Performance Based Studies Research Group
ASU Food Services Case Study
www.pbsrg.com
Best Value System
PHASE 1
Identification
of Potential
Best-Value
PHASE 2
Pre Planning
and
Risk Management
PHASE 3
Management
by Risk
Minimization
Traditional Selection vs Best Value
Selection
• Traditional (Management)
• Best Value (Leadership)
•
•
Qualifications
Program
•
•
•
•
Interview
Financial projections
•
•
•
No linkage
•
Past Performance
Risk Assessment (don’t control) /
Value Added
Interview
Financials (simplified and proven)
Linkage into PP/QC and Risk
Minimization
Keys to Selection
• Non-Technical
– Risk focused
– Minimize decision making
– Data and binding information
– No “dining program/menu”
– No marketing
• Change
– Release of details and control
• 60 page RFP (compared to 200 page for similar service)
• Intent not requirements
– Differentiation – less is more
– Process Logic replaces experience
• Minimal technical knowledge needed
RFP Selection Phase
• Pass/Fail Criteria
– Executed Mandatory Proposal Certification
– Willingness to execute
– Pro Forma Financial Projections
• Scored Criteria
– Risk Assessment and Value Added Plan (5pages)
– Management Interview
– Past Performance Information
– Financial Compensation (1page)
Scored Criterion:
Past Financial Data (vs Time)
•
•
•
•
•
•
•
•
•
•
•
Total return (in dollars $)
Total return (as a percentage % of sales)
Retail revenue (in dollars $)
Catering revenue (in dollars $)
Voluntary meal plan revenue (in dollars)
Total sales per labor hour
Total enrolled student population
Total number of meals per enrolled student
Total number of retail meals per enrolled student
Meal plan average missed meal percentage
Customer satisfaction (for students)
• Average
• Delta
• Slope
Pre-Planning and Quality Control Phase
Scored Criterion:
Financial Proposal
• Financial Proposal Worksheet
– Commissions offered to the University
• Meal plan sales
• Retail sales
• Subcontractor sales
• Catering sales
• Summer Conference Dining sales
– Capital Investment Plan
– Equipment Replacement Reserve
– What is given here will become part of the final contract
Financial Proposal Worksheet
Pre-Planning and Quality Control Phase
Scored Criterion:
Interview
• The ASU interviewed the key personnel. This included:
–
–
–
–
–
On-site General Manager
General Manager’s Immediate Supervisor
Regional Vice President
Director of Catering
Executive Chef
• Interviews were conducted individually
Selection Phase Results
No
1
2
3
4
5
6
7
8
9
10
Summary Criteria
RAVA Plan
Transition Milestone Schedule
Interview
Past Performance Information - Survey
Past Performance Information - #/Clients
Past Performance Information - Financial
Financial Rating
Financial Return - Commissions
Capital Investment Plan
Equipment Replacement Reserve
Out of
10
10
25
10
Raw #
10
10
Raw $
Raw $
Raw $
Finanical Totals
$
$
$
$
A
5.9
5.2
15.8
9.8
5.7
7.0
4.0
30,254,170
14,750,000
7,213,342
52,217,512
$
$
$
$
Vendor
B
7.1
7.0
16.8
10.0
3.0
8.7
8.0
60,137,588
20,525,000
4,100,001
84,762,589
$
$
$
$
C
6.3
6.3
13.5
9.8
4.4
6.9
8.0
64,000,000
12,340,000
8,171,811
84,511,811
A financial difference of 62.3%
No
1
2
3
4
5
6
7
8
9
10
Summary Criteria
Weight/Out of
RAVA Plan
28
Transition Milestone Schedule
2
Interview
25
Past Performance Information - Survey
9
Past Performance Information - #/Clients
1
Past Performance Information - Financial
15
Financial Rating
5
Financial Return - Commissions
7
Capital Investment Plan
6
Equipment Replacement Reserve
2
100
Pre-Planning and Quality
A
16.5
1.0
15.8
8.8
1.0
10.5
2.0
3.3
4.3
1.8
65.1
Control
Vendor
B
19.9
1.4
16.8
9.0
0.5
13.0
4.0
6.6
6.0
1.0
Phase78.1
C
17.7
1.3
13.5
8.8
0.8
10.4
4.0
7.0
3.6
2.0
69.0
Best Value/PIPS System
This is the most critical phase of the process
PHASE 1
Identification
of Potential
Best-Value
PHASE 2
Pre Planning
and
Risk Management
PHASE 3
Management
by Risk
Minimization
Paradigm Shift
• Role change for the Vendor
• Becomes the leader
• Generates the “baseline plan” – sets optimal scope and schedule
– Optimal for both the client and the vendor (win-win)
• Identifies, prioritizes, and minimizes all foreseeable risks
