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Outlook 2012: College and University Dining

Outlook 2012: College and University Dining

The operating cost/contribution squeeze is growing more intense.

Most states slashed spending on higher education last year, creating the largest decline in state aid in 50 years; a third of them saw double-digit drops (see: annual ISU Grapevine Study: Meanwhile, the percentage of U.S. 18-24 year-olds enrolled in college is at an all time high, with increasing numbers of them choosing state schools or community colleges, a result of the economic downturn and rising education costs.

The operating cost/contribution squeeze is growing more intense for operators as tuition caps, board plan cost freezes, rising food costs and other factors collide with negotiated wage and benefit packages and increased contribution lines in annual budgets.

At the same time, there is still something of an amenities 'arms race' going on in higher ed, but the costs and returns on new projects are being scutinized ever more carefully. Capital remains short and in demand.

“The whole issue of dining departments obtaining money for renovation and replacement needs on a feast or famine basis needs to be examined,” says one director. “These projects would be more cost effective is they were funded on planned life cycle expectancies rather than all-or-nothing renovations.”

The FSD as CFO. Many directors are reaching a point of diminishing returns from tighter food procurement strategies and worry that food quality may be threatened. Balancing such factors is taking an increased percentage of campus dining directors' time and resources.

“Sometimes I feel more like a CFO than a foodservice director,” observes University of California Berkeley's Shawn Lapean.

“The challenge will be to reduce costs further without the consumer seeing any impact,” adds Frank Gladu, assistant vice chancellor for business services at Vanderbilt.

Customers will continue to have high food expectations and schools will continue to feel pressure to meet them. "Directors will have to reach out to customers in much more aggressive ways in coming years,” Gladu adds, employing new social media and other strategies.

Campus dining apps are popping up everywhere as departments look to connect their offerings with student lifestyles and social media habits. (For a good example, download the Yale Dining app from the iTunes store).

The nature of student community gathering habits is changing and may offer retail opportunities. Private library and student center study areas are being replaced by “social study” space where students gather in groups to study together. This trend could help schools where foodservice at student centers has been financially challenged.

Campus directors are looking to technology for more actionable data in real time. This is especially true for retail, where most future growth potential exists but where margins are tighter and operational and pricing adjustments may need to be made weekly or even daily. Training managers and staff to collect and act on such data will be a priority.

The untold story. As one director puts it, “The untold story in higher ed is that even as most directors are looking to expand retail operations to build incremental revenue, these will simply never generate the percentage of net revenue that traditional board operations provided.” Coping with that reality and managing equivalency and other meal plan options so as not to aggravate the problem will be a continuing challenge in campus dining's future.

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