SBJ/May 28 - June 3, 2001/Special Report
Colleges work up an appetite for pro service
Published May 28, 2001
If you're in the concessions business and are looking to beef up your client base, you might want to check out the collegiate concessions industry.
Not only is the college market in the midst of a facilities boom, which means revamped concessions areas and increased sales opportunities, but the market is also, by industry estimates, largely untapped when it comes to hiring outside companies to do its stadium and arena concessions work.
Executives at Sodexho Marriott Services and Aramark, the two market leaders in collegiate concessions, said only about 30 percent of the college market is outsourced. That percentage has been increasing over the last decade as concession stands in college venues have been enhanced, said Scott Baumgartner, vice president of concessions and arena management for Sodexho Marriott.
"With the new construction that's going on on college campuses and the changes in concessions facilities, you're definitely seeing an increased need for specialists to come in," said industry consultant Chris Bigelow, president of The Bigelow Cos.
Historically, it was not uncommon for whoever did campus dining to also handle sports facility concessions, Bigelow said.
That's how Sodexho Marriott and Aramark, two leading on-campus food providers that also have separate concessions divisions, claimed their stakes in the market.
"We became market leaders really by default," said Kim Lossing, general manager for Ohio State University Concessions for Sodexho Marriott. "We had so many campus dining accounts that a lot of the schools told us to provide for the football stadium, too."
Sodexho Marriott has more than 40 major collegiate concessions accounts, including Ohio State, Washington, Texas, Georgia Tech and Auburn, while Aramark has between 25 and 30 major accounts, including Clemson, Virginia, Texas A&M and Oklahoma.
But as the industry has changed, additional concessions companies have entered the market, Bigelow said.
"It's more than overseeing areas that are not much more than four walls and a counter with little electricity and plumbing," he said. "The trend is to bring college facilities up to major league standards."
Other players in the industry include Volume Services America, Boston Concessions Group and smaller regional companies like V/Gladieux Enterprises Inc., a Toledo, Ohio-based company that services a handful of Midwestern institutions.
Companies that built their businesses around professional sports teams' venues also are starting to dip into the college market.
Sportservice Corp., the third-largest concessions provider with 42 pro teams, signed its first collegiate venue this year — the Ervin J. Nutter Center at Wright State University.
"I think we're seeing more [requests for proposals] going out for college venues than ever before," said Mark Thomas, vice president of Well Bread Restaurant Services Group, a division of Sportservice. "And I believe that it's because administrators of universities and colleges are looking for different ways to maximize revenue and they're looking to bring in the pros when it comes to concessions."
Industry consultant Bigelow said the number of outsourced concessionaires will continue to grow but a lot of the market, particularly institutions with smaller departments, will remain self-operated in order to keep all concessions revenue in-house.
"It doesn't make economic sense for some schools to contract out," Bigelow said. In general, schools pay up to 25 percent commission to outsourced concessionaires, he said, adding that schools in the elite conferences are paying commissions of up to 40 percent, which is similar to what major league teams pay.
That 40 percent is worth approximately $400,000 to $800,000 to concessionaires at schools with big-time football programs.
The industry has changed so much, though, that it has become necessary for institutions choosing the self-operated concessions route to hire experienced concessions managers, Bigelow said.
"To pay an extra $10,000 to $15,000 to someone who knows the business will more than pay for itself in the long run," he said. "Because if you hire a bad manager, a lot of money could be lost very quickly."