Dec7dtf

Food Service DTF
December 7, 2000
Attendance: Piper Kapin, Chuck McKinney, Shoni Schlotzhauer, Kevin Anderson, Russell Garafalo, Mike Drennon, Robin Herring.

Rich Wheeler, Fessel International, was on campus today. He spent the morning with Chuck and Piper going over history and budgets, did a walk-through of the facilities, and had lunch at the burrito bar. He joined the DTF for a question-and-answer session.

Rich gave a brief introduction for the group. He has been in college and university food service industry for approximately 30 years, and in the food service/restaurant business for more than 35 years. A large proportion of his clients are self-op, ranging from small campuses with a few hundred students to UCLA and Harvard.

Rich asked the staff and students what the situation is now with the food service and about the impending decision.
Comments:
? Most people don't want Fine Host or Marriott here. When Rich asked the student to break them out, it was stated that Fine Host is having problems regarding their workers unionizing and that the food quality is bad. Marriott has prison industry links, has money, and "because of ethical things". There was a large public outcry about it last year. The "informed" community doesn't want it.
? Community is dissatisfied with food and doesn't look forward to going to lunch. If you ask students, they'd prefer in-house or in town; that's the general consensus.

Rich commented that to move to a self-op requires quite a commitment. You don't just start out and then decide to go back to a contract. You have numerous employees working for you; you become responsible to your workers and shareholders.

A student commented that a self-op is more democratically controlled and you would have more control on where the food comes from. Rich reminded the group that you could write that into a contract. You can write virtually anything into a contract. The contractor will probably charge you for being more responsive, but it can be done.

Rich said that a self-op and vendor have the same costs associated with providing that responsiveness. Generally the campus has higher expectations of a self-op, and the campus does not give them the latitude to reach those expectations as they do not want them to charge more. That is the position a campus eventually takes; the community you are serving are your customers, and when they give you the directive not to charge more, that's how it will be.

A student asked if it would be difficult to find a food service director for a self-op. Rich said that they are out there, and one should be interested in this position as it would be challenging and a good opportunity. He thinks that the salary range Chuck has figured into the model is probably a good figure, but we couldn't go below that amount.

A student commented that we would be fishing in a pool of people with the same ethics. It was pointed out that his stance didn't relate to ethics, but to philosophy. We could find someone who doesn't have the same philosophical views, but who is ethical.

Rich asked what our expectations were for a food service operation.
Comments:
? One that would respond to the community very attentively. It was stated that because a self-op would be part of the community, it would be looked at differently.
? Number of factors to consider:
? Large vegan population on campus
? Where the food comes from
? Politics of the director
? Labor issues

Rich asked if we would retain the current staff. Go Union? The response was that we would retain the staff, but all classified employees would have to join the local union.

Chuck stated that some of the issues from the students involved utilizing regional products and composting. Rich told the group that you should be able to do all of that with a self-op or with vendors by writing it into the contract. A student commented that it should be simpler to deal with these issues; corporations are only interested in the bottom line. Fine Host is not the problem with composting; lack of facilities for composting comes into play.

Rich stressed that everything that leads to customer satisfaction can be written into a contract. You can have specific measurement results that are built in as an incentive, rather than a hammer; when the company accomplishes a set result, they get a bonus.

A student asked if there was a good reason to go self-op. Rich said that day-in and day-out, you'll get much better responsiveness from a self-op than from a contractor. You have the opportunity to make more money potentially, with possibly lower prices to the community. You can also build into the budget reserves capital to do the work, such as service area improvements. You would have responsiveness to the quality of food, cleanliness, quality of service, etc.

Robyn Herring asked if you could legally make a profit as an auxiliary. Chuck McKinney said he would look into it.

A student said that there was motivation for Evergreen to go self-op because there was a lot of anti-corporate sentiment. Some students are concerned about the ways corporations do business world-wide. One of the students felt that they would be more inclined to spend money on campus if the dollars went locally.

