University Dining Contracts:
Managing Vendor Investments
Written by:
Angela Joyce, Director of Client Services
The Solution Design Group, Inc.
January 2014
1
Introduction
Many colleges and universities contract their dining operations to one of several national vendors, including Sodexo,
Chartwells and Aramark. Dining operations are complex by nature and auxiliary and business managers must be
able to track varying types of data associated with each contract. Key factors such as sales by location, meal plans
statistics and expenses must be carefully tracked. Other important financial measures include commissions,
scholarships, catering funds, and cash versus card transactions. Because universities are seeking to maximize
revenue, measuring and monitoring all types of dining revenue is a key component of managing a successful dining
operation.
Dining Investments
Many dining contracts are long-term, often
spanning ten to twenty years. A significant source
of income from long-term dining contracts can be
investments from the vendor. Investments are
provided to a university, either directly or
indirectly, and can include cash donations, new or
renovated dining facilities, or purchases of dining
and related equipment.
Catering
Funds
Scholarships
RevenueVision®
Commissions
In return for vendor investments, institutions
commit to a certain contract term in order that
vendors can realize long-term profits. Once an
Investments
investment is made, the funds are amortized, or
“paid off” over a period of time. If a university
terminates a contract earlier than the agreed term,
it must refund the portion of the investments that have not been paid off (the unamortized amount).
One example of a dining investment is a lump sum of $1,000,000 provided to a university for use in a dining hall
renovation. The investment must amortize over a ten-year period on a monthly straight-line basis. After one year,
1/10 of the investment – or $100,000 – is fully amortized.
A different example of a dining investment is a direct vendor purchase of new kitchen equipment of $400,000 that is
to be amortized over a five-year period. The money is not directly provided to the university, but must still be
amortized. In this example, the investment, monthly amortized amount, and schedule are different from the lump
sum investment and must be tracked separately.
Challenges of Managing Dining Investments
There are specific challenges with tracking investments and associated amortizations. There are often multiple
investments made over time by the dining vendor and those must be tracked individually. Each investment is a
different amount, the monthly amortization is a different amount, and the amortization schedules are of different
lengths and starting dates. The amortized and unamortized balances must also be maintained for each investment.
Contract managers typically use spreadsheets to track the details of investment and amortization data. However,
January 2014
Copyright © 2014, The Solution Design Group, Inc.
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this manual method is time-consuming, tedious, and prone to errors.
cumbersome over time.
Spreadsheets can become large and
Managing Dining Investments and Amortizations with RevenueVision®
RevenueVision®, a cloud-based contract and revenue management solution from The Solution Design Group, Inc.
(SDG) is currently being used by over a dozen universities to manage auxiliary and procurement contracts. The
software allows university contract managers to track all of the important data associated with their contracts,
including sales, commission and other revenue, dates, and contract provisions.
As part of the deployment of RevenueVision®, several universities have configured the system to manage
investment funds and corresponding amortization schedules on their dining contracts.
In late 2011, The University of West Florida (UWF), located in Pensacola, deployed RevenueVision® to manage their
dining, vending, bookstore and other auxiliary contracts. UWF entered into a new dining contract in June 2012. At
the start of the contract, a large lump-sum investment was made by the vendor. Tracking the amortization of that
investment was a priority for the UWF Auxiliary Services director. The a system was setup with a yearly amortization
schedule for the life of the investment with both the monthly and annual target amounts. Then the system’s
schedule feature was configured to automatically post the monthly, straight-line amortization. The process is fully
automated and requires no data entry or maintenance by the UWF contract manager. Through RevenueVision®
reporting, the manager can determine “target to actual” totals quickly and easily when needed.
The University of Central Florida (UCF), located in Orlando, deployed RevenueVision® in November 2012 to manage
over two dozen auxiliary and concession contracts. At that time, the contract manager was using spreadsheets to
manage six separate dining investments. Each of these funds was a different amount and amortized on a different
schedule. SDG configured RevenueVision® to track each of the six investments and through the use of the schedule
feature to automatically record the monthly amortization amounts. Using RevenueVision® reports, the contract
manager can quickly determine total amortized amounts for each investment by fiscal or calendar quarter, fiscal or
calendar year, or overall totals from the amortization start date. The system can also report the remaining
unamortized totals for those same periods.
RevenueVision® Benefits
Through the use of RevenueVision®, both UWF and UCF were able to eliminate lengthy and cumbersome
spreadsheets and track their investment data in a centralized location. They now have an automated and accurate
process in place for monitoring investments and recording amortizations. No manual intervention or data entry is
needed, so staff time is saved. UWF and UCF contract managers and auxiliary staff can readily access whatever
investment or amortization data that may be needed quickly and easily.
Dining amortization is just one of the
ways that RevenueVision® can help to improve operational efficiency and reduce financial and reputational risk.
For more information about RevenueVision® or to request a demonstration, please contact:
The Solution Design Group, Inc. – 407-382-1959 x 107 or at info@RevenueVision.com
January 2014
Copyright © 2014, The Solution Design Group, Inc.