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 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.
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?
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.
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
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
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
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)
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
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%
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
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.
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
TRENDS IN BUSINESS AND
INDUSTRY
 Aggressive marketing
 Organic growth
 More options for diners
 More branded concepts
 Innovative menus
 Grab n’ go
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
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
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
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
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
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!
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
SCHOOL FOOD SERVICE
 Lowest percentage of contractor penetration
 Lower profit margins
 Specialized market
 Large systems (650 schools in Chicago)
 Challenges with restrictions and diet
TRENDS IN SCHOOL FOOD
SERVICE
 Lower enrolments
 Fighting child obesity
 Greater responsibility of food service
programs
 Growing importance of education
 Celebrity involvement