When the coronavirus hit the United States a year ago and began forcing schools, colleges and businesses to close the doors to their facilities, hospitals to bar most visitors and curtail discretionary and non-critical services, senior living communities to consign residents to their living quarters and sports and entertainment venues to suspend events, the foodservice providers for those facilities faced a significant loss of business in most cases.
To make up for the revenue shortfalls forced on them by these circumstances, dining programs began exploring new avenues of revenue generation or expanding existing but tangential programs to maintain some financial viability and perhaps even position themselves for operating in a post-pandemic environment when few things are expected to return completely to what had been the “normal” prior to March 2020.
But in the process of adapting their programs to meet the challenges of 2020, onsite dining may also have discovered some promising new business opportunities for 2021 and beyond that they may not have considered when their traditional operations were fully functional. Among these are new product lines, new customers, new service models, new technologies and new ways to use established systems and processes.
Expanding the range of offerings
One traditional way to find new business is to add new products and services that can attract new customers and/or prompt existing customers to expand what they buy from you. Over the past year, onsite dining programs have added a number of new products or at least bulked out existing product lines to meet the new circumstances.
Among these is an expansion of packaged grab-and-go options as café hot food serving lines were de-emphasized for regulatory, safety, operational and financial reasons. The grab-and-go cooler had traditionally served as an adjunct to those core service outlets and generally offered cold options such as sandwiches and salads. However, in the past year operators have been busy expanding their grab-and-go palettes to include a whole new range of choices, an expansion that will likely continue to meet the needs of a convenience-oriented and safety-conscious post-COVID customer base.
Meanwhile, in the corporate dining world, some management companies have created and marketed special culinary gift boxes that work-from-home staff can enjoy collectively in online meetings or receive as individual premiums from their employers to show their appreciation. Several launched such initiatives around the holidays last year as a seasonal test run and some are now thinking of expanding the initiative into a home meal service if the client company wants to extend its traditional office meal perk to remote workers as part of its employee satisfaction, recruitment and retention efforts.
Photo: Employee Connect Boxes were debuted by management company American Dining Creations for clients who wish to extend a meal-based amenity to remote working staff, an example of how corporate dining providers are looking to find new business opportunities in the current work-from-home environment.
Photo credit: American Dining Creations
Certainly, with remote workers expected to be a larger part of the post-COVID workforce—especially in industries that employ large numbers of highly compensated white-collar professionals and that traditionally represented the corporate dining world’s lucrative upper crust—dining programs will have to adapt to this new corporate culture.
That’s what Sodexo—a major operator in corporate dining among other segments—was thinking with its recent acquisition of Nourish Inc. and expansion of its European Good Eating Company brand to the U.S.
“The onsite food model has changed,” remarked Mike Gillespie, Sodexo’ president of corporate services, when the moves were announced. “We have been able to bring forth contemporary, relevant brands that we feel will complement the return-to-office or work-from-anywhere strategies of our clients and customers.”
A world in which millions of affluent “work-from-anywhere” consumers look for convenient, quality meal choices during the day is an emerging market that is already drawing competitors from outside the established onsite dining community and can expect to draw more going forward, building on what is already a well-established takeout food culture in the commercial restaurant world. For existing dining providers that had previously served consumers in client sites, the challenge will be to find ways to continue to serve them when they aren’t at those sites.
Meal kits extend onsite to offsite
Another product area that has seen substantial growth over the past year and has the potential to continue to be a revenue generator is the take-home meal kit. Home meal replacement was briefly a thing earlier this century but receded in the face of operational obstacles. Its recent revival is based on exploiting a growing demand for convenient, quality take-home meal solutions for working staff in offices and healthcare institutions, and, in a different context, for nutritious subsidized meal options for food-insecure members of the community.
Operators in corporate dining and healthcare have found that marketing take-home family meal kits for employees leaving for the day offers a possible new business line that can be accommodated with existing staff and facilities. The ready-to-eat meals are a version of the meals kits some operators experimented with pre-COVID but something that the crisis has forced some operators to get experience with as a short-term way to reach out to those impacted by the virus, including in some cases their own employees.
Granted, most of these meal kit programs currently are marginal, but their potential in a post-COVID world may grow as offices evolve into part-time workplaces for employees who work from home the rest of the time. In such an environment, the option to take home a reasonably priced individual or family meal at the end of a day spent in the office may be attractive, especially if the office dining program has established a reputation for quality, while at the same time offering the dining program an additional revenue source.
