When Only a QSR Will Do
They’ve got the name, the power, the systems and more. That’s why QSRs are a big help—in the right setting.
While consumers love the big-name quick-serve restaurants (QSRs) for the experience they promise, non-commercial foodservice operators like the traffic they provide, the revenue they generate and the quality standards they represent.
Thomas Taman, foodservice director at Wishard Hospital in Indianapolis, says he has included a national QSR in his foodcourt due to, among other things, the pure power of branding, which he views as a way to keep potential customers on premise during lunch.
“Staff members here patronize the cafeteria maybe three or four days a week and then will go out to eat the other two,” says Taman. “If they are going to go out to a Subway restaurant that’s two blocks down during their break, it makes more sense for them to go to a Subway that’s in-house.”
Subway is the only QSR brand with which Wishard has worked. The 300-bed hospital serves about 1,500 meals per day, and its cafeteria seats 200. Wishard sits on a campus that includes three other hospitals and 15,000 employees, all within a one-mile radius. “It’s a highly populated area for foodservice,” says Taman.
Capture tool: The Subway unit is located in the hospital’s outpatient building in order to give it a separate identity away from the cafeteria, Taman explains. “We wanted that because we capture the outpatient market, the people who are in the outpatient area,” he says. “That’s where a majority of our sales is coming from. Not only does our staff patronize it, but [so do] those customers in the outpatient area who normally would not come to the hospital and to the cafeteria for something to eat. It’s a fairly spread-out campus.”
Operating the Subway unit actually costs less than a proprietary brand, Taman says. Subway itself picks up construction costs. “All we do is provide utilities and some support. It’s a win-win situation for the organization because they provide the entire package and all you do is negotiate a rate.”
That rate can be either a percentage of sales paid to the institution, or a flat monthly fee. Wishard opts for the percentage system. The unit generates between $40,000-$45,000 a month in net sales.
Wishard also opted to let Subway staff the unit with its own people, rather than train and supply his own staffers. The reason is simple: labor cost. “Any time you want to open up a venture you have to keep tabs on the labor cost involved, because that’s my heaviest single expense,” he says.
Anchor concept: Jeff Berdis, district manager for Sodexho at the University of Alabama at Birmingham’s UAB Hospital’s foodcourt, agrees that QSRs make sense. In researching concepts prior to opening, he and his staff focused on brands that rank high in sales volumes and number of stores in the Birmingham area.
“The UAB Hospital selection committee basically told all the [competing contract foodservice] companies that were involved in the process that they absolutely wanted a Chick-fil-A,” Berdis recalls. “So Chick-fil-A was a good business solution. We consider [it] our anchor foodcourt store.” Also in the foodcourt are a licensed Starbucks location—also a popular concept across Birmingham—and a Freshens unit.
Berdis has great respect for the power of brands. “I’m thinking that even with the royalties that we have to pay back to Chick-fil-A, we would do better with Chick-fil-A [than with a proprietary concept],” he says. “It draws people in.” The hospital pays the chicken chain 10% of sales, while it gives Starbucks both royalty and marketing fees.
"Sodexho does have its own internal coffee brand,” he notes, and when it and Starbucks are both operating as they should “and have the right customers in place, we probably would be pretty close to what the bottom line is.”
Other brands present in the foodcourt include Sodexho’s Pandini’s, an Italian concept serving pizzas and made-to-order salads and pastas; Charleston Market (similar to a Boston Market); and a grab-and-go program. “The Charleston Market is meeting our expectations,” Berdis says, “but would not bring customers in from the streets. Chick-fil-A and Starbucks do.”
Buying a bun: David Annis, executive director of foodservice at the University of Oklahoma in Norman, OK, refers to his branded offerings as “a mixed bag". "When you go to a QSR, especially a Chick-fil-A or a Quiznos, product [and other] costs aren’t that much more than what I was already paying for in my all-you-can-eat area. If I’m serving a chicken sandwich in my all-you-can-eat area of the cafeteria I’m still buying a chicken breast, I’m buying a bun, I’m buying the fries, and paying very similar prices.”
A student might go through the cafeteria line and select a pork chop, Annis continues, “but that pork chop costs more than a chicken sandwich, so there are a lot of things to offset the cost.” The only real additional cost is the percentage of sales that the operation pays to the brand. In the case of the University of Oklahoma, the QSR counters are staffed by university staffers.
The university works with several nationally known QSR brands in addition to its proprietary concepts. They include Chick-fil-A (three), Quiznos, Wendy’s (which the university owns and operates), Cinnabon and Freshens. Also present is Taco Mayo, a large regional Mexican chain. The QSR outlets are clustered together in the university’s student union foodcourt, with additional units scattered across the campus.
All you can eat? The Chick-fil-A outlet located in the main cafeteria is, to Annis’s knowledge, the only all-you-can-eat Chick-fil-A unit in the country.
“It’s worked out very well for us,” Annis notes, although he admits that “a lot of foodservice folks looked at me when we started talking about putting in an all-you-can-eat Chick-fil-A unit like I was really, really strange. And in a lot of ways it appears that way on the surface.”
The move, however, has made sense. The university’s main cafeteria is a large facility with multiple concepts and no fewer than 12 serving lines. Most of them are self-branded concepts: smokehouse, Asian, Mediterranean. “But I needed an anchor in that building,” he says. “I needed a brand that students were looking for, something that would bring [them] into the cafeteria. Then, once they got in there, they would see everything else that we have.”
Spurring trial is important, he explains, because many of the incoming freshmen still view cafeteria food as “pretty negative. We’ve got a wonderful, wonderful facility, but I’ve got to get them in.”
"The percentage paid to the QSR concepts ranges from 7% to 10%. That payment is balanced out," Annis says, "by the fact that at the same time the brand will bring in more business. And I think that the increased volume helps cover your overhead, and actually gives you as good a bottom line." Annis’s highest-grossing operation is self-operated, “but I have a couple of my QSRs that are very, very close,” he notes.