Thanks to a focus on value and convenience, the B&I segment seems poised for a comeback.
Although the recession has taken its toll on the business & industry (B&I) foodservice segment, there appears to be light at the end of the tunnel. Last year, B&I generated close to $13.5 billion in retail sales, representing a 2.3 percent share of the foodservice industry, according to Technomic, a Chicago-based research firm.
This year will continue to be a challenging one for B&I operators, the segment is expected to fare better than it did in 2009. Nominal growth, which decreased 10 percent in 2009, is anticipated to be down only 7 percent this year, Technomic reports.
"Corporate dining is, and has been for quite some time, facing increasing competition from off-site restaurants. As a result, retaining customers is sometimes a challenge," says Annika Stensson, the NRA's director of media relations.
Value meals, grab and go items and healthier options are recurrent themes in corporate dining operations. And the corporate cafeterias may have the edge when it comes to convenience. "Convenience is a key factor in the success of these facilities, especially in locations that don't have other restaurant options in the vicinity," Stensson says.
Some companies position subsidized foodservice programs as an employee benefit, developing dining rooms more reminiscent of an offsite restaurant rather than the traditional corporate cafeteria. As part of this transformation, menus in this segment continue to evolve.
"In the past couple of years, people's awareness of health and nutrition has increased substantially," says Tom MacDermott, president of Kingston, N.H.-based Clarion Group, management consultants in dining foodservice. Consequently, corporate dining facilities are beginning to include nutritional information on menus.
There also has been a growing interest in sustainability and the use of local ingredients. "Local sourcing and various aspects of sustainability are becoming more common and important elements in this segment," says MacDermott. "Energy-efficient equipment also is now a top priority."
B&I kitchens are becoming smaller, yet they serve the same number of employees. "There is more grilling in these operations as opposed to cooking," says Angela Phelan, Clarion's senior vice president. "Kitchens have become more efficient and food is taking less time to cook. Everyone is trying to do more with less."
Q&A with Kelly Friend, vice president of operations, Whitsons Culinary Group, Islandia, N.Y.
A family-owned dining services company, Whitsons Culinary Group can hold its own against its bigger competitors in the B&I segment due to the organization's ability to adapt to the changing needs of its clientele.
A 20-year veteran of Whitsons, vice president of operations Kelly
Friend's extensive hospitality and culinary background, which includes a stint at the famous Le Cordon Bleu cooking school in France and a degree in hospitality management from the New York Institute of Technology, helps the company maintain its competitive edge. In her role, Friend introduces concepts, works on menu development and helps implement foodservice programs for B&I clients.
"We develop internal concepts that mirror retail operations as well as focus on creating unique foodservice models for corporations," Friend says. "These are for small and large applications as well as freestanding kiosk-type environments."
FE&S spoke with Friend about the changing B&I segment and how Whitsons has overcome the challenges in today's economy.
FE&S: What are the day-to-day issues today's B&I operations face?
KF: It's important to provide enough value so customers' purchases warrant the expense. In some instances, companies want a full-service option. We will partner with third-party providers to design and build cafeterias. Other clients want us to help their operations be more successful. We can either overhaul or refine self-operated programs.
FE&S: How have you adjusted your operations to remain profitable in this economy?
KF: Even though participation in corporate dining remains steady for most of our locations, check averages have dropped from $5.50 to $2.75. As a result, value-added menus are one of our most successful programs. We also have adjusted our portion sizes. By offering smaller meals at lower price points, we can reduce costs and keeps meals in line with today's nutritional values. Our programs bundle soup and a beverage with an entrée or fruit with a sandwich. It's still possible to offer satisfying meals at a reasonable price. Consequently, we're seeing check averages begin to creep up.
FE&S: What makes the B&I industry unique?
KF: Unlike the retail environment, we have a captive audience. The downside is corporate dining can't rely on street traffic to increase sales. The goal is to keep employee diners interested. If a diner has a bad experience in retail, they won't come back. Corporate dining operations can't afford to let this happen.
FE&S: Please describe your menu concepts.