Finding new customers among the food-insecure
As corporate dining programs focus on selling take-home meals to employees, some school systems have found that their existing infrastructure is perfectly suited to expanding into community feeding, while others have taken the meal kit concept to expand their programs to feeding students’ families either with prepared meals or grocery packs. The viability of these extensions is obviously subject to continued public financing of such anti-poverty measures, but as long as the funding pipeline exists—through government sources or private source grants—school meal programs have a potentially expanded market to serve.
Providing nutritious meals is also an area where hospital dining programs may get involved given the growing trend of medical providers writing “prescriptions” for healthy, nutritious food for discharged patients and outpatients, food that often is subsidized in some way. The pandemic has also prompted some hospital dining programs to extend their services to takeout food targeted at the wider community, leveraging the traditional status of hospital cafes as informal community meeting places where seniors and employees of nearby businesses can get a quality, reasonably priced meal.
The existence of central kitchen and even delivery infrastructure in some larger onsite programs, not just in schools but also in other institutions like colleges and hospitals, may also allow them to become production centers for external clients. This is a possible source of extra income generation that few programs have adopted in the past due to factors like non-profit status, town/gown issues, union contracts and a general reluctance to operate a “non-commercial” in-house department as a commercial enterprise.
New service styles emerge for the long term
When COVID hit and forced traditional service models like self-serve and buffet lines to cease, onsite dining program were forced to adapt with either new ways of getting food to customers or leveraging existing but underutilized modes of service.
One emerging approach, especially in the college market, is the ghost kitchen concept that allows a diversity of cuisine choices to be offered by essentially converting a servery into a production space and relying on remote ordering/payment for the transaction process. The recent announcement from major college dining services operator Chartwells about its ghost kitchen program shows the interest major players have in this approach, which promises enhanced—and safety-conscious—customer services at a reasonable cost.
One of the necessities of a ghost kitchen program is remote ordering, something that was already making in-roads in onsite markets, especially colleges, but which expanded greatly in the past year not only on campuses but in corporate dining, hospitals and even K-12 schools.
For colleges in a post-pandemic world, remote-ordering services may simply be a concession to customer expectations rather than a way to substantially add sales, but in environments like hospitals and some business venues with large numbers of time-constrained staffers, the technology offers an option that doesn’t require them to spend time ordering at a counter, waiting for the order to be filled and then waiting again to check out. The orders can even be placed in high-tech lockers accessible only to the customers for which they are intended. For in-house foodservice operations that will likely have to cope with fewer customers being onsite, such streamlined transaction options might be a way to add business by reducing the discouragement factor of long waits.
Meal delivery obstacles and opportunities
Meal delivery can subtract even more minutes from transactions, but the labor requirements for providing this service make it impractical for many operators at this time. Nevertheless, it is something operators are tinkering with, using strategies such as bundling orders to reduce delivery trips and even using robots to make the deliveries.
Currently, robot delivery is confined mostly to college campuses, where the phenomenon is slowly proliferating, but robots have also been used in some healthcare environments to deliver patient meals and this might serve as the basis for an expanded automated meal delivery service to staff as well as patients at some point.
Delivery is an entirely new area for the K-12 market used to either feeding its customers inside its own buildings or at most sending food to summer feeding sites. Now, not only are districts delivering to such locations during the school year but actually to individual student homes, often in combination with remote-order platforms.
While K-12 schools are expected to return to mostly full-time in-person instruction at some point, their meal programs may want to hold on to the experience they gained over the past year in serving meals offsite as some remote learning may continue to linger as an option for some families. Also, the delivery practices developed in response to the remote-learning culture could be leveraged to expand summer and evening/weekend meal service as a way to add revenues.
Besides delivery robots, automation in the form of scattered, unmanned service outlets is another emerging area of technological innovation that can help expand the reach of dining programs. They can range from smart fridges offering fresh food in small footprints to full-blown artificial intelligence-guided retail stores, all offering the advantage of round-the-clock availability to add sales at times when any manned outlet would be impractical.
These technologies seem pie in the sky and out of reach for most onsite dining programs at this point, but their growing adoption in mass commercial markets like retailing and restaurants promises to make them ever more viable going forward as market forces drive innovation, the adoption of best practices and competitive pricing.
So while COVID’s year of living dangerously has certainly altered the way onsite dining programs operate, it has also prompted an impressive range of innovations and program extensions that promise to keep the industry relevant, responsive and vibrant going forward.