PROPOSAL OF OGDEN FOODS, INC.

WITNESSES

FRANK TURNER, MANAGER, SPECIAL SERVICES, OGDEN FOODS, INC.

STANLEY MALAMUT

ROBERT C. BASSETT, VICE PRESIDENT, OGDEN FOODS, INC.

Mr. YATES. We are sorry for the delay. We have a reporter here. Let us tell you before you start that you will be shown a copy of the transcript before it is published. You will be able to add to it or delete from it in accordance with your wishes. If there is anything you want to say off the record for fear of making some of your trade secrets available to your competitors, you may tell us and we will go off the record.

What we want is a full, frank discussion with you.

We will try to expedite this because we know that your time is limited. We will do everything that we can to get you out of here in a hurry.

Let me ask you some questions.

In the first paragraph of your letter of May 31, you refer to your proposal for operating the total food services at the U.S. Capitol. Mr. TURNER. We would make a correction and say the House of Representatives.

SOME OGDEN-OPERATED FACILITIES

Mr. YATES. I know that you have a large operation throughout the country. Where do you have a large facility that would compare with the House of Representatives?

Mr. BASSETT. In likeness or dollarwise?

Mr. YATES. Both.

Mr. BASSETT. Probably we would have to name a chain that we have, which is the Greenfield operation, Detroit, Mich., which is a complex of three stores.

Mr. YATES. Do you have anything in the Washington area?

Mr. TURNER. We would have the flight kitchen at Dulles Airport. United, American.

Mr. BASSETT. Maryland House.

Mr. TURNER. BFK. Fairchild Aircraft at Germantown and Hagerstown.

Mr. YATES. Do you run both private cafeterias and dining rooms? Mr. TURNER. Yes, sir; for executives.

WAGE SCALES

Mr. YATES. You know about the wage rates, wage scales we have for our employees. Are yours comparable? Is yours a union operation? Mr. BASSETT. We have both union and nonunion. In most cases they would be union and comparable to your rates.

FRINGE BENEFIT COMPARISONS

Mr. YATES. Would you propose in your operation of the restaurant to retain our employees on the same type of a wage relationship as they are retained now? If you have any changes, what changes would you propose?

Mr. BASSETT. We calculate the wage rate would be comparable to what you have, with the exception of possible fringe benefits, and I do not think we could transfer any pension rates that the Government is passing on to employees. We have the basic fringes, as we call them, which is the holiday, vacation pay, certain amount of life insurance, Blue Cross-Blue Shield, and the what we call standard type fringe benefits.

Mr. YATES. You know that occassionally there are Federal pay increases for all employees of Government. These would affect our employees.

Mr. BASSETT. We are familiar with this because we deal a lot with this at the Mississippi Test Facility, in Bay St. Louis, Miss., which we operate through General Electric.

TURNOVER RATES

Mr. YATES. What is the present rate of turnover among your employees on an annual basis? Is that a secret?

Mr. BASSETT. I cannot answer that. I don't have current facts on that.

Mr. ANDREWS. If we could get this on the record.

Mr. Roof, ours is about 40 percent, is it not?

Mr. Roof. Yes, sir.

Mr. TURNER. I would say that would be very high for us. There would be specific instances in which the turnover might be that high, but in general I can't think of anything that would come under that. That is very high.

WAGE SCALES

Mr. YATES. Have you seen the comparison that at least appeared in our record, comparison between the amount of wages that we pay our help and those that are paid to commercial restaurants in both union and nonunion?

Mr. BASSETT. Yes.

Mr. YATES. Where do you fit in this; do you pay anybody less than $1.60, minimum wage?

Mr. BASSETT. To the best of my knowledge at this time this is within their area, geographic region.

Mr. MALAMUT. You are referring to this restaurant facility?

Mr. YATES. Yes.

Mr. MALAMUT. Yes.

Mr. BASSETT. Stan, would that include theater operations within the immediate area?

Mr. MALAMUT. That would not include this.

Mr. BASSETT. We are not classifying theater-type operations.

Mr. ANDREWS. Your scale for head cooks is between $2.26 and $3.25 and the scale for bus help starts at $1.60?

Mr. MALAMUT. Yes, sir.

EMPLOYEE MEALS

Mr. YATES. Do your employees get meals in addition to pay?

Mr. BASSETT. Yes, sir.

Mr. YATES. How many?

Mr. BASSETT. Our meal policy, if you want to call it that, is that we give the employee a meal allowance of 25 cents per day which goes onto gross wage. This is taxable for social security purposes only. Meal allowance is not applicable for withholding taxes.

his

Mr. ANDREWS. You do give him his food?

Mr. BASSETT. Yes. He gets his meals as well as uniforms in most

cases.

Mr. YATES. How many meals is that, one or two?

Mr. BASSETT. It depends on whatever we negotiate. In one case we have three meals a day. In most cases it is usually a snack and a full noon meal.

Mr. TURNER. The 25 cents does not relate to the value of the meal. It is a good substantial meal or meals.

Mr. YATES. In submitting your proposals, have you based your estimates on the provisions and the assumptions that were contained in the Architect's statement of May 23?

Mr. BASSETT. Yes, sir.

PROPOSED STAFFING PLAN AND SERVICE

Mr. YATES. You say that you have developed plans for operation of the House facility. What does that mean? What sort of plans have you developed?

Mr. BASSETT. We have a pro forma made up.

