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Food - one of the three
basic needs in life. But is it a basic need
in corporate America? How has our
consumption of food at the workplace changed
over time, and what could the future hold?
The corporate food services
function is changing at a rapid rate,
prodded by an increasingly mobile and
variable workforce, pressure to reduce costs
and subsidies, health and social justice
issues, innovative branding and marketing
initiatives, new technology, and even
security concerns. These are in addition to
the traditional productivity and employee
recruitment and retention drivers that have
influenced corporate food service decisions
for years.
Food Service Over the
Years
Over the last ten years, the corporate food
service function operated cafeterias and
managed relationships with vending machine
operators. Employers offered free coffee and
beverage service, or perhaps a stocked food
pantry. Food service was highly subsidized.
The low cost to employees and added
convenience associated with the service was
considered an investment in employee
satisfaction and increased productivity.
Today, corporate functions,
including food services, are under intense
scrutiny, along with their impact on the
bottom line. As a result, subsidies have
been drastically reduced. Contracts with ten
year terms, or even evergreen contracts are
being supplanted by three or five year
contracts with performance-based metrics and
compensation structures providing corporate
clients with better performance management
tools and greater cost controls.
New EMS Research
In order to get a more detailed
understanding of the shifts taking place,
Expense Management Solutions conducted a
survey of corporate food service managers in
37 companies, and conducted in-depth
interviews with eleven of these survey
participants. This research was used in the
development of the report, "Corporate Food
Services: Current Perspective and Future
Trends." The results are revealing.
Corporate food service strategies have
developed characteristics as unique as the
individual corporate missions they support,
and the menu of options offered by the
marketplace are quite complex. The
challenges of increased costs, decreased
participation, increased expectations and
decreased profits were characterized by one
of the interview participants as a ‘perfect
storm’ requiring service providers and their
clients to reinvent food service programs.
One aspect of food service
all of the interview participants had in
common was outsourcing. Each participant
contracted with one or more food service
provider(s). Even ten years ago, food
service was primarily an outsourced
function, and the major players in food
service management have remained unchanged.
According to a report in Food Management,
"In 1998, Aramark, Compass and Sodexho
accounted for about 44 percent of the Top
50’s [food management companies’] total
volume." Compass Group, Aramark, and Sodexho
again topped the list in 2006. This time,
Compass Group had taken the lead, but the
top three food service management companies
accounted for more than 76 percent of the
Top 50’s total revenue volume.
Another common thread
throughout the research was the corporate
focus on eliminating food service subsidies.
Although all of the interview participants
subsidized space, equipment and utilities,
only 27 percent fully subsidized a coffee
and/or beverage service. Another 18 percent
provide subsidized beverages on a limited
basis or only in specific geographies.
Twenty seven percent of respondents
purposefully maintain their cafeteria prices
below ‘street’ costs in order to raise
participation rates or to provide an
employee benefit.
Current Challenges
The competing interests of the client, the
service provider and the customer create
tension and have become a major challenge
for corporate food service programs. The
customer (employee) wants variety, lowest
cost, highest quality and convenience. The
client wants to control costs, increase
productivity and employee satisfaction, and
ensure consistency of service delivery and
accountability. The service provider must
balance all of these competing demands and
make a profit while competing for qualified
labor in a tight labor market.
Other challenges include:
-
Responding to the different expectations
and regulations of different countries
and cultures.
-
Projecting order and transaction volumes
at facilities with highly variable
workforces.
-
Reconciling multiple stakeholder
interests when the food service provider
is a subcontractor.
Trends in Food Services
Organizations are responding to these
challenges by leveraging new technologies to
reduce the cost of delivering food services
and manage the relationship with their
service providers more efficiently. Service
providers are bringing innovative new menu
options and partnerships with major brands
to raise interest and participation levels
through themed outlets, cafes, menus or
events, often referred to as "menu-tainment."
Grab-and-go options are an
increasingly important component of
corporate food service programs. As the
workforce becomes more mobile and the
workplace becomes more flexible,
participation rates for food service
programs suffer. In response, some companies
now offer prepared meals that rushed
employees can take home at night. Others
offer online ordering options where
employees order specific meals ahead for
quick pick-up or even desktop delivery.
Another trend is the
emphasis on offering healthy options on the
menu, whether in cafeterias, cafes, or even
vending machines. Some companies incorporate
social justice themes into their menus,
including locally produced products, organic
foods, and foods developed or harvested
using sustainable practices. They may
arrange to host local farmers’ markets where
employees can purchase local produce to take
home.
Looking Ahead
Corporate executives who understand the many
changes in the marketplace will be well
positioned to succeed in the decade ahead.
Innovations in supplier relationship
management, performance based compensation
and new supplier management technologies
provide a platform to manage the more
complicated relationships that result as
more companies adopt the new options offered
by their service providers.
This article has offered a brief
reflection on how the industry has
transformed over the past decade, if you
would like to receive a copy of the full
report, "Corporate Food Services: Current
Perspective and Future Trends," contact
Robert Teplansky, Director, Expense
Management Solutions, at (508) 460-7014.
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