1995   25 Years   2020 

July 4, 2020

We're celebrating Clarion Group's quarter century of providing solutions and uncovering opportunities in dining and hospitality services.

Take a look at our prior years' posts below.  You may find something that's useful today. 

The new summer 2020 issue of Dining Insights Is at the printer and being readied for e-mail subscribers

➧ Planning ahead for the new work and learning environments

➧The FDA's advice for keeping on-site dining safe from old and new risks

➧ Case Study: How QA Audits Improve Performance

➧ How clients miss the full value of consultants' efforts

➧ Advice from top women chefs

. . . and much more.

To get your copy via mail or e-mail, send your name, organization and physical or e-mail address to info@clariongp.com.

Are You a Co-Employer With Your Food Service Contractor?

            Companies, colleges and others who have outside contractors operating their on-site food services should beware of the risks they face in the rapidly evolving arena of employment law.  The widely publicized finding of the National Labor Relations Board General Counsel that McDonald’s is responsible for the employment actions of its franchisees is fair warning.

            The NLRB’s General Counsel has “found merit” in charges that McDonald’s and some of its franchisees “violated the rights of employees,” according to a NLRB press release.  “If the parties cannot reach settlement in these cases, complaints will issue and McDonald’s USA LLC will be named as a joint employer respondent.”

            Another warning comes in the NLRB’s current consideration of the relationship between companies and on-site contractors.  The case involves a company and its on-site service contractor.  A union is trying to have the company declared a joint employer who must participate in the collective bargaining between the contractor and the union.  The case is pending. 

             If these views stand, it isn’t a far reach to see how an organization could be held responsible for the employment actions of food service and other contractors on its premises.

             The U.S. Department of Labor, other regulators and labor unions have long tried to tie the host company or institutions to its service companies’ employees as a joint employer.  Sometimes, the host has made it easy to be linked – and held responsible financially – for actions over which it has, at best, only indirect control.

            The NLRB defines joint employment as when “two entities . . . share or co-determine those matters governing the essential terms and conditions of employment [including] matters relating to the employment relationship such as hiring, firing, discipline, supervision and direction.”

            When an organization requires its onsite food service contractor to submit candidates for key management positions and makes the selection itself, it’s opening the door to a finding that it is a joint employer.

            Other actions organizations often take that can lead to a finding that it is a joint employer with its on-site contractor include:

            • Negotiating with the contractor over the wage rates, pay raises and benefits the contractor offers its employees working on the premises.

            • Directing the contractor to promote, demote, transfer or take another action affecting one or more of the contractor’s employees.

            • Telling the contractor what hours its employees should work, rather than what hours of service to provide.

            • Paying bonuses or making other payments to the contractor’s employees or authorizing the contractor to make the payments and reimbursing the expense.

            • Treating the contractor’s employees as “members of the family” with privileges the same as, or similar to, those of its own employees – access to the on-site fitness center, for example.

            The basic defense against a claim of a joint employer relationship is a strong, clear statement in the operating contract that the contractor is the sole employer and has sole authority over all aspects of its employment relationships.    But if management interferes, even indirectly, in the actions of its on-site contractor related to the contractor’s employees and their wages, working conditions and the like, then the barrier created in the contract crumbles.

Clarion Group can analyze your dining and hospitality services and contractual relationship with your provider to help you avoid creating a joint employer relationship -- and improve operational and financial performance of you services.  For information, contact Tom Mac Dermott, president (603/642-8011 or TWM@clariongp.com) and visit our website, www.clariongp.com.

         

Ensure Your Food Service Operating Contract Protects Your Interests

The managers of corporate and campus food services and related hospitality services often make a mistake when they outsource these services by accepting the vendor’s "standard contract." Based on our experience, we recommend that you don’t accept this contract. It’s one-sided and not in your favor.

This isn’t the same situation as renting a car or buying a computer program where your options are take it or leave it. A food service contract, worth from several hundred thousand to many millions of dollars in sales, is much more important to the vendor than an individual customer is to a car rental company.