When asked if the students would prefer having a contracted food service on campus that met our needs with having a self-op that is more responsive and prices 10 percent higher, a student said that she would rather spend the extra money. When asked the same question only having the prices 20 percent higher, the students weren't as sure. One said that he would have to know what he would be getting for the additional 20 percent.

There was some concern that having a self-op may include having a lot of bills with no way to pay them and state employees we are committed to keep. It seems better to transition into a self-op, if possible.

One student said that having a self-op would make it more compelling to purchase food on campus. Rich said that you can't make that leap. You may have organic food, and someone who is responsive to the campus, but that doesn't necessarily make the food more palatable or tasteful. The student hoped that someone coming to Evergreen would bring knowledge of culinary cuisine more adaptive to the community.

Chuck asked if there were tested menus available for purchase that would be suitable for a self-op. Rich said that they are available from a number of resources and a number of different packages can be purchased. There are vegetarian and vegan products out of Cornell University that are good. You can buy in-house brands, recipes, and procedures-very extensive packages. You can review a menu mix and adapt it to campus.

Rich asked what people would think if the only contractor alternative was Sodexho. A student said that she would rather pay 20 percent more for a year and hope that the self-op would improve and cost less, rather than sign a contract for 7 years.

Rich assured the group that you can write 6-month reviews into the contract-even a 10-year contract. That practice isn't common, but it can be done. If the contractor thinks they can fulfil it, they'll do it, but we may have to pay an unamortized investment if the contract doesn't go to term. However, even that could be offset because the college could control the purse strings as a counter measure.

A student asked about the average timeline to go self-op. Rich said that that is dependent upon the campus and that we are on a very tight, short timeframe with this. He would hate to be in our place and make the decision to go self-op because we are in a tight timeframe bind. He suggested that a couple of options would be to "re-up" with Fine Host or work with a local contractor for partial catering for a year while more research was done. He would hesitate to see us make such a large decision solely because we're dissatisfied with Fine Host. We were reminded that a contractor is only as good as their on-site manager. There are some good contractors out there; Fessel was recently hired to do a master plan for a contractor and they have turned a bad situation around.

A student stated that Fine Host was not willing to add on a year to the contract with Evergreen. That wasn't established as a fact, but it was commented that probably a year extension is not a strong option. Rich suggested that we wouldn't want Fine Host around for another year if they were to operate the way they were today; that would not be a good option. However, we could consider a different type of contract with them, such as a management fee. That would cost more, but we may get a higher level of food quality and responsiveness. A contract like that would state that we want a set level of service and/or product; if the contractor performs, we pay for it.

One of the students asked if that was a way to phase in a self-op-to which Rich responded "if you were a corporation, would you do that?" A jump to a management fee accomplishes that to a degree. It would give us the management control-for quite a fee. Would that put quite a damper on our ability to go self-op, because of draining of funds? Chuck didn't think so.

Rich stated that we could get the self-op modeling done in 9 months, but that would be a real forced march and would take quite a commitment from the administration. When asked the best way to take another year to develop the model, Rich responded that the group would have to do more studying, develop a master plan, measure the amount of business available for either a self-op or a vendor. What proportion of the current audience are you serving? Who's out there? How do you reach them? Is additional business out there? There needs to be market research and an analysis of the campus marketplace. What does it take to meet the needs and the cost to accomplish that? Rich reminded the group that it is expensive to be able to continue to meet the needs of the campus community; students change continuously, and you need to build in a 25 percent change factor each year. You have to continue to reinvest in these operations.

One student expressed his frustration with surveys, as he doesn't feel that he gets accurate data. Rich's company can go into a campus, take a look around in a couple of days, and get a sense of 80 percent of what's going to work on that campus. Sodexho did surveys and had a good sampling, as they were positioned for evening and residential populations as well. Their information is not available to us, but their model is based on those surveys, and Chuck has been using the Sodexho model as a guideline.

