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Outlook 2012: Business & Industry

B&I operators are focused on growing participation and accommodating the habits of a new generation entering the workforce.

Business Dining is the onsite segment most sensitive to the ups and downs of the economy. It suffered in 2010-11 as financial services and pharmaceutical companies downsized and as uncertainty caused more employees to brownbag meals from home.

2012 looks brighter to virtually everyone, with a mild resurgence in manufacturing, continuing growth in technology-company employment and catering in a modest recovery. Another bright spot: the tough environment of recent years made providers more efficient in managing operations; as foodservice spend returns, incremental dollars will contribute more to profitability on a flow-through basis than just a few years ago.

Further penetration of existing accounts is the top priority of B&I providers. “Participation is king and a great P&L always starts with the top line,” says Rick Post, CEO of contract foodservice, Compass Group North America.

Penetration efforts often include a focus on extensions of existing programs, like conference or coffee services, even including “full site” and technical services. Penetration goals have also caused providers to re-think “shutdown periods” in cafés as they look to take advantage of the so-called “snacking daypart.”

The workforce is getting younger as boomers slowly move out of the workplace and with incoming Millennials exhibiting different dining habits.

“They eat more frequently, when and where they want, and are more diverse in their ethnic traditions,” says Gary Crompton, president of Aramark's Business Dining Group. Business dining can learn from the way retail venues in higher education have catered to these customers, he adds.

“Many consume heavier entree-based lunches that tend to fulfill the need for a main day meal,” agrees Jay Silverstein, vice president of conference and dining services at Credit Suisse. “Then they graze in the evening and don't have to go home and cook.”

Tweeting the chef. “The way business operates today is a baby boomer model, run by them, designed by them, serving them,” adds Mark Bickford, president of business and industry solutions, Sodexo.

“With the Gen Ys and Millennials entering the work force, technology will have an immense impact. They don't even like to swipe credit cards, but want to do it all on their smart phone. They don't necessarily want to meet the chef, but they do want to be able to tweet the chef.”

In Silicon Valley, high tech companies are again waging a war for top talent and perks subsidized food and other amenities are in demand. The same trend is evident in other technology hot spots like Portland, Seattle and Austin.

Some B&I clients are re-thinking the way they oversee contracts. As subsidies elsewhere have disappeared, some are finding they need a liaison who does more than simply administer foodservice contracts; he or she also needs to competently monitor and evaluate service levels across locations and ensure they adequately meet the needs of employee populations. Most clients are seeking greater transparency in contracts, with terms growing shorter and large clients looking for dashboard approaches to provide customized oversight metrics.

Situations where real estate management companies have sought to bundle a client's foodservice contracts with those for building maintenance, environmental services, etc. are becoming more common. They are also causing both clients and providers to flex their models as they seek productive operating relationships.

Among the “Big Three,” Sodexo has made the most aggressive move to itself enter the broad service business, while Aramark and Compass Group have tended to seek more traditional “partnering” arrangements with major real estate management players like JCI, CBRE and Jones Lang LaSalle.

Providers emphasize that effective managing agent relationships require that they have a “seat at the table” in negotiations with clients. They also say clients are learning that foodservice cannot be treated as a commodity if it is to satisfy client needs and remain profitable.

Small site solutions remain a hot button for clients and providers alike. There's lots of experimentation in terms of how best to blend vending, self service, online technology, “micro” cafés and other strategies to best serve small populations. Another impetus: most new clients coming into the market are smaller startups that can't easily support traditional dining models.

Global foodservice contracts remain a topic of frequent discussion. Clients say they want more financial and operational consistency across such programs even as the “realpolitik” of achieving comparable financial terms in multiple countries remains problematic. Local regulatory and domestic priorities often take precedence over idealized, one-size-fits-all models.

Wellness is at the top of client and provider priority lists, with some seeing it eclipsing sustainability initatives in importance. 2012 will be the year many corporate insurance programs and HR departments expect foodservices to actively support such initiatives. Wellness loyalty programs and other “better choice” incentives will proliferate. If you're not seen as an important part of the solution you'll be seen as a big part of the problem.

At least some observers predict a “return to formality” in the white collar workplace, with a renewed emphasis on physical presence as a way of emphasizing value to the organization and perhaps generating more use of onsite dining (see this column,

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