When we’re helping a Clarion Group client select a food service operator, we turn the tables and present the vendor with our "standard contract." We draft the contract in collaboration with our client’s attorney to ensure it’s fair to the vendor, but clearly delineates the vendor’s responsibilities and fully protects our client’s interests.

We’ve developed our contract format over two decades of food service consulting and adapt it to each client’s specific circumstances. Then we negotiate the final terms and conditions with the vendor, with our client’s participation and final approval.

Food service operating agreements used to be simple two- or three-page documents, but changing times and circumstances in the food service industry, government regulations and other factors have dictated that these agreements be much more detailed.

Important points to be included in a food service management contract, often omitted in the contractor’s proposed form:

• The vendor’s responsibilities should be clearly defined and the vendor should agree to perform its services to a high standard, defined as clearly as possible.
• The vendor should be an independent contractor, solely responsible for its employees and for its actions and not able to act as an agent for the client company. (If the vendor makes purchases or other commitments as the client’s agent, the client can be held liable for the vendor’s unpaid debts or other commitments.)
• The vendor has sole responsibility for the food it serves, from the farm field to the diner’s plate. Its program for ensuring the food it serves is wholesome, healthy and safe for consumption should be clearly described in the operating contract.
• Financial terms should be unambiguous, including the contractor’s responsibility for producing accurate operating statements promptly and providing satisfactory supporting material for its claims for reimbursement of costs. A contractor can produce financial statements within 10 days of an accounting period’s end date.
• Contractors receive rebate payments from their vendors, which they keep as additional income and do not disclose to clients. We have negotiated for our clients to receive a share of these rebates.
• The contract should be enforceable in your home state, not the vendor’s.

These are just highlights of the terms a food service contract should include. In our role as consultants, we level the playing field for our clients in their dealings with food service contractors because we know the players, their tactics and objectives. We ensure our clients have comprehensive, fair and enforceable contracts to guide their relations with their on-site service operators.

To learn how Clarion Group can ensure the operating agreement with your current or future food service contractor can be both fair to both you and the operator and fully protect your interests, contact us at info@clariongp.com or call Tom Mac Dermott, president, at 603/642-8011. 

Proposed OT Regulations Will Upset Management Structures

Proposed OT Regulations Will Upset Management Structures

April 14, 2014

Food service operators who are worrying about a possible increase in the minimum wage are looking in the wrong direction.

The federal government’s proposal to tighten regulations on exemptions from overtime pay has received little attention, but if implemented, will have a far greater and more immediate impact on corporate and campus food service operations that an increase in the minimum wage.

Operators will have to rethink and restructure their on-site food service management teams.

In March, President Obama directed the Department of Labor to revise the regulations covering the minimum salary level that exempts an employee with some supervisory responsibility from receiving time-and-a-half pay for work performed over 40 hours in a week. Currently, the minimum is $455 a week or $23,660 a year. Proposals for the new minimum are as high as $984 a week or $51,168 a year.

In contrast, the impact of a raise in the federal minimum wage from the current $7.25 to a proposed $10.10 an hour – when it happens – will be minimal. The minimum wage increase will be phased in over two or three years, cushioning its impact. Many states have already raised their minimum wages and federal contractors must pay at least $10.10 an hour. Few food service employees are paid less than $8.00 an hour now.

Federal law permits an employer to pay employees who have some supervisory responsibilities, such as overseeing two or three other employees and exercising some independent judgment in the performance of their duties, on a salaried basis. They aren’t compensated for hours worked beyond 40 in a week.

In a food service operation, these would be chef-managers, chefs who oversee other food preparation workers, assistant managers and many supervisor positions, such as shift leaders. Many of these positions don’t pay much more than the $23,660 minimum to qualify. When that minimum is raised, even to $35,000 or $40,000 a year, persons in those positions will no longer be exempt from time-and-a-half pay. Operators will have to raise salaries, redefine salaried positions or begin paying for overtime work on an hourly basis.

What ever course operators choose, their labor cost will rise, much more than it will when the minimum wage is increased.

Latest Dining Insights Issue Published

The Spring issue of Dining Insights is at the printer and ready to go, featuring . . .

Trends to watch, from sales and food cost to distributor mergers, technology and greener greenness.