Chuck commented that the food menu will continue to change. We don't have information on where we are going in the next 3-4 years or the next 8-10 years-let alone trends.

Robyn asked if we have narrowed down the definition of self-op. Chuck and Piper are developing a model for the January meetings, using the Sodexho footprint. It will be a pretty basic model that will include a detailed labor analysis.

A student said that the student consensus was that they didn't want outside vendors coming in, as they didn't want to take money from the self-op. Rich said that that isn't necessarily a given. If someone provides a service, they would probably make a profit, but that program may generate more business, which would bring more money into the self-op. The University of Washington has Subway selling a large dollar volume on site; if they made subs on their own, they may not sell as many and would make less money. You could always phase into taking over those concessions over time.

One of the students believes that they're getting a clear picture of what the self-op would look like. Chuck said that they can define a model and some parameters by January, but there is still a big leap to implementing the self-op. He expressed some concern about taking over from Fine Host and operating something just like it on campus, and felt that was a recipe for failure.

Rich reassured the group that the existing kitchen and servery could be used. A set of menus could be brought in on a temporary basis, as the self-op was phased in. He suggested that the deli be attacked first rather than doing everything at once. There would definitely have to be a program in place and a concerted effort to do one thing at a time. That would be an alternative, but not something he's recommending. To clarify, he said that if Evergreen decided to go self-op, they could go into the Greenery as is, change the menu concepts, and bring in recipes as a phased approach. If Evergreen opts for a self-op, he suggests a phased-in approach.

Rich stated that it would be a major jump to go self-op, and would need a plan on how to implement it and phase it in. He said it's too early for him to recommend a plan.

When asked about contracting out and including in the contract that certain menus be used, Rich said that that is common. Marriott operates with different brands and local brands. Contractors do the same thing with recipes. You could use the vegetarian program out of Cornell, for instance. You could contract with Cornell for a year for someone to do the training and come out occasionally for follow-up. A student commented that that would be a way to potentially test the market without going self-op.

One student asked about the chances of getting a 1-year contract that would meet our needs. Unfortunately, we don't have anything that is attractive enough to anyone for them to want to do that. One-year contracts are not appealing to contractors, as they have to make a commitment to their employees. Rich has found that it is far too expensive and too big a commitment for even a 3-year program for most companies. Chuck said that it would be hard to get a good general manager, and we are challenging enough that we would need one with really good managerial skills. A company would be more apt to put a skilled, talented general manager in a position where they could bring in more money.

A student asked if there are other options besides signing with Fine Host for another year. Chuck said that the University of Washington is willing to look at hiring on with us as a managing consultant for a fee. That is very tentative, however, and hasn't been discussed with Evergreen's Senior Staff. If it happens, it would be a true alternative, but it would still be a large commitment to self-op, as we would have about 10-12 state employees for the year and would be unable to contract out and eliminate their jobs.

The only options at this point are:

• Have an RFP on the street in February
• Work out a contract with University of Washington
• Work out an extension with Fine Host
• Jump into self-op.

Rich said that there may be another option: cut an agreement with Fine Host and the University of Washington. Fine Host would continue to be the contractor of record and supply the employees, but the University of Washington actually would manage the program. We would have to pay Fine Host, but we would buy time-and it would not be cheap.

Would it be possible to put the RFP out and still decide to go self-op? Yes, but there is still a lot of work involved if we decide to go self-op. Also, Rich's company can be hired to come in and develop a master plan that is responsive to the campus needs. That program could be used to put out for bid.

Rich's bottom line: By extending for one year, that first year would cost a lot, but jumping into a self-op at this point could cost even more, is risky, and you're buying a long-term commitment without a lot of preparation.

Chuck commented that the University of Washington group advised us that we needed another year, also.

Rich will provide the DTF with a written report of his findings. If there are more questions for him, he can be reached by e-mail (via Piper).