Operators optimistic for retail growth
Renovations and new locations expected to boost retail growth.
The retail sales outlook for the year to come is positive, according to the majority of operators surveyed for FARE’s State of Foodservice at Retail, which included those in the colleges and healthcare segments. Even the challenges that lie ahead signify long-term opportunities to improve the overall quality and competitiveness of retail dining.
For hospitals, healthcare reform will continue to force consolidation, and the hospitals with the best-executed foodservice programs will have an advantage.
“Either you’re going to pick someone up or you’re going to get picked up,” says Angelo Mojica, director of food and nutrition services at UNC Healthcare, Chapel Hill, N.C. “So [success is] about making sure our brands are really strong and they’re repeatable.”
For some operators, expansion is helping to propel sales. The Ohio State University Healthcare has issued a request for information from vendors for concepts for a new $1.1 million building, slated to open by 2015.
Meanwhile, immediate sales growth is expected from a new service area that offers quick-serve concepts, plated meals and custom creation stations, says Drew Patterson, assistant director of nutrition services for The Ohio State University Wexner Medical Center in Columbus. “We will also see an increase in traffic due to the addition of staff with the expansion of the medical center and construction teams on site,” he says.
Likewise, Joie Schoonover, foodservice director at the University of Wisconsin-Madison, expects her retail business to continue to increase due to a number of new facilities that put retail dining in the spotlight. Schoonover is running operations in two brand new buildings, and three more are under construction. By January 2014, every foodservice facility will be new or remodeled.
Schoonover says the renovated locations focus on portable options and making offerings more attractive and easier to find, which is boosting sales.
In the senior living segment, ACTS Retirement-Life Communities in West Point, Pa., is adding new restaurant concepts to its communities in addition to the traditional marketplaces—bistro dining in a casual atmosphere—that are open from 7 a.m. to 7 p.m. The restaurants will offer varying cuisines and service levels for a slight fee above residents’ daily meal plan charge. The company is even testing pop-up—temporary—restaurants in some locations.
“Our biggest challenge is only [being] bound by our energy level and our creativity,” says Marianne Jones, regional director of culinary and nutrition services. “We know [these restaurant concepts] are successful, we know [they satisfy] our audience because [they break] up the monotony.”
Labor costs—especially the cost of benefits—continue to hinder operators; it was indicated as a top hurdle in the survey.
“With the changes in healthcare, for every dollar that I spend in true salary, it costs me 75 to 80 cents more in benefits,” says Dean Wright, director of dining services at Brigham Young University in Provo, Utah. “How do you recover that?”
Some operators expect to grow their business by reaching out to new dayparts and customers. Mojica says he struck gold this year with a hot pretzel concept called Twisted, open only from 2 p.m. to 6 p.m. Schoonover and Patterson, meanwhile, say they are looking at post-dinner sales. “We need to focus on running a great service for staff that come in at the end of our traditional day,” Patterson says.
Regardless, retail dining continues to be a bright opportunity on operators’ horizons. “I expect to see a continual, slow but very steady growth in all of our retail operations, which is a good sign because two years ago or even a year ago we were looking at just continuing to stay the same,” says Wright.
Mojica concurs, theorizing that the food quality and 20% hospital discount has his customers eating a substantial lunch at the hospital and opting for a light dinner at home. “I keep seeing sales going up in the face of prices and the economy, and you’d think people would be brown-bagging it more.”
Many operators—57% of colleges, 64% of healthcare—believe business conditions will improve in the next year.