KF: We offer 22 different menu concepts, working off of a seasonal corporate cycle. One of our most popular menu concepts is the crepe station because it's different and unique from most other options. There is not a lot of competition when it comes to crepes, and there are endless ingredient possibilities. Crepes can be a meal in any day part as well as a dessert item. We add various proteins, cheeses and vegetables. We can create ethnic crepes. Customers enjoy picking out ingredients to customize their meal and watching it being prepared in front of them. Another popular concept is Expressly Asian. This station typically outsells all of the others. This simple stir fry setup offers either a choice of noodles, including cellophane, lo mien or dry, or fried, sticky or brown rice. Customers choose from a variety of meat and fish, such as Asian-flavored chicken, sesame beef or baby shrimp. We recently added sea bass to the lineup. Vegetable ingredients include carrots, broccoli, bok choy and peapods. We are continually adding new sauce components and ingredients to this station. The Italian eatery concept, La Cucina, includes freshly baked pizza and is one of our top performers due to the lower price point.
FE&S: How have the menu items evolved in recent years?
KF: We have a large R&D team that researches and tests recipes in our corporate kitchen, but each installation's culinary team has the flexibility to create signature recipes using the company's ingredient specifications. In the last seven years, we have changed our recipes because ingredient declarations have been revised. We've stripped out all of the processing, chemicals and additives in what we're serving. Ingredients contain no MSG; enhancers; colors; flavorings; trans fats; or hydrogenated oils. Our meat and dairy products are free of hormones and antibiotics. Produce is purchased locally from the New York Tri-State area, until the growing season commences. Whitsons makes large volume commitments with area farmers and growers at the beginning of the season, so they plant what we need. It has been a win-win for us. We purchase the freshest product, while reducing our carbon footprint.
FE&S: How does foodservice equipment support the menu?
KF: Each location cooks food on site from scratch. Sites are completely self sufficient in terms of food procurement, equipment, etc., but we set specs at the corporate level. Kitchens range in size greatly, but most include ovens, tilt skillets and char grills. We have bought equipment specifically to prepare one menu item, and found out it's flexible enough for a variety of dishes. For example, locations without a deck or brick oven have a conveyor oven for making pizza. The chefs experimented with the conveyor oven and quickly discovered how versatile the unit is. We were able to expand our Mexican concept, creating individual pizzas in muffin pans and filling them with Tex-Mex ingredients. The oven also was instrumental in creating our Toastables concept, which features hot sandwiches. In an effort to provide a home-style entrée at a cost-effective price point, we recently experimented with a macaroni and cheese concept called Elbow Room. Customers can choose from traditional, whole grain or gluten-free pasta, in addition to 20 different toppings and five cheeses. Individual aluminum rectangular containers are filled with cooked pasta and rolled into the conveyor oven to create a simple dish. Larger facilities that have catering options use cook-and-hold ovens, while smaller sites utilize double-door reach-in refrigeration, because it's easier to have items stored by each station rather than in a walk in within the kitchen.
FE&S: When buying equipment, what attributes are key for the B&I segment?
KF: It's important that our equipment is portable so we can move items amongst the different stations as menu concepts evolve. Units also need to be flexible for food holding and steaming. We look for equipment that is easy to clean and sanitize. Quick disconnects are important for these tasks.
FE&S: What are the equipment innovations that have had the biggest impact on the B&I segment?
KF: One of the newer innovations that has been great for our operations is ovens that provide both convection and microwave capabilities. We use these units for breakfast sandwiches and to crisp fries quickly. These ovens allow us to expand our snack offerings, as well. The biggest benefits are easy operation and minimal labor.
FE&S: Are there any aspects of your business that have or will change?
KF: Because today's work force has less time for meals, we want to expand our grab and go program. This may include more elaborate offerings, like exotic sandwiches made with ingredients such as imported cheeses and artisan breads, which are not typically found in corporate dining environments.
FE&S: What are your goals for this year?
KF: Our goal is to focus not just on expanding business in general, but on increasing same store sales. Although corporate dining participation levels are close to where they were five years ago, we still try to capture employee diners looking for value.
FE&S: What do you predict for the future of this segment?
KF: As corporations continue downsizing, B&I will keep changing. We are reinventing ourselves and working to modify large kitchen facilities to fit the needs of hundreds of employees instead of thousands. The trend is to create retail appearances, while condensing a variety of food in a very small area. We are going back to basics by cooking to order, which adds excitement and reduces waste. This generation of consumers is very focused on value, variety and quality.
