Cornwall County Council has taken its school meals service back in-house after nearly 10 years in the hands of Initial Catering Services.
The county's Commercial Services has won the £2.2m-a-year deal to provide school meals at 116 schools for five years, with an option to extend for another two.
The contract starts on 1 September, and 260 staff will be transferred under TUPE regulations. Cooks' hourly pay will rise from £5.45 to the nationally agreed council rate of £5.71 an hour. The pay rate for kitchen assistants will go up from £4.76 to £5.33 an hour.
Catering manager Jayne Jago said Commercial Services had won the contract because of its commitment to supporting local suppliers, and the example of the food it provides at 32 private finance initiative (PFI) schools under a contract it won two years ago.
"We source as much as we can locally," she said. "As we grow, we can give more commitment to local suppliers. We believe that's of great benefit to the children. We won the contract because of the quality of the food we've been using."
Although Initial said it was "disappointed" to lose the contract, it has recently won a deal through its Eden Foodservice division to provide meals at 20 independent secondary schools in the county.
Initial had dominated Cornish school catering since 1994, when it was known as BET and had won a three-year, £6m school meal contract from the in-house operators.
The win led to Brian Howells, then manager of Cornwall's Commercial Services department, being sacked. Howells took his case to an industrial tribunal but it was turned down.
The tribunal was told that BET's tenders for the council's catering, cleaning and grounds maintenance contracts were £317,000 lower than the council's in-house tender bids, and that, under compulsive competitive tendering, the council had no lawful alternative but to award the contracts to BET.