How Brands Like Domino's Profit From School Lunch - YouTube

We hear a lot about school lunches in America and the food itself doesn't always get the best reputation

When I think about school lunches I think of boiled hamburgers

The cheese was always like plasticy

The staler it was, the more delicious it was

From Hollywood depictions to real-life memories, the school cafeteria is a quintessential part of American culture

But who decides what food gets put on the tray

and how come one school serves this on a dollar 25 budget while another serves this

Why are teachers working at McDonald's for a night

and how does a slice of Domino's Pizza meet USDA guidelines

Those are all loaded questions with complicated answers but if you really boil it down

the answer is money, lots and lots of money

Today the 4.9 billion lunches that get doled out in school cafeterias every year

make up a multi-billion dollar industry that makes sure millions of k ids are fed

It starts with Federal money but on its way to cafeterias, school districts have to order the meals

and food giants grab a big slice of the school lunch pie

But before we get to all of this

The food fight sweeping school cafeterias, going from tray to trash

Let's go back to the 1800s

In 1853, the Children's Aid Society of New York started an informal lunch program for its vocational school

but it wasn't until the 1930s that school lunches really caught on in the rest of the country

In about the 1890s, you see a real expansion

and the role of schools and community is when they actually start to become social institutions

and so, in addition to basic education they're also providing health services

and one of the things that happens when you know physicians and nurses start working in schools

they start documenting all kinds of cases of things like malnourishment

In 1935, Congress set aside money for school lunch programs

Not everyone in the community supported the government's efforts to feed kids during the day

Restaurant owners sued school districts for lost business

The courts typically sided in favor of the school's right to operate lunch rooms

And by 1941, roughly six million kids were eating food provided by the government

That food came from products farmers had too much of like pork, dairy, and wheat, a win for both schools and farmers

In the '40s, the Federal government passes the National School Lunch Act

and this makes it possible to actually fund the programs predominantly with public money

National School Lunch Program in thousands of schools for millions of American children

By this time, other countries around the world had already developed their own school lunch systems

While the U.S. took the lead from European countries, there was one thing that made school lunches in the U.S. distinctly American

a hint of capitalism

The fundamental basis for school lunches was a sort of business model

They often adopted like little tokens like little coins or use like tickets of some sort that you know paying kids would buy

and then kids who were receiving free lunches would be given the ticket

but the idea is that you were exchanging something, there was a transaction

Enter the School Lunch Lobby

Today you have groups like the School Nutrition Association and National School Boards Association advocating on behalf of the schools

In corporations like Tyson and PepsiCo show face at meetings to make sure their products are in school districts minds

Meanwhile, groups like the Food Research Action Center and the Center on Budget and Priorities keep a close watch on nutrition

Robert Doar worked as a commissioner under Mayor Bloomberg where he administered food assistance programs in New York City

And he's no stranger to the lobbying efforts in the world of government assistance

It is true that the interests here are not only what's best for low income families, the other interests are the various providers of food

This is true of anything we do in government, anytime the Federal government is extending significant dollars on a product

people that sell that product you're gonna be interested in maximizing that spending

In 1966, Congress passed the Child Nutrition Act expanding the school lunch program

In 1969, about 15% of kids were getting their lunch for free or at a lower price

In fiscal year 2017, that number had risen to 73%

That meant that millions of trays needed to be filled every day and that created a business opportunity

School lunch programs really start to move away from scratch cooking

and toward this kind of factory prepared meal that's been reheated and then served to them

And then came the funding fights which led to the infamous ketchup controversy

In 1981, The Reagan administration wanted to cut $1 billion in school lunch funding

In order to meet the nutritional guidelines while staying on a budget, the Department of Agriculture got creative and declared ketchup a vegetable

The backlash was so strong the funding cut was quickly reversed, but ketchup hasn't been the only product to stretch the definition of what makes a vegetable

Even today, some school pizza sauces count as a serving of veggies

French fries obviously are made out of potatoes and potatoes are a vegetable

That was another defeat I would say that the USDA experienced because of industry lobbying

Yes, fries still count as a veggie, frozen potato wedges are on the USDA's vegetable list for child nutrition programs

Those bags of frozen foods have to come from somewhere which is where companies like Tyson come in

The company, valued at more than $21 billion, saw the opportunity and acted

Tyson has its own k12 poduct catalog of frozen foods made just for school cafeterias

We reached out to Tyson for comment and to see how much of their business comes from its k12 food products

