How One Company Is Revolutionizing the School Lunch

Revolution Foods specializes in providing healthy meals for schoolchildren.
OPEN Forum Editors, Business Writers
April 06, 2012

The recent outcry over pink slime, also known as “finely textured beef,” has led many educators and parents to pay more attention to what is being fed to their kids in the school lunch line.

That’s good news for Revolution Foods, a food services company based in Oakland, Calif., that specializes in providing healthy meals for schoolchildren. Founded in 2006 by UC Berkeley Haas School of Business graduates Kristin Richmond and Kirsten Tobey, the food services company has doubled its revenue each year while espousing a social enterprise business model. Virtually all of Revolution Food’s kitchen waste is composted and recycled, food storage units are energy efficient and containers are printed with soy-based inks.

Now in 600 schools across six regions, Revolution Foods serves 120,000 meals a day and employs 750 people. The company operates local culinary centers and plans to expand to four more states this summer. Participating schools—the bulk of them charter schools—have reported higher concentration among students, fewer disciplinary problems and a growing interest in sound nutrition.

Working with schools in California and Colorado, Revolution Foods has placed 50 vending machines that dispense “natural” snacks without artificial ingredients, like organic fruit rope, whole grain bars, protein shakes and baked chips. Next year, the company is expected to roll out a new product line in retail stores, focusing on complete meal solutions minus the high-fructose corn syrup and trans fats.

Tobey, who is the company's chief innovation officer, a career educator and public health advocate, recently spoke to OPEN Forum about how Revolution Foods has circumvented the industrialized food chain, operating on razor-thin margins to help combat the nation’s obesity epidemic.

The current federal reimbursement rate for school lunches is $2.74. How do you provide healthier alternatives at that rate while turning a profit?
We try to design our meals as close to the federal reimbursement rate as possible, but that is largely dependent on the size of the school and location. Our individual meal prices are, on average, about $3 and that includes all the ingredients, labor and transportation. There are providers out there that can make a 600-calorie meal for under $1, and the schools end up keeping the profit to use toward operations. The USDA is cracking down on that more. Right now, our overall company is not profitable because we’ve invested so much in growth. If we decided not to grow anymore, we could be profitable within the next 12 to 18 months. In the typical venture capital model, we are exactly where we need to be.

Women comprise the majority of Revolution Foods’ management team, including chief operating officer, chief financial officer and executive chef. How does the company benefit from their perspectives?
This hasn’t necessarily been intentional. We hire the best talent we’re able to find. Across our leadership team, the people have a really strong connection to seeing schools as the tool to build stronger, healthier, thriving children in our communities. Kristen and I both became mothers in the early phases of the company. When people hear we’re both moms, they assume it’s a fluffy business. Across the board, we’re a tough group. We don’t take “no” for an answer, and we push back in a very passionate way. The industry has convinced itself that kids just want to eat junk food. But kids want to eat healthy food that is not the color purple or laced with sweeteners. They’re eating less healthy food because that’s what is readily available.

How do you persuade children to change their eating habits and take these lessons home with them?
Studies have shown that it takes kids about 27 tastes of a new food before they develop a palette for it. We don’t give up after trying something once. We educate the children about new menu items, and we take their feedback seriously. We send out a monthly family newsletter with healthy eating tips, and we conduct cooking classes for parents. People are more adventurous then we give them credit for. We hear a lot of stories about kids bringing home knowledge, recipes and ideas to share with their families. One female student thought she was eating a hot mango for lunch until she was informed that it was actually a butternut squash. She loved it and took her mother to the farmer’s market to get some the next weekend.

How has the growing attention paid to the issue of school lunches affected your business?
The visibility given to school lunches over the last five years has been unmatched. First Lady Michelle Obama has taken this on as a core initiative and food personality Jamie Oliver is raising awareness through prime-time television. In the past, food quality was more of an elite niche issue. We’re trying to make it acceptable to the rest of the country. We’re teaching kids how to take care of their bodies in the classroom, and then feeding them something differently in the lunchroom. Every kid deserves to have a healthy meal every day.

What are the company’s future expansion plans?
We see a real need for rapid geographic expansion. It is challenging to work with some of the bigger public school districts because of the service costs and multiple layers of decision-making. We are in the second year of a pilot program with six Washington, D.C., public schools. We’re evaluating our business model to determine how scalable it is.

Margie Fishman has worked as a professional journalist for a dozen years, contributing to National Geographic, The Philadelphia Inquirer, Newsday, Atlanta Business Chronicle, and many other media outlets.