Sodexho earns high marks in school

Mike Buzalka

It looks like a college cafeteria, from the snazzy signage and colorful merchandising to the exhibition cooking and the multiple meal options. Customers move briskly through the servery, picking from a range of choices, from individually prepared hot entrees to prepackaged grab-and-go salads, sandwiches and sides. The whole scene conveys a sense of excitement about food, and professionalism in the preparation and serving of it.

It could be a college cafeteria, except that it's a high school, North Olmsted High School near Cleveland, one of some 4,000 individual school sites managed by Sodexho School Services, the public school segment division of contract services giant Sodexho, Inc. The retail flair is thanks to the company's signature Crossroads Café program for high schools. Similar, age-appropriate programs also exist for middle and primary school environments.

Operations like North Olmsted show how Sodexho's centrally developed programs can work at the unit level by offering a "total solution" that includes professional merchandising and marketing, operational expertise, sophisticated management systems, an expanded menu, cost-effective purchasing and value-added adjunct services like nutrition education.

While self-operated departments can offer similar levels of operational efficiency and menu diversity, these depend to a great extent on individual circumstances, while Sodexho presents its solution in a neat turnkey package adaptable to most school environments.

The proof of the company's approach has been its recent success in signing school clients. In the past three years Sodexho has converted some 60 formerly self-operated districts to its management, according to division president Rod Bond.

Today, Sodexho School Services stands on the cusp of a billion dollars in annual managed volume—including about $160 million attributed to non-food-related services like facilities and maintenance—and realizes about $500 million in annual foodservice sales, more than $50 million of that added in just the past year. (In addition to its public school business, Sodexho also realizes more than $100 million in sales to private schools, but this segment is managed by the Campus Services division.)

Let's take a closer look at how Sodexho approaches the K-12 market and at some of the programs and initiatives that have contributed to its success...

Growth Curve
Sodexho has been managing nutrition programs in schools since one of the company's predecessor organizations, Marriott Management Services, acquired Saga Corp. back in 1986. At that time, Saga managed services in 23 school districts. This year, Sodexho is on track for more than 475 districts by the time the current sales season is finished in late summer, according to Vice President of Marketing Tom Callahan.

The growth has been coming faster over the last three years, says Bond, who notes that in addition to the dozens of self-operated district conversions, Sodexho over the same period also signed deals to assume contracts at other districts—including Atlanta Public Schools—that were formerly managed by other contractors.

But while Bond acknowledges that Sodexho is always glad to compete for bids in contract-managed districts, "one of the significant measures that we use to gauge our success is the number of self-operated school districts that switch over to us. And over the last three years we believe we've been the leader in that," he says.

In fact, Bond claims that Sodexho is currently the market share leader among foodservice contract management companies serving primary and secondary schools, though the assertion is difficult to verify because exact competitive figures are unavailable. In Bond's view, that bodes well for the division's future since the vast majority of the $14 billion school segment— around 85 percent, by Bond's estimate— remains self-operated.

That means not only plenty of room to grow but the luxury of picking and choosing the districts that best fit the company's services and business model. These primarily are in urban and suburban settings in densely populated regions. Currently, Sodexho School Services operates in 37 states.

"Clearly, there are some districts that are so small that it may not be cost-effective either for us or for the school district to have us serve them," Bond says. "At the same time, there might still be ways that eventually we can help them in other capacities, such as procurement or training. But clearly, the smaller school districts in the more rural areas are not where we are focusing first."

To account for the recent success, Bond points to an increased recognition of the Sodexho name as well as an increasing openness to the idea of outside management services in the school community generally.

"Within the last couple of years, with the economy taking some tough times, school districts have been faced with severe financial issues," he notes. "They have less money to spend and less tax revenues from the states and/or federal government to count on. Given those factors, along with their need to focus on their core mission of education, they see outsourcing as a way to get out from underneath having to handle auxiliary services—not just food but other areas like facilities as well."

"In the past we had to spend a fair amount of time just explaining what outsourcing is, and why it might benefit districts to consider it," Callahan adds. "Today, we're finding that school districts already recognize that, so we can spend more time talking about what differentiates us."

