The Rising Cost of College Dining

“Like many college students, I have a full bookcase and an empty fridge.”

In a March 2017 Op Ed, Olivia Ellison–a senior at University of Colorado majoring in Exercise Science–shares her experience and thoughts on an alarming C&U student trend: food insecurity.

Ten years ago, Georgia State University officials became worried about the impact of pricier student housing on the ability to afford earning a degree. Research was commissioned to examine the connection and the results were sobering: for every $5,000 in unmet financial need, a student was 12 percent less likely to graduate[1].

As the higher education industry faces declining undergraduate enrollment and falling numbers of high school graduates, basic and affordable amenity options are quickly becoming top priority with C&U leadership looking to attract increasingly cash-strapped students and their families.

WHY IT’S HAPPENING

Consider the following statistics regarding the costs of higher education:

100% increase in college tuition since 2000; 28% increase in room and board in last decade; 50% increase in student meal plan costs since 2006.

It shouldn’t be a big surprise that 83% of Americans say they can’t afford a college degree for themselves or a family member.

With tuition, class materials and student fees being inflexible fixed costs, students are opting out of meal plans–or buying the bare minimum–to save money. In addition to declining meal plan revenue, campuses are now also battling double-digit levels of food insecurity* among students.

According to a recent food insecurity study of college students[4]:

  • 47% of students enrolled at four-year colleges say they experienced food insecurity in the last 30 days.
  • 43% of students at four-year colleges and enrolled in a campus meal plan say they experienced food insecurity in the last 30 days.

*Food insecurity is defined as the state of being without reliable access to a sufficient quantity of affordable, nutritious food.

WHAT WE THINK

The projected financial reality of future C&U students and their families makes changes to dining services inevitable.

The desire for quality, nutritious and delicious food is universal among students. But the average college and university charges about $18.75 per day, for a three-meal-a-day dining contract, compared to the less than $11 a day a single person spends for food[5]. As the number of financially stressed students who see cost as a barrier to selecting a meal plan that fits both their budget and hunger state increases, so do the risks to current C&U dining services models.

WHAT’S NEXT

It’s important to proactively anticipate these conversations and be prepared with both product and business solutions to help foodservice directors navigate this next evolution in C&U dining.

Consider the case of Jerry Rackliffe, Georgia State University’s vice president for finance administration:

After seeing the research on financial need and graduation rates, he convinced the housing department to open a “tiny-dorm” option that would include smaller rooms, more basic amenities and an unlimited meal plan that would collectively cost less than a room alone at other upperclassmen units. When Patton Hall opened in the fall of 2009, it filled up faster than any other campus housing option. It was so popular, the school converted two local hotels to the same concept in 2011.

A basic-tier plan that provides unlimited meals could be a mutually beneficial solution: increasing meal plan participation among financially at-risk students and relieving pressure from stop-gap hunger solutions like food banks and student meal donations.

Just some Thought for Food™

 

[1] “Why Universities Are Phasing Out Luxury Dorms.” The Atlantic. August 21, 2017.
[2] “Tuition and Fees and Room and Board Over Time.” The College Board. 2016
[3] U.S. Department of Education. 2017.
[4] “Hunger on Campus: The Challenge of Food Insecurity for College Students.” Dubick, Matthews and Cady. October 2016.
[5] The Hechinger Report. 2016.

GPO Traction with Independents Changing The ‘Street’ Game

In late April, I attended a summit in Chicago exploring the rise of Group Purchasing Organization (GPO) membership among independent restaurant operators and the statistics surprised many of us in the room:

GPO Traction with Independents Changing The ‘Street’ Game

Source: “The Fight for Foodservice ‘Sweet Spot’: GPO Traction with Independents.” Pentallect. April 2017.

  • Nearly 40,000 independent operators belong to a GPO
  • Independents only represent 40% of total GPO purchasing volume, but comprise more locations than chains/groups (60% of GPO volume)
  • Independent membership in GPOs is projected to experience double-digit growth over the next five years

As Pentallect poignantly observed “independent foodservice operators [represent] a $100 billion market with little clout.”

Why It’s Happening

It’s a combination of several factors, but two themes emerged throughout the day: price and transparency

  • Independents pay 10% – 20% more than ‘groups’ for products and services
  • Average GPO gives operators an immediate 5% – 7% savings on margin
  • The rise of non-traditional foodservice ‘distributors’ (Restaurant Depot, Webstaurant Store, Amazon) are pushing the industry toward total price transparency

What We Think

Manufacturers that rely heavily on street business must have an overarching GPO strategy.

GPOs are here to stay. With penetration already high in non-commercial, expect aggressive pursuit of independents and even K-12 accounts. Adopting an overarching GPO strategy is critical to protect margins and will help ensure pricing consistency as operators demand (and receive) more price transparency.

What’s Next

There is no one-size-fits-all strategy that works for everyone. Manufacturers need to identify GPO partners that align with strategic portfolio and business priorities. Partnerships should:

  • Ensure programs align with one another
  • Ensure operator compliance
  • Have measurable ROI systems in place

Want a deeper dive on how GPOs with independents are changing the industry? Contact your account service representative to learn more.

Questions, comments or want to learn more? Let's connect! akile@jtmega.com

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