You are here


Moneymaking Meals

Campus dining program strategies for giving revenue a boost
University Business, March 2013
Jumping on the food truck craze (Mercyhurst University) is one way higher ed institutions have increased dining revenue.

In the summer of 2012, the University of Pennsylvania completed a sweeping renovation of one of its largest dining facilities—a three-story space that now includes a traditional dining hall, retail operations, and specialty dining concepts like a pizza oven and global cuisine.

A Starbucks in the building was remodeled to include a study area and conference room. It’s now open from 7 a.m. to 2 a.m., when previously it opened later and closed at 9:30 p.m. most days. The changes paid off. In the first semester after it reopened, the coffee shop experienced a 3 percent revenue increase, says Doug Berger, the university’s executive director for business services. Replacing a small convenience store with a gourmet market, meanwhile, resulted in a 48 percent increase in sales and a 24 percent increase in the average check compared to the previous year, he shares.

Much of the inspiration for these changes came from the success of a new dining space added to the university’s Wharton School of Business a year earlier. Working with Bon Appetit Management Company, which operates all dining facilities at UPenn, university officials decided to replace an outdated coffee shop in a building that was being renovated at the business school. The new shop is called Joe’s Café, after school namesake Joseph Wharton.

Designed by Voith & Mactavish Architects of Philadelphia, Joe’s Café earned LEED Gold certification for commercial interiors. A local coffee roaster created a Wharton Blend just for the café, and the food menu boasts fresh, local fare.

In the two years since Joe’s opened, university dining managers have exported some of its most successful ideas to other dining facilities.

“We’ve kind of used Wharton as our laboratory to see how things would work,” Berger says.

Boosting the revenue of university dining programs usually boils down to finding ways to attract more customers, but the methods can be as varied as the menus at a mall food court.

“Everybody’s interested in different ideas and newer concepts that are outside the box,” says Bob Sempek, regional director for Treat America Food Services in Omaha, Neb., who notes that it’s typical for meal plan participation to drop off as students go off campus in search of more variety and more convenient dining times. “Colleges are looking at ways for vendors to reduce that missed meal factor and to increase participation.”

More Options

For some institutions, a strategy for raising dining services revenue has been to build more flexibility into their meal plans so more students are inclined to participate.

A few years ago, surveys rating dining services at the University of Massachusetts, Dartmouth showed students weren’t happy, says Jeff Augustine, director of auxiliary services. They wanted more choices about when and where they could dine on the university’s meal plan.

Deciding that a major change was in order, Augustine put the dining services contract out to bid. Under new management from Chartwells, in September 2011 UMass, Dartmouth began offering a meal equivalency feature that allowed students on the board plan to eat a limited number of meals outside the campus dining hall.

Since then, students’ satisfaction levels and perception of the quality of the food service program have increased, Augustine says. There has been an increase in meal plan participation among the 2,000 or so students not required to sign up, and those who choose declining balance plans over the traditional model with a set number of meals are picking the more expensive plans.

Along with the residential dining halls, nearly all of the retail dining outlets on campus accept equivalency payments, says Ed Gilmore, resident district manager for Chartwells.

“Students between classes who can’t make it back to the dining hall can go into one of those retail outlets and swipe off their meal and get a sandwich or salad, a beverage, and a bag of chips,” Gilmore says.

In fall 2012, the University of California, Irvine and its food service contractor, Aramark, introduced an all-access option, providing unlimited meals in either the residential or retail dining facilities. Since the change, the participation rate—counting the number of students going through the doors of campus dining facilities—more than doubled, according to Jack McManus, director of hospitality and dining services at UC, Irvine. The all-access meal plan, which costs about $300 more than the conventional plan, has brought more than $500,000 in additional dining revenue for the university, McManus says.

Southwestern Community College (Iowa) recently switched to an all-retail dining program, introducing Treat America branded concepts such as a hot entrée station called the Comfort Zone, Sempek shares. Students pay for their food by swiping a card carrying a declining balance. Going retail enabled the college to create an additional revenue stream by selling bottled drinks and takeout food to both resident and commuter students, he says.

Extended Hours

Traffic in the student dining hall at Bridgewater College (Va.) has increased dramatically since the school switched from a traditional meal plan to a continuous dining plan. The dining hall is open daily from 7 a.m. to midnight, when previously there were breaks in service between meals and 7 p.m. was the latest close time.

By the end of the first semester, the participation rate stood at 72 percent—even better than the 56 percent dining services managers were projecting, says Mary Speir, general manager for Parkhurst Dining Services, which took over campus dining operations in July 2012.

