Chapter 7

On-Site Food Service

ON-SITE FOOD SERVICE

On-Site food service is defined as “operations where food is served outside of the home but where food is not the primary business.”

This can include locations where people are at work, play, recreation, school, etc.

This segment has a long history. It was originally known as “institutional” food service because it was associated with “institutions” such as universities and hospitals.

ON-SITE FOOD SERVICE

Examples include: (1) Business and Industry; (2) Colleges and Universities; (3) Health Care and; (4) Schools.

These are the four primary segments that we will discuss but there are many other environments where people purchase food service in these types of environments – can you think of some examples?

ON-SITE FOOD SERVICE

The segment was also known as “noncommercial food service” because originally, it was operated by the institutions themselves on a break even basis (without attempt to make a profit).

It was also long operated on the assumption that its customers represented a “captive market.” The current thinking views the market more as customers who have choices.

ON-SITE FOOD SERVICE

Some terms that you will need to understand (that are unique to this segment) include the following:

Participation rate (compare with measure used in commercial restaurants)

Self-op Contractor Managed services Client

ON-SITE FOOD SERVICE

The reasons that we choose to include this segment in this course is:

The areas that it has in common with other hospitality sectors

The involvement of traditional hospitality companies in management

Its size and scope The professional opportunities available

SELF-OPERATED FACILITIES

Self-ops are food service operations that institutions choose to manage themselves

Historically, before the advent of professional management companies, this was how most operations were managed

MANAGED SERVICES COMPANIES Managed services companies are those

companies that specialize in managing food service operations for a third party

Such companies believe that they are able to offer operational advantages to the host company (client) including cost savings, economies of scale, variety of offerings and problem solving abilities (trouble-shooting)

MANAGED SERVICES COMPANIES Managed service companies have been able

to develop a network of expertise from managing “accounts” all over the country and the world

They develop managers who are experts in the area

They have support systems, new product development and financial stability

MANAGED SERVICES COMPANIES

The “penetration” of managed services companies continues to grow. The penetration rates in the major market segments is:

B & I: 80% – 85% Colleges and universities: 60% – 65% Health care: 45% – 50% Schools: 20% – 25%

MANAGED SERVICES COMPANIES The major companies include ARAMARK,

Sodexho, and Compass. Other companies tend to be smaller, regional

operators or operators that specialize in a particular segment (stadium feeding)

Oddly, their names rarely appear in (or on) the facility itself so that the customer sometimes does not know which company operates the food service

BUSINESS AND INDUSTRY

Business and Industry (or Business Dining) provides food service to company employees

Business Dining is affected by the size of the work force and the health of the economy (or employment rate)

It has the highest rate of managed service of all four segments.

BUSINESS AND INDUSTRY

Food programs have proven to be very important to companies in recent years but…

Companies have reduced subsidies in recent years

Affected by commercial restaurant segment Many companies specialize in Business

Dining such as Guckenheimer and others

TRENDS IN BUSINESS AND INDUSTRY Aggressive marketing Organic growth More options for diners More branded concepts Innovative menus Grab n’ go

COLLEGES AND UNIVERSITIES Foodservice on college and university

campuses is necessary even if the campus is non-residential

Food services must not only accommodate students but also faculty, staff and visitors

Where “board plans” were once the rule, now there are many options

COLLEGES AND UNIVERSITIES

College and university food service is affected by demographics, students living on campus, and food quality, among others

The introduction of brands has been the biggest factor in recent years (national and proprietary)

Most college and university programs are managed by contractors and the penetration rate continues to increase

Some large schools that are still self- operated include Purdue, Penn State, and Michigan State University

TRENDS IN COLLEGES AND UNIVERSITIES Healthy segment Universities are trying harder to attract

nontraditional students New brands (Starbucks) More choice Comfortable/multi purpose dining areas

HEALTH CARE FOOD SERVICE This segment includes hospitals (large and

small) and nursing homes Food had always been important in this

environment but has become more important in recent years

The presence of Dieticians makes this segment different

Dieticians are professional qualified individuals who manage the nutritional aspects of food service

HEALTH CARE FOOD SERVICE Hospitals are taking food more seriously as a

result of: (1) competition; (2) customer feedback and; (3) becoming more “business like”

Health care has sophisticated facilities and systems as well as unique challenges

Only about 50 % of health care food service facilities are outsourced but increasing

TRENDS IN HEALTH CARE FOOD SERVICE More emphasis on retail Introduction of brands Cost reductions – doing more with less Revenue enhancement (catering, cooking

events) Growth!

SCHOOL FOOD SERVICE

School foodservice serves two functions: (1) proving food to school children and; (2) taking care of underprivileged children through federally assisted meals

This is accomplished through subsidies and government food programs

Some systems feed 1 million children a day Again, participation rates are important

SCHOOL FOOD SERVICE

Lowest percentage of contractor penetration Lower profit margins Specialized market Large systems (650 schools in Chicago) Challenges with restrictions and diet

TRENDS IN SCHOOL FOOD SERVICE Lower enrolments Fighting child obesity Greater responsibility of food service

programs Growing importance of education Celebrity involvement