Noncommerical Links

Chains find hungry customers in schools, hospitals and offices

By Margaret Sheridan, Senior Editor -- Restaurants & Institutions, 7/15/2003

Pizzas that arrive on time, hot, freshly made and evenly sliced, make Geoff Habgood’s Wednesdays much less stressful. The district manager of foodservices for Deer Valley Unified School District in Phoenix claims participation in school lunch jumps 20% among 30 schools every Wednesday when pizza is featured.

“Kids want brands they recognize,’’ Habgood says. He contracts with Peter Piper Pizza, a Scottsdale, Ariz.-based national brand, and two local shops. In September, he adds Dallas-based Pizza Hut as a fourth vendor.

“At a food cost of 60 cents per slice, pizza is the most expensive item I serve. But it draws the most business,’’ he says. But offering branded items increases participation in the district’s school-lunch program. “Students who normally brown bag don’t bring lunch on Wednesdays.”

As foodservice budgets are squeezed and pressure mounts for noncommercial managers to find more revenue-building opportunities, national chains present a solution. Instantly recognizable, a well-known brand can enhance perceptions of quality, consistency and value. In addition to product, many chains supply technical help, training and marketing expertise. Such alliances not only raise
revenues but also reinvigorate foodservice programs.

Of Pizza Hut’s 7,000 units, approximately 1,100 cater to nontraditional sectors such as schools and colleges, supplying pizza from local stores or commissary kitchen, according to Veena Puri, national director for strategic initiatives. Although the chain has been selling to the school and university segments for 12 years, Pizza Hut plans to invest more to develop business in these markets, she says. “Pizza Hut will go wherever consumers are.’’

HEALTHCARE INROADS
Subway markets low-fat sandwiches and vegetarian choices to foodservice administrators in education and healthcare. The Milford, Conn.-based chain displays at healthcare foodservice conventions to connect with managers and learn more about their needs, according to Janet Bencivenga, senior national accounts manager.

Of Subway’s 15,400 units, approximately 3,700 fit the nontraditional profile, operating at military bases, schools, hospitals, B&I, amusement parks and national parks. Now in 62 hospitals, the chain hopes to increase that by 50% this year, according to Bencivenga. The brand also is in place at 170 colleges and expects to add more than 30 this year.

The chain’s success comes from flexibility of concept and simplicity of product, Bencivenga explains. “Sandwiches don’t require elaborate cooking, training, ventilation or grease traps,” she says. “Our operations can fit into small areas, especially in a food court. An oven is the one major piece of equipment needed.”

AN OLD DOG’S NEW TRICKS
Pairing product to audience is easy for Nathan’s Famous, which finds willing audiences at universities, travel plazas, airports and military bases. “Hot dogs are quick and convenient,’’ says Wayne Norbitz, president of the Westbury, N.Y.-based chain. He adds that the product line can easily be expanded at a college or healthcare facility by adding carts and kiosks to augument traditional operations.

Nathan’s does business on approximately 20 university campuses, with restaurants or counters in campus food courts and branded offerings on menus. In addition, Nathan’s is in the portfolios of major foodservice contractors. The product line appeals to noncommercial segments because food costs are minimal and menu items are easy to prepare and serve with minimal training.

COLD COMFORT
About nine years ago, Atlanta-based Freshëns Frozen Treats expanded its product line, adding ice cream, frozen treats and smoothies to its core yogurt business. About the same time, noncommercial dining was evolving from drab cafeteria fare to exciting venues such as food courts, kiosks and carts. That evolution prompted Freshëns’ to sharpen its focus on the noncommercial sector, according to Steve Kibler, vice president of business development. Now, two-thirds of Freshëns’ business comes from nontraditional customers such as colleges, healthcare and B&I.

The chain’s decision to enter the campus market was ideally timed, says Kibler. “Here is a new generation of students raised on brands. At the same time, foodservice and college administrators were under pressure to make retail operations profitable. Adding brands was a solution,’’ he explains.

With products that require minimal inventory and space, and yield margins around 30%, Freshëns plans to add 200 accounts by year-end, with about 25% in the college/university segment, according to Kibler. Healthcare also is earmarked for more growth. As hospitals open more nontraditional retail operations in such areas as lobbies, outpatient clinics and office buildings with medical practices, Freshëns’ capture rate beyond the traditional hospital cafeteria will increase, Kibler contends. “The business opportunity is there. Healthcare is like B&I with beds,’’ he adds.