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Food for Thought

In spite of rising food costs, off-campus competition, and finicky students, dining directors are finding innovative ways to please their 'customers' while making a healthy profit.
University Business, Jul 2004

Keeping students well fed can add significant revenue to an institution's bottom line. However, before food service can be the cash cow that everyone expects and desires it to be, experts say it must be operated as a business and not as a peripheral auxiliary service.

"Food is one financial area that can grow on a college campus without a huge investment," says Dean Wright, dining services director at Brigham Young University (UT). "You can open a new food operation at a reasonable price. But to build a new residence hall or add on to a bookstore is a much bigger challenge." Yet, creating a lucrative food operation isn't always so easy, especially when faced with tough competition from area retail operations.

"Campus food service, to remain competitive, must become more commercial in appearance and structure," says Rob White, president of Envision Strategies (, a consultancy group that specializes in campus food service. "That requires constant innovation, renewal of facilities, and reinvestments." It's time to say goodbye to the old, traditional dining halls or "airplane hangars" as White calls them.

"As schools look to a more distributive and retail model, many will find the need to replace the traditional halls with more strategically operated boutique operations," he says. "I see very few situations where a campus is so isolated from the outside word that it can say 'We are going to maintain a traditional program.' Change is going to be a given."

Food is one financial area that can grow on a college campus without a huge investment.

-Dean Wright, Brigham Young University

Schools that embrace changes in the marketplace and adapt to their students' ever-changing needs tend to see the most customer satisfaction and bottom-line benefit.

Wright at BYU learned that a successful food service operation is measured primarily by the use it gets, and not how pretty it looks. Last March, he opened Legends Grill, a new dining facility featuring 11 plasma screen TVs, a rotisserie grill, and a hearth-baked oven. While it sounds inviting, "We couldn't get students to come to it and that's despite a massive ad campaign we launched to promote it," he says. Wright chalks it up to bad timing. When the school asked their students why they weren't coming, their response was: "We already know where we are eating." "Students are truly creatures of habit. By about the fourth or fifth week of a semester, they know the path that they walk and for the most part they don't deviate," Wright says.

To counter these students' fixed dining routines, he devised a more strategic plan. "We've learned that the time to open an operation is right before fall semester. This way, you can get the attention of the incoming freshmen who have yet to determine their geographical eating patterns. Furthermore, during the fall, BYU has many more students on campus (about 30,000), and that's compared to about 6,000 in the spring and summer," Wright says.

"We learned that if we open an operation mid semester, we may not see financial success for it for almost a year," he adds. But, maybe immediate success is overrated? "One good thing about this is we had a soft opening. We worked out the bugs and are in better shape to financially bank on those sales next fall," Wright says.

Another challenge is to sidetrack attention away from the big cafeterias that are mainstays on campuses. "The bigger operations are a lot easier to operate and tend to run more efficiently," he says. "To make our smaller operations successful, we've had to provide uniqueness." For example, the business school cafe is now the only food operation on campus that offers panini sandwiches. While the same basic sandwich is offered other places, it is not in panini form in any other place. "Students appreciate these nuances," he says.

Most schools require their students to purchase meal plans simply because it's perceived as a sure-fire way to generate revenue. But, University of Georgia, with its voluntary, all-you-can-eat meal plan, has proved that such programs can be just as lucrative, if not more so. "I spend 100 percent of my time pleasing customers who want to be my customers," says Michael Floyd, food services director at the university. "But with a mandatory program, I'd have to spend 80 percent of my time trying to please the 20 percent that don't want to be my customers." The problem with that, Floyd says, is that you can never please that group. Just this year, more than 96 percent of the university's students who live on campus and about 1,500 students who live off campus, bought a meal plan. In total, the school generated $20 million, $4 million more than last year.

Floyd created a great incentive to attract off-campus students: free, one-hour parking. The school currently validates 400 cars every night, some 250 more than three years ago, when the incentive was created. "That is what drives participation on campus," he says. "They come back to campus at night not only to eat with us but because they have a campus community network here." The late hours--they're open till midnight Monday through Thursday--also contribute to its success. Snelling Dining Hall serves more than 1,800 customers between 8 p.m. and 10 p.m. and about 400 between 10 p.m. and midnight.

