Aramark Corp.’s most recent Securities and Exchange Commission filing shows the food service provider’s operating income rose 29 percent last quarter, a sharp profit increase its report euphemistically credits to “effective cost controls.” Those cost controls come at the expense of one of Aramark’s most prestigious clients: Yale University. Over the last two years, the Philadelphia-based private food management giant has dramatically and unapologetically slashed the dining hall food budget at Yale College, turning the system by which the University feeds its students and builds the residential college community into a profit-making market.
But those profits come at a cost: the quality of the food, the creativity of chefs and the satisfaction of students. A month-long Yale Daily News investigation has revealed that in its efforts to offset a poor business partnership and increase its bottom line, Aramark has shaved the amount it spends on meal production and cut key foods like shrimp, tenderloin steak, white meat chicken breast and spring rolls from its menus. These efforts have proved fruitful. In its first full year at Yale, 1999-2000, the corporation was $3 million in the red. Aramark now hopes to further cut the average cost of meal production per student from $2.50 to $2.20.
We expect Provost Alison Richard and Acting Vice President of Finance and Administration Kemel Dawkins will launch a formal inquiry of their own into Aramark’s cost-cutting strategy and how it is affecting the quality of dining hall food, cooking staff morale and meal plan satisfaction.
Aramark cannot be faulted for attempting to turn a profit, but Yale can and should be faulted for hiring a food service provider that it knew would have to cut corners. Because of a 17-year-old public partnership with Sysco Corp., a primary produce provider and one of the largest food distributors in the world, Aramark is forced to purchase much of its produce at uncompetitive rates. On average Aramark spends 20 percent more on produce from Sysco than it would from local providers, an expense the company passes on to students in the form of deleted menu items and cheaper food.
Yale should begin applying pressure on Aramark to reduce its reliance on Sysco and once again purchase dining hall produce through local providers like Fowler-Huntting Co., a firm that once held an annual produce contract with Yale Dining Services for $750,000. With Sysco’s higher prices, the University may be losing up to $150,000 annually on lower quality produce for Yale College. Richard and Dawkins should also direct Aramark to bring higher quality meats and shrimp back on the menu. Undergraduates can — and frequently do — vote with their feet, leaving the meal plan altogether or purchasing a limited option because of lower quality food under Aramark.
There is more than quality at stake in the debate over Aramark and its cost-cutting strategy in the last two years. The decline in dining hall food quality in many ways poses a long-term threat to the centrality of the residential colleges at Yale. Meals represent the most significant opportunity for social interaction in the colleges, and the erosion of food quality will likely lead to the decline in meal plan purchases.
Aramark administrators say they will soon cut the amount it spends per student by 12 percent to offset a rise in food costs. Before that happens, Yale should reevaluate its relationship with the company and its bald bottom line-first strategy.