"Nutrition and child obesity are predominant issues today," Bond says. "The school districts are facing a tremendous challenge because, while they know they've got to be fiscally sound, they also know that they've got to be responsive to nutrition

concerns because that's where the pressures are from the public and the community. Meanwhile, the tastes of kids today are more sophisticated and more diverse than they were five, 10 years ago, and if they don't like what they're offered, they won't eat it, so it's very important to have good choices.

"The school services business on the food-service side is all about serving as many students as possible in what's essentially a short window of time," he summarizes. " By doing that, we're able to generate more revenue for the school district."

And, not incidentally, for Sodexho as well, since most contracts pay the management company fee based on the number of meals served. That means the bottom line for measuring success is how well the company is able to build participation.

Lunch remains key
Most of the meals Sodexho serves in its school operations continue to come at midday, although the company has greatly expanded its breakfast program in the past three years, and also continues to grow in the after-school snack and vending areas.

At the heart of Sodexho's strategy is its three branded café programs, each designed to appeal to different age demographics.

Crossroads Café, introduced at the beginning of this decade, is designed for high schools and emphasizes a retail look combined with "authentic cuisine" ranging from gourmet pizzas to ethnic foods, a variety of choices and "service-to-one" (individually prepared, exhibition-style) options made possible in constricted school-lunch time windows by extensive pre-prep work that allows servers to assemble meal components quickly and efficiently to order, giving the impression of "made-to-order" food while keeping the line moving. The goal is 15 to 25 seconds per student, says Richard Hill, vice president of product & culinary development for the School Services unit.

Kid's Way Café, for elementary schools, incorporates stimulating colors, fun graphics and kid-friendly meal choices.

"It has a higher degree of communication elements that are targeted to a younger audience," Callahan explains. "That includes communicating the nutritional value of different foods and offering what amounts to a 'rewards program' for making good selections. In addition, we try to make the meal break a fun and festive time, with things like a riddle of the day and nutrition tip of the week."

Introduced last year for middle schools, "E.D.z" (Energy Download Zone), mimics mall-style food courts and includes an expanded menu accented with retail-style packaging and trendy-looking stations.

"This is the age when students really start to have more freedom and more responsibility to make their own decisions," explains Callahan. "E.D.z attempts to guide them to make the right decision from a nutritional standpoint while still giving it that retail flair."

Choice is a big component of each.

"We've found that student satisfaction and participation rates rise in concert based on the number of available choices, so that even students on the elementary level are not satisfied with just one or two selections now," Callahan explains. "The minimum for a Sodexho operation is five entrée choices in elementary schools—in high schools there could be over 20!"

Whatever the number of choices, the focus is on meal options that meet federal requirements for reimbursable lunches. A la carte sales as a percentage of the total business "has always been lower than most," Callahan claims.

"Sodexho is a child nutrition organization," he emphasizes. "While we do offer a la carte additions to our menus, they are just that—additions to the menu. Our primary focus is on the reimbursable meal."

Other programs
Other revenue-enhancing strategies include expanding other daypart meal programs, especially breakfast, and exploring opportunities in vending.

"Around 2000, we really started pushing breakfast," Callahan says, "so we've seen a pretty dramatic rise in the number of breakfast meals we serve."

Today about 45 percent of the company's client districts have breakfast programs, many—at least in elementary schools— being served in the classroom. In middle and high schools, breakfast is mainly offered in the cafeteria but the company is experimenting with alternatives, such as serving breakfast on school buses.

Vending is currently not a big part of Sodexho School Services, accounting for only about two or three percent of the revenue stream, Callahan estimates.

But Hill sees opportunities. "Vending is actually going to be a growth area for us," he predicts. Conventional vending suppliers "can't offer what we can in terms of a total breadth of healthy offerings." He's angling to put together a package of options— milk, water, pre-cut fruit and other healthy snacks—to offer administrators looking for nutritious vending solutions.

Building the School Menu
Because of the need to maintain the integrity of the nutritional profile of each meal component for federal reimbursement eligibility purposes, reimbursable meals served at individual school locations are based on the unit's 7,500-recipe central database (including recipes for catering and other non-reimbursable applications) developed by Executive Chef Steve Cooney and his culinary team. To accommodate regional and individual school tastes, many come with pre-approved parameters to allow for some flexibility in spicing and other individuating characteristics at the unit level.

"We try to make sure that we have a very diverse recipe base at all times and remain current with new trends," says Hill.