Mr. YATES. Would you consider to serve as per the schedule shown in the Architect's statement, days and times?

Mr. BASSETT. Yes, sir. Days and times, yes.

MENU PRICES

Mr. YATES. Would you change menus, prices?

Mr. BASSETT. Yes.

Mr. YATES. Up or down?

Mr. BASSETT. Probably some up.

Mr. YATES. Any down?

Mr. BASSETT. I doubt it. No.

SERVICE CHANGES

Mr. YATES. What kind of service changes would you make; would you make service changes?

Mr. TURNER. In the dining room?

Mr. YATES. Both dining room and cafeteria.

Mr. BASSETT. No. We couldn't understandably come into an operation and say we would want to deteriorate service when we give our full approach to this. You are going to say you might have to deteriorate service because we are talking about some changes in help situations.

FOOD QUALITY

Mr. YATES. What about the quality of the food that is served here now; there wouldn't be any lowering of the quality of the food? Mr. TURNER. Quality would improve.

Mr. YATES. Improvement rather than deterioration?

Mr. TURNER. I would say so.

Mr. YATES. What improvements? What examples do you have in mind?

Mr. TURNER. Specifically, we are very proud of our salad presentations around the country and that was one area in our survey we did. You had sliced tomatoes the day we were through.

Mr. YATES. Today we had a good salad that was not bad.

Mr. BASSETT. A salad?

Mr. YATES. They have a salad plate every day. It varies from day to day. They have other salads that you can get if you want.

FOOD PORTIONS

What about portions; would there be a change in portions? Mr. BASSETT. We would say no, we don't intend to change the framework of portions and immediately probably no price increases until there would be time to look at the total concept much closer and relate the portions to that. On a survey it is very difficult to look down every price and relate every type of commodity with every portion and equivalent price. Very possibly some things here could be overpriced in a particular area.

Mr. YATES. Some of the Congressmen say that is true.

Mr. BASSETT. There are specific instances, and we would find this out. I was out on the west coast a few months ago and there was a past practice of having a chopped sirloin plate with some french fries and sliced tomatoes and cottage cheese. They called this a health plate. By the time you added up the a la carte prices for each of these items it should have been about a 60-cent item. They had it for 75 or 85 cents. There was no equity to it.

We had to take a turn about and make it conform to the ala carte prices. It would be a case of adjusting a price when we take over an operation to come into conformity.

RETENTION OF EMPLOYEES

Mr. YATES. Does your statement, in which you say the present employees would be retained, refer to food workers or cooks or management employees? What is your idea on that?

Mr. BASSETT. On this one, this is an area when we say-and I want to make the record clear-when we say retain, that is, those employees retained who will receive all the benefits we have talked about, rates of pay, various fringe benefits that the companies have. On the offset of any operation we do intend to retain all employees.

Our total concept calls for a reduction of employees in trying to absorb them within our other operations within the area.

Mr. YATES. What other operations do you have in the area?

Mr. BASSETT. Those we mentioned before. Dulles Airport, Maryland House, some theater operations.

Mr. YATES. What about management employees?

Mr. TURNER. We were very impressed with your management. Mr. BASSETT. They still fit in. I have a reconstructed manager chart for your observation.

Mr. YATES. Would food be cooked on the premises or in a commissary?

Mr. TURNER. On the premises.

Mr. YATES. Any questions?

PROPOSED PLAN OF OPERATION

Mr. ANDREWS. What type of operation would you envision? Would you come in and, say, take this over for 2 or 3 years or for a certain period of time? What would we have to guarantee that if you were to take over 6 months later you didn't throw your hands up in the air and say, "This is a miserable mess" and walk away from it?

Mr. BASSETT. You are indicating in the bid invitation that this was for a 1-year contract, if I understood. One of our points today was that we don't feel for the size of this operation and for the volume any company can come in here and show a complete, satisfactory job under the inherent problems that we believe that you have.

You would find it difficult to show what you could do in 1 year without either an option or renewal for, say, 2 more years. When we sign a contract we want to give ourselves a chance to show what we can do. Mr. TURNER. Psychologically, if it were known by your management people to be retained we were here for a year, the basis, the minimum would not be sound.

Mr. YATES. Do you have any questions that you want to ask our Architect after having examined his proposals and having walked through our facilities? Are there any points you are not clear about you want some information on relating to costs or otherwise?

Mr. BASSETT. No. We think the layout of your figures was very complete. We couldn't ask for better.

Mr. YATES. What about this: You know the special problems that we have here, particularly in the House restaurant, special problems to which I referred and the fact that we don't know-we in the House don't know from day to day how late we are going to meet. We don't know whether or not an evening meal may be necessary. Would you continue the same practice? Do you have any ideas of changing that? What is your thought on that?

Mr. BASSETT. We cannot retain any thoughts to discontinue services that now exists.

Mr. TURNER. Basically what we would like to do is to establish in our opinion an efficient operation, continue to provide the same service that you always enjoyed.

Mr. YATES. Can you make it go on that basis?

Mr. TURNER. I think we have some supporting figures. Mr. Bassett might tell you about that.

Mr. YATES. Tell us how you think it might go in order to eliminate the deficit and for you to make a profit. I assume that you are going to do that. You are not doing this as a eleemosynary corporation. Mr. BASSETT. No, sir. We are a publicly owned company.

Mr. TURNER. We pay taxes.

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