When onsite dining operators go looking for brands to put into their dining mix, they traditionally looked either to established national names like Subway and McDonald's or they tried to create their own. But now, with authenticity and “local sourcing” two powerful industry trends, some operators have turned to an alternative that's been under their noses all along: local restaurant brands that may not be known nationally but have powerful resonance in their particular markets. In this special section, FM looks at three examples of this phenomenon in B&I, higher education and healthcare.
Microsoft: Emphasis on Local Flavors
Independent restaurateurs provide unique benefits to the onsite dining mix.
For a global enterprise, Microsoft sure is loco about local. At least, that seems to be the case when it comes to its onsite dining mix.
“Microsoft is a big company here in Seattle, and this is an opportunity to give back,” says Microsoft Senior Services Manager Mark Freeman. “We also want the choices to be restaurants our employees can relate to, can recognize as local, while also giving the vendors a chance to build their local businesses.”
Of course, unlike national chains with established protocols for licensing and franchising their concepts, local independents rarely have any experience with extending their operations — much less to an onsite environment, and much, much less to an onsite environment with as massive a scale as Microsoft, where some 25,000 meals a day are served at its headquarters complex alone.
Some are literally mom and pop establishments that have earned local reputations for their food but remain fairly informal when it comes to other aspects of their operations. Freeman says that is an understood part of the package, a necessary tradeoff for the authenticity and variety offered by the local entrepreneurs.
The process for picking the concepts is as straightforward as it is meticulous. “We start by surveying our employees annually,” Freeman explains, “asking them what concepts they like when they go out. We take those results, look at the local market and see what's available. Our due diligence looks at their finances and their health department scores, and we inspect their facilities so that we are satisfied with their sanitation practices and their understanding of the importance of food safety. We go through the checklist and narrow it down to the top two or three in each menu category.”
The deal is fairly straightforward for those that secure a place. The operator serves dishes from its established menu, does its own procurement (for authenticity) and provides its own labor. Microsoft pays the space and utility costs and owns the equipment.
In return for the free rental and equipment, the operators are required to charge menu prices at least 10 percent lower than they do for the same item in their street operations.
Microsoft's Local Brands Program was launched soon after Freeman took over management of dining operations for the company in 2005. From an original group of six concepts, the program has mushroomed to encompass 28 at the headquarters complex in Redmond, WA, plus at least one local favorite at each of the company's five other U.S. locations where it offers onsite foodservice. Most recently, another 14 local concepts debuted when Microsoft opened its new West Campus Commons in late April.
Early in the Local Brands Program's life, Freeman had to approach the candidates to pitch the opportunity. Now, as word has gotten around, it's starting to become the other way round.
He says he keeps a number in the queue in case one of the established operators pulls out. The approach is to keep a consistent cuisine mix without duplication. So only one pizzaria can operate at the Commons at a time, for example. This also lets Microsoft keep the same equipment in a station even if the operator changes.
For the local restaurateurs, there is the prospect of more sales. For some, it also means adding a new daypart if their primary location is mainly for dinner business. They also get a chance to participate in Microsoft's lucrative campus catering business. Those are made through the central catering office.
Catering production is handled at the station of each concept. All product is delivered to a common receiving and storage space located in the Commons' basement area, and then transported to the different stations.
The Local Brands Program, already the staple of the main campus dining program, received extra emphasis when West Campus opened a few months ago.
DON'T CALL IT A MALL…
Sitting just across Hwy. 520 west of the Redmond headquarters campus, West Campus is the latest word in American corporate community building. Designed to house Microsoft's Entertainment and Devices division (X-Box, Zune, etc.), it consists of four office buildings arranged around a central “Commons” that consists of three buildings housing an array of restaurants, stores and retail services.
“Our intent,” Freeman explains, “is to help our employees be more productive. When they need a break, they can come to the Commons, which serves as a kind of town square. There, they can eat, do their banking, go to the post office, even buy a cell phone or get a massage — all without leaving the campus. One local report showed one of our employees checking her e-mail while getting her hair done. I think that perfectly captured what the Commons is all about.”
The decision to utilize the Local Brands Program to fill out the dining mix reflects Microsoft's emphasis on making the Commons a unique destination.
The local vendors include Typhoon, one of the Local Brands Program's biggest success stories. Typhoon Restaurant Group principals Steve and Bo Kline developed a Typhoon offshoot for West Campus Commons called Streets of Asia. It is actually a series of four distinct station concepts — Street Vendor, Sushi, Noodle Bowls and Eastern Grill — each with its own menu focus.
Acapulco Fresh, a local Mexican chain whose Microsoft location has proved highly popular, renamed its existing main campus location Echo's (Echo is the restaurant's popular lizard mascot). The Acapulco Fresh brand now graces the new Mexican concept at West Campus.
Two other West Campus concepts — Quincy's and Steamers — are brands of a local restaurant management company called Consolidated Restaurants, which also operates the nationally known Metropolitan Grill steakhouse concept. Quincy's, a burger concept, and Steamers, locally known for its seafood, are both well known in the Seattle area (in fact, Quincy's has a location near Seattle's famous Space Needle landmark).
