2010: A look ahead
The challenges and opportunities are myriad as operators prepare for the coming year, many hoping for a change in fortune.
For many foodservice operators—and magazine editors and publishers—2009 has been a year to forget. Rising prices, tightened budgets and shrinking wallets have conspired to play havoc with both the top and bottom lines. Operators have been scrambling to find new sources of revenue, new ways to keep customers coming in the door and the least painful ways to cut costs—while still trying to satisfy customers’ requests for healthier options and more environmentally friendly operations.
It never does much good to dwell on the past, so as we close the book on 2009, we decided to ask operators to look forward: what their biggest challenges would be, their best areas for growth and the trend they believe would have the most impact on their businesses. Their answers were as varied as the types of operators who responded. We thought it best for readers to see for themselves what their colleagues’ concerns and hopes are, so we’ve compiled the most revealing answers on the following pages.
And we’d like to keep the dialogue flowing. So e-mail us your own challenges and opportunities, and we’ll print the best answers on the Opinion page in the coming months. All of us at FSD wish our readers the best of times for 2010.
What is the biggest challenge your operation will face?
We are going to be remodeling our entire café. So I will need to maintain sales in the café without an official café to work out of for four months. We’ll be relocating either to the lobby or a conference room, trying to keep the selection as broad as during normal operations using limited equipment, space, etc. We may put up a makeshift coffee bar in the main lobby to sell sandwiches, salads, coffees and pastries.—Lisa Poggas, R.D., Nutrition Services Director, Parker Adventist Hospital, Parker, Colo.
We are lucky and challenged at the same time. We have been on a construction binge the last few years and over the last four years we have added 2,500 beds to the campus. That creates the challenge of providing services for the increased population. Financing the construction and the operating hours are the challenges. Our all-you-care-to-eat location, Southside, is open 7 a.m. to 9 p.m. We have an operation called Ike’s that opens at 9 p.m. and stays open until 4 a.m., seven days a week. This year we opened a Starbucks 24 hours a day. Next fall we will open Pilot House, which will run 5 p.m. to 4 a.m. to take some of the pressure off the Southside location.—Mark Kraner, assistant vice president for university services, George Mason University, Fairfax, Va.
The biggest challenge here would have to be the overall economic impact to our operations. We are seeing more and more reductions in our workforce, and many employees continue to work from home or flex their hours. Catering sales have been drastically reduced, which limits contractor profitability.—Laurel Lutz, manager, business services, The Boeing Co., St. Louis
The demands on our program are not being matched by legislation or financial support. As the program is redefined, it will need a practical “master plan” with objectives and goals that need to be realistic, increase the commitment of dollars and review outdated USDA regulations; i.e., local procurement, etc.—Mark Bordeau, senior director of food services, Broome-Tioga BOCES, Elmira, N.Y.
We have come a long way toward our goal of being a model for healthy and sustainable food, but the next steps will be even more challenging. They include sourcing more sustainable poultry and dairy products, and some more local foods that offer some seasonal extension. Doing this in a cost-conscious manner is always a challenge, but it can be done.—Diane Imrie, director of nutrition services, Fletcher Allen Health Care, Burlington, Vt.
The trifecta of rising food and other costs, shrinking budgets and continued increasing demand for quality food offerings are our challenges. How to continue to achieve our goals will require unprecedented creativity.—Bernadette Chung-Templeton, Bi-College Director of Dining Services for Bryn Mawr and Haverford colleges, Bryn Mawr, Pa.
Maintaining participation and keeping subsidies to a minimum are our challenges. What is interesting is that even though these are the same two challenges as in years past, it is more urgent this year because of the economy and pressure to significantly reduce costs. Everyone is feeling the pressure of the economy so they aren’t spending as much, which has a negative effect on subsidies, which we are trying to decrease.—Patty Guist, director, Associate Programs and Services, Humana Inc., Louisville, Ky.
Revenues. We have seen a decrease at the beginning of the school year, in part as a result of the flu or flu-like symptoms. It is still consistent as we approach the third month of school. Also, our free and reduced applications have increased almost 35% in the last three years. In addition, parents are monitoring students’ accounts closer and watching their purchases.—Cindy Hormel, R.D., Director of Food and Nutrition Services, Liberty School District No. 53, Liberty, Mo.
One of our biggest challenges is funding capital renewal while keeping our room and meal rates affordable. The No. 1 reason cited by students who move off campus is affordability. We lose approximately 13% of our students to apartments or the Greek community between the start of the fall term and the end of the school year, which represents a revenue loss of about $4 million. If we could reduce our attrition rate, it would go a long way toward helping finance the refurbishing or replacement of our aging facilities.—Rich Turnbull, director, dining services, Oregon State University, Corvallis, Ore.
