Business & Industry

Fewer employees and smaller budgets pose challenges for self-op foodservice

By Margaret Sheridan, Senior Editor -- Restaurants & Institutions, 9/15/2003

When the economy gets tough, employee-feeding programs feel the pinch as workforces and shifts are trimmed. The 2% nominal sales decline Technomic projected for 2002 in the business-and-industry (B&I) segment was the first negative-growth forecast since the Chicago-based research firm began tracking the industry in the 1970s. A 2% nominal gain forecast for 2003 was a little brighter, though still a 0.7% drop in inflation-adjusted terms.

The struggle to regain strength is most difficult for self-operated B&I foodservice. Forced to defend its value to corporate decision-makers in a time of budget cuts, B&I also must at least pay its own way if not provide profit contributions. Despite these challenges, B&I operators remain committed to maintaining quality and expanding reach.

Last year’s 16% management downsizing at the Federal Reserve Bank of New York in New York City resulted in a loss of 150 customers for Mary Mauel-Friedman, catering services administrator. Her staff was cut by 10 to 47, and retail sales slipped 7%. Mauel-Friedman rebounded by adding vending, more self-serve and grab-and-go items, which helped her generate $1.95 million in retail sales in 2002.

With five foodservice outlets, including two cafeterias and several executive dining rooms, she plans to increase private-function catering (which provides 45% of revenues) and re-evaluate price structures for such services. When you compare our prices with restaurants in New York City, my pricing may be too low. Employees appreciate the convenience and quality of holding a private event here,’’ says Mauel-Friedman.

To counter the decline in retail sales, she increased takeout items. “Ten years ago, we never used paper products. Now, 70% of retail sales is take-away,’’ she explains.

Skillful staff management and deployment of technology allow her to control costs. An expanded POS system reduced the number of cashiers in one cafeteria while a new automated inventory-control program streamlined purchasing. Now, Mauel-Friedman intends to expand these capabilities to purchase via the Internet.

Survival skills
“To survive as a self-operator, you’ve got to think like a contractor. Be more efficient and cost-conscious, anticipate business swings, and react fast before the company tells you to,’’ says Mike Sweet, operations supervisor at Corning Inc. in Corning, N.Y.

He speaks from experience. The closing of two Corning plants in 2002 resulted in the loss of 100 to 140 jobs per location. Combined with a 40% decrease in retail sales since 2001, the job cuts forced Sweet to think creatively about menus and implementation.

To meet the challenges, he increased self-serve options and substituted for or reduced the number of labor-intensive items on the menu. Recipe and ordering standardization keeps spending consistent and reduces waste. And Corning’s Web-based procurement system electronically tracks invoices, cutting down on errors.

Meeting the challenge
Despite 2002’s 11.3% year-over-year decrease in retail foodservice sales, General Manager Brett Fairbanks of Cafe Limited continues to track sales, retool his menu and create new events at clothing retailer The Limited’s Columbus, Ohio, headquarters.

Lunch accounts for 60% of daily sales. Weather-permitting, Fairbanks offers barbecue on Fridays, which increases participation from 100 to 140 customers. Improved displays resulted in additional catering business, which generates about 21% of overall sales. The figure grows to 25% during summer months when Cafe Limited adds more entrée salads and specialty breads.

At software developer SAS Institute, a hiring freeze didn’t faze Foodservice Manager Julie Stewart. She reassigned employees from catering and cross-trained staff at the company’s Cary, N.C., headquarters. The extra work means added hours for some staffers and an opportunity to acquire new skills.

Last year’s 2% increase in retail sales to $2.6 million came partly from better marketing of foodservice on the SAS intranet. A redesigned food page provides more information on menus, specials and promotions. Employees order at their desk for pick-up later, maximizing kitchen usage and customer satisfaction. An added bonus: No one has to wait in line, Stewart adds.

Food Service Manager Paul Caron monitors costs at Anthem in North Haven, Conn., but he never lets profit concerns keep him from offering a few luxuries to the insurance company’s 1,900 employees. He doesn’t make a profit from items such as Delmonico steak or lobster bisque, but these menu marketing tools get customers talking—and returning. “They come to see the next surprise,’’ he says.