• Begins holding the client accountable for their impacts
Paradigm Shift
• Role change for the Vendor
• Risk Management Plan becomes a contractual document
• Measurement of deviation from the baseline plan is the weekly risk
report
• Must learn the new paradigm to compete
Paradigm Shift
• Role change for the Client
• Must release control to the expert
• Becomes the facilitator
– Identifies constraints & requirements
– Provides need data to the vendor
• Provides any concerns/risks – to be addressed by the vendor
• Review Weekly and Monthly vendor reports
Pre-Award Period Deliverables
•
Risk Management Plan
•
The RMP should contain the following:
1. Scope
• Clear and detailed service scope (what is and what is not included)
• Detailed food services program
2. Uncontrolled Risks List
• List of risks Proposer does not control with plans to minimize
3. Identified Risks List
• List of all previously identified risks (by other proposers, user, and
client) with plans to minimize
4. Client Action Item List
5. Agreed to performance metrics with baseline numbers
6. Weekly Risk Report
7. Finalized transition schedule
8. Metric reporting schedule (weekly and monthly)
9. Other: agreed to value adding options, original RAVA Plan, Interview
minutes, etc…
16
Vendor Performs Risk Management
• RMP– became the contract
– Focus on risk the vendor cannot control and their minimization
– Seven (7) Primary Risks (26 sub/general risks)
• Bad Debt
• Meal Plan Counts
• Asbestos Abatement
• Construction Delays
• Loss of Sites
• Client change in start date
• Utility capacity
– Risk minimization steps
– Identification of when the risk reverts to client with level of impact
Example: Bad Debt Collection
Bad Debt Collection Result
• ASU not certain about debt collection
• Contract formed with two options (if and if not)
• Once impact shown, decision made to eliminate risk and have ASU
collect debt
• Risk identified – risk eliminated
Helping Client Efficiency
Pre-Planning and Quality Control Phase
Best Value System
This is the 2nd most critical phase of the process
PHASE 1
Identification
of Potential
Best-Value
PHASE 2
Pre Planning
and
Quality Control
PHASE 3
Management
by Risk
Minimization
Performance Metrics
• Financial
– Sales
– Commissions
– $/Labor-hour
• Performance
–
–
–
–
–
–
Risks
Student Satisfaction
Customer Satisfaction
Missed Meal Factor
Student Worker #
Sustainability (tonnage)
• Expansion
– Catering $
– Retail $
– Voluntary $
Pre-Planning and Quality Control Phase
Year One Results:
Information Environment
No
1
2
3
4
5
6
7
Category
Total Revenue ($M)
Total Return & Commissions ($M)
Captial Investment Contract ($M)
Capital Investment 2006 v 2007 ($M)
ASU Administration (# of People)
Customer (Student) Satisfaction (1-10)
Mystery Shopper Satisfaction (1-10)
FY 06-07
Incumbent
$
27.02
$
2.17
$
14.75
$
0.26
7
5.2
NA
Year 1
Aramark Difference % Difference
$
30.83 $
3.81
14%
$
2.67 $
0.50
23%
$
30.83 $
16.08
109%
$
5.70 $
5.44
2092%
1.5
-5.5
-79%
7.3
2.1
40%
9.6
---
– 2008 results were generated despite…
• Memorial Union Fire – 80% of Tempe campus dining
• Unrealized Meal Plan Counts – Keystone to financial proposal
• Extreme difficulty in “finding” prior numbers
– Results shown are normalized for available data from incumbent
A Successful Transition:
Replacing a 52 year incumbent
•
Aramark successfully transitioned the largest dining services in the history
of Arizona State University in one month
– Over 25 venues
– Over 150 points of sale
– 600+ personnel
– Over 18 different construction projects
• All construction finished on time and within budget
•
400 of 600 employees could not prove citizenship and had to be replaced in
30 days
•
Raised average wage rate
•
Aramark spent $350K to refund students who did not retain their remaining
balances held by the incumbent
Issue: MU Fire
• Risk management plan defines actions
• Communication is minimized
• Vendor acts in best interest of the client without direction
• Aligned environment
Memorial Union (MU) Fire
Can the vendor act in the best interest of the client
without a “directing” contract?
