Chapter 8 Managed Services

Chapter 8: Managed Services Overview - - - Managed services consists of all foodservice operations as follows: airlines, military, elementary and secondary schools, colleges and universities, healthcare facilities, business and industry, leisure and recreation, conference centers, airports, and travel plazas. Companies and organizations, such as educational or health care organizations, must decide if they want to operate their foodservice themselves or contract it out to a managed foodservice company. There may be cost savings, but if they lack the expertise, they may want to invite contractors to submit proposals. Managed services are different from commercial operations in several ways: => Managed service operators must meet the needs of both the guest and the client. In a restaurant, the challenge is to please the guests. => Often, they have “captive” audiences. => Many managed service operations are housed in “host” organizations that do not have foodservice as their primary business. => Most managed service operations prepare food in large quantities to be served during specific hours. This is called batch cooking. => The volume of business is more consistent and easier to forecast. In-Flight and Airport Foodservice - Food has become a major competitive factor among airlines. Airlines may provide meals from their own in-flight business or have the food provided by a contractor. The food must be able to withstand transportation conditions and extended holding times (hot or cold). The meal must also be appealing and able to fit in the limited passenger eating space. In-flight foodservice management operators plan the menus, develop the product specifications, and arrange the purchasing contracts. Many airlines place a high priority on controlling meal costs. International flights tend to have better food and beverage (F&B) service. - As airlines have decreased their in-flight foodservice, airport restaurants such as popular chain restaurants, along with quick-service restaurants have picked up the business. Military - Military foodservice is a large and important component of managed foodservice. Even with military downsizing, military foodservice sales are estimated at over $6 billion. Efforts are being made to address problems with service delays, inferior products, and inventory controls. In many cases, officers’ clubs have been contracted out to foodservice management companies. Another trend is the testing of prepared foods that can be reheated and served without much labor. MREs (meals ready to eat) are standard for troops in the field. One problem of privatization of military foodservice operations that may arise is the need to provide foodservice in combat situations. In such cases, the military must be able to provide its own foodservice. Elementary and Secondary Schools - In 1946, the U.S. Government enacted the National School Lunch Act in response to concerns about student meals. The rationale was that if students received good meals, the military would have healthier recruits. Today, approximately 31 million children are fed breakfast, lunch, or both each day, at approximately 101,000 schools, by the National School Lunch Program. A major challenge for the program is to balance nutrition with foods the students like. Alternatively, some schools purchase ready-to-serve meals that are assembled at the meal site. The government’s NSLP is a huge market for fast-food chains. Although entering this market does mean a decrease in revenues, future benefits, such as building brand loyalty, can be extremely valuable. Many parents feel that fast food does not sound nutritious. Nutrition Education Programs - Nutrition education is now required in the NSLP. The food guide called MyPlate was developed by the USDA and illustrates what to eat to follow a healthy diet. Colleges and Universities - - - Residence halls, cafeterias/student unions, faculty clubs, sports concessions, conferences, convenience stores, administrative catering, and outside catering are the major components of this segment. On-campus dining can be a challenge because the clientele lives on campus and eats most of its meals at the campus facilities. Students, faculty, and staff may get bored with the menu offerings. Budgeting, in such operations, is simplified because the on-campus students have already paid for their meals and, therefore, numbers are easier to forecast. College foodservice operations tend to offer students a variety of meal plans. Many schools have adopted a prepaid credit plan, where students pay a dollar amount up front, and as they eat meals over the course of the term or school year, the dollar amount of each meal is subtracted from the student’s account. The driving forces of change on campuses are the advent and growth of branded concepts, privatization, campus cards, and computer usage. A college food service manager today must have better skills in retail marketing and merchandising as students are given more discretion in how they may spend their money for food on campus. Student Unions - The college student union offers a variety of managed services that cater to the needs of a diverse student body. Among services offered are cafeteria food services, beverage food services, branded quick-service restaurants, and take-out food services. Like public schools, some college campuses have opted to allow restaurant chains to open on campus. The restaurant pays fees, either to the contract food company directly or to the college. Managing Managed Services - - The managed services operating ratios vary according