Proposed OT regs will hit food services, changing the rules for lower-paid managers.

Fresh, local foods, how they get from farm to your fork.

Miss Dancing Waters' diamond toenail and your food service vendor.

. . . and more

For the current issue and a complimentary subscription, send your name, position and address for the paper edition or your name, position and e-mail address for the electronic edition to: info@clariongp.com

How to Increase Sales and Profits in Corporate Food Service

The signs are pointing upward for corporate food services, according to two recent surveys of the industry, but not for everyone. The story’s a little different at every company.

 Overall, customer counts and the average sales per customers increased in 2012, compared to 2009 at the depth of the recession, according to the 2013 Industry Standards and Benchmark Comparison study conduced by the Society for Hospitality and Foodservice Management.  The study found customer counts increased by10.6% and customers were spending 16.5% more for breakfast and 9% more for lunch than in 2009.

 The unevenness of the improvement is illustrated in the findings of a separate survey by FoodService Director magazine, where 59% of corporate food service operators reported a 10% increase in sales this year over last, but 29% reported a 10% decrease in sales.

The results reflected the findings of a survey of corporate food service managers conducted earlier in the year by Clarion Group and Food Management magazine, where half of respondents reported sales increased by 5% or more in 2012 over 2011. The other half said sales were flat or declined.

 Corporate food service operators have to work harder to achieve these favorable results. Increased employment and price increases alone won’t do it.  Operators have to do more to entice recession-conditioned customers back to purchasing their meals in the company café. Every survey on the subject says people are more attuned to the value of their purchases than to just price.

 Here are a few suggestions  corporate food service operators can use to increase sales and the bottom line:

• Sell the sizzle. Active marketing and promotions via the company intranet, posters and fliers can emphasize periodic "specials." They needn’t be reduced prices, just greater perceived value.

• Special events, promoting a holiday or a new food offering every few weeks will help bring in customers who usually go out for lunch or bring their own to work. If you get them once, you may be able to convert them to regulars.

• Make good use of social media to promote the café. A small restaurant chain in California is using an app to communicate with customers in its limited territory. The same would work for a corporate food service operation.

• A visiting chef from a popular local restaurant almost always attracts a bigger crowd. You can keep them coming by offering your version of the restaurant’s most popular dishes on succeeding days.

• An "action station" where a chef prepares meals to order at the counter as the customer watches is the surest way to convey "fresh" and "healthy" to you customers.

 Above all make sure the food you offer is good, service is warm, friendly and prompt and the café is clean and attractive. Combine all these elements and sales and profitability are bound to rise.

About Clarion Group
Clarion Group is an consulting firm that advises companies, professional firms, colleges and universities, independent schools and institutions in the management, operation and improvement of their in-house employee/student food services, catering, conference, lodging and related hospitality services throughout the U.S. and Canada.

For information, contact:
Tom Mac Dermott, FCSI, President
Clarion Group
PO Box 158, Kingston, NH 03848-0158
603/642-8011 or TWM@clariongp.com
Website: www.clariongp.com

Texas A&M Got Big Money for Outsourcing Dining Services. What's Their Risk?

Article revised December 2, 2013

Be careful what you ask for.  You might get it, and a lot more in the bargain.

 We're talking about the large investments major food service contractors are offering colleges for the opportunity to operate their campus food services. The dollars certainly are enticing, but not quite so attractive when you look at the long strings – really thick cords – attached to them.

The biggest recent example is Texas A&M University, College Station, TX, which outsourced its food service operations to the Chartwells Division of Compass Group last year.  A separate Compass division also was awarded landscaping and maintenance contracts.

 With an enrollment of 56,000 students including 8,000 campus residents, Texas A&M certainly isn’t a typical university, but the rewards the administration hopes to receive and the risks they're taking, scaled down, are the same for any college or university that accepts a contractor's "investments."

The financial commitments Chartwells made to the university to gain control of the campus food services are enormous, yet it has already caused problems, maybe more problems than it cured.