Case Study: Thomas Cuisine Management, Meridian, Idaho
Meridian, Idaho-based Thomas Cuisine Management is a contract foodservice organization that provides customized programs to corporations across the western U.S. To help generate a profit for its customers, Thomas Cuisine must provide the right variety of food at a price corporate diners will pay. Even under the best of circumstances delivering on this promise can be challenging for corporate feeders like Thomas Cuisine due to the many built-in obstacles this section faces.
For example, unlike many traditional restaurants, most corporate dining facilities provide only breakfast and lunch, which can result in smaller check averages that typically lead to lower revenues. Also, in many instances these facilities do not operate on weekends and holidays, further reducing the profit potential. In addition, most employee dining operations are generally only open to those people working on visiting the campus, which can also restrict profit potential.
Thomas Cuisine targets companies looking to provide their employees with a more upscale dining experience. Its corporate clients are larger companies on closed campuses with more than 700 employees. "We provide customized operations to meet the company's needs. Businesses looking for a simple grill or deli foodservice program wouldn't be a good fit for us," says Mark Kadell, Thomas Cuisine's president.
Corporate dining customers may look for value, yet healthy meal options are just as important. Thomas Cuisine's goal for its installations is to entice as many workers as possible to dine on site, while also reaching out to potential catering customers off site in order to increase revenue potential and lower costs. "It's important to offer variety, or corporate diners will dine elsewhere," Kadell says.
To maintain participation high among its clients' employees, Thomas Cuisine takes an aggressive approach to attract customers and maintain participation in its corporate dining operations. Along with offering a large menu selection and trying to maintain average checks that will provide clients with lower operating costs, the company focuses on providing value meals.
The Thomas Cuisine staff tends to work in remodeled or retrofitted facilities instead of a newly built operation. With new corporate clients, Thomas Cuisine staff conducts a business study and site visit to determine kitchen capacity and limitations. In customizing the process for each client Thomas Cuisine provides everything from labor to menus and contracts for food and supplies.
"We educate our clients on market pricing and how to attract and keep diners, while looking at their objectives and balancing this with the budget," Kadell says. An increasing number of corporate clients want their contracted foodservice operations to be as close to breaking even as possible.
To better compete with national corporate foodservice providers, Thomas Cuisine provides a full suite of unique, made-from-scratch concepts and both coffee/beverage and vending services. Concepts include the Grillery's grilled items; home-style entrees at the Main Event; a sauté cook-to-order station called Flavor and Fire; the Spotlight Program featuring healthy meals; Manhattan Deli; the Field of Greens made-to-order salad station; Cuisine Express' grab and go options; Fusions wok station and Solid Grounds espresso bar. All food is made from scratch.
Even with set menus, Thomas Cuisine allows flexibility at the local level. "We have a variety of set menus, but also encourage our on-site chefs to create their own meals to accommodate local preferences," Kadell says.
Kitchens typically consist of a range, char broiler, griddle, convection and deck ovens, steamer, tilt kettles, braiser and both walk-in and reach-in refrigerators and freezers.
In terms of foodservice equipment and supplies purchasing, Thomas Cuisine places an emphasis on sustainability. For example, the company specifies energy-efficient equipment and encourages the use of china and silverware instead of disposable plates and flatware.
With its approach and positioning, Thomas Cuisine has grown its business by capitalizing on new opportunities. "There are businesses out there looking for foodservice providers to do more and build sales," Kadell says. "We have become more creative in offering healthier options and value meals."
Looking ahead, the company will continue its focus on fresh and healthy from-scratch menu items. Value meals also will be expanded to provide low-cost options that allow corporate employees to dine out more frequently.
"Equipment that provides quick food production is important," Kadell says. "We're working toward menu concepts that allow us to cook more to order. This is where the industry is headed."
E&S Considerations for B&I Foodservice Operations:
- Flexibility: Because menu concepts are constantly evolving and changing in B&I, equipment that can be used for multiple tasks is invaluable.
- Portability: Display cooking is now a big part of this segment. Cooking and refrigeration equipment that can be easily moved and accessed can increase speed and efficiency.
- Energy Efficiency: With tighter budgets, B&I operators are looking to save money wherever they can. Specifying Energy Star equipment can help cut utility costs and improve the bottom line over time.