to the type of operation; for example, labor costs range from the low teens to 50%. For residential and retail, labor costs are high and food costs are low, whereas for concessions, labor costs are low and food costs are high. Overall, a well-run operation makes a net profit of between 5% and 15%. In addition to foodservice, key areas of responsibility include: => Employee Relations => Human Resource Management => Financial/Budgeting => Safety Administration => Safety Budgeting In addition to food service, key areas of responsibility include: => Food Production/Service => Sanitation/Foodborne Illness Prevention => Purchasing/Recruiting => Staff Training/Development. Sustainable Managed Services - Hospital foodservice directors often say that offering healthy choices in their cafeterias is a key department mission. But many operators are quick to add that they still offer the so-called unhealthy options to prevent a drop in participation and revenues. Health Care Facilities - - Health care foodservice operations are very complex because they must meet the needs of clientele with special needs. Service is provided by tray, in the cafeteria, dining room, coffee shop, catering, and vending. Labor accounts for 55% to 66% of operating dollars. For example, the main focus of a hospital foodservice operation is the tray line which must be double- and triple-checked to be sure each patient gets his/her correct meal. Innovations in preparation, such as sous vide and cook-chill, have allowed for labor savings. - Additional savings can be realized through the quantity purchasing, menu management, and the use of operating systems to reduce food and labor costs. Quick-service chains have also entered this segment of the industry. These chains benefit from long-term leases at very attractive rates compared with a restaurant site. Business and Industry (B&I) - - - Important terms to understand in regard to this segment are: => Contractors Companies that operate food service for the client on a contractual basis. => Self-operators Companies that operate their own foodservice operations. Important terms to understand in regard to this segment are: => Liaison personnel Responsible for translating corporate philosophy to the contractor and overseeing the contractor. Contractors have about 80% of the B&I market. A new trend is for one operator to serve several tenants in a building through a central facility. By offering more healthful meal options, operators are meeting the evolving needs of their clients. Resources largely determine the type of service offered by B&I operators: money, time, space, and expertise. Typical manners of service include: full-service cafeterias with straight, line scatter, or mobile systems; limited service cafeterias offering parts of the full-service cafeteria; fast-food service; cart and mobile service; and executive dining rooms. Managed Services Other Than Food - Many companies, such as Sodexo, have recognized the potential to increase their market opportunities by developing service capabilities beyond food. Companies that are on the cutting edge are able to offer clients broader packages of services. These services often come under the area of facilities management and include: => Housekeeping/custodial/environment services => Maintenance and engineering => Grounds and landscaping => Procurement and materials management => Office and mail services => Concierge services => Patient transportation services (hospitals) Leisure and Recreation - Leisure and recreation is probably the most fun area of the foodservice industry to work in. It includes stadiums, arenas, national parks, state parks, zoos, aquariums, and other venues where F&B are provided for large numbers of people. Stadium Points of Service - Stadium points of service include vendors, concession stands, and restaurants. The concession stands offer everything from branded foods (meaning well-known brands foods) to hot dogs and hamburgers, to local cuisine. A major point of service is the F&B offered in the premium seating areas, known as superboxes, suites, and skyboxes. It is possible for all of these points of service to go on all at once, serving upwards of 60,000 to 70,000 fans. Other Facilities - The same managed services companies that serve the stadiums and arenas contract most U.S national parks. These parks have hotels, restaurants, snack bars, gift shops, and a myriad of other service outlets. Other venues that require F&B service are golf and tennis tournaments, which may service 25,000 people in one day. Advantages and Disadvantages - Advantages of a foodservice career in this segment include the unique opportunity to see professional and amateur sporting events as much as you please; to be in rural, scenic areas and enjoy the great outdoors; to provide a diverse set of services for the guests or fans; and to have a set work schedule. - With recent growth in this segment, many new career openings are now being offered. Disadvantages include large amounts of people to serve in short periods of time; a work schedule of weekends, holidays, and nights; impersonal service; less creativity with food, seasonal employees; and an on-/off season work schedule. Trends in Managed Services - College and university foodservice managers face increasing challenges. There is an ever-present problem of trying to balance rising costs with decreased revenues. Employing students has helped to reduce labor costs. The use of grab-and-go menus, campus cards, 24-hour service, business in health care and nursing homes, and carts at vantage points has increased, etc.