The district may switch from current food provider Chartwells' buffet-style lunch to a new provider with grab-and-go meals, according to Cathy Mak, the district's co-chief business official.
Chartwells was originally contracted for the 2006-07 school year to lower costs while providing more healthy food options.
But the district lost $350,000 on its school-food program this year, prompting it to look at other options, Mak said.
District staff will present suggestions at the April 22 school board meeting, she said.
Chartwells replaced the district's previous food provider Sodexho.
Encouraged by lobbying from the parent-led Healthy School Lunch Committee, the district instituted new food rules in 2004, banning soda and requiring a healthful side-dish of salad or fruit.
In 2005, the district sought a new provider to fit the new rules and picked Chartwells.
The more healthful meals would also attract more students to the program, which would in turn keep costs down, school board members reasoned at the time.
While it has become an axiom of the green-food movement that healthier food costs more, the price of food for school districts hinges on how many kids are eating.
When more students sign up, the per-meal cost goes down, Mak said.
The district's 13 percent participation rate in 2005 under Sodexho led the district to lose more than $200,000.
Under Chartwells' more healthful offerings, participation has inched up a mere 2 percent, according to Mak, and the district is losing more money than it did with Sodexho.
Last year, the district spent about $6 per meal on food and labor, a number that dipped slightly this year due to staffing reduction, although the exact figure hasn't been calculated, she said.
But students only pay $3.75 for lunch in elementary school and $4.25 in high school, she said. Unless participation rises dramatically, the district is destined to lose money, she said.
Even the new grab-and-go option, which would cut staffing, would mean a projected loss of $200,000 annually, she said.
Chartwells district-director Greg Lynch said one reason for low participation is lack of awareness. Parents don't realize there is nutritious fare available at schools, he said.
The program's image could have been improved with better marketing to parents — something neither the district nor the state invests in, he said.
The number of free or reduced-price lunch participants also affects how much schools pay for food. The more students qualify for the federal subsidy, the more guaranteed participants in the school-food program a school has, Mak said. That again spreads the cost per student over unchanging fixed costs such as staffing and utilities, she said. But fewer than 10 percent of Palo Alto's students qualify for the subsidy.
In contrast, officials at the East Palo Alto charter schools that have adopted an organic-food provider said many students receive the federal subsidy.
Perhaps ironically, attempts to make food more healthful are not a driving factor in meal cost, Lynch said.
"If you do your homework and find the right manufacturing, [you could see] eight different corndogs at 18 price points," he said. Enough research allowed Chartwells to provide more nutritious food, he said.
The grab-and-go plan now being considered wouldn't mean sacrificing health standards, Mak said. The state mandates that meals have a mix of protein, carbohydrates, fruit and vegetables. A grab-and-go option could replace a side salad with a bag of carrot sticks, she said.