The database is updated twice a year and Hill estimates that about five percent turns over annually. Operators access it either through the company intranet or from updated CD-ROMs that are distributed to local site operators.

While a certain percentage of meal offerings, especially at smaller schools, are composed of convenience items, Hill says Sodexho tends to emphasize scratch cooking because the increasingly diverse marketplace simply requires more authenticity that only scratch prep can provide.

That has in turn drawn chefs who might formerly have laughed at the idea of working in the public school environment.

When asked how CIA graduates react when he tells them where he works, Hill, who was trained at the Institute, says, "At first they wonder why I'm here but when they hear about my job, they want it."

That job is to incorporate America's growing ethnic food diversity into an appetizing—and cost-effective—menu program that will appeal to kids savvy to different culinary traditions.

"A lot of Asian Rim influence is coming into play, and we sell a lot more of what I call drill-down flavors," Hill says. "What used to be called simple 'Italian' is now subdivided into Sicilian, Tuscan and so forth. Bold colors and flavors are very big."

In addition to the challenges posed by ethnic traditions and authenticity, the culinary team must also continually find ways to meet the operational and cultural challenges of serving meals in school settings.

"Schools often are overcrowded," Hill explains. "There isn't a lot of space—or a lot of time—so portability and doing away with utensils are huge factors."

Solutions? Hill cites Cyclone Salads, cone-shaped tortilla shells filled with a variety of salad options topped by low-fat dressings.

"They can walk around eating a salad like an ice cream cone," he explains.

Another option, Expressables, is similar to Oscar Mayer's Lunchables product except that it is designed to meet federal school lunch nutrition guidelines. It gives kids a healthy grab-and-go option if they don't want to stand in the lunch line.

"When you talk high school, the most important thing is to get the right seat and to mingle with the right people," Hill laughs. "So food definitely needs to be portable and something you can get quickly."

Support programs
Sodexho's school meal program also includes a variety of ancillary services focused on nutrition education, training and community outreach, all designed to present client districts with a comprehensive student nutrition package. They are backed by the company's own detailed studies of the market, examining lifestyle, attitudes, eating habits and food preferences. The first, Kids and School Meals, was published three years ago. An updated version, Millennial Generation Lifestyle and Eating Habits, was released in the past year.

Sodexho's nutrition education activities have evolved to keep up with the changing school environments, especially squeezed schedules. The most recent is School Stars.

"School Stars is all about 'teachable moments' and doesn't require educators to allocate large blocks of time," Callahan explains. "Rather, it is designed to tie in with other subject matters like math, science and geography and is based on activities that are targeted at 15-20-minute time slices, which are much easier to schedule."

Schools are often overcrowded, so portability and doing away with utensils are huge factors.

It also ties in with Sodexho's meal program at the particular school to present "a more holistic approach," Callahan says. "If we teach students the basic concepts of good nutrition and of making good choices, the last thing we want is to have the serving line reflect bad choices."

School Stars is designed for elementary schools. Performance Zone, for middle and high schools, was piloted last year and is being rolled out division-wide this fall. It combines a focus on nutrition with an emphasis on an active lifestyle.

Legacy
School Services has quite a legacy to live up to. Saga was one of the first contractors to enter the school market in 1974, when the government began allowing outside management of school cafeterias participating in the federal lunch program. In fact, one of Saga's original school clients—Oregon City (OR) School District—celebrates its 30th year as a customer this year.

Later, predecessor company Marriott was one of the first to begin offering multiple entrée options in elementary schools and to begin focusing on nutrition and more healthful meal options. More recently, Sodexho has been instrumental in popularizing breakfast-in-the-classroom programs and is now encouraging the expansion of the fresh produce pilot initiative and socalled "seamless product utilization" programs that allow like-for-like substitution of product at the distributor level into the commodity program, reducing costs.

Going forward, Bond sees a new mission emerging.

"Increasingly, we feel an obligation to encourage an appreciation for fresh, healthy food in children," he says. "That's one reason we have chefs in our schools and do things like exhibition cooking. In this age when there are few meals prepared at home, a child may only know how to cook by pushing a button on a microwave. But if kids can be taught about good nutrition and about how to cook wholesome food for themselves, they'll have life skills that will benefit them their whole lives and also have something that they might then pass on to their children."

That, indeed, would be quite a legacy.