Acme Company operates an employee dining area. Acme owns the building in which the dining hall is locatedand owns the kitchen needed for the operationall stoves, refrigerators, freezers, microwaves, deep fryers, warming lights, cafeteria line and food warmers, and so forth. The dining area employees are employees of Acme Company.
Acme operates the employee dining as an employee benefit. They operate it at a loss. Currently, it is costing Acme approximately $1.00 per meal served. For example, a lunch that Acme charges employees $3.00 for costs Acme closer to $4.00.
Several other companies in the area have outsourced their employee dining operation to Windsor Foods.
Your supervisor has asked you to contact Windsor Foods to explore a possible outsourcing.
Windsor Foods tells you that they can operate the facility profitably if they charge the employees only what Acme is presently charging them. They say that they can do this because of their experience in food serviceand because of their central kitchen and large-scale buying of ingredients.They offer to buy all of Acmes equipment for $30,000 cash upfront. They also offer to pay Acme $500 a month for the use of the dining areaand to pay for the dining area utilities.They offer to hire all of Acmes food service employees, who will continue to do the same jobs but be employed by and paid by Windsor Foods.
