CC BY
23
https://doi.org/10.29013/EJEMS-20-3-32-36
Jiang Fangke, Hangzhou foreign language school 309 Liuhe Rd, Xihu, Hangzhou, Zhejiang, China E-mail: [email protected]
IMPROVING THE OPERATIONAL EFFICIENCY OF THE ELDERLY KITCHEN IN HANGZHOU
Abstract. As the aging population in china grows, many elderly people live in their homes after they retired since there are not enough senior homes. Compared with those living in senior homes, they don't have enough support of home care and may not be able to cook every day. The Elderly Kitchen Program in Hangzhou City is one such program subsidized by the government to help the elderly with their nutrition needs. The program is very welcomed by the elderly, but its current operation models have a lot of room to improve. The most felt pain point by the specific customers is the price setting, which if lowered, will attract more elderly people to participate in the program. There are many ways to reduce the meal cost, such as encouraging participating customers to help with some low capacity work, engaging the senior homes to use part of their cafeteria for the program, and encouraging the participates to help each other with meal pick-up. The success of the Elderly Kitchen Program will have very positive influence in the communities.
Keywords: welfare, Elderly Kitchen Program, government subsidy, meal plans
I. Introduction It is important to control its cost so that the pro-
The aging population is growing fast in China, es- gram can last longer within budget and provide for
pecially in Zhejiang Province. According to the Hang- more elderly who need the support. However, so far
zhou government's census, by the end of 2016, there the Elderly kitchen is not very cost effective in the
were1591300 people aged 60 or above in Hangzhou, early experimental communities. Most of the elderly
but ivy the end of 2017, there are 1671824 people aged in these communities have low income and their ac-
60 or above, accounting for 22.16% of its total popula- ceptance of the program is not very high, even at the
tion. The increase of the number of the elderly people subsidized price. By August 2018, the basic pension
brought a big need for home-based care, including for urban corporate retirees was about ¥2773 (Chi-
medical care and meal support. As the old Chinese nese Yuan) per month in China("Notice on further
saying goes: food is the first necessity of men. How to solving the living difficulties of former industrial and
solve the problem of diet for the elderly, especially for commercial enterprises" (ministry of Labour and so-
those who live alone, is becoming a more and more cial welfare [2002] no. 9), but the elderly in the experi-
prominent issue. The government of Hangzhou City mental communities are lower than this average. Tak-
experimented on Elderly Kitchen, which was a pro- ing the Shuangling community as an example, 90% of
gram initiated and sponsored by the city government the elderly have income lower than the average. Their
to provide subsidized food support for the elderly. In need for an affordable meal program is very high. this program, the elderly pay for the prepared food at One solution is to improve the operational effi-
a price that is lower than its regular cost, and the gov- ciency of the Elderly Kitchen to lower the program's
ernment subsidize the gap between the price and cost. cost to make it more affordable. This study aims to
analyze the pain-points in the current operating models of the program and explore possible improvements.
II. Data and analysis methods
This study used data from government and community reports and also surveyed 30 elderly on their opinions and experience of the Elderly Kitchen. The experimental site ofJianggan District was selected as the sample for this study due to restricted access to other program data.
For the survey, I interviewed 30 elderly citizens in the community and all are 55 years or older. Twenty of them live alone while 9 live with their spouse, and none of them live with their children. Due to their low income, 60% of surveyed indicated an acceptable price of ¥5-10 per boxed meal, while the others indicated ¥5-10 per meal.
III. The current business model of elderly kitchen
The Jianggan district set up 102 program touch-points for the Elderly Kitchen running in three types of models. The first type includes 28 cafeterias where the elderly can dine in, the second type includes 71 pick-up sites with boxed meals where the elderly need to pick up by themselves to take home, and the third type covers 3 lines of delivery sites with food carts. Besides these 102 locations, there are also a new method where a designated small area is reserved in some cafeterias for the Elderly Kitchen, where the elderly can enjoy food with their friends and dine in a better environment. Since this is a brand-new method, there is not much data on it.