Thursday Afternoon - 11-1-07- Fire in the MU
(3:11pm email sent to all ASU)
• Aramark employees first to see fire
• Aramark activates fire alarm
• Aramark lead the evacuation
• Aramark (John J and Jim J) go back in and
find people not evacuating – get them out
• Aramark modifies all markets to accept meal
plan cards (usually only dining areas)
• All meal plan students have access
29 to
additional food in a matter of hours
Thursday Night – 11-1-07
• John J gets call at 9:00pm to access the building
•
Gets two laptops and 600 paychecks needing to be distributed
© PBSRG 2008
30
Friday Morning – 11-2-07
• MU closed
• Investigation switches from Tempe and ASU authorities to ATF
• Treated as a criminal investigation
• Rumors abound…
31
© PBSRG 2008
32
© PBSRG 2008
33
© PBSRG 2008
Friday Morning 11-2-2007
Friday Afternoon – 11-2-07
• Aramark begins switch over to nearby gym (PE West)
• Aramark organizes resources
• Aramark begins making the calls and bringing the necessary items in
(inventory lost at MU ($390,000) – all was replaced)
34
© PBSRG 2008
Saturday Morning – 11-3-07
• MU employees allowed to get items left behind in building
• Gym begins being prepared for MU
• Contractors brought in
• Protective floor installed
© PBSRG 2008
35
Saturday Afternoon and all night
• GYM prep’d for electronics
• Tables/chairs/booths…etc cleaned and transferred over (Belfor)
• Kitchen ordered, refrigerator/freezers ordered
• Vendors contacted (papa johns, Chic-fil-a…)
36
© PBSRG 2008
Work takes place around the clock
37
© PBSRG 2008
38
© PBSRG 2008
Sunday Morning 11-4-07
• Still transporting
• Still setting up
• Data hookups/cash register testing
© PBSRG 2008
39
Sunday Afternoon 11-4-2007
• Arranging gym
• Stocking
40
© PBSRG 2008
Can the client transfer risk and control to the
vendor?
Monday morning 11-5-07
• Open for business at 9:00 am
• Radio station was brought in
41
• Serving “grab and go” plus full convenience
store
© PBSRG 2008
42
© PBSRG 2008
Wed 11-7-07
• Freezer/refrigerator delivered
• Services expanded in gym (more hot food, etc)
43
Events cont.