Perhaps the centerpiece of the dining mix on West Campus Commons is Pike Place at the Commons, which was developed in partnership with Seattle's famous Pike Place Market. The original Pike Place Market consists of a series of food stations, art exhibits and produce, and the West Campus Commons iteration uses the logo and themes of that famous venue — even including the iconic big clock — to brand its version.
Like the original Pike Place Market, Pike Place at the Commons incorporates a series of food station concepts: an espresso bar, a juice bar, an ice cream bar featuring local product, a full bakery, a deli, a salad bar and a hot food bar with rotisserie. There are also plenty of grab-and-go options for those on the run. Around the broader area, the Commons has replicated the look and feel of Pike Place Market through a series of retail stands featuring iconic Pike Place vendors like Chukar Cherries and Market Spice Tea.
“As you walk though the space, you get the feeling of being in the actual Pike Place,” Freeman offers.
Elsewhere in the Commons dining mix are stations from local restaurants like Flying Pie Pizza, Mayuri and Soups, which has a location in a downtown Redmond office building (“our architect is in that building and we just stumbled into it one day and loved what they offered,” Freeman says). Soups menus 10 different soups a day along with different breads. It also runs an adjacent station called Chandy's, which has an organic salad bar, a hummus bar, organic meats and roasted vegetables.
Finally, there is Spitfire, which has its own building. The concept is another import from the Pike Place Market area, where it has a successful sports pub outlet. On the West Campus Commons, Spitfire is billed as a sports bistro and operates as the Commons's only tableservice restaurant during the day. At 3 pm daily, it becomes a catering venue open to groups of Microsoft associates by reservation.
The groups can reserve Spitfire for any of three set time slots each day: 3-5 pm, 5:30-7 pm and 7-9 pm. There is no cash exchange. All food and beverages, including beer, wine and spirits are charged to the group. Freeman says Spitfire is averaging about one group a day in the early going, while the restaurant does an average of two turns daily during lunch.
MIT: Independents Prosper Among The Big Boys
While all three big contractors operate on campus, the locals rule one food court.
The dining program at the Massachusetts Insitute of Technology is a pretty crowded place. Campus Dining Director Richard Berlin oversees a mix that includes offerings from each of the Big Three dining contract management companies — Sodexo, Aramark and Compass Group subsidiary Bon Appetit — along with some small local operators who have enriched the campus dining mix with their own brand of menu offerings.
Most are concentrated in an eclectic food court in the school's Stratton Student Center, where they share space with a couple of national brand franchise outlets (Subway and Dunkin Donuts). “We included the national brands because I think a food court needs a high-profile brand or two for the same reason that malls have anchor stores,” says Berlin. “The familiarity brings people in.”
The food court in question used to be operated by a contractor that had several stations in the mix with common beverage, disposables and condiments area and a single checkout. It was underperforming in Berlin's estimation, so he changed it to a marketplace type setup with self-contained station concepts, each with their own checkout.
The new approach has been very successful, tripling revenues from the previous approach.
Among the stations in the Lobdell Food Court are Sepal, a Middle Eastern concept, and Shinkansen, a Japanese concept. Both were developed and are operated by local businessmen.
Sepal had been a very popular, award-winning eatery in nearby Watertown. “I got a lot of recommendations to bring him in,” Berlin laughs.
Shinkansen was developed by the former sushi chef for one of MIT's contractors. “He was interested in doing some Asian food for us so we worked with him and a friend who was a chef at a local restaurant to develop the concept for Shinkansen,” says Berlin (Shinkansen is a Japanese term that refers to the country's famous bullet trains, implying that the eatery's service is similarly speedy). The restaurant serves a mix of teriyaki and sushi dishes.
Elsewhere in the Stratton Student Center are Anna's Taqueria and Cambridge Grill. Anna's Taqueria is a local Mexican multi-unit with six locations serving burritos, tacos, quesadillas and other Mexican quick-serve favorites (“it's like Chipotle, only better,” quips Berlin). Cambridge Grill, which specializes in grilled sandwiches, burgers and pizza from a stone oven, was developed by an individual Berlin first got to know when he worked in the dining services department at Duke University. The individual also franchises the Dunkin Donuts unit that runs alongside the Cambridge Grill on the student center's first floor.
Outside Stratton, the campus also boasts Pacific Street Café, a kind of Euro bakery restaurant serving panini sandwiches, hot entrees and pizza along with specialty coffees and baked goods. Located on the ground floor of a graduate student residence complex near the campus, it opens to the street and draws significant commercial traffic though it is technically a part of MIT Dining Services. Pacific Street Café was developed and is operated by a former operations manager at the locally famous Carberry's Bakery & Coffee House.