In model type one, The 28 cafeterias use a form of collaboration between the Elderly Kitchen Program and small businesses. The community office provides the space for these cafeterias and some third party small businesses run the day to day operation. Besides the elderly, they can also serve other customers at the market price, while customers of the Elderly Kitchen Program pay at a 70% discounted price. The gap of the 30% is where the government subsidy goes. At the end of the year, these
cafeterias will submit their financial statements and a report on how many elderly consumers they have served in the year. Then the government can decide how much to subsidize and reimburse the third party small businesses. Theses cafeterias are like the partner with government. They are small but very flexible to locate in dispersed locations, so that the Elderly Kitchen Program can reach more elderly with quality hot food. There is an ideal atmosphere when the elderly can sit down in these cafeterias to enjoy their hot meals. On the other hand, they still can make some profit from the other customers they serve at the regular price.
In model type two, the 71 pick-up sites are supported by a small number of relatively bigger commercial cafeterias, who make boxed meals for the Elderly Kitchen Program. If old people are disabled, they can order in Eleme and waiting for courier. Since these commercial cafeterias are relatively large, they can buy a large amount of raw materials at wholesale price and the cooks are better trained, able to cook many dishes at the same time. There is an economy of scale in these cafeterias so the cost is lower than those of model type one. While being able to lower the cost of the box meals, they have a really limited menu offering just a few dishes. Since they provide the boxed meals at a price set by the Elderly Kitchen Program, they can make some profit as well.
The third model is 3 delivering lines with food carts. This model has some similarities with model two, but instead of boxed meals, they provide different dishes in a food cart format where the elderly can pick the items they like. Three big commercial cafeterias make the food and use cars to deliver the food salvers to communities. The community office provides the place for them to sell the food. The elderly enjoy a more flexible menu in this model and can choose what they want instead of the identical kinds boxed meal in model 2.
IV. Pain point of the current business models
Pain points are the critical aspects of the business model where inefficiency exists. By comparing the
current operating models and gathering consumer perceptions, three main pain points were found.
The biggest pain point is how to set the price to attract more elderly people to participate in the program. The subsidized price needs to go even lower since most of the elderly expect so from the Elderly Kitchen Program. Currently, the program cannot be considered as a total public welfare since the elderly customers still pay a portion out of picket. When there is no such program, the elderly are very interested in these boxed meals; however, when the program runs, many do not actually go because of the price. Some of the elderly like to compare the price of the boxed meals with the cost of cooking themselves, concluding that the price is too high. On the other side, if the price is lowered to the point of comparable to their home cooking cost, the profit margin for the providers would be rather small to sustain their daily operation.
The second pain point lies in the cost of these cafeterias. The costs of employing the cooks, maintaining the equipment, daily cleaning, gas, water, the cost of hiring cooks, maintaining equipment, cleaning and electricity expenses all have relatively high fixed prices. In the current operation model, it's hard to lower these cost items. The elderly canteens generally make low profit, or even suffer a long-term loss. This situation is not conducive to a healthy and stable development of the Elderly Kitchen Program. Many kitchens have failed because of the low profit.
The third pain point is how to deliver food to the disabled old people or the old people who are sick. It is not convenient for these old people to walk to the program touch-points. Also, when it is very hot in summer or very cold in winter, the weak elderly cannot go out of their rooms. Helping them to reach the program will on one hand increase the customer base, and on the other hand push the program to reach the needy deeply. The delivery lines can be a solution, but currently they have a limited routing and the elderly may have safety concerns opening their doors to the stranger couriers.
V. Proposed solution
Addressing these pain points will naturally yield a better model. For pain point one and two, which is around price and cost of the Elderly Kitchen meals, we need to think of the demand and the supply. On the demand side, if the program can attract more elderly by lowering the price, the cafeterias may still be able to get a better profit due to the economy of scale. On the supply side, when it comes to lowering the price, a good solution is to learn from those kitchens that are more successful, which usually have big sizes, and they can enjoy wholesale prices for the raw materials. When the number of customers per cafeteria increases due to the lowered price, these program cafeterias can benefit from a similar economy of scale. Even though they may face prices higher than wholesale, but would be better than the smaller orders before.
