When P&L Meets Town & Gown

John Lawn, Editor-in-Chief

John Lawn

As I write this, I'm en route to a Houston airline connection and have just finished my first a la carte “meal” purchased from the new Continental Airlines coach menu. Surprisingly, I found it readily exceeded my expectations.

As every frequent traveler knows, the days of free, coach class meals and snacks have been in steady decline for years, with Continental one of the last remaining holdouts until recently. Now Continental, too, has bowed to the P&L pressures all our readers are familiar with and has begun to charge for even modest on board snacks.

On the other hand, the $7 meal box I purchased was a much better deal than what I typically find available in airports these days. It offered great variety: a bag of multigrain tortilla chips (made with quinoa, soy, brown rice, flax, sunflower and sesame seeds), augmented by a package of hummus spread; a 3-oz. bag of dried fruit and nut mix; an organic, chewy granola bar; a delightfully savory pouch of Mediterranean green olives seasoned with basil and garlic; and for the more traditional snacker, packages of salami slices along with some Parmesan spread and crackers.

All in all, a great value and a tasty and nutritious one. Such a good value, in fact, that it made me briefly wonder if terminal vendors might protest such offerings as a “town and gown” affront to their “free market” businesses!

Which brings me to the topic of this month's column:

As we report in a story elsewhere in this issue, many onsite operators are finding a variety of benefits to be gained from looking outside of their traditional “captive” customer bases for new business opportunities. Not emphasized in the article is the pushback many get when they are perceived as “infringing” on the customer turf of local businesses or business wannabees.

While our article focuses mostly on café and retail food choices, such complaints have long been raised when our readers have sought or accepted off-campus catering opportunities.

Traditionally, such arguments often go like this: “You, Mr. (or Ms.) Operator, enjoy tax-supported subsidies at your non-profit institution, giving you an unfair advantage when you compete with our free-enterprise and tax-paying local business. Thus, you should be prohibited from offering services that compete with ours, whether or not yours are higher quality, a better value or more fully-featured than what we offer.”

These complaints have been raised most frequently in the higher education arena, where such supposed conflicts of interest are commonly known as “town and gown” issues.

It's my belief that while there can be an amount of truth to such arguments, there's plenty of evidence to make the case that in today's environment many such complaints should be considered moot. Let's start with the argument about “unfair subsidies.”

Today, many dining departments operate as formal or informal auxiliaries, not only carrying all their own costs but also making very significant “contributions” to their institutions' general operating funds. Further, most carry cost burdens that many private employers do not, such as significantly higher wage and benefit packages for employees, negotiated union agreements, etc. If anything, many dining operations are financially handicapped if you compare their cost structures to those of local businesses.

Now, let's take a look at the other side of this argument. Even when they want to, onsite operators are inevitably constrained from reaching very far outside their own doors for additional business. But that hasn't stopped fast-food restaurants, convenience stores, food trucks, pizza shops and a host of other local and national businesses from seeking to tap what they see as a lucrative customer base within any college, hospital, corporate headquarters or other entity with a significant onsite population.

A quick look up and down the street outside the entrances to many of our readers' locations will show entire business communities that have sometimes come to rely on them as a means of support. And make no mistake: they are a financial serious drain on many in-house dining P&L operations.

But if that's your situation, don't bother looking for any recourse (or subsidies) from your administration. The “subsidies” many local business perceive you as having are mostly a thing of the past.

My point is this: Just about every onsite operator today has to run the same kind of self-supporting organization that local businesses do, often with lots of costs the local guys don't have. Administrations need to begin recognizing this and seeing many of those objections for what they are: not a call for a free market, but a call for local protectionism via policy restrictions that actually serve as a business subsidy for the off-site players.