Berlin says he originally brought the idea for using local restaurateurs and entrepreneurs from Duke. “It made sense here because the venues are smaller and people were looking for certain price points the big providers were not giving,” he says. “Also, the local vendors give you much more diversity in the menu mix. For example, the Middle Eastern specialties you see on Sepal's menu, for instance, would not even be on the radar screen of an executive chef at a big contractor. Finally, it's also nice to support the local community”
Berlin says finding the right concepts is an inexact science. He uses student surveys to identify and gauge interest in specific concepts, which improves the prospects but doesn't guarantee success.
Sometimes it's simply an ill fit. MIT's first foray into independent restaurateurs was Arrow St. Crepes, a highly regarded and award winning operation near Harvard Square. The concept “did okay,” but it was clearly having trouble keeping up with the volume demands of a university environment because of its to-order operational approach. When it couldn't adapt it was replaced. The successor in the location, Anna's Taqueria — also a highly ranked student survey choice — has been a home run.
Berlin has come to appreciate the importance of a menu that works in a high-volume environment. Some, like Arrow Street Crepes, though excellent, can't adapt while others like Sepal have. The Middle Eastern eatery had been famous for its falafel in its commercial location, but when discussing a move to expand to MIT, Berlin also urged a menu expansion into other Middle Eastern items. It has been a successful transition and these days, falafel isn't even the best selling item on the menu.
The operators at MIT are typically on five-year deals with options to extend. Berlin says the five years are needed both to gauge a concept's staying power and to give the operator fair opportunity to pay down their investment in the space. For volume production needs, some operators get their own section of a large former central kitchen space in the student center basement that has been divided up for the purpose. Others have kitchen spaces in other parts of the building. One even operates from a former dishroom converted into a kitchen.
Contract terms vary but are generally tied to commissions based on revenues generated. Berlin says straight monthly leases don't recognize the cash flow issues created by slow periods when classes are not in session.
MIT approves menus and pricing, though the competitive environment makes raising prices difficult anyway. To augment their services to MIT, the independent operators do get to participate in on-campus catering opportunities.
PeaceHealth: Local Eatery Boosts Dining Variety
Restaurant's healthful menu just what the doctor ordered.
Hospitals are increasingly careful about the kind of message they send with their onsite food options. While it is impractical to remove everything “unhealthy,” there is a certain institutional responsibility to emphasize healthier choices.
So when the PeaceHealth healthcare organization was deciding what dining options to offer in its planned new Sacred Heart at Riverbend hospital in Eugene, OR, it focused only on those providers that had menus consistent with healthful lifestyles.
But what made the search even more unusual was that the dozen or so RFPs sent out to solicit bids for the planned restaurant space on the new hospital's first floor were sent primarily to local independents.
“We made up a list of local restaurants we felt would fit what we wanted,” says Tamara Miller, director of property planning and development for PeaceHealth. “We put Café Yumm on our list because many of us loved it. It's a great local restaurant and a lot of people around here love that kind of food. As it turned out they were very interested.”
One reason for their interest was that Café Yumm — the eventual contract winner that also has eight other locations around Oregon — was founded in part as a reaction to an encounter with food in a hospital. Café Yumm co-founder Mary Ann Beauchamp had that experience in 1964 when her father had a heart attack. “I knew even at 14 there had to be a healthier alternative to the food the hospital was serving to a sick man,” she recalled years later.
The eatery is also familiar to and with many of Riverbend's staff, as one of its locations stood just outside the hospital's former location and was a popular lunch stop (the new Riverbend opened in August of 2008, moving everything over from the hospital's old location). That experience raised the comfort level for the restaurant's operator in moving into the unfamiliar environment of an onsite location.
“Being in a hospital that's new and being so health-oriented we knew we'd be embraced,” says Zack Hegge, who owns the franchised location at Riverbend. “We knew the customers and what they like.”
Café Yumm is a definite “healthier alternative.” The eatery's menu of bento boxes, rice bowls, soups and salads made with organic ingredients is, literally, just what the doctor is likely to order, both for him/herself and for patients. It is also environmentally friendly, with biodegradable disposables, and all trash generated by the facility is sorted and recycled.
The space occupied by the Riverbend Café Yumm does have its challenges because it was not necessarily designed to accommodate a foodservice outlet. It has no hood vent, for starters, but the location has adapted. “We didn't modify our menu at all,” says Hegge. “Instead, we modified the equipment we use to prep and cook the food.”
The space is leased with Café Yumm paying the hospital rent. It competes with the main cafeteria and a coffee shop run by Riverbend's internal nutrition services department. Café Yumm currently averages about 5,000 transactions a month. Offsite alternatives are limited as there are no restaurants nearby within easy walking distance of the hospital and staffers — most of them hourly employees — usually get only a half hour for meal breaks.
Because of the needs of the staff across the day, Café Yumm operates from 10 am to 10 pm daily. It currently generates about 200 transactions a day, but hopes to boost that in early July when it installs POS readers that will allow it to participate in PeaceHealth's electronic payroll deduction option.
“The ID badges double as payment cards,” explains Miller. “Many of our staff don't carry purses or wallets around because they're coming from surgery or are in scrubs, so using the card is a great convenience because everyone always has that with them.”