When the University hired food-services giant Aramark Corp. in the fall of 1998 to take over Yale College’s dining services, Yale thought it had found the ideal managed-services firm to control the rising cost of food preparation and to improve the quality of the residential dining halls.
But a month-long investigation by the Yale Daily News, including an examination of invoices and interviews with present and former Dining Services managers, administrators and cooks indicates that in its quest to make a profit and to offset its rapidly increasing spending, Aramark, which is hamstrung by an expensive long-term agreement with a food provider, is dramatically lowering the amount it spends on meal production and cutting key foods from the menu — while charging Yale more for its services than it has ever paid before.
In the full year before Aramark took over, the Yale-operated dining service posted a deficit of $2 million on a budget of $20 million. In its first full year at Yale, 1999-2000, Aramark was $3 million in the red, a 50 percent deficit increase in two years.
Aramark is currently cutting costs to eliminate deficit spending and to turn a profit, sources said. More expensive items such as shrimp, tenderloin steak, white meat chicken breast and spring rolls have all been eliminated from the menu. Also, Aramark hopes to cut the average cost of meal production per student from $2.50 to $2.20.
And Aramark is burning the candle at both ends. A comparison of similar produce products from Sysco Corp., Aramark’s primary produce provider and one of the largest food distributors in the world, and Fowler-Huntting Co., a local produce provider, revealed that Sysco produce purchased by Aramark was, on average, 20 percent more expensive than Fowler-Huntting produce.
Unlike the old Yale-run dining services, which used in-state providers such as Fowler-Huntting for the majority of their products, Aramark must have Sysco as its primary provider because of a cooperative business partnership the two companies established in 1984. Under the partnership, Aramark gets a discount on products it buys in bulk from Sysco, Aramark spokesman Doug Warner said.
Since Aramark took over here, many top Yale cooks have openly expressed disgust with the quality and variety of food Sysco gives them to prepare — a problem that could be a source of labor strife with only 10 months until the cooks’ labor contract with the University expires.
Since Sysco became the primary food product provider for Yale Dining Services, local distributors have experienced significant drops in their business with the University. Fowler-Huntting lost all of its business with Aramark-managed University eating establishments until they complained to Dining Services director David Davidson in January. Fowler-Huntting, which used to do up to $750,000 worth of business with Yale College dining halls, now only serves Commons and its catering service. With Sysco’s higher prices, Yale may be losing up to $150,000 annually on produce for Yale College.
Yale hired Philadelphia-based Aramark in 1998 because the company provided the best management and employee training available, said Kemel Dawkins, who is acting vice president of finance and administration. But administrators and cooks said privately that Yale hired Aramark so it could get out of the food management business and devote more human and financial resources to Yale’s academic development.
It is a growing national trend; the University of Pennsylvania and Harvard also have privatized their food services. Under self-operation of dining services, universities allocate a fixed amount of money to their food services and try not to lose money. In privatized systems, the goal of the private company, in addition to serving the students, is to make money.
Aramark’s most recent Securities and Exchange Commission filing shows that its domestic sales volume increased 6 percent last year, but the company saw a jump in operating income of 29 percent — a sharp profit increase that the company’s quarterly report attributes to “effective cost controls.”
Those cost controls will hit close to home for Yalies in the near future; Aramark will cut the amount it spends per student by 12 percent to offset a rise in food costs.
Any price changes in the Dining Services budget are only a result of increased costs, said Ernst Huff, who is associate vice president of financial and administrative services for the University.
The union factor
More than 20 cooks from various dining halls, citing drops in food quality and variety, voiced their disapproval for Aramark and Yale in a press conference Feb. 14. The contract of their union, Hotel and Restaurant Employees Union Local 35, is up for negotiation with the University.
Not only is Sysco produce more expensive, but many cooks said they believe it is of a lower quality. Sysco is also providing more pre-prepared food items, such as pre-breaded mozzarella sticks, which the cooks said prevent them from enjoying the same freedom in their food preparation.
“We spent a lot of years in this industry,” Calhoun College cook Kenny Brown said. “Now we’re just warm-up cooks.”
Davidson, the Dining Services director and an Aramark employee, said he is willing to entertain menu and recipe changes.
“We asked all cooks to follow the recipes,” Davidson said. “If cooks disagree with the recipes, we will address that issue.”
But the main concern among Dining employees continues to be the change from a self-operated mode to a for-profit sub-contractor, Yale unions spokesman Antony Dugdale said.
“There’s a lot of feeling Aramark is in it for the money and not for the quality of the food,” Dugdale said. “That has a lot of workers worried.”
Despite issues of higher prices and perceived lower quality, Yale Dining Services hopes to remedy the situation.
“[Dining Services] has a responsibility to the students to not have to increase prices,” Huff said. “As product management, it makes sense to look at a whole continuum of options.”
There have been no significant complaints against Aramark that have not been resolved, Davidson said.
To address the problems of cooking-staff employees, Davidson holds “family meetings,” at which cooks meet with managers and Davidson to discuss how conditions can be improved. Davidson also met last week with some of the cooks who were present at the press conference to address their concerns, Huff said.
But Don Jacobs, vice president of Silver Plate Associates, a coalition of former dining service directors, believes universities hire services such as Aramark to avoid high labor costs. Jacobs was director of dining services in a self-operated program at the University of Pennsylvania from 1976 to 1998.
