Five schools are to employ private caterers
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Up to 17 schools in Swindon may close their kitchens with 100 catering jobs being lost.
Swindon Services, which provides hot meals to schools, says it is running the operation at a loss.
Five schools have now opted to take up catering contracts with private firms rather than pay any increase in costs.
Schools have until Friday, 13 February to inform Swindon Borough Council if they intend to continue their contracts with their contracts.
Councillor Gary Perkins said the problems began three years ago, when some of the larger secondary schools opted to get their meals from private contractors.
This meant that Swindon Services was no longer providing cost-effective catering across the town.
"Recently more and more schools have decided quite rightly they wanted to seek services elsewhere for school dinners.
"We've been left with a number of small schools which obviously has created additional cost for Swindon services to provide those school meals."