Here's the thing... most kids won't take up the school on the free breakfast. They know it is for poor kids, and don't want to be associated. 

I believe you on the oatmeal... Sam's Club 110 servings of oatmeal is $8. But when I volunteered at the local school, what I remember is one kid who would get the free meal. He wore the same clothes each day, and seemed a little feral. He sometimes missed school. One day I was running errands in the afternoon and passed a shirtless guy on a bike. This little kid had his butt in the front wire basket (no helmet), holding a bag of cans. When he missed school he was helping Dad collect cans. Did they have a stovetop to heat the oatmeal? I have no idea. I think most needy people are needy and not just buying $5 lattes when they could be providing food for their family.