Julaine Kiehn, director of campus dining services at University of Missouri-Columbia, has seen a sharp increase in her food operations costs, particularly in the dairy and meat segment. "Thank you Atkins, mad cow, and low carb diets," she says sarcastically. "Commodity items have increased specifically because of these factors."

In fact, as of April this year, the price index of producers of beef and veal products (both fresh and frozen) went up 17.2 points from April of last year, a 13.5 percent increase, according to the U.S. Department of Labor's Bureau of Labor Statistics. In addition, dairy producers saw a 21.8 percent increase in their price point index from April of 2003 to April 2004. The selling price for beef and dairy products is clearly on the rise.

Kiehn says the cost per meal at the University of Missouri has gone up seven percent since last year. Cheese, milk, eggs, chicken, and beef are particularly expensive, she says. But, she says she's lucky. "Luckily, we had budgeted some extra money this year. But some of my peers are seeing double digit increases," Kiehn says. "We've never seen food cost increases like this."

In order to offset the rising food costs, Kiehn says she and her staff will have to do some "menu engineering" which means they will tweak the combination of foods they offer. "Maybe we'll offer them pasta and chicken tenders together instead of just two or three servings of chicken tenders," she says. There are other options to consider too. "Do we just charge more for the meal plans? Do we reduce the portion size? Or just change an ingredient?" Kiehn asks. "These are some of the questions we will have to start asking ourselves."

Take-out used to mean ordering from the local pizza joint down the block. Now, college students are getting take-out from an even closer location: the campus food court. "This is a lifestyle change for this generation of students," says Richard Turnbull, director of dining services at Oregon State University. "They are on the run. Even if they do eat part of their meal in one of our dining facilities, the rest of it is packaged to go." About 40 percent of OSU's students request foods to go, which is up from 15 percent five years ago, Turnbull says. But, there is demand not only for pre-packaged fast food, but also for healthy, organic food-to-go. Turnbull says his students are requesting certified organic foods--those that are grown without pesticides. "This generation has a whole mindset about healthy eating. There's a lot of self-consciousness that exists here." But OSU is not the typical school--its number one beverage seller is water, not soda. And its most popular take-out foods are sushi and smoothies. "Students in Oregon are probably more impacted by culinary developments and California cuisine. They're more into CPK (California Pizza Kitchen) and trendy foods than they are into Pizza Hut," Turnbull says.

Geography does play an important role in students' preferences and eating habits. At OSU, you won't just get a burrito or a taco, you'll get carnitas or chile rellenos from the Sonoran region of Mexico. At the same time, Turnbull says, there would be a revolt if the macaroni and cheese and Rice Krispie treats were eliminated.

If only all students had the same eating habits, life would be easy for Ted Mayer, executive director of dining services at Harvard (MA). "Harvard students have a couple things in common: they all come from the top five percent of their class and they have high expectations," he says. "But, their backgrounds are different." Mayer says eight percent are vegetarians, one percent are vegans, three and a half percent have eating disorders, eight percent say they have have food allergies, and 16 percent are international. "Then there's the student who grew up in the mountains in West Virginia who wants a slab of ham with milk gravy," says Mayer. "There's no such thing as 'normal' when it comes to students' eating habits."

In addition, students often request special foods such as fair trade bananas. Fair trade goods promote more equitable dealings with producers in developing countries. It's clear that student activism has filtered into the food service world too. "College is a time when students explore and test their knowledge, and change the world," Mayer says. "But there's a significant increase in cost to the school." Fair trade bananas cost $5 more a case, and students eat about 60 cases a year. Mayer says if he switches to fair trade completely, he'll have to find ways to offset their cost.

Then, there are students who boycott foods, like grapes. One group of students asked Mayer to offer grapes. Their leader was a student whose father owned a winery. The anti-grape movement was led by a student whose parents were migrant workers. Mayer put the question to a vote. Two-thousand votes later the pro-grape students won. "These issues are raised when you deal with any informed group of people. These students pay a lot of money to go to college and they have a great sense of entitlement," Mayer says.

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