• Tuesday 11-13-07
– Kitchen Set Up and serving food
• Tuesday
– Kitchen shut down by ASU permitting
• Wed 11-14 -07 - Tues 11-20-07 (six days) no permit issued (then
Thanksgiving)
• Wed 11-28-07
– Kitchen is up and running
44
Summary
• Aramark had very fast response and resolution
• Did not cease operation and look for direction (no contract directives)
• Utilized their Risk Management Plan and proactively mitigated the risk,
which was planned for before their service began
• Weekly report creates the documentation of how the risk is resolved
– Shows value added and vendor performance
45
Issue: Boarder Count Inaccuracy
• Client is typically the biggest risk
• Vendor should define reality for the environment, adjust
baseline plan when new dominant information arrives,
track impacts to the service
• Reversion and relationships
Issue Summary
•
Guaranteed boarder count incorrectly measured by ASU first semester of contract
– An error of 26% not found until Dec of first year
– RFP contained error in actual boarders at ASU as well
•
Year 2 the contract was adjusted to account for ASU boarder shortfall
– Additional Years and Additional Campuses
– Commissions Increased
– Capital Constant at Tempe Campus and some added for other campuses
•
Year 2 & 3 confusion on the boarder count process and expectation of client and
vendor
– BV process not followed
– Risk minimized by vendor innovations in efficiency and accounting
•
Year 4 (FY11) ASU was facing tremendous shortfall which would result in a $6.3M
penalty and a four year projected penalty of $28M, and a contract duration of
$107M
– Aramark adjusted contract to minimize risk for ASU
YR 1:ASU Boarder Count Inaccuracy
•
ASU transfers $ to Aramark for mandatory meal plan dollars at the start of
each semester
– ASU transfers anticipated meal plan # to Aramark
– Aramark sets purchasing, staffing, and operations
– ASU collects the meal plan $ from students
•
ASU has difficulty identifying the actual number of mandatory boarders
– July 1, 2007: 6,331
– August 25, 2007: 6,575
– October 15, 2007: 6,733
– December 21, 2007: 5,221
• 19 days after the last class and 1250 students (26%) below payment #
•
ASU claims overpayment to Aramark and request $1.8M back
•
Despite not being contractually obligated to re-pay ASU for the “over-advanced”
meal plan $, Aramark still returns $1.038M to ASU to maintain a favorable
relationship
ASU Boarder Count Inaccuracy
• Spring has difficulty as well:
– January 1, 2008: 5,504
– February 4, 2008: 5,504
– February 12, 2008: 5419
– April 3, 2008: 5,259
– May 1, 2008: 5,221 (1133 students below the number in the RFP)
• ASU claims overpayment to Aramark and requests $217K back
• The impact was ultimately agreed to be a wash as carried over from the
fall
• Agree to amend the contract for YR2+
What should have happened…
• Best Value operates off of the plan
• Year 1
– Not an operations issue, should have gone through contracts
– Contract had terms in place for resolution, these were ignored
– Plan should be followed:
• Penalty implemented
• Negotiations of deals for long term contracts in highly bureaucratic
environments is not efficient
– ASU request for contract amendment for future years
• Money, time, effort are the three variables
Issue: Engrained Stairway
• A relationship based example
• Risk is deviation from the baseline plan
• Weekly risk report tracks the deviation
• Without measurement, vendor is at risk
Stairway for Engrained
Restaurant
• ASU wanted a “eco-restaurant”
• Part of contract plan
• After fire, President wanted “signature stairway” up to the restaurant
– Signature stairways cost $1.4M
• ASU did not have $1.4M – wanted to use Aramark capital
• Non-revenue generating investment
• Aramark built the stairway – relationship based – but minimizing risk?