We have had to reduce staff, through attrition, to reduce our overall labor expenses, about 30% since 2006-07. In that time we have needed to accommodate customer requests to go to more fresh, whole and local foods. This requires a more efficient workforce and in some cases equipment training. Our staff has had to pick up the slack and be willing to do more and learn more. The good news is that by making these changes we have seen participation increase and our connection to parents and the community strengthen.—Doug Davis, director of food service, Burlington Schools, Burlington, Vt.
We will continue to struggle with lagging sales on the cash side and dramatically reduced sales in catering. That leads to increased pressure to aggressively manage our expenses
in both the operating and capital budgets. We have seen an increase in brown bag lunches and people are generally spending less on food. We are defering spending wherever we can. —John Strickland, director, corporate administrative services, BOSE Corp., Framingham, Mass.
We are being asked to do more, without the possibility of increased staffing, so we are really having to get creative. Also, we are already experiencing some effect of the flu season, and with the potential H1N1 pandemic it is worrisome. Also, we have moved into the technological world: charting the electronic medical record, having electronic POS systems and having a fully computerized room service program. My staff are “foodies, not “techies,” and more and more we need IT support in all areas of our department.—Patti Oliver, director of nutrition services, UCLA Medical Center, Los Angeles
Purse strings are tightening. We used to have an average check in our secondary schools of almost $6. The kids were buying a lunch and à la carte. We have seen that drop significantly. The average check in our secondary schools is now between $4.75 and $5. The demographics haven’t changed, but with the weakened economy, the kids have less money to spend on lunch in the schools.—Mary Anderson, Culinary Express supervisor, Wayzata Public Schools, Wayzata, Minn.
In what area are you most likely to be able to grow your business?
I believe delivery to individuals’ work stations is an untapped market. Advances in POS systems now make it possible to have a self-contained, customizable online ordering system. We all see the amount of traffic in our seating areas reducing regardless of whether sales are increasing or decreasing. Being able to provide a wider variety of items that aren’t necessarily conducive to grab and go would open another avenue of convenience for our time-pressed customers.—Damian Monticello, corporate foodservice liaison, BlueCross BlueShield of Florida, Jacksonville, Fla.
For us it is adjusting our kiosks to create a menu mix that is productive for us and attracts business. We have problems with location and a very spread-out campus. —Lloyd Delaney, foodservice director, Providence Health Services, Burbank, Calif.
It gets harder to find more ways every year. I have about tapped out all the things we can do to increase business. We have our own bakery. It is like the best-kept secret in town. So I am going to promote our fresh-made buns and rolls to the public to purchase. Instead of cutting labor, we need to find ways to continue to promote other sales and catering.—Sandi Kramer, director of foodservice, Yankton School District, Yankton, S.D.
We expect to see continued increases in non-traditional meal times up to and including late-night options. We currently are planning three new quick-service cafés in buildings currently under construction. We also expect continued growth in our all-you-care-to-eat marketplaces from our non-resident student population as well as faculty and staff. We began a major redesign of our menus three years ago to increase the number
of healthy foods and to provide detailed nutrition information for our customers. We expect this work to continue.—Greg Black, director of foodservice, University of Iowa, Iowa City, Iowa
We are looking at more vegetarian options as customers are demanding this. Healthy food that tastes good is where we are headed. We have to set an example in healthcare foodservice. Also, customers want much more value, as they have less to spend. So I see much of our focus around smaller transactions and value enhancement: sliders, half portions, snack items, grab and go and meal bundling.—Neal Lavender, director of food, nutrition and hospitality, Texas Health Presbyterian Hospital, Dallas
The biggest potential we have to grow our business is in the area of selling more off-campus meal plans. Currently only 4% of off-campus students purchase a meal plan. Realistically, I feel we can capture 10% or more of this market.—Rich Neumann, dining services director, Ohio University, Athens, Ohio
Healthy or, I should say, the perception of healthy. We are in the process of identifying and labeling our healthier items. This is not so much a change in products—we already have many healthy options—but rather an effort to market these items and educate our students about smart choices.—JoAnne Robinett, foodservice director, Beavercreek School District, Beavercreek, Ohio
For us it would have to be the supper meal in our Basement Bistro cafeteria. We do not have much business for the supper meal and I would like to offer senior discounts for early bird specials. The only problem that I really have to work out is how I can advertise since we are not for profit and don’t officially charge sales tax.—Cathy Babbs, director of food and nutrition services, Sarah Bush Lincoln Health Systems, Mattoon, Ill.
