Getting a Slice of the School Lunch Pie : Food: Districts’ switch to outside vendors is good news for companies such as Chicago Brothers’ Pizza.

Increasing numbers of school districts across the country are relying less on in-house food service staffs to feed their students and more on outside vendors, a trend that has proven highly lucrative for Chicago Brothers’ Pizza of San Diego.

The Miramar Road-area manufacturer of frozen pizzas has doubled its sales in less than three years to the current annual rate of more than $35 million, from $17 million in 1989 when the company was selling pizzas mainly through supermarkets and membership warehouse chains such as Price Club.

Its penetration of the school lunch market has played a major role in that growth, Chicago Brothers vice president and co-founder Robert Steinborn said Monday. School sales now account for up to 30% of the company’s frozen pizza sales, up from zero in 1989.

The company began by selling its 6-inch pizzas to districts in Southern California, but quickly expanded to schools throughout the nation, including in Atlanta, Houston and Palm Beach County, Fla. Chicago Brothers now sells its frozen foods in about 50 school districts in 12 states, Steinborn said.

Last week, the company announced a $1.5-million deal to deliver 4.8 million pizzas to 800 Chicago schools over the next year, its biggest single school transaction ever. The pizzas generally sell in schools for about $1.50 each.

Chicago Brothers and other frozen pizza manufacturers that have cracked the schools market, including Sabatasso Foods and Mama Sarducci’s of Orange County and Pizza Hut, the Wichita, Kan.-based unit of Pepsi, are benefiting from school districts’ increased imperative to be financially self-sufficient in an age of tighter budgets.

To be self-sufficient, districts say, they must offer students food that will be bought in high volume and that meets U.S. Department of Agriculture nutritional guidelines, which allows the districts to qualify for federal school lunch subsidies.

It just so happens that pizza fills both bills, said Jane Boehrer, food service director for the San Diego Unified School District. Pizza can easily be made to meet minimum bread, dairy and vegetable content guidelines. In contrast, the hamburgers available at most fast-food outlets are too high in fat content to satisfy the USDA requirements, she said.

Another incentive for schools, Boehrer said, is that pizza has replaced tacos and spaghetti in recent years as the most popular student food. The San Diego school district, which last year contracted with Pizza Hut to provide pizzas at selected schools, includes nearly 122,000 students in 147 senior and junior high, middle and elementary schools.

Economies of scale and investments by companies such as Chicago Brothers in high-tech pizza manufacturing equipment make it much more cost-effective for schools to purchase the food from outside vendors than to try to manufacture it themselves, Steinborn said.

Schools say the offerings of food produced by outside vendors have increased as students’ tastes have changed and as the schools face stiffer competition from off-campus fast-food outlets. Students at all 18 senior high schools in the San Diego school district, for example, are free to go off campus for lunch, Boehrer said.

“Student customers of today are very much into brand names,” Boehrer said. In taste tests, “we offered our own pizza, which beat out competition. But in sales, the brand-name pizza, Pizza Hut, did better.”

Not all districts are selling pre-prepared food. The La Mesa-Spring Valley School District, for example, which includes 21 elementary and middle schools and an enrollment of 9,500, produces all of its student meals.

But once students reach high school age, school food services find themselves struggling for the dollars of students who more often than not have off-campus lunch alternatives to cafeteria food.

“If pizza is what people want, we will try to sell it to them rather than have them go off campus,” said Sue McCann, director of food services for Garden Grove Unified School District and president of the California School Food Service Assn., a group representing some 1,200 school district food service departments.

McCann said the school lunch menus in her Orange County district consist of 60% “homemade” food and 40% from outside vendors.

Twenty years ago, school districts had captive markets and were better financed, McCann said, but school cafeterias now are in financial binds at the same time that outside competition has intensified.

“We treat each student as a customer, because you can send the most nutritious stuff--alfalfa sprouts on whole wheat bread--but if the child doesn’t eat it, we haven’t gotten anywhere,” McCann said.

Boehrer said the changes in school menus also reflect a societal shift toward easier-to-prepare “hand-held food” and away from “casserole”-based menus, a change brought on in part by the fact that fewer mothers have time to cook traditional meals.

McCann said pizza companies in general have done a better job of marketing their products to school districts than makers of other fast-food products.

Since its founding in 1977--by Steinborn and partners David Levy, Barry Robbins and chief executive Craig Schechtman--Chicago Brothers’ Pizza has demonstrated an instinct for seizing a market advantage.

Starting as a pizzeria chain that grew to four San Diego outlets at its peak, Chicago Brothers saw a more lucrative and broader market in producing frozen pizza. It developed that market through sales to membership warehouse clubs, notably Price Club, as it phased out the pizzerias.

Warehouse clubs now account for 45% of Chicago Brothers’ annual sales, and the pizzerias have long since been closed, Steinborn said. The company now employs 250.

“We still get calls from people complaining about us closing down our pizzerias,” Steinborn said.