Amendment #5
Boarder Count Issues
Aggregate Amendment - History
•
ASU not able to meet guaranteed minimum boarder counts Fall 2007 and
Spring 2008 (first year of contract)
•
ASU desires to expand contract to all four campuses
– Aramark already working in good faith at Downtown location with major install
construction underway Summer 2008
•
ASU and Aramark agree to set amendment to fix ASU boarder shortfall for
future years and add other three campuses to contract
– Increase in commissions
– Increase in total capital – keep same ASU Tempe Campus original proposal amount
•
Aramark can no longer shift capital from Tempe to Downtown unless contract
amendment is signed
– ASU cannot move fast enough to finalize amendment so settle on Letter of Intent
– Letter of Intent Signed August 20 to all construction to continue and venue to open on time
Aggregate Amendment - History
• Letter of Intent clearly states:
– FY09 – Tempe only boarder count requirement of 5815
– ASU agrees and signs Letter of Intent along with Aramark VP
• Contract amendment signed (Amend #5) on Oct 9 – intended as
formalization of letter of intent
• Early Spring 2009 final Fall 2008 boarder numbers - Aramark realizes
ASU did not meet the required minimum boarder counts – penalty is
invoked per their understanding of the contract
• ASU objects to the penalty…claims not in shortfall but above the
minimum…
Amendment #5 –
Aggregate Boarder Count
•
ASU states that the 5815 boarder count in the amendment is aggregate
across all campuses, not just Tempe
•
Contract wording disputed as not being clear by ASU
•
Aramark disagrees, references Letter of Intent to show clarity
•
ASU states:
– A meeting was held with Aramark VP and ASU Assoc VP of Res
Life that changed 5815 number from Tempe only to all Campuses
– Letter of Intent is not a contract document
•
Aramark does not remember the call referenced by ASU as to where
they changed the original deal from the Letter of Intent
Amendment #5 –
Disputed Language
Amendment #5 –
References Table
What Happened Next
• Disagreement amounts to $521,000
• ASU agrees first two years are Tempe only but there is no clear
Tempe only number
– Table is titled for all campuses, so no Tempe number is available
• Begin to look for a best value, win-win solution
• Takes four months to find and settle on a solution but one was found
What Happened Next
Solution:
First Transaction
• ASU takes $521,000, 0% interest loan from Aramark – Loan is received as
un-invoked penalty of commissions of $521k (no money transfer)
•
ASU makes scheduled payments back to Aramark for loan amount across
2 years
In a separate transaction
• Aramark makes efficiency adjustments which result in savings of $333k,
these savings are paid back to ASU across two years in schedule
amounts
•
ASU uses some of left over capital savings from Aramark efficiencies on a
separate project to pay off remainder of $188k
$600,000
Aramark to ASU Loan – NO MONEY TRANSFERS
- Aramark invokes penalty, counts $521k as revenue
$500,000
$400,000
Money
$300,000
$200,000
ASU to Aramark Loan Payments
Loan Payments from Excess Capital
Aramark to ASU Payments from Operational Efficiencies
$100,000
$0
-$100,000
1
2
3
4
5
6
7
8
9
10
11
12
Month
13
14
15
16
17
18
19
20
21
What should have happened…
• Held the Required Summary Meeting before signing
• This meeting was, by consensus of ASU Res Life and Aramark not held,
at the opposition of ASU Procurement & PBSRG
• ASU claimed, ASU Res Life and Aramark held a separate, private
meeting, which became the basis for much of the disagreement in the
contract, explaining the terms
• Aramark had no recollection or information from this meeting
• For the lack of process application upfront, the risk was handled as well
as it could have been
Arizona State University
Dining Service: FY08 vs. FY09 (Overview)
No
1
2
3
Financial Performance Metrics
Catergory
FY08
FY09
Difference % Diff.
Total Revenue ($K)
$ 29,977.8 $ 33,135.6 $ 3,157.8
10.5%
Commissions on Total Revenue ($K)
$ 1,902.3 $ 2,011.3 $
109.0
5.7%
Commission %
6.35%
6.07%
-0.28% -4.35%
No
1
2
3
Performance Metrics
Catergory
FY08
Number of Mandatory Meal Plans Sold
5,361
Number of Voluntary Meal Plans Sold
2,128
Student Satisfaction Survery (1 - 10) (2x/yr)
7.34
FY09
6,159
2,882
7.27
Difference % Diff.