“The kids love it,” she reports. “They enjoy being able to come in, watch some TV, grab a cup of coffee and a dessert, and sit here and study—without having to worry about taking a meal off [their plan allowance].”

Contrary to the fears dining services operators may have, food costs actually decrease with continuous dining programs by around 2 percent on average, according to hospitality operations consultant Susan Wilkie, president and CEO of Wilkie Enterprises. The reason, she explains, is that students no longer pile food on their plates—and often waste much of it—thinking they won’t have a chance to return if they’re hungry later because the dining hall will be closed.

Menu Redo

Dining services managers at California State University, Chico implemented a broad makeover in February 2012, including several new dining concepts, after hiring Wilkie Enterprises as a consultant. But rather than expand the menu, they pared it down by at least 25 percent at each campus dining location, says Corinne Knapp, retail manager at the university.

The baked potato and salad bars were eliminated. The labor-intensive Philly cheesesteak was taken off the menu, while the easier cheeseburger combo received a bigger marketing push. Even more changes came with the arrival of a new dining services director. For example, a poorly performing Mexican restaurant concept became a much more successful street taco station.

According to Knapp, the changes resulted in a 10 percent increase in cash sales, a 2.7 percent reduction of cost of goods sold, and a 3.2 percent reduction in payroll expenses compared to the previous year. Payroll went down because, with fewer menu items, less back-of-the-house labor was needed for prep work, Knapp says.

Besides making the dining services program more profitable, Knapp adds, scaling back the menu made quality assurance easier to achieve.

“We primarily have student employees in our dining operations, and with a smaller menu we were able to train them more thoroughly and ensure the quality of the products,” Knapp says.

Moveable Feasts

Food trucks are solving the access problem at a number of colleges and universities where some students can’t easily get to buildings with dining facilities.

The dining halls at Mercyhurst University (Pa.), for example, are located on the opposite side of the campus from where most upperclassmen live. “Because there are a couple of fast food areas that are close by them, we saw students walking to off-campus venues just because of the convenience,” says Gerry Tobin, vice president for student life.

The university didn’t have space to build a dining facility in that area, so food services contractor Parkhurst Dining Services purchased a food truck advertised on Craigslist. The Culinary Cab, which made its campus debut in September 2012, makes the rounds on Friday and Saturday nights, serving up pulled pork sandwiches, wraps, and nachos—but no fried food. “We try to keep it fairly healthy, because there’s a lot of late-night eating,” says Kim Novak, general manager of dining services for Parkhurst.

UMass, Dartmouth has a Corsair food truck called the Scally Wagon that serves hot and cold sandwiches, French fries, and the like. It goes out at 8 p.m., Wednesday through Sunday, making three or four stops across campus, Augustine says.

Going National

Over the last six years, UC, Irvine has opened three to eight new retail dining outlets annually, according to McManus, with branded concepts outnumbering self-operated eateries. Six years ago, the decision to bring a Starbucks to campus encountered protests. Today, McManus says the coffee shop is thriving, and several others have been added. National brands on campus also include Wendy’s, Wahoo’s (serving fish tacos and fusion cuisine), and Panda’s Chinese restaurant.

Recently, dining service operators brought in a Subway to replace another national sandwich brand, resulting in a 70 percent increase in revenue over what was generated for the previous outlet, McManus shares.

Janet Bencivenga, category manager for Subway’s franchise world headquarters, says that about 60 percent of Subway restaurants on college campuses are owned by franchisees who lease space from the university, 34 percent are owned by food service contractors, and 6 percent are university-owned. Food portability, healthy menu options, and late-night service are appealing to college students, she says.

One thing that appeals to university business managers is when a franchise allows for flexibility with space. Subway spokesperson Les Winograd says that all Subway restaurants “are designed to fit into just about any space that’s available. We don’t use a plain vanilla shell. We don’t have one plan that’s set in stone.”

Years ago, at a university where Wilkie was working in the operations department, an analysis revealed that students in west campus buildings were walking past nearby dining facilities to eat at the more popular ones in the center of the campus. The solution: Put a Taco Bell on the west side.

“As a result of that, we were able to pull students away from the center of campus, create a destination location, ... and increase profitability,” Wilkie says.

While national franchises can be great revenue generators, Wilkie cautions that if that revenue “is cannibalized from another location, and doesn’t increase net sales, you’ll have less profit when you have to pay the license fee.”

Sempek emphasizes that however university officials might like to tweak or overhaul their dining programs, they must weigh the impact of the changes on student costs.

Colleges want to keep the rates that they have to charge students for meal plans as low as possible, he notes. “I can go in and propose to deliver the world, but somebody has to pay for it.”