Prepay, Reservation and Elderly Volunteers
Using a pre-pay and reservation system, and encouraging the elderly to help out in the cafeterias can help to ease pain-point one on lowering price and reducing cost. The pre-pay mechanism is that the elderly pay for a certain number of meals up front and get a meal cards so that they could come to eat more often. From my survey, most respondents (85% of total) are willing to pre-pay and like the idea of reservations. In this way, the kitchens can better plan their purchase orders to meet the demand without too much excessive waste. This improvement in operation efficiency can help to lower the cost of the meals. Yet another suggestion is that some of the elderly people can work for the Elderly Kitchen Program by helping with the food cooking, water refilling, or cleaning. They may feel more fulfilled when helping out, and at the same time, the kitchens can save on some cost.
Collaborate with Senior Homes and Elderly Help Elderly
For the pain point three on reaching less capable elderly people, my suggestions are 1) utilize the existing senior homes in the communities to serve as
a Elderly Kitchen cafeteria, and 2) to encourage the elderly to help each other with picking up the meals. Just in Jianggan district, there are eleven senior homes dispersed throughout the district. If they can allow part of their cafeterias to support the Elderly Kitchen Program, it will be very convenient to reach the elderly people who do not live in the senior homes, but live relatively close. All of the respondents to my survey agreed that this would be a good model.
Furthermore, a rewarding system can be used to encourage the elderly to help each with the meals. Sometimes it is not convenient for some elderly live far away to dine in or pick up from the Elderly Kitchen touchpoints. The relatively younger elderly people aged 55-70 who are able to walk and willing to help others can bring food back for the others living in their neighborhood. Each time they help others, they can gain some points and these points can be redeemed toward some free goods later. This model is similar to the policy for garbage classification in Europe, where people who sorted garbage correctly get points, and they can use the points to get free goods. The government or organizations usually pay for these goods. The advantage of this model is that it is efficient. Even though not much in value, the free goods are seen as a sign of self-worth and the ability to help others. It can be very fulfilling to the elderly and promote their willingness to help others. On the other hand, the less capably seniors also benefit from this model because they do not need to spend money on meal delivery.
Potluck Beyond the Elderly Kitchen Program
Besides the Elderly Kitchen Program, I also see the opportunity to encourage a pot-luck fashion without the need for operating an elderly kitchen. In this model, the elderly can cook their own dishes but eat together in one person's home and all enjoy
the pot-luck dishes. The sharing with each other will reduce wasted food and people can enjoy each other's accompany at the same time. It can be good for the elderly people's health and it is convenient for those who live in nearby neighborhood. Of course, this model only fits when several conditions are satisfied. First, the participating elderly need to be capable enough to cook. Secondly, they need to live close enough to feel comfortable to gather like a party. Thirdly, they need to be friendly enough towards each other. There are many details to be concerned about in order to make this model a feasible one. Nonetheless, it is worthwhile exploring.
VI. Conclusion
The Elderly Kitchen Program in Hangzhou has been a very popular experiment so far and there is a bright future for it. The price and cost of its meals need to be improved and there are rooms for improvement from both the program and the elderly customers. By addressing these issues, the program would be able to reach more elderly customers in the long run. The key lies in increasing its economy of scale, cooperating with existing senior homes, and encouraging the customers to help out in the kitchens and among themselves. Potluck fashion meals are another possible solution for the elderly people.
There are some potential issues of my proposed solutions as well. For example, if more and more elderly people earned enough points for the free goods, can the government afford to fulfill their award? Also, we should worry that whether the elderly volunteers are healthy enough to avoid potential disease spreading. What's more, because volunteers provide door-to-door service, the safety issue arises as many old people live alone at home and are vulnerable. All these can be good research topics for later researchers.
References:
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2. Ministry of Labor and Social Welfare [2015] - No. 9.2015. Notice on further solving the living difficulties of former industrial and commercial enterprises.
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4. Zheng Haiyun. How many canteens are there for the elderly in Hangzhou? Why can't some canteens go on? What's the problem, Hangzhou Urban Express - 2019-08-09.
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