According to the local newspaper, The Eagle, the company paid the university a "signing bonus" of some $45 million upon being awarded a five-year contract, with an option for another five years. It paid another $6.5 million this year and spent some $5 million in dining facility renovations, with additional payments to come throughout the contract’s life.  The total cost to Chartwells over the 10 years -- if the contract runs that long -- is the $45 million signing bonus, plus a total of $25 .5 million in facilities improvements, a 5 percent commission on sales in the first year and a 10 percent commission on sales in the remaining years, about $2.5 million,  for a potential total of around $73 million.

The administration apparently sees that as a real bargain, since it reported losing $1 million a year running the food service on its own 

 That’s the good news.  But here’s the other side:  Meal plans for resident freshmen and sophomores have been made mandatory. By the 2016 academic year, all 8,000 resident students will be required to joint the meal plans at prices that currently range from $1,236 to $2,096 per semester and will increase by up to 3% a year. When all resident students are required to belong to a meal plan, Chartwells’ revenue from the plans will be about $27 million a year; potentially $270 million if the contract runs for the full ten years, not counting revenue from retail outlets, catering and other sources.

Of the total $270 million in potential meal plan revenue, the $73 million in payments and commissions equal some 27%.  Chartwells has to generate a profit on top of that big enough to justify the payments, probably 8 to 10 percent of sales, leaving about 65% or less of total revenue for food, labor and operating expenses.

But what if all doesn’t go well?  The Eagle reports a great deal of student unhappiness and agitation over the mandatory meals plans, price increases and new restrictions on meal plan options.  Already,  Chartwells has had to replace the campus general manager, a sure sign of trouble.

 A college or university has only one good option when its food services become unsatisfactory and the contractor cannot improve them.  It must replace the contractor. But wait, what about those dollars the contractor provided? The institution has to reimburse all the money the contractor provided, prorated by the number of years left in the contract. Not many institutions can afford that – the money has been spent – so it may have to go along with the unsatisfactory food service operation and hope the contractor can improve its performance.

 Of course, the money isn’t really an investment, it's an advance or loan.  Repayment comes from higher meal plan charges and other prices and maybe reduced services. The college never knows how much return the contractor is making on the loan. It’s buried in the cost structure of the financial reports it sends to the client. A college would do better to borrow the money at a known interest rate and let the contractor operate at a known rate of profit.  

 College and university administrators should carefully look the gift horse in the mouth and think about the possible long-term consequences to the campus food services and the institution of accepting immediate money in exchange for a long-term commitment to a single provider.

About Clarion Group   
Clarion Group is a consulting firm that advises colleges and universities, companies, professional firms and institutions in the management, operation and improvement of their in-house employee/student food services, catering, conference, lodging and related hospitality services throughout the U.S. and Canada.

For information, contact:
Tom Mac Dermott, FCSI, President
Clarion Group
PO Box 158, Kingston, NH 03848-0158
603/642-8011 or TWM@clariongp.com
Website: www.clariongp.com

Is Self-Management Still a Good Option for Campus Dining Services?

Should a college or university operate its campus food services on its own, or turn the role over to a food service contractor? That’s a question with an ambiguous answer, according to Tom Mac Dermott, FCSI, president of the dining service consultant firm. Clarion Group.

"It depends on a number of factors," Mac Dermott says, "primarily, how important food services is considered to be to the institution’s core mission and how competently the service is being managed."

Some 90 percent of all colleges and universities now outsource their food services to a contractor; the exceptions being the largest campuses of state universities and a small number of state and independent colleges, he says. "The big state universities’ dining services with budgets of $20 million or more are larger than many regional food service companies and have the resources to employ professional staffs and operate successfully."

"Among smaller institutions, the decision to remain self-managed is based on the value the college sees in its dining services and a desire to keep it as an integral part of the campus community," Mac Dermott says. "Over the past 30 or so years, colleges have increasingly outsourced food service operations almost invariably for economic reasons."

The decision usually was made, he says, when the food service operation was losing money or a competent manager retired and the successor was not competent.

"In recent years, colleges have converted to contractor management because the contractor offered a substantial financial investment to upgrade – or event build – the food service’s facilities. Some of these investments have been in the millions of dollars, even for relatively small institutions," according to Mac Dermott. "Of course, the investments do not come without strings in the form of a long-term contract, sometimes for more than ten years."

