Managed Services

1. 8 Managed Services

2. Chapter Objectives • After reading and studying this chapter, the student should be able to do the following: • Outline the different managed services segments. • Describe the five factors that distinguish managed services operations from commercial ones. continued on next slide

3. Chapter Objectives • After reading and studying this chapter, the student should be able to do the following: • Explain the need for and trends in elementary and secondary school foodservice. • Describe the complexities in college and university foodservice. continued on next slide

4. Chapter Objectives • After reading and studying this chapter, the student should be able to do the following: • Identify characteristics and trends in health care, business, and industry, and leisure and recreation foodservices.

5. Overview • Managed services consists of all foodservice operations asfollows: airlines, military, elementary and secondary schools, colleges and universities, healthcare facilities, business and industry, leisure and recreation, conference centers, airports, and travel plazas. continued on next slide

6. Overview • 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. continued on next slide

7. Overview • 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. continued on next slide

8. Overview • Managed services are different from commercial operations in several ways: • Many managed service operations are housed in “host” organizations that do not have foodservice as their primary business. continued on next slide

9. Overview • Managed services are different from commercial operations in several ways: • 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.

10. 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). continued on next slide

11. In-Flight and Airport Foodservice • 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. continued on next slide

12. In Flight and Airport Foodservice • 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.

13. 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. continued on next slide

14. Military • 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. continued on next slide

15. Military • 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.

16. 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. continued on next slide

17. Elementary and Secondary Schools • 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. continued on next slide

18. Elementary and Secondary Schools • 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. continued on next slide

19. Elementary and Secondary Schools • 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 is not sound nutritious.

20. 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.

21. 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. continued on next slide

22. Colleges and Universities • 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. continued on next slide

23. Colleges and Universities • 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. continued on next slide

24. Colleges and Universities • Many schools have adopted a pre-paid 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. continued on next slide

25. Colleges and Universities • The driving forces of change on campuses are the advent and growth of branded concepts, privatization, campus cards, and computer usage. continued on next slide

26. Colleges and Universities • A college foodservice manager today must have better skills in retail marketing and merchandizing as students are given more discretion in how they may spend their money for food on campus.

27. 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 foodservices, beverage foodservices, branded quick-service restaurants, and take-out foodservices. continued on next slide

28. Student Unions • 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.

29. 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. continued on next slide

30. Managing Managed Services • Overall, a well-run operation makes a net profit of between 5% and 15%. continued on next slide

31. Managing Managed Services • In addition to foodservice, key areas of responsibility include: • Employee Relations • Human Resource Management • Financial/Budgeting • Safety Administration • Safety Budgeting continued on next slide

32. Managing Managed Services • In addition to foodservice, key areas of responsibility include: • Food Production/Service • Sanitation/Foodborne Illness Prevention • Purchasing/Recruiting • Staff Training/Development.

33. 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.

34. 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. continued on next slide

35. Health Care Facilities • 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. continued on next slide

36. Health Care Facilities • 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. continued on next slide

37. Health Care Facilities • These chains benefit from long-term leases at very attractive rates compared with a restaurant site.

38. Business and Industry (B&I) • Important terms to understand in regard to this segment are: • Contractors • Companies that operate foodservice for the client on a contractual basis. • Self-operators • Companies that operate their own foodservice operations. continued on next slide

39. Business and Industry (B&I) • 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. continued on next slide

40. Business and Industry (B&I) • 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. continued on next slide

41. Business and Industry (B&I) • Resources largely determine the type of service offered by B&I operators: money, time, space, and expertise. continued on next slide

42. Business and Industry (B&I) • 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.

43. 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. continued on next slide

44. Managed Services Other Than Food • 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 continued on next slide

45. Managed Services Other Than Food • These services often come under the area of facilities management and include: • Office and mail services • Concierge services • Patient transportation services (hospitals)

46. 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.

47. 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. continued on next slide

48. Stadium Points of Service • 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.

49. 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. continued on next slide

50. Other Facilities • Other venues that require F&B service are golf and tennis tournaments, which may service 25,000 people in one day.