798
14.9%
755
35.5%
-0.1
-1.0%
Arizona State University
Dining Service: FY08 vs. FY09 (Specifics)
No
1
2
3
4
5
6
7
8
9
10
11
Financial Performance Metrics
FY08
Catergory
$ 8,915.5
Mandatory Meal Plan Sales ($K)
294.2
$
Voluntary Meal Plan Sales ($K)
$ 15,408.1
Retail Sales ($K)
$ 2,329.1
Catering Sales ($K)
$
Camp/Conference Sales ($K)
$ 3,030.9
All Other Sales (Subcontractors & Sushi) ($K)
$ 29,977.8
TOTAL REVENUE ($K)
$ 1,902.3
Commissions on Total Revenue ($K)
391.7
$
Subsidy - DPC, West & Polytechnic ($K)
Commissions Paid to ASU ($K) (Comm. less Subsidy) $ 1,723.3
6.35%
Commission %
FY09
$ 8,212.2
$ 404.1
$ 17,320.4
$ 2,526.5
$ 865.2
$ 3,807.2
$ 33,135.6
$ 2,011.3
$ 1,381.6
$ 629.7
6.07%
Difference
$ (703.3)
$ 109.9
$ 1,912.3
$ 197.4
$ 865.2
$ 776.2
$ 3,157.8
$ 109.0
$ 989.9
$ (1,093.6)
-0.28%
% Diff.
-7.9%
37.4%
12.4%
8.5%
-25.6%
10.5%
5.7%
252.7%
-63.5%
-4.35%
Performance Metrics
No
Catergory
1 Number of Mandatory Meal Plans Sold
2 Number of Voluntary Meal Plans Sold
3 Customer (Student) Satisfaction Survery (1 - 10) (2x/yr)
FY08
5,361
2,128
7.34
FY09
6,159
2,882
7.27
Difference % Diff.
798
14.9%
755
35.5%
-0.1
-1.0%
Aramark Value Added Analysis:
ASU Dining Service
$2,300,000 Efficiencies Added
$1,200,000 Results of feasibility study of all Residential Halls
$1,100,000 Saved ASU $ on Barretts construction costs
$95,200 Food Donations
$30,000
$45,000
$6,000
$6,000
$4,000
$3,000
$1,200
VDS Groundbreaking Catering Summer 07
Catering Donations
Foundations dinner
ASU Golf Tournaments - 4
Conference Support
TFA Bags
DPC Open House Event
$687,500 Other Donations
$300,000
$250,000
$70,000
$35,000
$32,500
Payment of commissions on lost revenue due to MU fire
Payment of the fire insurance deductible
Honored and accepted incumbent M&G balances outside of original scope of contract
Car Giveaway
Unrecoverable funds
$3,082,700 Total
YEAR 3
Performance Based
Performance Metrics – Combined ASU
FY 2010
Financial Performance Metrics
No
Category
YTD Prior Year ADJUSTED wk 6
Sep
YTD Actual
YTD Budget
Var Act. vs
PY
$ 12,531.2
$
Var Act. vs
PY %
Var Act. vs
Budget
Var Act. Vs
Budget %
$ 6,694.8
84.6% $ 2,078.0
16.6%
264.7
$
(18.1)
-4.6% $
40.7%
1
Mandatory Meal Plan Sales - Meals ($K) (Meal Swipes)
$
7,914.4
$
14,609.2
2
Voluntary Meal Plan Sales - Meals($K) (Meal Swipes)
$
390.5
$
372.4
3
Retail Sales ($K) (Sun $, M&G Vol, M&G Mandatory and Cash
$
&16,756.8
Credit Cards)
$ 17,656.1
$ 22,697.4
$
899.2
4
Catering Sales ($K)
$
2,475.5
$
2,502.0
$
2,733.4
$
26.5
1.1% $
(231.4)
-8.5%
5
Camp/Conference Sales ($K)
$
865.2
$
822.1
$
648.9
$
(43.1)
-5.0% $
173.2
26.7%
6
All Other Sales (Subcontractors & Sushi) ($K)
$
3,703.3
$
3,793.8
$
5,169.6
$
90.5
2.4% $ (1,375.8)
-26.6%
7
TOTAL REVENUE
$
32,105.7
$
39,755.5
$ 44,045.1
$ 7,649.8
23.8% $ (4,289.6)
-9.7%
8
Commissions on Total Revenue ($K)
$
2,011.2
$
2,413.2
$
2,673.5
$
402.0
20.0% $
(260.4)
-9.7%
9
Subsidy - DPC, West & Polytechnic ($K)
Commissions Paid to ASU ($K) (Commission on Total
Revenue less%Subsidy)
Commission
$
1,202.3
$
604.6
$
1,157.6
$
(597.7)
-49.7% $
(553.0)
-47.8%
125.0% $
292.6
19.3%
10
11
$
803.7 $
6.07%
1,808.5
6.07% $
1,515.9
6.07% $ 1,004.9
107.7
5.4% $ (5,041.3)
-22.2%
Performance Metrics
No
Category
YTD Prior Year YTD Actual
YTD
Budget
Actual vs
PY
Var Act.