Some medium-sized and smaller colleges have a long history of self-management and have been successful. Davidson College in North Carolina, Saint Anselm College in New Hampshire, Bowden and Bates Colleges in Maine and Middlebury College in Vermont are examples. "Many of these regularly appear on the Princeton Review’s annual ‘Best Campus Food’ list," he notes.

"At one time, colleges would outsource their food services because the contractor claimed its buying power would enable it to reduce the operation’s food costs," Mac Dermott says, "but that’s no longer the case, if it ever was true. Food service companies now retain all the advantages gained by their purchasing volume and promise no more than to match local market prices – the same prices a competent independent operator could get on his or her own."

"Competent" is the key word, according to Mac Dermott. "The self-managed food service operation is only as good as its manager, and purchasing food economically is only a part of the picture. The manager’s skills in creating imaginative menus that reflect the tastes and preferences of the campus community; adaptability in meeting the needs of the college and students, and leading a well-motivated, well-trained staff are more important."

"The college or university that is considering outsourcing its self-managed food services should be aware that, while it’s comparatively easy to convert to contractor management, its far more difficult to do the reverse, revert back to self-management. The infrastructure to support the operation has to be reassembled and a competent manager found and hired," he notes.  

About Clarion Group

We're a consulting firm that advises companies, professional firms, colleges and universities, independent schools and institutions in the management, operation and improvement of their in-house employee/student food services, catering, conference, lodging and related hospitality services throughout the U.S. and Canada.

For information, contact:
Tom Mac Dermott, FCSI, President
Clarion Group
PO Box 158, Kingston, NH 03848-0158
603/642-8011 or TWM@clariongp.com
Website: www.clariongp.com

College Food Services Face New Challenge

By Clarion Group Food Service Consultants
www.clariongp.com

College food service operators are finding a new competitor for their voluntary meal plans. 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.

"Student housing development has remained robust [and] continues to boom, and analysts predict growth in the coming years," The New York Timers 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 reports. In Manchester, NH, 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 one 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 notes.

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.

The University of Missouri in Columbia, with an enrollment of 35,000, probably doesn’t need to worry too much about off-campus competition.  But the option of living near but off campus may lure some students away from the dorms and meal plans of 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. 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.

A good example is Iona College in New Rochelle, NY. 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 is having a really good, imaginative and responsive operation that will attract students on its merits.

Clarion Group can help your campus dining service meet its long-standing and new challenges. For information, contact Tom Mac Dermott, president, 603/642-8011, or Angela Phelan, senior vice president, 201/305-8653, or Ernie Wilder, 703/282-4040, or e-mail us at info@clariongp.com.

Visit our website, www.clariongp.com

The Unung Heros of Corporate Food Service

By Tom Mac Dermott, FCSI, President, Clarion Group

www.clariongp.com

 

A version of this article appeared in the online newsletter of Food Management magazine

 

“It doesn’t matter which company, it’s the manager they send me that makes the difference,” is a frequent comment by corporate facilities managers and others who are responsible for their organizations’ on-site food services that are operated by a food service management company.

And they’re right – to an extent.  The manager of an on-site food service certainly has the primary responsibility for the day-to-day operation, including the quality of meals, service and catering; hiring, training and overseeing hourly employees; financial results, and sometimes, more.

But who ensures the on-site manager is doing the job properly, provides advice and support and brings in the food service company’s specialized resources as needed?  That’s the district manager (or equivalent title, such as director of operations).

Company executives usually get most of the attention and credit, but it’s their district managers who are in the field making sure everything goes right at the dozen or so operations they supervise.

The DM is the direct link between contractor and client.  He or she is the direct overseer of the on-site manager, is directly responsible for client relations, utilization of the contractor’s resources to solve problems and improve services, and for the company’s success or failure at a location.

How do they manage their multiple responsibilities?  How do they coach their on-site managers, resolve problems, satisfy clients, deal with personnel, budgets, sales and cost, profit or loss and other issues?

