they are in now.

Lastly, you have written that "so that you can get an idea from everybody and thereon only you can reach your destiny...".

Dear Manoj, it cannot be Prajaktaa's destiny but destination. May I request you to amend that word?

Thanks,

Dinesh V Divekar

Dear Mr. Divekar,

First of all, I apologize for the mistake that occurred, and it has now been rectified by me. The word "Destiny" is omitted and should be read as "Destination." I am very thankful for you notifying me of my mistake. To be honest, I need more exercise to develop my communication style, especially in English communication. I am certain that it will improve when I interact with professionals like you. Thank you for your guidance and suggestions.

The examples you mentioned in your message are excellent, and you deserve appreciation. However, implementing such policies in the private sector can be challenging. You are correct in pointing out that "Equal may not be Equitable," which is a great example. Nonetheless, I believe that the policies of a Government Agency cannot be directly compared to those of the Private Sector when it comes to protecting the interests of employees.

If there are any mistakes in this message, please let me know. Thank you and regards. Let's keep in touch with more topics.

Thanks and Regards,
Manoj

Hi, Mr. Dinesh & Manoj.

First of all, I am very thankful for the suggestions you provided. Special thanks to Mr. Dinesh for offering a new and thoughtful perspective on the existing issue. I seek the same cooperation in the future.

Thank you.

Well said, Dinesh. Another suggestion is to abolish subsidies for the white-collar people. Tell them to bring their own lunch boxes and provide only coffee/tea three times a day. Give lunch coupons (Rs.30/-) only to lower designation people other than the white-collar individuals. Also, provide coffee/tea three times a day. This will save and reduce costs for the organization.

Hi Mr. Dinesh,

Finally, it works. Management has taken a different approach for implementation, but we finally implemented it in the way you suggested and have received good feedback. Finally, equity for equality works.

Hope for the same cooperation in the future.

Regards, Prajakta :)