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Chapter 7 On-Site Food Service. ON-SITE FOOD SERVICE On-Site food service is defined as “operations where food is served outside of the home but where.

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Presentation on theme: "Chapter 7 On-Site Food Service. ON-SITE FOOD SERVICE On-Site food service is defined as “operations where food is served outside of the home but where."— Presentation transcript:

1 Chapter 7 On-Site Food Service

2 ON-SITE FOOD SERVICE On-Site food service is defined as “operations where food is served outside of the home but where food is not the primary business.” This can include locations where people are at work, play, recreation, school, etc. This segment has a long history. It was originally known as “institutional” food service because it was associated with “institutions” such as universities and hospitals.

3 ON-SITE FOOD SERVICE Examples include: (1) Business and Industry; (2) Colleges and Universities; (3) Health Care and; (4) Schools. These are the four primary segments that we will discuss but there are many other environments where people purchase food service in these types of environments – can you think of some examples?

4 ON-SITE FOOD SERVICE The segment was also known as “noncommercial food service” because originally, it was operated by the institutions themselves on a break even basis (without attempt to make a profit). It was also long operated on the assumption that its customers represented a “captive market.” The current thinking views the market more as customers who have choices.

5 ON-SITE FOOD SERVICE Some terms that you will need to understand (that are unique to this segment) include the following: Participation rate (compare with measure used in commercial restaurants) Self-op Contractor Managed services Client

6 ON-SITE FOOD SERVICE The reasons that we choose to include this segment in this course is: The areas that it has in common with other hospitality sectors The involvement of traditional hospitality companies in management Its size and scope The professional opportunities available

7 SELF-OPERATED FACILITIES Self-ops are food service operations that institutions choose to manage themselves Historically, before the advent of professional management companies, this was how most operations were managed

8 MANAGED SERVICES COMPANIES Managed services companies are those companies that specialize in managing food service operations for a third party Such companies believe that they are able to offer operational advantages to the host company (client) including cost savings, economies of scale, variety of offerings and problem solving abilities (trouble-shooting)

9 MANAGED SERVICES COMPANIES Managed service companies have been able to develop a network of expertise from managing “accounts” all over the country and the world They develop managers who are experts in the area They have support systems, new product development and financial stability

10 MANAGED SERVICES COMPANIES The “penetration” of managed services companies continues to grow. The penetration rates in the major market segments is: B & I: 80% – 85% Colleges and universities: 60% – 65% Health care: 45% – 50% Schools: 20% – 25%

11 MANAGED SERVICES COMPANIES The major companies include ARAMARK, Sodexho, and Compass. Other companies tend to be smaller, regional operators or operators that specialize in a particular segment (stadium feeding) Oddly, their names rarely appear in (or on) the facility itself so that the customer sometimes does not know which company operates the food service

12 BUSINESS AND INDUSTRY Business and Industry (or Business Dining) provides food service to company employees Business Dining is affected by the size of the work force and the health of the economy (or employment rate) It has the highest rate of managed service of all four segments.

13 BUSINESS AND INDUSTRY Food programs have proven to be very important to companies in recent years but… Companies have reduced subsidies in recent years Affected by commercial restaurant segment Many companies specialize in Business Dining such as Guckenheimer and others

14 TRENDS IN BUSINESS AND INDUSTRY Aggressive marketing Organic growth More options for diners More branded concepts Innovative menus Grab n’ go

15 COLLEGES AND UNIVERSITIES Foodservice on college and university campuses is necessary even if the campus is non-residential Food services must not only accommodate students but also faculty, staff and visitors Where “board plans” were once the rule, now there are many options

16 COLLEGES AND UNIVERSITIES College and university food service is affected by demographics, students living on campus, and food quality, among others The introduction of brands has been the biggest factor in recent years (national and proprietary) Most college and university programs are managed by contractors and the penetration rate continues to increase Some large schools that are still self- operated include Purdue, Penn State, and Michigan State University

17 TRENDS IN COLLEGES AND UNIVERSITIES Healthy segment Universities are trying harder to attract nontraditional students New brands (Starbucks) More choice Comfortable/multi purpose dining areas

18 HEALTH CARE FOOD SERVICE This segment includes hospitals (large and small) and nursing homes Food had always been important in this environment but has become more important in recent years The presence of Dieticians makes this segment different Dieticians are professional qualified individuals who manage the nutritional aspects of food service

19 HEALTH CARE FOOD SERVICE Hospitals are taking food more seriously as a result of: (1) competition; (2) customer feedback and; (3) becoming more “business like” Health care has sophisticated facilities and systems as well as unique challenges Only about 50 % of health care food service facilities are outsourced but increasing

20 TRENDS IN HEALTH CARE FOOD SERVICE More emphasis on retail Introduction of brands Cost reductions – doing more with less Revenue enhancement (catering, cooking events) Growth!

21 SCHOOL FOOD SERVICE School foodservice serves two functions: (1) proving food to school children and; (2) taking care of underprivileged children through federally assisted meals This is accomplished through subsidies and government food programs Some systems feed 1 million children a day Again, participation rates are important

22 SCHOOL FOOD SERVICE Lowest percentage of contractor penetration Lower profit margins Specialized market Large systems (650 schools in Chicago) Challenges with restrictions and diet

23 TRENDS IN SCHOOL FOOD SERVICE Lower enrolments Fighting child obesity Greater responsibility of food service programs Growing importance of education Celebrity involvement

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