Catering and grab and go. The space to offer catering services is increasing and there are some requests for university catering to provide services at the Civic Center. The grab-and-go area has done nothing but grow since we implemented it, largely due I think to other facilities and outlets being overtaxed.—Sam Bennett, associate vice president of student services, Texas Tech University, Lubbock
Breakfast is where I am placing a focus on growth. Well-fed students are better learners, and offering more variety in our breakfast is what I am looking at. But it is very hard to put together meals the students really like for the price we charge. —Gay Anderson, child nutrition director, Brandon Valley School District, Brandon, S.D.
We will be accepting credit cards beginning in 2010, and we are looking to increase revenue during breakfast in The Dining Room. We also have opportunities to increase revenue by increasing our menu selections on a daily basis.—Tony Almeida, director of food and nutrition/environmental/host services, Robert Wood Johnson University Hospital, New Brunswick, N.J.
What trend will have the most impact on your operation?
Special needs customers. Community members with various dietary restrictions such as gluten-free meals. Manufacturers have products, but they need to be the right size and stocked in the right warehouse at the right price.—Stuart Orefice, director of Princeton Dining, Princeton University, Princeton, N.J.
Brown-bagging. There is still the ability to sell a beverage and dessert to someone who brings a sandwich from home.—Jay Silverstein, vice president, corporate services, Credit Suisse, New York
Providing this large-scale patient and retail dining service with a minimum negative impact on our environment: from the type of equipment we buy and the type of energy we use to the food items we serve and how we handle our waste stream. I believe there are some elements of faddishness to the environmental movement, but the fundamental principles are sound and we need to do everything we can to support sound environmental stewardship.—Walter Thurnhofer, assistant administrator, support services, University of Washington Medical Center, Seattle
I do believe the tween and teen research is essential in helping us market to our savvy little consumers. I believe creative and economical menu and marketing strategies stand to have the most impact in helping our operations be successful.—Maureen Faron, foodservice director, Hudson School District, Hudson, Ohio
Students are very tuned into value. This was one of the most frequently mentioned items in our customer service benchmarking survey. Students need to make the most of their money and are looking for opportunity in all of our operations. We are discussing ways to increase the perception of value in retail and all-you-care-to-eat residential dining. We are planning to revamp our meal plan offerings with value being forefront in our minds.—Debra Ross, dining services director, Concordia College, Moorhead, Minn.
The economy’s impact has forced many people to tighten their belts and budgets when dining out. For this reason, hospital retail cafés—always a good value—are now even more popular. We are capitalizing on this trend by offering promotional events, daily specials and other tactics to “care for the caregiver” and their wallets.—Mary Angela Miller, R.D., administrative director, Ohio State University Medical Center, Columbus, Ohio
Local foods will be the hottest topic in the near future. There is a farm-to-cafeteria movement rolling across the country. More and more advocacy groups are speaking out and grant money is starting to show up in every corner. The USDA has made it a priority, which means dollars will become available. This will impact labor, facilities and commodities usage.—Katie Wilson, foodservice director, Onalaska School District, Onalaska, Wis.
The trends that have the most effect are the ones I try to create by mirroring fast food trends and/or quick-serve/mid-tier restaurants. Our student population eats out more than ever and I have developed some new menu entrées to mimic that. Mini sliders, snack wraps, buffalo chicken pizza, etc., have been added to my menu this year to great success. We even do a “Munchable” lunch at K-6. All of these have been modified to fit school lunch guidelines with healthier ingredients. Also, I think the new bandwagon is reduced sodium.—Maryann Lazzaro, foodservice director, Plum Borough School District, Pittsburgh
Everyone wants local, fresh, sustainable menu ingredients and claim they will pay for it. Many of my vendors that profess to speak to that model are worried that when they are compared to some of the vendors that don’t offer local or sustainable products at higher prices they will lose market share. So we’re watching that closely since my entire business model is based on collecting a commission on revenue in the absence of rent and utilities. If there’s a decline in revenue it impacts my bottom line directly. We have many venues on campus with low price points, and when you add the 10% employee discount we offer at all 35 dining venues the ones with the best price/value perception will gain revenue, and those offering healthier options with fresh products may lose out. We’re anticipated a challenging year as we deal with the overall economic crisis.—Jim Wulforst, director, Duke Dining Services, Duke University, Durham, N.C.