Close communication with the on-site manager and the client’s representative is the key say district managers for several companies.

“No surprises” is the way Adam Salem, a director of operations for the Flik International division of Compass Group, sums it up.  “I talk to or visit my clients every week and keep in touch through e-mail.”  He’s responsible for food services at a group of corporate offices and law firms in the Washington, DC area.  With his regional vice president, he also holds quarterly review meeting with his clients.

Ken McIntyre, a long-time director of operations for Guckenheimer overseeing corporate headquarters accounts, was recently promoted to regional vice president for the Middle Atlantic and Southeastern region.

He says client relationship management is structured.  The director of operations has “monthly review meetings with our client and the on-site manager.”  A quarterly major review is also attended by him as regional vice president.  “It’s the centerpiece of the client relationship and a measuring tool [enabling us] to measure and manage the operation.”

John Gee, a Culinart Group West Coast district manager for corporate accounts, agrees.  “Getting off to a good start with a new client is important to establish the relationship.” he says.  He has mostly corporate and some education accounts throughout California.  He meets with clients on a monthly or bi-monthly basis, “unless they have a question” in the interim.

Gee, a 20-year veteran with Culinart, has the unusual experience of having been a district manager on both coasts.  After working in the company’s home region in the Northeast, he transferred in 2006 to their division in Los Angeles with accounts all along the Pacific Coast and in the Southwest.

What’s the difference in the business on the two coasts?

“New York is very traditional – shirt, tie and suit,” he says.  But despite the laid-back, no necktie attitude, “California is not more relaxed when it comes to work.  Don’t underestimated what happens out here. [Clients expect] greater accountability than on the East Coast:  ‘We want it done, and done tomorrow.’”

A DM’s most important responsibility is ensuring his on-site managers are performing well, both operationally and financially.  This is accomplished by a combination of individual coaching and formal training through periodic meetings of all the district’s or region’s managers and online training programs.

Training programs range from the basics, like culinary skills and accounting, to regulatory compliance and human resources topics, such as disciplinary procedures and the prevention and handling of harassment issues.

“I have weekly meetings with all my managers and chefs via Webex (a web-based conferencing program),” Guckenheimer’s McIntyre explains. “An HR person, our regional health and wellness manager, marketing manager and corporate Director of Culinary Operations (manager of the company’s regional executive chefs) participate.  We have a very chef-driven culture.”

His managers also are enrolled in an online training program.  “Managers can pick their own topics, but they’re also required to take some specific courses.”

Adam Salem of Flik says, “Our regional resources, such as regional chef and marketing specialist, provide training.  Regional meetings also provide training opportunities.”

“Training is on-going” at Culinart, according to Gee.  “I have a senior manager work with the less-experienced managers to set them up for success.”

Despite their best efforts, things can go wrong at a DM’s account.  What do they do when an angry client calls with a complaint?

“You can’t wait.  You have to anticipate trouble,” Salem says.  “It’s most important to get in front of the client right away.”

“Get face-to-face as fast as possible – on the same day,” Gee echoes.  “You can’t change the complaint.  You have to correct whatever the problem is.”

McIntyre agrees. “The first thing is to listen and assess the situation.  I have to be open-minded and, most important, be pro-active in responding.” 

Like McIntyre, both Salem and Gee utilize regional or corporate specialists to get into the account and work with the manager to solve the problem and get the operation back on track.

Gee’s approach is to be positive.  “I get positive feedback from the client and [talk to the manager] about the good things first, build on the good things.  Positive reinforcement is the most effective way” to get a manager to see and resolve an issue.

“I meet with the on-site team and go to our resources – the regional chef and others – and create an action plan,” Salem explains.  “I come back to the client with the plan and follow up.”         

But what if the manager is the problem – he or she isn’t controlling the staff, has let costs run away or has a conflict with the client?

“Like a baseball team, we have to have a relief pitcher,” McIntyre says.  “It’s very important to have the right person ready to step in.”  He prefers managers with a culinary background.  “Many talented chefs get burned out in the kitchen and go into management.”

“Recruiting is on-going,” according to Gee.  “We try to promote from within before going outside” when an on-site manager needs to be changed.                           