“Colleges don’t want to deal with labor unions,” said Jacobs, who formed Silver Plate Associates with former dining service directors from Kansas State University, the University of Tennessee and the University of Iowa to help other universities return to self-operated dining programs. “[Universities] think [leaving self-operation] is a magic bullet. The key is labor. They think they can get cheaper labor.”
But Aramark currently cannot replace union employees, including the cooks who voice their disapproval of falling food quality. Nor does Aramark intend to replace University employees with Aramark employees, Davidson said.
Although the unionized dining hall employees are not worried about job security, atmosphere in the workplace is now a major concern.
“Morale is low in the dining halls,” Brown, the Calhoun cook, said at the Feb. 14 press conference. “We’re being mismanaged, and Yale is setting up the cooks to look bad.”
The cooks’ press conference came 11 months before their contract with the University expires in January, but administrators said they do not believe the problem with Aramark is serious.
“The current situation is far overblown,” Dawkins said.
Yale actually chose Aramark over continued self-operation to prevent the very mismanagement Brown described, Dawkins said.
“Hiring Aramark was an attempt to get that most vast food managerial experience we could get,” Dawkins added.
The University chose Aramark not only for its present competence, but also for its training programs and vision of Yale’s future in dining services, Huff said.
“[Aramark’s] skill, ability and vision of what dining services should be was exceptional,” Huff said. “They denominated they had greater experience and presentation skills for how a dining service should be managed.”
But produce providers such as Fowler-Huntting and a New Haven-based managerial firm called Good Work Associates already provided on-the-job training for both cooks and managers. Good Work was in the process of restructuring Yale Dining Services management the summer before Aramark was hired, but once the University announced its hiring of Aramark, months of planning for a new managerial system were erased, sources said.
Experienced managers said privately they are worried about job security under a company that now has its own employees in the positions of executive chef and director of Dining Services.
“I feel abandoned by Yale, not Aramark,” one assistant manager said. “The University set us up.”
Rising food costs and fewer menu items are points of concern that employees believe will also negatively affect meal plan prices at Yale.
“Five years from now, a meal plan may cost triple what it costs now,” one dining hall manager said.
In addition to lowered perceived food quality and increased costs at Yale, local providers such as Better Brands and Fowler-Huntting have lost significant amounts of business. The University was one of Fowler-Huntting’s top 10 patrons out of a clientele of over 800, Fowler-Huntting vice president David Yandow said.
“Basically, we had a better product at a better price,” Yandow said. “I don’t think Aramark was willing to admit that.”
In June 1999, Fowler-Huntting received a letter from Aramark telling the company its services were no longer needed at the residential colleges, Yandow said.
In the fall of 2000, at the protest of deans and masters, Fowler-Huntting again began doing business with the University. Before winter break that year, Aramark sent an informal e-mail to managers reminding them to follow proper ordering procedures, sources said.
After the memo circulated, Fowler-Huntting again lost all of its business with the residential colleges, leaving the company serving only locations not already contracted by Aramark, such as the Law School.
“They cut our legs off on all other units,” Yandow said.
After being entirely cut out of the residential colleges, Fowler-Huntting complained to Davidson and Huff, who reinstated Fowler-Huntting at Commons. Davidson said he is currently exploring other ways to involve Fowler-Huntting in supplying three residential colleges.
And Aramark still uses the majority of providers that Yale used when the University operated its own dining services, Huff said. He added that Yale Dining Services is supplied by a larger number of providers than most universities.
Although Fowler-Huntting has lost the majority of its service with the University, Yandow said Huff and Davidson will fix the situation.
“[Huff and Davidson] have Yale’s interests at heart,” Yandow said.
In the Dining Services’ fall 2000 student satisfaction survey, consistency of food quality fell to 3.18 out of a possible score of five from last year’s 3.26 rating.
To resolve the issues of employees and patrons, Davidson and Huff said they have done their best to keep the lines of communication open through the Dining Services advisory board, a committee of students and faculty that meets with Davidson and executive chef John Turenne four times a year.
“We’ve really tapped into a lot of folks as far as feedback goes,” Davidson said.
While the cooks complained about a reduction in portion sizes for meat and fish products, it was the advisory board that approved the reduction to avoid plate waste, said Katherine Cappeluto ’04, who is a Dining Services advisory board representative.
“Every meeting, [dining service administrators] have been open to all our suggestions,” Cappeluto said. “They take what we say to heart.”
Dining Services administrators also consulted the advisory board regarding how they should run their spring survey. Administrators did not consult the advisory board before running the fall survey, Cappeluto said.
Some seniors who have been at Yale before and after Aramark took over the Dining Services account said they have not noticed a significant decline in food quality.
“I think [food quality] has gone up,” said Cynthia Obstinik ’01, who estimates she takes an average of eight meals a week in the dining halls. “There are more choices now, and the quality is better.”
But other students feel that the current menu options are more restrictive than liberating.
“[Dining hall food] definitely has its ups and downs as far as quality goes,” Katrina Whalen ’04 said. “One of the ups is it makes you creative when it comes to finding food. I feel like I’ve been existing on pasta, cereal, salad and that’s it.”