Var Act. Var Act. vs
Vs
vs PY %
Budget Budget %
1
Number of Mandatory Meal Plans Sold
6,133
7,573
7,843
1,455
23.6%
-229
-2.9%
2
Number of Voluntary Meal Plans Sold
2,882
4,056
2,215
1,174
40.7%
1841
83.1%
Now What?
No Contract Adjustment - Next Four FY Look Ahead
Projected Reality
FY11
FY12
Guaranteed Students
9780
9910
Projected Students
7415
7778
Guaranteed Commission $3,209,892
$3,482,904
Penalty
($6,385,500)
($5,958,940)
TOTAL ASU $$$
($3,175,608)
($2,476,036)
FY13
10315
8000
$3,745,325
($6,694,980)
($2,949,655)
FY14
11400
8300
$4,168,761
($9,281,400)
($5,112,639)
TOTAL
41405
31493
$14,606,882
($28,320,820)
($13,713,938)
Generated Solution
• Switch from student count to revenue based
• Hopefully align meal plan pricing
• Maintained Capital, reduced guaranteed commission
• With revenue model, still projected to meet expectations
Amend #5
Current
Current
Amend #5
Reality
Amend #8 - 85%
Mandatory Boarders
156,875
124,901
137,167
Revenue MMP including DB
595,540
474,158
$499,066
Revenue Retail and Catering
700,775
557,944
$214,654
4,316
3,436
$10,872
0
0
$1,588
68,710
68,710
$39,230
Mandatory Boarders Comm
N/A
N/A
$34,660
Retail Commission @ 85%
N/A
N/A
$4,570
0
$ 107,551
$0
$68,710
($38,841)
$39,230
$34,800
$103,510
$34,694
($4,147)
$34,694
$73,924
Subcontractor OI
Subsidy
Total Commissions
Remedy - Every $25K equals cost recovery
Total Cash
Capital commitment - Original Contract
Total Value to ASU
Where we are now
• Close to completely outsourced
• Took time and education and diligence
• Operate from Weekly Risk Report (blank)
• Minimal Transactions / Minimal Communication
• Vendor is self managed, self reporting
– Set metrics to meet different user needs
ASU Dining Performance Summary
Criteria
Year 1
(From Incumbent)
Year 2
(From Year 1)
Year 3
(From Year 2)
Sales
14% Increase
11% Increase
24% Increase
Commission
23% Increase
6% Increase
20% Increase
ASU Management
Requirement
Reduced 79%
--
--
Student Satisfaction
37% Increase
1% Decrease
9% Increase
Example of Future Risk
• If we don’t hit guaranteed revenue:
– Not a operations issue
– Stick to the plan, enforce the agreed to penalties
– ASU to request additional contract amendment or
considerations
– If possible, Aramark to offer possibilities (if any)
and agree to idea exchange
– Entire resolution handled through contracts office
Questions???