“A weak [on-site management team] means I have to spend a lot of time there.  It’s not good for the client,” adds Salem.  “I’ve developed sources [to identify potential managers].”

Financial performance also is important, whether the operation is P&L (the operator has the financial risk) or subsidized (client has the financial risk).

“I have a weekly flash [report],” according to Gee.  “By Monday, I have the results.  I get on the phone, accounts with bad results first.”

Other DMs do essentially the same, relying on weekly “flash” reports from their managers, usually on the first business day after the accounting week closes.

“I review each account’s financial reports weekly,” Salem says.  “If there’s an issue, I return to the account and notify the client.  It’s important that there are no surprises.”

Salem best sums up the job for all DMs: “I’m successful because of the team I’ve built.  Communication is the key to the job.”    

'Human Cloud' Poses New Challenge to Corporate Food Service

Food service contractors and employed operators of corporate food services may face further diminishment of their customer bases. Operators will have to use technology to counteract the changes technology is forcing on their traditional ways of doing business.

Companies now have new ways to outsource even highly skilled work to freelance workers all over the world, reducing the need for – and cost of – on-site employees.

As reported in MIT Sloan Management Review by Evgeny Kaganer, an assistant professor at the University of Navarra in Barcelona, Spain and three other academics, "A third-generation sourcing ecosystem . . . the 'human cloud' is centered on an online middleman that engages a pool of virtual workers that can be tapped on demand to provide a wide range of services to any interested buyer."

New human cloud organizations can now provide freelance talent for at least 15 major work categories, including content generation, sales and marketing, design and optimization, Kaganer et al say. These are jobs that traditionally are kept in-house, but now may disappear from the office and the food service department’s customer pool.

Human cloud organizations ("platforms") – the middlemen who connect companies and freelancers – saw their revenue increase by 53% in 2010 and 74% in 2011, the authors said. The number of active platforms increased to more than 100 in 2012 from about 40 in 2011.

As rapidly-advancing technology has disrupted other industries, it now is food service management’s turn. Corporate food service operators will have to rethink their business models to stay relevant in this new environment.

For example, a Clarion Group client with $1.5 billion in sales and 4,500 employees nationwide has only 250 employees at its new headquarters, where it is just opening a new food service, and has no food service at any of its other offices. Technology has enabled other Clarion clients to increase sales and profits while reducing on-site headcounts.

The impact of this sharp and still evolving change in the way businesses operate has an impact on both the food service operator and the company it serves. Formerly profitable food services may become unprofitable for the operator, and the company may find it has a choice of either subsidizing its employee food services or reducing their scope.

The solutions will vary from company to company, but all will involve a change in the way the food service operator looks at, and manages, the business. Companies will have to cooperate with their operators as they both adapt to the new reality."

For example, at company with multiple buildings on a large campus, closing cafes in all but the most highly-populated buildings (about 1,000 employees) may be necessary. The other buildings can be serviced by the type of food trucks that now are popular, and successful, on college campuses.

At smaller sites, a mini-café supported from an off-site commissary and staffed by one or two attendants may be a solution.

Vending operators, including some major food service contractors, have begun installing "micromarkets," a c-store-type, compact facility with no attendant. The customer selects foods from refrigerated display cases and shelves and pays for the purchases at a self-checkout kiosk. This option only works in a closed environment with a small population, about 250 or fewer employees.

Clarion Group can help you meet the new challenges of the evolving world of corporate and campus food service.  For information, contact Tom Mac Dermott, president, 603/642-8011; Angela Phelan, senior vice president, 201/306-8613, or Ernie Wilder, vice president, 703/282-4040, or e-mail us at info@clariongp.com.  Visit our website, www.clariongp.com

Corporate Food Service: A Benefit or a Convenience?

Companies that once considered low cost meals an employee benefit sometimes now are revising their attitude and thinking of food service as a convenience that should be self-sustaining.

The conversion can be tricky because it inevitably means higher prices and maybe fewer services when the food service has to pay its own way.  In working with corporate clients, Clarion Group consultants have seen the conversions completed with minimal disruption and customer acceptance – and disastrously.