The company didn't respond and it's k12 earnings aren't specified in its annual report

but frozen foods aren't the only way to cash in on school lunches

In 2014, the USDA came up with something called smart snack guidelines, making the snack line healthier

Which meant if big food companies wanted to keep their products in schools they had to adapt

Now nearly every major food manufacturer in the U.S. has a catalogue of products custom-made to meet USDA standards

We felt like kids were getting exposed to these brands you know like Frito-Lay brands

and then they would go to the grocery store and want to buy that brand and it's not the same product

We did a study where we really put the two products side by side

Just looking at that it's super obvious that the companies really made no effort to distinguish

the one they were selling in school versus the one you could buy in the store

The product on the left labeled special edition is sold in schools, it has 7 grams of sugar, vitamin C 25%

The product on the right sold in stores has 10 grams of sugar, the vitamin C in this one is just 10%

And those custom-made foods aren't just in the snack line

Domino's has a special smart slice program with pizzas tailor-made to meet USDA standards

and the more pizzas schools buy, the more rewards points they wrack up

Those can be traded and for Domino's swag and even cafeteria equipment

Domino's told us, quote, We are proud of our school lunch product

It meets the USDA guidelines for school nutrition standards and is something that kids love to eat

It is also good for the schools as it is simple for them to serve and keeps lunch participation rates high

It also said that schools make the choice as to whether to serve their pizza branded or unbranded

Remember the SNA, one of the lobbies on behalf of schools, they're listed as a smart slice partner

And it's worth mentioning Domino's, Tyson and a number of other major food companies are SNA industry members

meaning they pay money for monthly newsletters advertising discounts and just a local legislative contacts

The SNA said, quote, While many schools are working to increase the amount of freshly prepared and scratch-made menu items

those with limited equipment and labor resources rely on healthy pre-prepared foods to ensure students receive balanced meals each day

Corporate money reaches far beyond the lunchroom

It works its way into schools' sporting events and celebrations through fundraisers

Think of scoreboards, parking lot signs, and pizza parties or that summer reading program

Krispy Kreme sponsors a major fundraising program too and McDonald's has a McTeacher's Night fundraising program

where teachers come in to work the counter in hopes that their kids come in to see them

It caught a lot of flack from school districts with LA's ending the program altogether but some schools still participate

None of those companies returned our request for comment

So why do people care so much

Schools need food and big companies have it but the childhood obesity rate has more than tripled since the 1970s

And with roughly 30 million kids getting their lunch from a government funded program

it raises the question, what responsibility does the government have to make their meals healthy

In 2010, Michelle Obama spearheaded a major change in the system with the Healthy Hunger-Free Kids Act

We have an obligation to make sure that those meals are as nutritious as possible

It tightened nutrition guidelines for cafeterias across the country, requiring them to serve more fruits and vegetables

At first, its noble intentions were praised but some took issue with how it actually played out in lunch rooms across the country

Kids throw food away at about the same rate as the rest of America but after the Healthy Hunger-Free Kids Act

people just started noticing it more

More kids were taking fruit it went up significantly but the same proportion was getting eaten and thrown away

So more is getting eaten and more is getting thrown away

Schools seem to be caught in the cycle of a lack of funding, kitchen training, and time

While there are Federal regulations, the menus really come from the schools on the local level

They're the ones ordering and preparing the food and since it's decentralized

it's hard to know which companies are making the most money and if kids are really getting fed quality meals

But some people are trying to change that on a local level

Dan Giusti is the former head chef of Noma where he created high-end meals for hundreds of dollars a person

Now he's running a group called Brigade working to bring scratch cooking, not just warming stations, to kitchens on a $1.25 budget

And he's trying to change the reputation of school lunches altogether

It's almost like it's this rite of passage like as a student in an institution like its just what you get, you get lousy food

In May 2018, the Trump administration rolled back some of the rules around whole grains, sodium and flavored milks

to give schools more flexibility in their meal planning

The politics, money and controversy around school lunches aren't going away

But at the end of the day, the kids are the ones it really impacts

And for some school lunches are the best meal they're going to get throughout the day

These kids are showing up to school everyday but at home they're not eating and it makes you rethink everything like holidays

like oh 3 day weekend, great

But that means that these kids aren't eating for 3 days, or snow days

But that means that not only are these kids not eating but they are also at home in an environment that's probably not good for them

Studies have shown that if kids are fed, they perform better in school and with millions of kids relying on free or low-cost lunches every day

it's a big, important problem to solve