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New College Dining Competitor: Off-Campus Residences?

College food service operators are finding a new competitor for their voluntary meal plans, off-campus student residences with in-house dining operations, says consultant Tom Mac Dermott of Clarion Group.

College food service operators are finding a new competitor for their voluntary meal plans, according to Tom Mac Dermott, president of the Clarion Group campus and corporate food service consulting firm.

“In addition to the usual off-campus restaurants, fast food, pizza and deli outlets, there now are a growing number of off-campus student residences, some of which have an in-house dining operation,” Mac Dermott says.

“Student housing development has remained robust [and] continues to boom, and analysts predict growth in the coming years,” The New York Times reported recently. The growth in off-campus housing has appeared in such diverse place as Columbia, MO, home to the University of Missouri, and Manchester, NH. In Columbia, private developers have opened student residences with more than 3,800 beds since 2011 with more under construction, the Times said. In Manchester, a developer is building a residence for students of the local campuses of the University of New Hampshire, Southern New Hampshire University, Saint Anselm College and Hesser College.

The dining service operator at a large eastern university faces a special dilemma—a developer is building a new residence and dining hall on campus and plans to use a separate food service contractor. The new dining center is likely to lure some student meal plan members from the main campus food service, Mac Dermott offers. At a college that is struggling to keep its on-campus residence halls full, the off-campus competitor, such as the ones in Columbia and Manchester, can be a challenge, he adds.

“The University of Missouri in Columbia, with an enrollment of 35,000, probably doesn’t need to worry too much about off-campus competition,” Mac Dermott explains. “But the option of living near but off campus may lure some students away from the nearby, much smaller Columbia and Stevens Colleges. The colleges in and near Manchester may feel a pinch when the new private residence hall opens there next year.”

College food service operators have a few weapons to meet the new competition, according to Mac Dermott. “The off-campus food service facility isn’t convenient when the student on campus. The food service can actively promote its commuter meal plan or a low-cost 'block-meal' plan—a plan proving a fixed number of meals per semester—to capture some of the optional dollars.”

The college food service also can extend its meal plan to incorporate some local restaurants, a popular option at some campuses. While this type of plan does drain some revenue from the on-campus food services, it has proven valuable in attracting participants to a meal plan, according to Mac Dermott. “A good example is Iona College in New Rochelle, NY,” he says. “The all-declining balance meal plan includes an allowance for spending at local restaurants in addition to the four on-campus food service locations, but the service is still profitable for the operator and the college.

"But the most important element in competing with the off-campus residence operator and it food services,” he emphasizes, “is having a really good, imaginative and responsive operation that will attract students on its merits.”

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