The worst way to convert from subsidized to "P&L" (the operator has the risk of profit-or-loss) is all at once. Customers come in one morning and the price of everything is higher.

In one instance we witnessed, customers in a central city corporate headquarters almost completely boycotted the food service. Sales dropped by two-thirds overnight when prices were increased by 20%.  Nobody protested, they just began bringing their own meals to work or went out to the dozen or so nearby restaurants, delis and fast food outlets.

The losses were so severe that within a month, the food service operator was threatening to terminate its contract. Two months later, a new operator was in place.  Clarion prepared the Request for Proposals and managed the selection process.

The new food service contractor had some advantages.  The dirty work – price increases and service reductions – had been done by the predecessor.  The new operator gave the café a modest facelift, restored some services, introduced a new menu and rejuvenated what had been a mediocre operation into a model food service program.

Customers returned and sales rose to their former level, although prices hadn’t been reduced; they saw greater value in the new operation and meals offered for the prices.

The most effective way to eliminate or reduce the subsidy is gradually.  In cooperation with the food service contractor, a conversion can be made gradually, over a period of two years with minimal, or no, customer backlash.

Companies use long-range planning for the management of their businesses, development of new products or services, advertising and marketing, equipment purchases and the like.   They should do the same when they want to eliminate the food service subsidy.

When you want to shift the burden of profit or loss in your company's or organization's food services, we can help plan a successful conversion.  For information, contact Tom Mac Dermott, president, 603/642-8011, or Angela Phelan, senior vice president, 201/306-8613 or Ernie Wilder, vice president, 703/282-4040, or e-mail us at info@clariongp.com.  Visit our website, www.clariongp.com.

News from Clarion Group Food Service Consultants

The Spring issue of Clarion Group's newsletter is published.  Articles include:

Corporate food service operators see improvements in sales.
The coming health care law may not bite too hard.
What do food service customers want?  "Food quality" tops the list.
.. . and much more.

To obtain your copy and a complimentary subscription send your contact info (mailing address or e-mail address) to info@clariongp.com

Corporate food service may gain as work-from-home options are reduced

"Maybe the outgoing tide of more employees leaving the office to work at home is starting to reverse," says Tom Mac Dermott, president of Clarion Group, a food service consulting firm. "That would be good news for the operators of corporate food services."

For more than a decade, the percentage of companies’ employees who work from home has been steadily increasing, reducing the number of customers for the on-site food service. Some 63% of employers in a study conducted by the Family and Work Institute now permit employees to work from home at least part of the time, up from 34% in a similar study in 2005.

Recently, Yahoo, the internet search engine and website, announced it will require all employee to work at the office, starting in June. Several other firms have followed suit.

"Some of the best decisions and insights come from hallway conversations and cafeteria discussions," said Jackie Rese, Yahoo’s human resources director in announcing the new policy. "Speed and quality are often sacrificed when we work from home."

While the wisdom of the decision is hotly disputed, not everyone, including some Yahoo employees, are upset. "Deadwood is hiding at home," one Yahoo employee told The Wall Street Journal.

The food service operator can help its host company implement the improvements in productivity that Yahoo is seeking, according to Mac Dermott. "The on-site food service center can be a place where creativity takes place."

"The staff café is a natural gathering place, generally in a central location," he said If it’s configured to permit groups to work and discuss ideas, as well as have lunch or a mid-morning or afternoon snack and coffee, it can be a valuable asset to the company as well as to the food service operator."

"By providing tables and groups of tables of various sizes to accommodate different numbers of people, especially round tables where six or eight people can gather for easy discussion, the food service operator is providing a comfortable site for productive meetings and informal discussions, " he added.

Other ways of encouraging staff café use the food service operator can implement include partitioning off small areas with seating for from eight to 12, which informal groups can use in place of reserved conference rooms, which often are in short supply, he added.

"Making sure the café is wi-fi-enabled and providing flip charts and other communication aides also helps encourage employees to use the café," Mac Dermott suggests.

"Work-from-home is probably here to stay in some version," he added, "but the food service operator can help make working at the work site an attractive option.