On-site players fight sales contraction by streamlining labor, ops

Slammed with rising costs, on-site feeders in the Second 100 are looking for inconspicuous ways to streamline their operations. From cutting back-office labor to seeking out alternative products and buying more locally, contract operators say their efforts are intended largely to spare customers from price increases.

“Generally we’ve seen our costs go up significantly over the past several months,” says Matt King, president of Buffalo, N.Y.-based Delaware North Cos.’ Travel and Hospitality Services division. “We are [experiencing] the same cost pressures that everyone else is. What we’re trying to do is become more efficient in our operations by utilizing other product alternatives to try to maximize our labor model.”

He adds that those labor cuts are being done “in the background so they’re not noticeable to the customer.”

“If we have operations in two small airports,” he says, “we’ll consolidate the back-office [operations].”

Raising menu prices at airport locations is not easy because the airport authorities must approve them first.

“Most airport pricing is limited to what the brand is charging on the street,” King says. “Some airports will allow you to charge more than the street, but you have to wait until the street locations raise their prices. Then you can go to the airport commission to try and get their approval.”

CONTRACT CHAINS RANKED BY U.S. SYSTEMWIDE SALES

Despite the challenging environment, King says the travel and hospitality division “is very much focused on growth [in airports].”

“There has been a downturn,” he says, “but it won’t last forever.… We’ll push through this, go after new contracts and increased revenue at current locations and come out much stronger and bigger. We’ve already got quite a few new contracts this year and some interesting new concepts for regional gateways.”

At Sportservice, Delaware North’s sports and entertainment division, president Rick Abramson says management is “taking this opportunity to fine-tune business.”

“We have seen a 6-percent-to-7-percent increase in commodities, and it is hitting us, this I can tell you,” he says. “But we’ve been resourceful. We’re using more regional suppliers” while trying to buy foods raised by sources located within 100 miles of contract venues.

CONTRACT CHAINS RANKED BY GROWTH IN U.S. SYSTEMWIDE SALES(Year-to-year percentage change)

To that end, Sportservice’s chefs are creating seasonal menus with more local items to cut down on carbon footprints and long-distance freight costs. Abramson also said his division is focused on waste reduction and energy efficiency by having its chefs follow recipes exactly.

He further indicates that while sports fans continue to purchase food at stadium concession stands, they are ordering less-expensive menu items.

“It’s interesting,” he says. “I do have some scientific data, but I really feel that when teams are hot, the stadiums are full and people are eating and enjoying. We are seeing people trading down. Where we’re really seeing that is in retail, but that’s pretty much the case with food, too. We’re selling more hot dogs than we are tenderloin sandwiches.”

CONTRACT CHAINS RANKED BY NUMBER OF U.S. CONTRACT VENUES

Officials at Restaurant Associates Managed Services, a division of Charlotte, N.C.-based Compass Group PLC, are placing more emphasis on the purchase of local items. “Green initiatives and local [purchasing] have been pretty big for us,” says Gina Zimmer, RA’s vice president of marketing. “As the public is becoming more and more aware, they are looking for these kinds of things in foodservice operations, whether it be how we dispose of our waste or the type of food products we offer.

“Local is a huge piece of this, so we’re continually looking at how we can move the needle to offer more socially responsible initiatives,” Zimmer continues. “You know what’s going on with peppers and tomatoes right now? Organic has a much deeper meaning to people for different reasons.”

CONTRACT CHAINS RANKED BY GROWTH IN NUMBER U.S. CONTRACT VENUES(Year-to-year percentage change)